Ready for a market correction?

[Freak Out]

Lately I moved a bunch of money out of stocks into gold and other commodities as well as more into bonds. I still own some stocks in my 401k/IRA plans but have really changed my risk % as of late.

Here was an interesting read I found:

The Takeover Boom, About to Go Bust

By Steven Pearlstein
Wednesday, June 13, 2007; D01

To understand why there's a credit bubble, how it's inflating the price of stocks and what it will mean for you when it bursts, let's consider the acquisition of Avaya, a large telecommunications equipment maker, announced last week by two private-equity firms, Texas Pacific Group and Silver Lake Partners.

Avaya is expected to post revenue of about $5.4 billion this year. It has virtually no debt and has $825 million in the bank. Operating earnings -- profit before counting things like interest payments, taxes, depreciation and amortization -- are expected to reach $700 million. And if that's correct, it means the price being paid for Avaya, $8.2 billion, is 12 times operating profit, making it one of this season's richest deals.

What's driving such high valuations is cheap debt, and plenty of it. We don't know yet how the all-cash purchase of Avaya will be financed, but if it follows the pattern of other recent buyouts, the new owners will take on at least $6 billion in debt. Given the junk-bond rating that has already been assigned to the deal, that is likely to work out to an average interest rate of about 8 percent, along with the obligation to pay back 1 percent of principal every year. Add it all together, and the new, improved Avaya will have to pay about $540 million more a year in debt service than it does now.

Can the company handle that? Well, consider that only three years ago, Standard & Poor's calculated that operating profits for companies involved in leveraged buyouts were typically 3.4 times debt service. Last year, the number fell to 2.4. So far this year, it is 1.7.

And the Avaya deal? It's 1.3 to 1, which, if you think about it, isn't much of a cushion if revenue suddenly falls or expenses rise more than expected. Nor would there be much cash left over for the company to increase its investment in research or pay for new plant and equipment.

In other words, a deal like this would never get financed in normal times. Bank lenders and bondholders would demand that the new owners use more of their own money and take on less debt. Or they would demand interest rates so high that the company, as presently configured, wouldn't be able to generate enough cash to cover debt service. Either way, the buyers would never have agreed to pay $8.2 billion.

But these are not normal times, and overpriced and over-leveraged deals like Avaya have been getting financed in record numbers. Back in 2004, about $275 billion in loans were issued for such highly leveraged transactions. By last year, that had risen to $490 billion. And in just the first five months of 2007, that record was broken.

At some point sanity will be restored, triggered by any number of events. A high-profile acquisition could collapse because the new owners could not secure financing. Or a deal could blow up after it is discovered that there's really not enough cash to meet the debt payments. Or interest rates could suddenly rise from their current low level, threatening the viability of recently acquired companies and making it unlikely that the new owners will be able to sell for anything close to what they paid.

In fact, over the past several weeks, all those things have begun to happen.

On the bond market, yields on the benchmark 10-year Treasury bill have increased from just under 4.5 percent to more than 5.25 percent -- a three-quarters-of-a-point jump without any action by the Federal Reserve.

And just last week, William Gross, one of the country's leading bond investors, recanted on his prediction that interest rates were headed down, warning instead that yields on 10-year Treasurys could reach 6.5 percent over the next several years.

Syndicated loans used to finance the recent purchases of the Minneapolis Star Tribune, Linens 'n Things and Freescale, a semiconductor maker, are trading at significant discounts only months after the deals were closed, after the companies reported disappointing earnings or cash flow.

Meanwhile, the Wall Street Journal reported that after a period in which lenders were throwing money at leveraged buyouts with few if any conditions, several private-equity buyers are having more trouble financing their deals. Those include KKR's $26 billion acquisition of First Data and Texas Pacific's purchase of JVC, the struggling consumer electronics giant.

It is impossible to predict when the magic moment will be reached and everyone finally realizes that the prices being paid for these companies, and the debt taken on to support the acquisitions, are unsustainable. When that happens, it won't be pretty. Across the board, stock prices and company valuations will fall. Banks will announce painful write-offs, some hedge funds will close their doors, and private-equity funds will report disappointing returns. Some companies will be forced into bankruptcy or restructuring.

But the damage won't be limited to Wall Street and its investors. For if we've learned one thing in the past 20 years, it is that what happens on financial markets, in booms and in busts, can have a big impact on the rest of the economy.

Without the billions of dollars flowing each year to financiers and corporate executives, there will be less money to trickle down to car salesmen, yacht makers, real estate agents, third-home builders and busboys at luxury resorts.

Falling stock prices will cause companies to reduce their hiring and capital spending while governments will be forced to raise taxes or reduce services, as revenue from capital gains taxes declines.

And the combination of reduced wealth and higher interest rates will finally cause consumers to pull back on their debt-financed consumption.

It happened after the junk-bond and savings-and-loan collapses of the late 1980s. It happened after the tech and telecom bust of the late '90s. And it will happen this time.

The recent decline in home prices and the meltdown in the market for subprime mortgages are the first signs that the air is coming out of the credit bubble. Already, those factors have shaved half a percentage point off the economic growth rate. And you can be sure that there will be a much larger impact on jobs and incomes from a broad decline in stock and bond prices, a sharp tightening of credit and the turmoil that both of those will create in the murky derivatives markets.

Steven Pearlstein will host a Web discussion today at 11 a.m. at washingtonpost.com. He can be reached atpearlsteins@washpost.com.

[LL2]

I have been thinking about moving some of our retirement money to different investments. I have half of our funds in international investments and right now I think they are carrying too much risk. Our funds are up 20% for the year, which is my goal every year, so since I reached it I'm think of moving money to more conservative funds. I would never move money to gold or bonds. I'm far too young and if I wantedd the returns they give I'd stick my money in a savings account. Yes credit is tightening and the housing market is in the pits, but the economy always has an area in the down turn of a cycle. I'm a believer in the stock market, and that it's the real way to grow money (outside of starting your own business). If you do your research and pick the right asset allocation for your risk tolerance you should do well. Your risk tolerance might be really low so gold and bonds might be right for you, but I would do more research than just this article before dumping a lot of your money in gold or bonds.

[Patler]

The next big market correction = the next good buying opportunity! :D

[oregonpackfan]

What does the Ouiji Board say about the Stock Market? :)

[Freak Out]

but I would do more research than just this article before dumping a lot of your money in gold or bonds.

Well duh! Please.

:lol: I'm probably a few years older than you are so have much more to lose if there is a big dump and am caught in the middle. Don't get me wrong, I've made a ton of money in the stock market...the last 18 months or so have been amazing! :D :D :D :D but there are many signs out that are pointing to a large downturn. I want to be in position to take advantage of it. When I first started buying gold seriously it was in 98/99 and it has done very well since then. Before that it was penny Canadian mining stocks. :D :D $$$

Did you say Voodoo or Ouiji?

[Bretsky]

Freak,

You sound like a guy I'd really enjoy talking to. I do some stock research, but not nearly as much as I'd like to. Last week I went to Morningstar, studied my 401K investments, and completely shuffled around my mutual fund allocations.

I only own about seven stocks now; was on top of the world in the NET craze and then lost my ass, only to make a little profit in the end overall.
Still read my share of articles and have been considering subscribing to Jon Marksman's newsletter at a stiff price of $200 per year. His articles seem to be dynamic and his picks seem to be pretty solid from what I've read.

Curious as to what type of investing you do and what outlets you use to research specific stocks ???

[mraynrand]

Take a guess from where the 'Private Equity' firms are getting their money.

[Kiwon]

Well duh! Please.

Is this your personal or professional opinion?

Would you mind sharing your current percentage breakdowns between stocks, bonds, gold, cash equivalents?

[LL2]

Still read my share of articles and have been considering subscribing to Jon Marksman's newsletter at a stiff price of $200 per year. His articles seem to be dynamic and his picks seem to be pretty solid from what I've read.

Curious as to what type of investing you do and what outlets you use to research specific stocks ???

You should check out the newsletters at www.fool.com. I subscribe to the Champion Funds newsletter and think it's worth the $150 a year. I'm a DIY type when it comes to investing and love to read finance stuff. Most financial planners scare me and do not think they know more than I do, although I'm sure a decent percent do but most I wouldn't trust giving my money too.

[Bretsky]

Still read my share of articles and have been considering subscribing to Jon Marksman's newsletter at a stiff price of $200 per year. His articles seem to be dynamic and his picks seem to be pretty solid from what I've read.

Curious as to what type of investing you do and what outlets you use to research specific stocks ???

You should check out the newsletters at www.fool.com. I subscribe to the Champion Funds newsletter and think it's worth the $150 a year. I'm a DIY type when it comes to investing and love to read finance stuff. Most financial planners scare me and do not think they know more than I do, although I'm sure a decent percent do but most I wouldn't trust giving my money too.

Thank you for the url; I also read about other newsletters they have.

Right now I'm looking for the newsletter to help me look for a couple stock home runs. I'd doing ok via the traditional methods...401K/IRA..etc....

In search of something outside of the norm to help me identify stocks; of course we are all looking for the next Hansen of the past five years or DELL from earlier years. Easier said than done of course.

Cheers,
B

[MadtownPacker]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?

[Freak Out]

Well duh! Please.

Is this your personal or professional opinion?

Would you mind sharing your current percentage breakdowns between stocks, bonds, gold, cash equivalents?

I don't base my investment strategy off of one persons opinion. I just thought it was a good read and that's why I shared it.

And I learned never to give buy recommendations.

[Freak Out]

Freak,

You sound like a guy I'd really enjoy talking to. I do some stock research, but not nearly as much as I'd like to. Last week I went to Morningstar, studied my 401K investments, and completely shuffled around my mutual fund allocations.

I only own about seven stocks now; was on top of the world in the NET craze and then lost my ass, only to make a little profit in the end overall.
Still read my share of articles and have been considering subscribing to Jon Marksman's newsletter at a stiff price of $200 per year. His articles seem to be dynamic and his picks seem to be pretty solid from what I've read.

Curious as to what type of investing you do and what outlets you use to research specific stocks ???

I first got into the market like many do..I guess? Through an employers stock purchase plan. I worked for a drilling company (oil) for many years and got to buy company stocks at a big discount as part of my compensation package. When I first started doing it I was VERY naive about investing in the stock market and would have lost out on some big opportunities if it was not for a friend/coworker who kind of took me by the hand and showed me the ropes. When I bought my first company stock the price was about $6...pretty cheap, and I bought as much as I could afford to buy down to $4 and then back up to about $45 over a 26 month period and then sold for a big profit. :D After that I just bought and sold company stocks following a pretty amazing historical cycle. It was almost a joke among the company officers and directors as to how much money you could make. The company started offering 401k type packages soon after and I invested in those as well, in a very conservative manner I might add. The things I like most about my 401k and IRA plans that I first got through the drilling company were all the cool tools that come with the investment. The research tools are amazing. The problem with the 401k/IRA plans is that it takes to much time to move stuff around and you can get burned fast if you are not careful so I have always played it pretty safe with that money.
It is very hard (for me at least) to recommend subscribing to one newsletter or group just like I will never tell someone to buy a certain stock just because they could lose their ass. I bought a bunch of SRS once, the company who does the WoW music technology... and it was a very good deal and they had just signed up with Microsoft blah blah blah...I told two friends about it. I started buying in at around $6 bucks or so and bought through about $26-$30. I think it went as high as $40 or so...and then crashed with all the other Tech stocks. I sold it all on the way down and made some good money. They never sold and called me freaking when they found out it was about $2 and change! Ooops. That was the last time I ever told anyone about a stock they should buy.
As far as newsletters and things like that go $200 is a good deal considering how much can be made but if you are going to put a bunch of money in you might be better off paying someone to manage it for you.

As always....buy low and sell high my friend.

[Freak Out]

Take a guess from where the 'Private Equity' firms are getting their money.

They can get it from many places but are you referring to Pension Funds?

[Freak Out]

Still read my share of articles and have been considering subscribing to Jon Marksman's newsletter at a stiff price of $200 per year. His articles seem to be dynamic and his picks seem to be pretty solid from what I've read.

Curious as to what type of investing you do and what outlets you use to research specific stocks ???

You should check out the newsletters at www.fool.com. I subscribe to the Champion Funds newsletter and think it's worth the $150 a year. I'm a DIY type when it comes to investing and love to read finance stuff. Most financial planners scare me and do not think they know more than I do, although I'm sure a decent percent do but most I wouldn't trust giving my money too.

The Fools are good. Funny to boot.

[MJZiggy]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?

From what I understand (and I'm sure I'll be told I'm wrong) is to start setting aside a portion of your paycheck before you ever even see the money and putting it in a mutual fund. Do it with every paycheck and take advantage of any retirement or matching that your company does. Then, when you're on your way to being rich, and run into a couple bucks, I like to buy a few shares of a company whose products I use (is craigslist publicly owned) and just hang on to it. I do that just for fun, but once my parents bought Sears stock and had a little cash from it for a few decades until Sears performance started sucking and they sold the stock. (I wonder if that dip in stock performance was at the same time as a certain associate was hired???
:wink: )

[Partial]

(I wonder if that dip in stock performance was at the same time as a certain associate was hired???
:wink: )


Yeah those Sears stores will hire just about anybody!!!

Their stock is supposedly on the up-and-up because there is discussion that Sears-Holdings is going to buy Home Depot or some other large retailer. I was very, very taken aback when I found out they were the 4th biggest retailer in the country.

[Bretsky]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?

From what I understand (and I'm sure I'll be told I'm wrong) is to start setting aside a portion of your paycheck before you ever even see the money and putting it in a mutual fund. Do it with every paycheck and take advantage of any retirement or matching that your company does. Then, when you're on your way to being rich, and run into a couple bucks, I like to buy a few shares of a company whose products I use (is craigslist publicly owned) and just hang on to it. I do that just for fun, but once my parents bought Sears stock and had a little cash from it for a few decades until Sears performance started sucking and they sold the stock. (I wonder if that dip in stock performance was at the same time as a certain associate was hired???
:wink: )

Just some thoughts on starting.

My first step was to pick out a mutual fund with a proven track record and I had $50 a month automatically deducted from my checking account each month. I started it with 2,500 at age 21 or so and never really even missed that $50 a month that I was contributing. But be smarter than me; I stopped tracking that mutual fund as well as I should have and didn't make nearly enough annually as I should have. I recently switched funds and hopefully that will work out better.

To start I hope anybody who has a 401K with a company matching part of your contribution is contributing money. For instance, if your company puts in 3% to every 6% you invest IMO that's contributing 6% of your wage is step one.

From there, I think it's a good idea to get familiar with stocks through Internet Websites....such as msn.com/smartmoney.com/kiplingers.com.....and mutual funds through morningstar.com.

I always feel like it's good to invest in sectors you are interested in. Mad is a Tech expert so it would seem to me that he would begin looking at technology companies you know and respect and do some research on them. Pick out a few companies and go to msn.com in the investing area. Use their stockscouter and view earnings expectations, and even current analyst ratings on the company.

If you know a Investment guy, you can also meet with them and push their goods. But in reality if you go to a site like www.discountbroker.com you can buy stocks for $7 a trade.

There are some starter ideas; the main thing is for people to get off their comfortable couches and take action. Start now, or it will cost you later.

[Freak Out]

I always feel like it's good to invest in sectors you are interested in.



Good advice. Investing 101 almost....Go with what you know.

[retailguy]

(I wonder if that dip in stock performance was at the same time as a certain associate was hired???
:wink: )


Yeah those Sears stores will hire just about anybody!!!

Their stock is supposedly on the up-and-up because there is discussion that Sears-Holdings is going to buy Home Depot or some other large retailer. I was very, very taken aback when I found out they were the 4th biggest retailer in the country.

Sears used to be the biggest retailer in the world, until a certain little company based in Arkansas took 'em down. :P

[retailguy]

I always feel like it's good to invest in sectors you are interested in.



Good advice. Investing 101 almost....Go with what you know.

Only a fool who wants to be separated from his money invests in something he doesn't understand. That advice comes straight from the mouth of a guy named Warren Buffet. And, no, he's not Jimmy's brother... and they've got the DNA to prove it.

[Kiwon]

Well duh! Please.

Is this your personal or professional opinion?

Would you mind sharing your current percentage breakdowns between stocks, bonds, gold, cash equivalents?

I don't base my investment strategy off of one persons opinion. I just thought it was a good read and that's why I shared it.

And I learned never to give buy recommendations.

I wasn't looking for stock recommendations (and you don't want mine either). I was curious about your overall portfolio breakdown. You wrote that you changed your risk percentage recently so I wondering what you thought a good balance was.

("Lately I moved a bunch of money out of stocks into gold and other commodities as well as more into bonds. I still own some stocks in my 401k/IRA plans but have really changed my risk % as of late.")

I've got a couple of mutual funds dedicated for the kids' college fees that have done well recently. After reading the article and what you did, I was wondering if now was the time to take those profits and sock them away. I did not do this in 2000 when I had the chance and regretted it.

Also, I understand that the Motley Fool approach is buy and hold. Does this investing philosophy run throughout all their newsletters or do different newsletters connected to them advocate different investing strategies?

[Freak Out]

Ooops.

June 21, 2007
Rescue bid for Wall Street hedge funds
Suzy Jagger in New York

Blackstone, the US private equity group, was locked in rescue talks last night with a dozen lending banks, including Bear Stearns, to prevent the collapse of two hedge funds that control investments of about $20 billion (£10 billion).

Bear Stearns, the parent bank, had offered to help the hedge funds with a $1.5 billion credit facility in return for assets, but it is understood that the offer was made on condition that no assets were seized by other lenders.

Merrill Lynch, the American investment bank, yesterday published a list of assets worth $850 million held by the hedge funds that it intended to seize and auction on Wall Street last night. It wanted to sell the bonds to claw back money that it had lent to the funds.

It was not clear whether the parent bank’s offer of new credit facilities still stands.

Both hedge funds invested the bulk of their funds in risky securities linked to the sub-prime mortgage market – home loans made to borrowers with poor credit histories. That market has suffered significant losses after lenders became sloppy in chasing full documentation from potential borrowers to check details such as their proof of income, and American house prices slid.

The collapse of the funds would mark the biggest casualty yet among investment banks in the American sub-prime mortgage market.

Investors, including wealthy individuals and so-called fund of fund shareholders, became concerned in May when one of the funds showed that its value had fallen 6.75 per cent in April. That loss ballooned to 18 per cent just two weeks later.

The two hedge funds – the High Grade Structured Credit Strategies Enhanced Leverage Fund and the High Grade Structured Credit Strategies Fund – are part of the Bear Stearns banking group.

JPMorgan had also threatened to seize assets to reduce its lending but is thought to have withdrawn the threat. It is also believed that Deutsche Bank and Goldman Sachs are considering whether to grab similar assets from the funds.

Sources close to the hedge funds were uncertain about the feasibility of the funds’ future after the Merrill Lynch move.

Other sources close to some of the lenders estimated yesterday that should the two hedge funds collapse, the banks will recoup only between 60 and 70 cents of every dollar that they had lent.

Blackstone, which is advising the hedge funds on a refinancing package, started talks over the weekend with lenders to the funds.

The private equity group is seeking to persuade other lenders to the funds, including Citigroup and Barclays Capital, to take part in a rescue package.

Barclays Capital and Goldman Sachs yesterday refused to comment on whether they, too, would seize collateral to claw back money from the two Bear Stearns funds. Merrill Lynch also declined to comment. Deutsche Bank was unavailable for comment. Bear Stearns also declined to comment.

Victims

— One of the highest-profile victims of the sub-prime lending crisis has been New Century Financial, one of the biggest providers of mortgages to low-income borrowers. It filed for Chapter 11 bankruptcy protection in April. Morgan Stanley, UBS and Barclays had credit lines to the company of $3 billion, $2 billion and $1 billion respectively

— HSBC was exposed to $11 billion of bad debts through its HFC Household American sub-prime division

— 31 American sub-prime mortgage lenders have failed in the past few months on the back of more borrower defaults

[Bretsky]

anybody have any good or bad experiences ??

http://msn.fool.com/investing/high-growth/2007/06/20/searching-for-40000-returns.aspx?logvisit=y&source=eedmsnlnk0010001

[LL2]

Well duh! Please.

Is this your personal or professional opinion?

Would you mind sharing your current percentage breakdowns between stocks, bonds, gold, cash equivalents?

I don't base my investment strategy off of one persons opinion. I just thought it was a good read and that's why I shared it.

And I learned never to give buy recommendations.

I wasn't looking for stock recommendations (and you don't want mine either). I was curious about your overall portfolio breakdown. You wrote that you changed your risk percentage recently so I wondering what you thought a good balance was.

("Lately I moved a bunch of money out of stocks into gold and other commodities as well as more into bonds. I still own some stocks in my 401k/IRA plans but have really changed my risk % as of late.")

I've got a couple of mutual funds dedicated for the kids' college fees that have done well recently. After reading the article and what you did, I was wondering if now was the time to take those profits and sock them away. I did not do this in 2000 when I had the chance and regretted it.

Also, I understand that the Motley Fool approach is buy and hold. Does this investing philosophy run throughout all their newsletters or do different newsletters connected to them advocate different investing strategies?

Motley Fool does advocate a buy and hold approach, but you have to do your own research and do what you feel comfortable doing. The Fool newsletter I subscribe to is Champion Funds, and it's strictly a newsletter for mutual funds. They do have newsletters for stcoks too like Rule Breakers and Hidden Gems. I'm thinking about getting one of those too. Have you ever taken a risk tolerance questionaire? It's a good step, but not the only one, to find out what type of investor you are.

[Freak Out]

I'm thinking its a good time to buy some Yahoo.....getting an itchy trigger finger. I've been watching it for some time and heard that fucking Rupert Murdoch was going to make a run at it.

Dammit Jim!

[LL2]

I'm thinking its a good time to buy some Yahoo.....getting an itchy trigger finger. I've been watching it for some time and heard that fucking Rupert Murdoch was going to make a run at it.

Dammit Jim!

I thought about Yahoo too but I'd like to see the stock price drop some more. Say to around $20 or lower. It's at $27.67 today. If Murdoch buys Yahoo Microsoft will probably regret it. Google has a monopoly on internet advertising and search revenue. Boy, I wish I was an employee of Google before their IPO, even if it was a Janitor.

[Partial]

Wasn't Yahoo at over 300 dollars at one time?

[Freak Out]

I'm thinking its a good time to buy some Yahoo.....getting an itchy trigger finger. I've been watching it for some time and heard that fucking Rupert Murdoch was going to make a run at it.

Dammit Jim!

I thought about Yahoo too but I'd like to see the stock price drop some more. Say to around $20 or lower. It's at $27.67 today. If Murdoch buys Yahoo Microsoft will probably regret it. Google has a monopoly on internet advertising and search revenue. Boy, I wish I was an employee of Google before their IPO, even if it was a Janitor.

I bought Google at $200 and was scared....lol.

I won't wait for it to go as low as $20. I think I'll pull the trigger on Friday but we'll see.

I'll have to check but I think you are close Partial.

[LL2]

Have you thought about Sirius? Currently at $2.84. It's not a recommend over at fool because they lose more money than they make and have yet to make a profit, but I think it might be worth the risk. Dump 20k into it and hopefully watch it grow to $15 a share in 5 years. A while back I saw it around $1 a share. I don't think the company is going to go away and it could eventually be bought out by some media or internet company.

[Freak Out]

Have you thought about Sirius? Currently at $2.84. It's not a recommend over at fool because they lose more money than they make and have yet to make a profit, but I think it might be worth the risk. Dump 20k into it and hopefully watch it grow to $15 a share in 5 years. A while back I saw it around $1 a share. I don't think the company is going to go away and it could eventually be bought out by some media or internet company.

When I first heard of merger talks with XM I thought about buying a bit but have not done so. I'm still just a bit leery of it. I do own a little XM after buying some cheap a few years ago. I sold most when it hit like $36 but it has tanked since then.

Anyone get any Blackstone today? It's up 18 percent already.

[Freak Out]

Damn chicken littles anyway..........


BIS warns of Great Depression dangers from credit spree

By Ambrose Evans-Pritchard
Last Updated: 9:02am BST 25/06/2007

The Bank for International Settlements, the world's most prestigious financial body, has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood.

Construction in Shanghai: BIS warns of Great Depression dangers from credit spree
The BIS said China may have repeated the disastrous errors made by Japan in the 1980s

"Virtually nobody foresaw the Great Depression of the 1930s, or the crises which affected Japan and southeast Asia in the early and late 1990s. In fact, each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a 'new era' had arrived", said the bank.

The BIS, the ultimate bank of central bankers, pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system.

"Behind each set of concerns lurks the common factor of highly accommodating financial conditions. Tail events affecting the global economy might at some point have much higher costs than is commonly supposed," it said.

The BIS said China may have repeated the disastrous errors made by Japan in the 1980s when Tokyo let rip with excess liquidity.
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"The Chinese economy seems to be demonstrating very similar, disquieting symptoms," it said, citing ballooning credit, an asset boom, and "massive investments" in heavy industry.

Some 40pc of China's state-owned enterprises are loss-making, exposing the banking system to likely stress in a downturn.

It said China's growth was "unstable, unbalanced, uncoordinated and unsustainable", borrowing a line from Chinese premier Wen Jiabao

In a thinly-veiled rebuke to the US Federal Reserve, the BIS said central banks were starting to doubt the wisdom of letting asset bubbles build up on the assumption that they could safely be "cleaned up" afterwards - which was more or less the strategy pursued by former Fed chief Alan Greenspan after the dotcom bust.

It said this approach had failed in the US in 1930 and in Japan in 1991 because excess debt and investment built up in the boom years had suffocating effects.

While cutting interest rates in such a crisis may help, it has the effect of transferring wealth from creditors to debtors and "sowing the seeds for more serious problems further ahead."

The bank said it was far from clear whether the US would be able to shrug off the consequences of its latest imbalances, citing a current account deficit running at 6.5pc of GDP, a rise in US external liabilities by over $4 trillion from 2001 to 2005, and an unpredented drop in the savings rate. "The dollar clearly remains vulnerable to a sudden loss of private sector confidence," it said.

The BIS said last year's record issuance of $470bn in collateralized debt obligations (CDO), and a further $524bn in "synthetic" CDOs had effectively opened the lending taps even further. "Mortgage credit has become more available and on easier terms to borrowers almost everywhere. Only in recent months has the downside become more apparent," it said.

CDO's are bond-like packages of mortgages and other forms of debt. The BIS said banks transfer the exposure to buyers of the securities, giving them little incentive to assess risk or carry out due diligence.

Mergers and takeovers reached $4.1 trillion worldwide last year.

Leveraged buy-outs touched $753bn, with an average debt/cash flow ratio hitting a record 5:4.

"Sooner or later the credit cycle will turn and default rates will begin to rise," said the bank.

"The levels of leverage employed in private equity transactions have raised questions about their longer-term sustainability. The strategy depends on the availability of cheap funding," it said.

That may not last much longer.

Information appearing on telegraph.co.uk is the copyright of Telegraph Media Group Limited and must not be reproduced in any medium without licence. For the full copyright statement see Copyright

[Merlin]

If you really want a market downturn, keep letting Greenspan shoot off his mouth, pass universal healthcare and the imigration reform bill.

[Tyrone Bigguns]

If you really want a market downturn, keep letting Greenspan shoot off his mouth, pass universal healthcare and the imigration reform bill.

What does greenspan have to do with the market?

[Freak Out]

If you really want a market downturn, keep letting Greenspan shoot off his mouth.

That is what gets me, the old fuck scratching his balls the wrong way sends the market down 200 pts.

[LL2]

I was young in the 80’s and don’t know the history behind the collapse of the Japanese economy, but I doubt China’s situation is similar. China has a cash reserve of 1 trillion dollars, whereas the US gov’t has a debt more than that. I’m not an economics expert but don’t think China will experience a 1929 type crash, but maybe a 1987 type crash as their market is a little overheated.

[Scott Campbell]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?


Charging a subscription for ParkerRats.

[GrnBay007]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?


Charging a subscription for ParkerRats.

I contribute my 2 cents every now and then. :P

[GrnBay007]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?

I prefer stock owning Cracker...but, oh well. :P

EVERYONE advises a starting point is investing if your employer/company contributes or matches your contribution in a deferred comp....or whatever it may be called where you work. I have been doing that at the minimum amount for years....but this year took the plunge and tripled my contribution to get the max from the Department.

[LL2]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?

I prefer stock owning Cracker...but, oh well. :P

EVERYONE advises a starting point is investing if your employer/company contributes or matches your contribution in a deferred comp....or whatever it may be called where you work. I have been doing that at the minimum amount for years....but this year took the plunge and tripled my contribution to get the max from the Department.

Your a smart cookie! Increase it 1% every year until you reach 10% of your salary. You'll be on your way to a nice retirement.

[BallHawk]

I contribute my 2 cents every now and then. :P

Clever! :D :D

[Merlin]

If you really want a market downturn, keep letting Greenspan shoot off his mouth, pass universal healthcare and the imigration reform bill.

What does greenspan have to do with the market?

Every time he opens his mouth publically, the market goes down. The problem is that he has been saying that we are headed for a recession for 3 years now and some people actually believe him! Economists are basically glorified statisticians. Everything they say is based off of a certain set of numbers and even if those numbers are inaccurate, it doesn't interfere with their logic.

The Truth:
Inflation - Directly affected by two factors: Price of Gas (not oil) and Minimum Wage hikes. When the price of gas is high, everything is affected because the cost of transportation rises. When minimum wage increases, most everything is affected because a majority of Union Wages are based off of the minimum wage so those wages go up, the hospitality business raises their prices because the minimum wage goes up. So now everything produced with union labor goes up and the price of a Big Mac, a hotel room and a pizza goes up. So in essence, everything the middle consumes goes up in price. The exception is the wages that non-union middle class workers get. Very few non-union and non hospitality jobs out there adjust their wages based on the minimum wage. Agricultural jobs are also affected by minimum wage. Minimum wage hikes are usually gradual increases so the average consumer does not realize that by the time the full minimum wage increase gets here that they are now paying more for products and also paying more in taxes for those products. It's a good scam and people fall for it every time. The rate of inflation doesn't appear to go up much because it was a "gradual" increase. If the price of your Big Mac goes from $1.99 to $2.25 over the course of a year, you don't even think about it. BUT, that is a 12.5% increase in price and much higher then the normal rate of inflation. The tax goes from (5.5% where I live in WI) $.11 to $.13 or an 18% increase in tax. Now apply that to most products out there. Hopefully you get the picture, congress bets you won't.

Recession - When you don't have any money or are do not feel confident in spending money, the economy tanks and our whole economic system tumbles. Some ways to tumble the economy: Raise taxes, higher interest rates, stagnant wages, job losses. Ways to prevent this: Tax Cuts (the government is taking in record amounts of money since the Bush tax cuts because the people & businesses are spending money), Allow the market to determine the rates, Allow the free market to determine the wages and not the government, Job losses are usually the last thing to go in a recession and shipping jobs overseas is a falacy. If as consumers we did not demand lower prices for goods, there would be no reason to purchase items from say, China. The fact is, we thrive on low price goods and most of us could not afford buying everything from American Made Union products.

Unemployment in this country has been in the low 4% range for years now, lower then when Clinton was in office. Our GDP is up, Government Revenues are up, health care costs are stabilizing and our economy has been solid. This has all transpired since the Bush tax cuts of 2002-2003. Yet, a moron like Greenspan opens his mouth and it all falls apart. Yet, we have a congress and in a lot of cases state governments that are clamoring for more money, universal health care and taxing the evil rich who are already paying half the tax burden as it is in this country.

And yet, people still vote for them.

[Scott Campbell]

If you really want a market downturn, keep letting Greenspan shoot off his mouth, pass universal healthcare and the imigration reform bill.

What does greenspan have to do with the market?

Every time he opens his mouth publically, the market goes down.


I remember Greenspan telling congress about "irrational exuberance" just ahead of the dot.bomb debacle. Nostradamus could learn a thing or two from Alan.

[Scott Campbell]

If you really want a market downturn, keep letting Greenspan shoot off his mouth, pass universal healthcare and the imigration reform bill.

What does greenspan have to do with the market?

Every time he opens his mouth publically, the market goes down.


I remember Greenspan telling congress about "irrational exuberance" just ahead of the dot.bomb debacle. Nostradamus could learn a thing or two from Alan.

[Scott Campbell]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?

I prefer stock owning Cracker...but, oh well. :P

EVERYONE advises a starting point is investing if your employer/company contributes or matches your contribution in a deferred comp....or whatever it may be called where you work. I have been doing that at the minimum amount for years....but this year took the plunge and tripled my contribution to get the max from the Department.




Your a smart cookie! Increase it 1% every year until you reach 10% of your salary. You'll be on your way to a nice retirement.



I also really applaud this. Payroll witholding automates savings discipline.

So 007, did the impact to your cash flow hurt? Or has it been relatively painless?

[GrnBay007]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?

I prefer stock owning Cracker...but, oh well. :P

EVERYONE advises a starting point is investing if your employer/company contributes or matches your contribution in a deferred comp....or whatever it may be called where you work. I have been doing that at the minimum amount for years....but this year took the plunge and tripled my contribution to get the max from the Department.




Your a smart cookie! Increase it 1% every year until you reach 10% of your salary. You'll be on your way to a nice retirement.



I also really applaud this. Payroll witholding automates savings discipline.

So 007, did the impact to your cash flow hurt? Or has it been relatively painless?

No, I can't say it hurt. I did notice a difference though, but it was also at a time my health insurance took a little hike. I raised my contribution at that particular time because I knew I would be getting at least a 3% raise in the next couple of months. (wowza....whopping 3%) ....but it sure does help offset it.

Increasing it 1% each year is a good plan and I'd like to do that, but I also just bought a house 2 years ago (30 yr. mortgage) and am trying like heck to get it paid off in 15 years. I also have college for 2 to think about. Not that I am going to try to pay for their college (I worked all the way through...they can too) but I have been stashing away money for that purpose as well.

I laugh when I read those articles that say you should pay yourself first when you get your paycheck. Yeah right!! Well, unless they are talking about investing for your retirement. And in that case, lets all hope we get to see a nice long retirement.

[LL2]

If you really want a market downturn, keep letting Greenspan shoot off his mouth, pass universal healthcare and the imigration reform bill.

What does greenspan have to do with the market?

Economists are basically glorified statisticians.

Isn't Patler a glorified statistian too? :?:

[HarveyWallbangers]

Isn't Patler a glorified statistian too? :?:

Unglorified.

[MJZiggy]

Ouch.

[Joemailman]

If you really want a market downturn, keep letting Greenspan shoot off his mouth, pass universal healthcare and the imigration reform bill.

What does greenspan have to do with the market?

Every time he opens his mouth publically, the market goes down. The problem is that he has been saying that we are headed for a recession for 3 years now and some people actually believe him! Economists are basically glorified statisticians. Everything they say is based off of a certain set of numbers and even if those numbers are inaccurate, it doesn't interfere with their logic.

The Truth:
Inflation - Directly affected by two factors: Price of Gas (not oil) and Minimum Wage hikes. When the price of gas is high, everything is affected because the cost of transportation rises. When minimum wage increases, most everything is affected because a majority of Union Wages are based off of the minimum wage so those wages go up, the hospitality business raises their prices because the minimum wage goes up. So now everything produced with union labor goes up and the price of a Big Mac, a hotel room and a pizza goes up. So in essence, everything the middle consumes goes up in price. The exception is the wages that non-union middle class workers get. Very few non-union and non hospitality jobs out there adjust their wages based on the minimum wage. Agricultural jobs are also affected by minimum wage. Minimum wage hikes are usually gradual increases so the average consumer does not realize that by the time the full minimum wage increase gets here that they are now paying more for products and also paying more in taxes for those products. It's a good scam and people fall for it every time. The rate of inflation doesn't appear to go up much because it was a "gradual" increase. If the price of your Big Mac goes from $1.99 to $2.25 over the course of a year, you don't even think about it. BUT, that is a 12.5% increase in price and much higher then the normal rate of inflation. The tax goes from (5.5% where I live in WI) $.11 to $.13 or an 18% increase in tax. Now apply that to most products out there. Hopefully you get the picture, congress bets you won't.

Recession - When you don't have any money or are do not feel confident in spending money, the economy tanks and our whole economic system tumbles. Some ways to tumble the economy: Raise taxes, higher interest rates, stagnant wages, job losses. Ways to prevent this: Tax Cuts (the government is taking in record amounts of money since the Bush tax cuts because the people & businesses are spending money), Allow the market to determine the rates, Allow the free market to determine the wages and not the government, Job losses are usually the last thing to go in a recession and shipping jobs overseas is a falacy. If as consumers we did not demand lower prices for goods, there would be no reason to purchase items from say, China. The fact is, we thrive on low price goods and most of us could not afford buying everything from American Made Union products.

Unemployment in this country has been in the low 4% range for years now, lower then when Clinton was in office. Our GDP is up, Government Revenues are up, health care costs are stabilizing and our economy has been solid. This has all transpired since the Bush tax cuts of 2002-2003. Yet, a moron like Greenspan opens his mouth and it all falls apart. Yet, we have a congress and in a lot of cases state governments that are clamoring for more money, universal health care and taxing the evil rich who are already paying half the tax burden as it is in this country.

And yet, people still vote for them.

In 2006, the unemployment rate was 4.6%, compared to 4.0% in 2000. The average unemployment during the Bush adm. has been 5.4%, compared to 5.2% in the Clinton adm. The average increase in health care costs has stabilized the last 2 years at just under 10%. While an improvement, it is hardly good news to U.S. workers whose wages have increased at 3-4%. Combine this with the rise in fuel costs, and this economy has hardly been good for middle class workers. In addition, more than 7 million people have lost health care benefits due to the loss of quality jobs, and the percentage of people in this country living under the poverty level has started to increase again after years of decline. You point to statistics to suggest a strong economy, but ignore the fact that the Bush adm. has had to add trillions to the national debt to achieve it.

I'm curious as to why you claim that most union wages are based on the minimum wage. Most union workers make far more than the minimum wage, and would not seem to be affected by it. The people whose wages are most likely to be affected by the minimum wage are those earning the minimum wage, and those just above it.

[the_idle_threat]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?

I prefer stock owning Cracker...but, oh well. :P

EVERYONE advises a starting point is investing if your employer/company contributes or matches your contribution in a deferred comp....or whatever it may be called where you work. I have been doing that at the minimum amount for years....but this year took the plunge and tripled my contribution to get the max from the Department.




Your a smart cookie! Increase it 1% every year until you reach 10% of your salary. You'll be on your way to a nice retirement.



I also really applaud this. Payroll witholding automates savings discipline.

So 007, did the impact to your cash flow hurt? Or has it been relatively painless?

No, I can't say it hurt. I did notice a difference though, but it was also at a time my health insurance took a little hike. I raised my contribution at that particular time because I knew I would be getting at least a 3% raise in the next couple of months. (wowza....whopping 3%) ....but it sure does help offset it.

Increasing it 1% each year is a good plan and I'd like to do that, but I also just bought a house 2 years ago (30 yr. mortgage) and am trying like heck to get it paid off in 15 years. I also have college for 2 to think about. Not that I am going to try to pay for their college (I worked all the way through...they can too) but I have been stashing away money for that purpose as well.

I laugh when I read those articles that say you should pay yourself first when you get your paycheck. Yeah right!! Well, unless they are talking about investing for your retirement. And in that case, lets all hope we get to see a nice long retirement.

From what I understand, Iowa has an outstanding 529 College Savings Plan that might help you out. :idea: Perhaps you know that already. 8-)

[Freak Out]

If you really want a market downturn, keep letting Greenspan shoot off his mouth, pass universal healthcare and the imigration reform bill.

What does greenspan have to do with the market?

Every time he opens his mouth publically, the market goes down. The problem is that he has been saying that we are headed for a recession for 3 years now and some people actually believe him! Economists are basically glorified statisticians. Everything they say is based off of a certain set of numbers and even if those numbers are inaccurate, it doesn't interfere with their logic.

The Truth:
Inflation - Directly affected by two factors: Price of Gas (not oil) and Minimum Wage hikes. When the price of gas is high, everything is affected because the cost of transportation rises. When minimum wage increases, most everything is affected because a majority of Union Wages are based off of the minimum wage so those wages go up, the hospitality business raises their prices because the minimum wage goes up. So now everything produced with union labor goes up and the price of a Big Mac, a hotel room and a pizza goes up. So in essence, everything the middle consumes goes up in price. The exception is the wages that non-union middle class workers get. Very few non-union and non hospitality jobs out there adjust their wages based on the minimum wage. Agricultural jobs are also affected by minimum wage. Minimum wage hikes are usually gradual increases so the average consumer does not realize that by the time the full minimum wage increase gets here that they are now paying more for products and also paying more in taxes for those products. It's a good scam and people fall for it every time. The rate of inflation doesn't appear to go up much because it was a "gradual" increase. If the price of your Big Mac goes from $1.99 to $2.25 over the course of a year, you don't even think about it. BUT, that is a 12.5% increase in price and much higher then the normal rate of inflation. The tax goes from (5.5% where I live in WI) $.11 to $.13 or an 18% increase in tax. Now apply that to most products out there. Hopefully you get the picture, congress bets you won't.

Recession - When you don't have any money or are do not feel confident in spending money, the economy tanks and our whole economic system tumbles. Some ways to tumble the economy: Raise taxes, higher interest rates, stagnant wages, job losses. Ways to prevent this: Tax Cuts (the government is taking in record amounts of money since the Bush tax cuts because the people & businesses are spending money), Allow the market to determine the rates, Allow the free market to determine the wages and not the government, Job losses are usually the last thing to go in a recession and shipping jobs overseas is a falacy. If as consumers we did not demand lower prices for goods, there would be no reason to purchase items from say, China. The fact is, we thrive on low price goods and most of us could not afford buying everything from American Made Union products.

Unemployment in this country has been in the low 4% range for years now, lower then when Clinton was in office. Our GDP is up, Government Revenues are up, health care costs are stabilizing and our economy has been solid. This has all transpired since the Bush tax cuts of 2002-2003. Yet, a moron like Greenspan opens his mouth and it all falls apart. Yet, we have a congress and in a lot of cases state governments that are clamoring for more money, universal health care and taxing the evil rich who are already paying half the tax burden as it is in this country.

And yet, people still vote for them.

In 2006, the unemployment rate was 4.6%, compared to 4.0% in 2000. The average unemployment during the Bush adm. has been 5.4%, compared to 5.2% in the Clinton adm. The average increase in health care costs has stabilized the last 2 years at just under 10%. While an improvement, it is hardly good news to U.S. workers whose wages have increased at 3-4%. Combine this with the rise in fuel costs, and this economy has hardly been good for middle class workers. In addition, more than 7 million people have lost health care benefits due to the loss of quality jobs, and the percentage of people in this country living under the poverty level has started to increase again after years of decline. You point to statistics to suggest a strong economy, but ignore the fact that the Bush adm. has had to add trillions to the national debt to achieve it.

I'm curious as to why you claim that most union wages are based on the minimum wage. Most union workers make far more than the minimum wage, and would not seem to be affected by it. The people whose wages are most likely to be affected by the minimum wage are those earning the minimum wage, and those just above it.

Look at the big concesions some labor unions are having to make just to keep a few jobs....40 percent wage cuts! Gotta love free trade...or should I say freedom for American companies to move all their manufacturing to the lowest wage nations.

[GrnBay007]

From what I understand, Iowa has an outstanding 529 College Savings Plan that might help you out. :idea: Perhaps you know that already. 8-)

I was not aware of that and looked it up....interesting. I'm surprised when I talked to my accountant this year at tax time he didn't mention this. He said if they were younger he'd go with stocks with the money but at the age they are now he'd suggest a CD.

[HarveyWallbangers]

In 2006, the unemployment rate was 4.6%, compared to 4.0% in 2000.

Both historically low.


The average unemployment during the Bush adm. has been 5.4%, compared to 5.2% in the Clinton adm.

Do you want to claim that Clinton didn't come into office with an economy on the upswing, and left office with an economy on the downswing? What was the trend when Bush came to office? Don't you think 9/11 affected the stats a bit, and likely would have at least wiped out all of the difference.


In addition, more than 7 million people have lost health care benefits due to the loss of quality jobs, and the percentage of people in this country living under the poverty level has started to increase again after years of decline.

I don't trust any of the health care statistics that the MSM pushes. It's fuzzy math. The poverty level is still historically low, and it had started rising before Clinton left office (funny, at the same time that the economy started sputtering).


Look at the big concesions some labor unions are having to make just to keep a few jobs....40 percent wage cuts! Gotta love free trade...or should I say freedom for American companies to move all their manufacturing to the lowest wage nations.

Outsourcing. Another one of those emotional issues that liberals like to use for political means (see minimum wage). Historically, America has insourced way more than it has outsourced. Last I looked, there were still more jobs insourced than outsourced. Want to argue that overall outsourcing/insourcing has been a drain on our economy? The facts don't back it up. I've also read that outsourcing has actually leveled off (although I haven't verified it), but it's good political BS to fire up the base. Traditionally, we've outsourced low paying jobs (usually manufacturing or hard labor) for high paying insourced jobs. The fact that the likes of China and India have evolved dramatically in the IT sector has provided a new dynamic, but then there are the arguments that the increased revenue from the savings made on outsourced jobs provide increased revenue streams that companies use to create new jobs domestically.

Get used to outsourcing though. With the baby boomers retiring, there will be sectors of the economy that will have to outsource just to find an adequate number of laborers for the available positions.

[the_idle_threat]

From what I understand, Iowa has an outstanding 529 College Savings Plan that might help you out. :idea: Perhaps you know that already. 8-)

I was not aware of that and looked it up....interesting. I'm surprised when I talked to my accountant this year at tax time he didn't mention this. He said if they were younger he'd go with stocks with the money but at the age they are now he'd suggest a CD.

I took a look, and there's a small state tax advantage---a state (not federal) tax deduction on all contributions during a calendar year, capped at $2595 per beneficary per year. If you put in maybe $1000.00 per year for both kids combined and you're in, say, an 8% state tax bracket, that's 80 bucks you'll get back on your state taxes. Nothing mindblowing if you're putting away peanuts. And IMO you should be putting away only peanuts for the kids' college savings unless you are fully funding your own retirement plans first (for most this means max out company match in workplace retirement plan and then max out Roth IRA). There are many other ways to fund college, and not nearly so many ways to fund retirement.

And if you're gonna keep the college stuff ultra-conservative, then the tax-deferred growth and (potentially) tax-free distributions will be less advantageous as well. Might still be worthwhile though if it's money you're specifically putting away for college savings.

Strange that your accountant is so polar---either ultra-aggressive with stocks or ultra-conservative with CDs. There are things in the middle.

But then again there are a lot of investors like that.

[Patler]

Isn't Patler a glorified statistian too? :?:

Unglorified.

..and I deserve this why???

[the_idle_threat]

Probably for the same reason I bet all the money in your wallet. :mrgreen: :whist:

[LL2]

Isn't Patler a glorified statistian too? :?:

Unglorified.

..and I deserve this why???

I said you were glorified...that's more of a nice thing...great with stats. Ol Harv probably doesn't like stats too much.

[Bretsky]

From what I understand, Iowa has an outstanding 529 College Savings Plan that might help you out. :idea: Perhaps you know that already. 8-)

I was not aware of that and looked it up....interesting. I'm surprised when I talked to my accountant this year at tax time he didn't mention this. He said if they were younger he'd go with stocks with the money but at the age they are now he'd suggest a CD.

Some other brilliant genius also mentioned a 529 Plan to you :flag: lol

Anyways, putting $$ in CD's is great if you are 65 or so; scratch that. I'd still probably use Money Markets. If I had my securitied license I'd be setting up a meeting with you to discuss the 529 plan as well as mutual fund alternatives. Say no to CD's

[Scott Campbell]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?


I'd do exactly what 007 just did. Increase your rate of savings. Keep ratcheting it up until you're socking a pretty good amount away each year. The #1 critical key is learning to live within what's left over after saving. That's why despite all the arguments you hear from B and RG on HOW to invest, they're both on the exact same page when it comes to what I refer to as discipline. Save the money first. You have plenty of time to worry about the finer points of investing later.

I max out my 401K every year (15% of the paycheck), max out my Roth every year (8G - 4G for both me and my first wife), max out my Employee Stock Purchase Plan every year (15% of the paycheck), and max out the kids Utah state 529 college savings plans every year. While this rate of saving might sound impossible to some, my wife and I started maxing out any available tax incentives right out of college. We were dirt poor. Any time the government offers me free money (tax incentives) to save, I try and take advantage of it. This free money is all use it or lose it - you have to take advantage of them now.

When you're young and have a smaller net worth, your rate of return (or how you invest) is far less important than your savings rate. As your savings pool grows over time, then your retrun on investment % will surpass your savings rate in terms of impact to your net worth.

[the_idle_threat]

I wouldn't rule out CDs entirely. Short term CDs can be very useful to enhance the return on cash that is sitting around in money markets. Lots of times there are 6-month or even 3-month CDs out there that offer a little better rate than the money markets. This is really only worth the trouble, however, if you have a fair amount of money in the money markets (e.g. more than 10K) because the difference might only be 25 basis points or so (0.25%).

[the_idle_threat]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?


I'd do exactly what 007 just did. Increase your rate of savings. Keep ratcheting it up until you're socking a pretty good amount away each year. The #1 critical key is learning to live within what's left over after saving. That's why despite all the arguments you hear from B and RG on HOW to invest, they're both on the exact same page when it comes to what I refer to as discipline. Save the money first. You have plenty of time to worry about the finer points of investing later.

I max out my 401K every year (15% of the paycheck), max out my Roth every year (8G - 4G for both me and my first wife), max out my Employee Stock Purchase Plan every year (15% of the paycheck), and max out the kids Utah state 529 college savings plans every year. While this rate of saving might sound impossible to some, my wife and I started maxing out any available tax incentives right out of college. We were dirt poor. Any time the government offers me free money (tax incentives) to save, I try and take advantage of it. This free money is all use it or lose it - you have to take advantage of them now.

When you're young and have a smaller net worth, your rate of return (or how you invest) is far less important than your savings rate. As your savings pool grows over time, then your retrun on investment % will surpass your savings rate in terms of impact to your net worth.

Agree 100%. The key is to get started at saving. Once you have some money put away, there are all kinds of ways to invest it.

[Merlin]

If you really want a market downturn, keep letting Greenspan shoot off his mouth, pass universal healthcare and the imigration reform bill.

What does greenspan have to do with the market?

Every time he opens his mouth publically, the market goes down. The problem is that he has been saying that we are headed for a recession for 3 years now and some people actually believe him! Economists are basically glorified statisticians. Everything they say is based off of a certain set of numbers and even if those numbers are inaccurate, it doesn't interfere with their logic.

The Truth:
Inflation - Directly affected by two factors: Price of Gas (not oil) and Minimum Wage hikes. When the price of gas is high, everything is affected because the cost of transportation rises. When minimum wage increases, most everything is affected because a majority of Union Wages are based off of the minimum wage so those wages go up, the hospitality business raises their prices because the minimum wage goes up. So now everything produced with union labor goes up and the price of a Big Mac, a hotel room and a pizza goes up. So in essence, everything the middle consumes goes up in price. The exception is the wages that non-union middle class workers get. Very few non-union and non hospitality jobs out there adjust their wages based on the minimum wage. Agricultural jobs are also affected by minimum wage. Minimum wage hikes are usually gradual increases so the average consumer does not realize that by the time the full minimum wage increase gets here that they are now paying more for products and also paying more in taxes for those products. It's a good scam and people fall for it every time. The rate of inflation doesn't appear to go up much because it was a "gradual" increase. If the price of your Big Mac goes from $1.99 to $2.25 over the course of a year, you don't even think about it. BUT, that is a 12.5% increase in price and much higher then the normal rate of inflation. The tax goes from (5.5% where I live in WI) $.11 to $.13 or an 18% increase in tax. Now apply that to most products out there. Hopefully you get the picture, congress bets you won't.

Recession - When you don't have any money or are do not feel confident in spending money, the economy tanks and our whole economic system tumbles. Some ways to tumble the economy: Raise taxes, higher interest rates, stagnant wages, job losses. Ways to prevent this: Tax Cuts (the government is taking in record amounts of money since the Bush tax cuts because the people & businesses are spending money), Allow the market to determine the rates, Allow the free market to determine the wages and not the government, Job losses are usually the last thing to go in a recession and shipping jobs overseas is a falacy. If as consumers we did not demand lower prices for goods, there would be no reason to purchase items from say, China. The fact is, we thrive on low price goods and most of us could not afford buying everything from American Made Union products.

Unemployment in this country has been in the low 4% range for years now, lower then when Clinton was in office. Our GDP is up, Government Revenues are up, health care costs are stabilizing and our economy has been solid. This has all transpired since the Bush tax cuts of 2002-2003. Yet, a moron like Greenspan opens his mouth and it all falls apart. Yet, we have a congress and in a lot of cases state governments that are clamoring for more money, universal health care and taxing the evil rich who are already paying half the tax burden as it is in this country.

And yet, people still vote for them.

In 2006, the unemployment rate was 4.6%, compared to 4.0% in 2000. The average unemployment during the Bush adm. has been 5.4%, compared to 5.2% in the Clinton adm. The average increase in health care costs has stabilized the last 2 years at just under 10%. While an improvement, it is hardly good news to U.S. workers whose wages have increased at 3-4%. Combine this with the rise in fuel costs, and this economy has hardly been good for middle class workers. In addition, more than 7 million people have lost health care benefits due to the loss of quality jobs, and the percentage of people in this country living under the poverty level has started to increase again after years of decline. You point to statistics to suggest a strong economy, but ignore the fact that the Bush adm. has had to add trillions to the national debt to achieve it.

I'm curious as to why you claim that most union wages are based on the minimum wage. Most union workers make far more than the minimum wage, and would not seem to be affected by it. The people whose wages are most likely to be affected by the minimum wage are those earning the minimum wage, and those just above it.

First, for every 20 doom and gloom articles you find, you will only find 1 article stating the converse. Why? The media wants you to believe everything they say. It is well known that the MSM (Main Stream Media) slants solidly left. You won't hear or see very many positive stories about the Bush administration, unlike the Clinton administration where even an extra marital affair wasn't his fault, it was the evil right wing. As I stated, people throw the Clinton unemployment rate out there and slam Bush for his. From what your numbers show (and depending on how you read into those numbers), Bush isn't doing a bad job in comparison to what has happened during his presidency, but you would have us believe otherwise. If you want to take a closer look, look at where the economy was headed in 2000 (If you think it was on the rise, you are sadly mistaken) and then 911 happened in 2001 which rocked our economy hard. So with an economy already going into the tank and events that made it worse, Bushes domestic policies pulled us out from under that. What exactly did Clinton do with the gas prices, the economy again? Oh yeah, tank it by the time he left office. There is mountains of evidence that support supply side economics and even more evidence that shows that raising taxes does nothing but tank the economy long term.

On to Unions. Most union wages are based off of the minimum wage and their contracts have built in escalators should the minimum wage rise. If you read what I said, I did not say that union workers were paid minimum wage, I said that their wages are effected by minimum wage. There are many jobs out there that are like that, not just your average McDonald's job (oh and BTW, they normally pay higher then the minimum because they can't get enough help, that's how a free market works).

[Merlin]

I grew up in a solid Union family. My dad worked for the Communication Workers of America basically his whole adult life. My dad took me to a Union meeting when I was 10 and I got grounded because I asked a simple question. I remember it like it was yesterday and my dad knew that I was not a flaming liberal and that he was in trouble from that point on. After listening them talk about how "bad" their jobs were (you know, 5 weeks vacation, huge wages, free health care, dollar for dollar retirement match, etc), they decided that if they didn't get what they wanted that they were going to strike. So I asked the question "What gives you the right to do this?". My dad was livid, embarrassed and Merlin never attended another meeting.

For all of you that wondered why your phone bill was so high before deregulation, I thank you. My father is now retired, earning more money then he did when he was working with full life time health insurance for he and my mom for only $5 a month (the $5 was negotiated by the union in 2004, prior to that it was free). Neither of them will ever have to worry about money again. My father has gone through several major surgeries and he didn't pay a dime and I thank you.

I don't begrudge my dad for working as hard as he did. He did work "somewhat" hard, but only when something broke or needed replaced. Otherwise he spent his time reading books on the job. The last 10 years or so of his career, he got to drive around to trouble spots and fix things. However, even by his own admission, it was a waste of money for the company because they were too few and far between. Subsequently when he retired, they abolished his job. He knew they were going to abolish it almost as soon as he transferred into it. BUT, the job was his until he decided to retire.

He got lucky, like a lot of previous union workers have. However, that was the pinnacle of unions and also the epitome of what was and still in part is wrong with unions.

Unions were brought upon by poor working conditions many years ago. Now they are little more then extortionists. You paid a high phone bill BECAUSE of the unions. You do PAY for their luxury. When people let the market decided wages, you will find that wages will go up in areas requiring a specific expertise. And yes, those wages are passed onto the consumer. However, I seriously doubt that any of us could afford to just up and strike and hold our company hostage like a Union can. I applaud companies for finally standing up and holding firm with these extortionists. Unions are outdated and serve no useful purpose anymore but to give someone someplace to bitch about work.

[Merlin]

Whoops.....double post..

[oregonpackfan]

[quote=MadtownPacker]Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?


I'd do exactly what 007 just did. Increase your rate of savings. Keep ratcheting it up until you're socking a pretty good amount away each year. The #1 critical key is learning to live within what's left over after saving. That's why despite all the arguments you hear from B and RG on HOW to invest, they're both on the exact same page when it comes to what I refer to as discipline. Save the money first. You have plenty of time to worry about the finer points of investing later.

I max out my 401K every year (15% of the paycheck), max out my Roth every year (8G - 4G for both me and my first wife), max out my Employee Stock Purchase Plan every year (15% of the paycheck), and max out the kids Utah state 529 college savings plans every year. While this rate of saving might sound impossible to some, my wife and I started maxing out any available tax incentives right out of college. We were dirt poor. Any time the government offers me free money (tax incentives) to save, I try and take advantage of it. This free money is all use it or lose it - you have to take advantage of them now.

Wow, Scott! I admire your fiscal discipline in your savings/investments.

Sadly, too many Americans lack your discipline and foresight for savings. We are conditioned to "Buy, buy, buy" and put our purchases on credit cards were the interest will add to our financial burdens.

I have read two disturbing statistics recently. First, is that Americans are currently saving/investing at a -1%!. Yes, that is a NEGATIVE one per cent!
Second, over half of American workers at age 50 have not saved a dime for their retirement!

Twenty years from now, we may see a rising number of impoverished elderly people in the USA.

More Americans need to do what you are doing with your money.

[LL2]

I grew up in a solid Union family. My dad worked for the Communication Workers of America basically his whole adult life. My dad took me to a Union meeting when I was 10 and I got grounded because I asked a simple question. I remember it like it was yesterday and my dad knew that I was not a flaming liberal and that he was in trouble from that point on. After listening them talk about how "bad" their jobs were (you know, 5 weeks vacation, huge wages, free health care, dollar for dollar retirement match, etc), they decided that if they didn't get what they wanted that they were going to strike. So I asked the question "What gives you the right to do this?". My dad was livid, embarrassed and Merlin never attended another meeting.

For all of you that wondered why your phone bill was so high before deregulation, I thank you. My father is now retired, earning more money then he did when he was working with full life time health insurance for he and my mom for only $5 a month (the $5 was negotiated by the union in 2004, prior to that it was free). Neither of them will ever have to worry about money again. My father has gone through several major surgeries and he didn't pay a dime and I thank you.

I don't begrudge my dad for working as hard as he did. He did work "somewhat" hard, but only when something broke or needed replaced. Otherwise he spent his time reading books on the job. The last 10 years or so of his career, he got to drive around to trouble spots and fix things. However, even by his own admission, it was a waste of money for the company because they were too few and far between. Subsequently when he retired, they abolished his job. He knew they were going to abolish it almost as soon as he transferred into it. BUT, the job was his until he decided to retire.

He got lucky, like a lot of previous union workers have. However, that was the pinnacle of unions and also the epitome of what was and still in part is wrong with unions.

Unions were brought upon by poor working conditions many years ago. Now they are little more then extortionists. You paid a high phone bill BECAUSE of the unions. You do PAY for their luxury. When people let the market decided wages, you will find that wages will go up in areas requiring a specific expertise. And yes, those wages are passed onto the consumer. However, I seriously doubt that any of us could afford to just up and strike and hold our company hostage like a Union can. I applaud companies for finally standing up and holding firm with these extortionists. Unions are outdated and serve no useful purpose anymore but to give someone someplace to bitch about work.

Very good read! I dislike unions myself. I have relative that are so pro-union it's pathetic. I don't think the mindset of a union worker is much different than a welfare recipient. They both have an entitlement minset.

[oregonpackfan]

Union abuse is far less than what it used to be. For one thing, there are fewer unions and fewer members of unions than there were before.

Many union members, particularly airline members, have had to sacrifice 25-33% of their wages and benefits to keep their airlines/corporations afloat.

If one wants to attack excessive corporate expenditures, just take an examination of the multi-million dollar salaries/stock options given to CEO's. A few CEO's, like the one for Home Depot, do not even last a full year but are given exorbitant buyout packages. Meanwhile, the average worker at Home Depot makes $10 an hour.

[Merlin]

I agree with the CEO thing OPF. No one deserves that kind of cash for a title unless they are actually making that kind of difference in the company and very few do. However, there are more examples of powerful Unions then there are of ones like the airlines. The airline unions negotiated exorbitant benefits and salaries when the airlines could afford it. That was the unions mistake. Instead of checking their hand, they went all in too early. Union job loss is a reality, why? Because Unions are a pain in the ass. When the going is good they want more then their share and when the going is bad they want that same share and expect to keep their jobs. Free Markets don't function well that way. Leave it up to the employers to determine the wages. If they all start gouging the employees then look no further then the overwhelming number of liberals who own companies. The tide has turned and big business is no longer run by the evil right wing conspiracy. All of those baby boomer hippies grew up and they control a lot more then people want to believe!

[GoPackGo]

That was a great market correction today!

[Freak Out]

That was a great market correction today!


$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$! Time to make some more.

[Freak Out]

Iran Asks Japan to Pay Yen for Oil, Start Immediately (Update1)

By Megumi Yamanaka

July 13 (Bloomberg) -- Iran asked Japanese refiners to switch to the yen to pay for all crude oil purchases, after Iran's central bank said it's cutting holdings of the U.S. dollar.

Iran wants yen-based transactions ``for any/all of your forthcoming Iranian crude oil liftings,'' according to a letter sent to Japanese refiners that was signed by Ali A. Arshi, general manager of crude oil marketing and exports in Tehran at the National Iranian Oil Co. The request is for all shipments ``effective immediately,'' according to the letter, dated July 10 and obtained by Bloomberg News.

The yen rose on expectations for an increase in demand for the currency to buy shipments from Iran, Japan's third-largest oil supplier. Central bankers in Venezuela, Indonesia and the United Arab Emirates have said they will invest less of their reserves in dollar assets because of the weakening currency, while the United Nations Security Council is preparing for another round of sanctions against Iran because of the nation's nuclear research.

``What else can Japan do but to accept the request, once the oil producer sent its wish?'' said Hirofumi Kawachi, an analyst at Mizuho Investors Securities Co. in Tokyo. ``The tensions between the U.S. and Iran are escalating, and it's Iran's measure to hedge risk.''

A spokesman for Iran's oil ministry in Tehran said he could neither confirm nor deny that the letter had been sent. Most Japanese oil refiners have until now used U.S. dollars to pay Iran for oil, said the spokesman, who declined to be identified by name because of government policy.

Yen Advances

The yen advanced to 122.15 per dollar at 10:34 a.m. in New York, from 122.42 late yesterday.

The Islamic republic, holder of the world's second-largest oil and gas reserves, has refused to halt uranium enrichment that it says is for use in nuclear power plants to produce electricity. The U.S. says Iran seeks instead to develop an atomic bomb. Enriched uranium can be used to make nuclear fuel or build nuclear weapons.

The government in Tehran has failed to suspend its nuclear activities after the imposition of two sets of United Nations- sponsored sanctions since December.

Iran isn't alone in wanting to drop the dollar for pricing oil. Russia has been examining plans to price the Urals oil export blend in rubles to curb currency risks. The nation plans to open the Energy Stock Exchange in St. Petersburg in the first half of next year to trade oil in rubles, UBS AG reported June 14.

`New Payment Mechanism'

Iran asked the refiners to use the yen exchange rate quoted at the Bank of Tokyo Mitsubishi UFJ on the date oil cargoes are loaded. The use of yen-based letters of credit for oil ``has finally been approved'' by the Iranian central bank and the NIOC, according to the letter, titled ``New payment mechanism for Iranian Crude Oil Cargoes.''

Payments from Japanese refiners to Iran rose 12 percent last year to 1.24 trillion yen ($10.1 billion), according to the finance ministry in Tokyo. Japan imported 1.59 million kiloliters of Iranian crude oil in May, the least since June 2006, according to government data.

Iran is cutting its U.S. dollar reserves to less than 20 percent of total foreign currency holdings, and will buy more euros and yen as tensions with the U.S. increase, Central Bank Governor Ebrahim Sheibany said on March 27.

Only Saudi Arabia and the United Arab Emirates are larger oil suppliers to Japan than Iran.

To contact the reporter on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net .
Last Updated: July 13, 2007 10:59 EDT

[Freak Out]

Damn...

[LL2]

Damn...

Not too worry. Stocks are on sale tomorrow. 300 points is just over a 2% drop. Not exactly a bloodbath.

[the_idle_threat]

Dollar cost averaging is your friend. That, and time.

[Joemailman]

Damn...

Not too worry. Stocks are on sale tomorrow. 300 points is just over a 2% drop. Not exactly a bloodbath.

Actually the close today of -311 was 140 points off the low. It will be interesting to see if that rebound continues early tomorrow.

[LL2]

Market is falling again. :(

I decided to check our 401k portfolio and it's down 6%! Yikes! It's still up 22% for the year, so I'm not complaining. I was happier when it was up 28% though. Everything will rebound by the end of the year.

[Freak Out]

Gold fell as well but bonds did ok, all stocks are getting it for the most part. Grain futures are up.

Stupid fucking 0 down no credit checking greedy bastards.

[Freak Out]

Did I forget to say that the dollar is getting ass raped again?

[Kiwon]

For Merlin.... Unions have been ruining Korea's domestic economy for years. Workers strike over anything, Globalization, FTA, in sympathy with other unions, etc.

This is an editorial from an English language newspaper, The Chosun Ilbo.

More Preposterous Union Demands

Unionized workers at Kia Motors have been holding sporadic strikes since June 28. On June 28 and 29, they downed tools to protest the Korea-U.S. Free Trade Agreement. And from July 3 to 19, they held eight separate strikes demanding a pay rise. They are demanding a performance bonus equivalent to 200 percent of their monthly salary, plus a W128,805 (US$1=W915) pay rise. Also among their demands are clauses that ban Kia from outsourcing new car production, while promising to maintain the same pay level even though Kia’s Korean production facilities may see a decline in production due to the establishment or expansion of manufacturing plants overseas.

This year alone, unionized workers at Kia have called 10 strikes. Kia’s union has the dubious distinction of striking every year since it was formed in 1991. Those strikes have led to a combined sales loss of W4.8 trillion for the automaker. In terms of the total number of strikes, Kia’s union has even beat the feisty union at Hyundai Motor, who have striked every year except one since forming in 1987.

Production efficiency must undoubtedly be poor in a manufacturing business with such a track record. It takes Kia 37.5 hours on average to roll out one car, which is much slower than General Motors (22.2 hours) and Toyota (22.1 hours). It costs Kia W890,000 in labor costs to assemble one vehicle at its Korean plants. That’s double the W440,000 at the automaker’s Alabama plant and 14 times more expensive than its Chinese plant, where it costs W58,000 per vehicle.

Last week, Kia reached the conclusion that 1.69 workers were doing a task that just one could handle and called on its unionized workers to accept a rotation-based system. That would give more flexibility to the company by allowing it to deploy more workers to the production of cars that sell well and is used by most automakers around the world that are more advance than Hyundai. Kia says the rotation can save the company W460 billion a year. But Kia’s unionized workers rejected the system, opting to hang on to their comfortable schedules.

url: http://english.chosun.com/w21data/html/news/200707/200707200027.html

[Freak Out]

I remember seeing some crazy strike footage coming out of Korea in the past. Riots and all that, I take it there is a law that requires a certain percentage of manufacturing to be done in country for companies like Kia and LG?

[Scott Campbell]

For Merlin.... Unions have been ruining Korea's domestic economy for years. Workers strike over anything, Globalization, FTA, in sympathy with other unions, etc.


That reminds me of when Schlitz went on strike in Milwaukee for (among other things) a bartender for their beer breaks.

Thank you Ronald Reagan, for firing those Air Traffic Controllers.

[Kiwon]

I remember seeing some crazy strike footage coming out of Korea in the past. Riots and all that, I take it there is a law that requires a certain percentage of manufacturing to be done in country for companies like Kia and LG?

Megacorporations like Hyundai, Samsung, LG, Daewoo, Kia, etc.... while not government owned are basically properties of the nation. They exist in people's minds in order to advance the nation of Korea itself.

Remember, this is a group-oriented society and 99% of the people are ethnic Koreans (same language, history, culture, etc.). They have kept it that way intentionally for 5,000 years. Mixed-married couples and especially mixed-raced children are just basically completely shunned. They almost all end up living abroad.

You will never see a large Korean firm being bought out by a multinational. It will NEVER happen. It took about 5 years for a GM-Daewoo partnership to be formed with a bankrupt Daewoo Motors to build cars. The worker unions sabotaged parts plants, threatened everything, pledged to never work for foreigners, but finally after years of being out of work and no other domestic buyouts in sight they decided to okay the merger.

Workers totals were set and not everyone was rehired. Despite all the BS and concessions on top of concessions by GM, the new company made money (exporting cheap cars to China and the Middle East). After a couple of years, guess what, all the original workers were hired back. Lesson learned? I doubt it.

These folks are used to having jobs for life and globalization is like an electric shock to the Korean psyche. They are adjusting but the FTA with the USA is widely unpopular (American beef brings Mad Cow disease, etc., etc).

As for the demos (demonstrations), they are completely orchestrated. The unions announce when they will hold one and get a permit. The government shows up with the riot police (mostly young people doing their national service) and they yell at one another and push back and forth. Occasionally, some protestor will set himself on fire to go down in infamy.

Ridiculous, but it makes for dramatic TV.

[Kiwon]

For Merlin.... Unions have been ruining Korea's domestic economy for years. Workers strike over anything, Globalization, FTA, in sympathy with other unions, etc.


That reminds me of when Schlitz went on strike in Milwaukee for (among other things) a bartender for their beer breaks.

Scott, seriously, tell me you are kidding.

[Scott Campbell]

For Merlin.... Unions have been ruining Korea's domestic economy for years. Workers strike over anything, Globalization, FTA, in sympathy with other unions, etc.


That reminds me of when Schlitz went on strike in Milwaukee for (among other things) a bartender for their beer breaks.

Scott, seriously, tell me you are kidding.


Nope. I'm sure it wasn't their primary motive, but it did give the boys something to rally around. The unions in this country have gotten the pounding they deserve.

Thank you Ronald Reagan for firing those Air Traffic Controllers back in the early 80's.

[Scott Campbell]

I remember seeing some crazy strike footage coming out of Korea in the past. Riots and all that, I take it there is a law that requires a certain percentage of manufacturing to be done in country for companies like Kia and LG?

Megacorporations like Hyundai, Samsung, LG, Daewoo, Kia, etc.... while not government owned are basically properties of the nation. They exist in people's minds in order to advance the nation of Korea itself.

Remember, this is a group-oriented society and 99% of the people are ethnic Koreans (same language, history, culture, etc.). They have kept it that way intentionally for 5,000 years. Mixed-married couples and especially mixed-raced children are just basically completely shunned. They almost all end up living abroad.

You will never see a large Korean firm being bought out by a multinational. It will NEVER happen. It took about 5 years for a GM-Daewoo partnership to be formed with a bankrupt Daewoo Motors to build cars. The worker unions sabotaged parts plants, threatened everything, pledged to never work for foreigners, but finally after years of being out of work and no other domestic buyouts in sight they decided to okay the merger.

Workers totals were set and not everyone was rehired. Despite all the BS and concessions on top of concessions by GM, the new company made money (exporting cheap cars to China and the Middle East). After a couple of years, guess what, all the original workers were hired back. Lesson learned? I doubt it.

These folks are used to having jobs for life and globalization is like an electric shock to the Korean psyche. They are adjusting but the FTA with the USA is widely unpopular (American beef brings Mad Cow disease, etc., etc).

As for the demos (demonstrations), they are completely orchestrated. The unions announce when they will hold one and get a permit. The government shows up with the riot police (mostly young people doing their national service) and they yell at one another and push back and forth. Occasionally, some protestor will set himself on fire to go down in infamy.

Ridiculous, but it makes for dramatic TV.


The sort of protectionism you describe is a recipe for disaster. If Korea or any other country does not adapt to changing globalization, it will eventually suffer.

Your post makes me wonder how in the world Samsung remains so unbelievably competitive in so many markets.

[Kiwon]

The sort of protectionism you describe is a recipe for disaster. If Korea or any other country does not adapt to changing globalization, it will eventually suffer.

Your post makes me wonder how in the world Samsung remains so unbelievably competitive in so many markets.

The Confucianist, group orientation works to their advantage.

The work force is highly educated and infused with an extremely competitive spirit. Korea is #2 in the world in math and science. Many Middle Schoolers return home from study institutes around 10 or 11 pm. High School is even worse. Korean parents will spend almost any amount of money for the sake of their child's education. This is the norm. It's one of the reasons that the birthrate is the lowest among industrialized nations.

The employees at the Samsung corporation (electronics, engineering, finance, on and on...) are the cream of the crop. The same for LG and Hyundai and most of their related companies. These "chebols" has benefited from decades of sweetheart deals with the Korean government and advanced from simple reverse engineering to cutting edge R and D in IT, Biochem, etc. Broadband Internet has been the standard countrywide here for almost ten years. I noted that the new iPhone has a Samsung chip in it. Sweet deal.

A lot of manufacturing is also done overseas due to labor costs. The engine of the Korean economy is exports (cars, ships, chips). If that ever goes south then the gig is up. They know it and are fighting like mad to maintain their competitive advantages, especially in the area of electronics, until China's economy really gets cooking. They are getting burned now with China blatantly violating intellectual property copyrights. What goes around comes around it seems.

[LL2]

The sort of protectionism you describe is a recipe for disaster. If Korea or any other country does not adapt to changing globalization, it will eventually suffer.

Very true. I see globalization at work every day as a Customs Broker. I just got hired by a 49 billion dollar company to oversee their US import operations. "Made in the US" is a thing of the past. I have some relatives that are extremely pro Union. For some reason they can never remember what I do for a living, and I've been doing it for 10 years. Well, at a famliy get together recently they asked me again, and I said "You see all that "Made in China" stuff, I help bring it into the country." Needless to say, my pro union family members sat there all quite and pissed. I wanted to tell them to get a grip with reality, and your kids factory jobs will no longer exist someday.

[Kiwon]

The sort of protectionism you describe is a recipe for disaster. If Korea or any other country does not adapt to changing globalization, it will eventually suffer.

Very true. I see globalization at work every day as a Customs Broker. I just got hired by a 49 billion dollar company to oversee their US import operations. "Made in the US" is a thing of the past. I have some relatives that are extremely pro Union. For some reason they can never remember what I do for a living, and I've been doing it for 10 years. Well, at a famliy get together recently they asked me again, and I said "You see all that "Made in China" stuff, I help bring it into the country." Needless to say, my pro union family members sat there all quite and pissed. I wanted to tell them to get a grip with reality, and your kids factory jobs will no longer exist someday.

:D That's a good story. A true clash of cultures.

[Scott Campbell]

Needless to say, my pro union family members sat there all quite and pissed.



Darwin is stalking them.

[Freak Out]

Damn...and we don't even get their best models!

August 1, 2007
Detroit Is Outsold by Imports in U.S.
By MICHELINE MAYNARD

.

DETROIT, Aug. 1 — Detroit lost its leadership of the American automobile market for the first time ever in July, when import nameplates outsold the three American companies in a dismal month for auto sales.

The traditional American brands owned by General Motors, the Ford Motor Company and the Chrysler Group held 48.1 percent of the market in July, according to a preliminary estimate by Autodata Inc., an industry statistics firm in Woodcliff Lake, N.J.

That meant foreign auto companies held 51.9 percent of the market. The most they had previously held was 49.8 percent of the market earlier this year.

Even taking into account the companies’ foreign brands, such as Volvo and Mazda, which are owned by Ford, the Detroit companies only held 49.7 percent of the market last month, said Edmunds.com, a Web site that offers buying advice to consumers.

In July last year, Detroit companies held 52 percent of the American market, according to Autodata.

Foreign nameplates have led Detroit in sales of cars for much of this decade, but Detroit’s wide lead in sales of light trucks, like pickups, sport utility vehicles and minivans, managed to keep the American companies ahead in the overall market.

The popularity of S.U.V.’s began to plummet, however, after gasoline prices spiked in the wake of Hurricane Katrina. And this year, with gasoline above $3 a gallon in many parts of the country, sales of big pickup trucks by Detroit companies have fallen, helping the foreign companies squeak ahead in total sales.

“It’s a clear signal that the industry’s business model needs to be transformed ASAP,” said John Casesa, a veteran industry analyst with the Casesa Shapiro Group. “It adds urgency to what is already an extremely fragile situation in Detroit.”

Foreign brands’ dominance of the American market came in a month when even the major Japanese companies, Toyota and Honda, reported small declines in sales.

But the declines by Detroit companies were even deeper, causing a shift in the ranking of the auto companies.

General Motors said its sales fell 23 percent in July compared with 2006, while Ford Motor Company said its sales fell 19.1 percent. The Chrysler Group, which has been enjoying a comeback this year, said its sales fell 9 percent last month.

Toyota, which unseated Ford earlier this year to rank as the No. 2 auto company in the United States, said its sales fell 3.5 percent from July 2006, which was a record month for the auto company.

“It was a rough month for everybody,” said Mike Michaels, a spokesman for Toyota.

Honda Motor Company also reported a sales decline, but it outsold Chrysler to take fourth place among companies selling vehicles in the United States last month, as it did in July 2006.

That meant the ranking among auto companies last month was G.M., Toyota, Ford, Honda and Chrysler.

All the figures were unadjusted for the number of selling days last month. There were 24 selling days this year and 25 last year. Adjusted numbers showed smaller declines in sales, but that did not affect the market share percentages.

Detroit companies, in particular, have been hit hard by the rise in gasoline prices, and the drop in home sales that has curbed the demand for big pickups and sport utility vehicles, which still dominate their lineups, even though they have introduced new cars and crossover vehicles.

The Ford decline is another setback for the automaker, which is in the midst of a restructuring program called the Way Forward.

Although Ford and G.M. are voluntarily cutting back on unprofitable sales to fleet customers, like rental car companies, Ford said its sales to consumers also fell 17 percent in July.

“We are encouraged by the progress we have made and consumers’ response to our new products,” said Mark Fields, Ford’s president for the Americas region. “At the same time, we know we have a lot of work to do, and July is a sobering reminder of the economic and competitive challenges we face.”

George Pipas, Ford’s chief sales analyst, played down the significance of foreign auto companies’ dominance of July sales, saying that the import brands have dominated the retail sales market since last year.

For the year to date, Ford sales are down 12.2 percent on an unadjusted basis. By contrast, Toyota sales are up 5.5 percent for the year.

Chrysler’s decline came despite the wave of new vehicles it has introduced over the last few months. But its sales for the year to date are up 2 percent over 2006.

Edmunds estimated that the average incentive last month rose to $2,524 per vehicle, up $102, or 4.2 percent, from June 2007, but down $286, or 10.2 percent, from July 2006. G.M. has already rolled out a zero percent financing plan on its big pickup trucks in an effort to increase their sales. Toyota has been offering zero percent financing on its Tundra pickup since June.

Nick Bunkley contributed reporting from Phoenix.

[Freak Out]

Hop Sing do good?

China threatens 'nuclear option' of dollar sales

By Ambrose Evans-Pritchard
Last Updated: 6:00pm BST 07/08/2007

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.
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It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.

"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.

He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.

"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.

"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily.

The threats play into the presidential electoral campaign of Hillary Clinton, who has called for restrictive legislation to prevent America being "held hostage to economic decicions being made in Beijing, Shanghai, or Tokyo".

She said foreign control over 44pc of the US national debt had left America acutely vulnerable.

Simon Derrick, a currency strategist at the Bank of New York Mellon, said the comments were a message to the US Senate as Capitol Hill prepares legislation for the Autumn session.

"The words are alarming and unambiguous. This carries a clear political threat and could have very serious consequences at a time when the credit markets are already afraid of contagion from the subprime troubles," he said.

A bill drafted by a group of US senators, and backed by the Senate Finance Committee, calls for trade tariffs against Chinese goods as retaliation for alleged currency manipulation.

The yuan has appreciated 9pc against the dollar over the last two years under a crawling peg but it has failed to halt the rise of China's trade surplus, which reached $26.9bn in June.

Henry Paulson, the US Treasury Secretary, said any such sanctions would undermine American authority and "could trigger a global cycle of protectionist legislation".

Mr Paulson is a China expert from his days as head of Goldman Sachs. He has opted for a softer form of diplomacy, but appeared to win few concession from Beijing on a unscheduled trip to China last week aimed at calming the waters.

Information appearing on telegraph.co.uk is the copyright of Telegraph Media Group Limited and must not be reproduced in any medium without licence. For the full copyright statement see Copyright

[LL2]

Woohoo! A couple good days in the market! I think they say there are 2 major market corrections a year, so we should be on the upswing for the rest of the year.

[Freak Out]

Woohoo! A couple good days in the market! I think they say there are 2 major market corrections a year, so we should be on the upswing for the rest of the year.

Uh...yep.

Well that wasn't that painful when it was all over.
But what does the future hold? I read that 1 in 5 subprime loans are in default nationwide and that many, many more are getting ready for a upward rate change which means much higher payments for the buyer or greedy speculator.
So is it almost time to get another home somewhere? Of course the places where I want to buy are still sky freaking high but I think that is getting ready to change....there are just WAY to many vacant homes on the market for the prices to stay up.

Aloha. :smk:

[Joemailman]

Um...the Dow was down 387 points today.

[Freak Out]

It's kinda scary when a large Bank like BNP Paribas, a large French bank suspends the operations of three of its funds because of "the complete evaporation of liquidity in certain market segments" -- that is, there are no buyers. Just a bit ominous...

[LL2]

The market is really taking a beating now! My returns on the year have gone from 28% to 12%! It's not just the US market either. The good thing is that there are 4 more months in the year for a small rally.

[Kiwon]

Okay, enough of the correction already.

[Freak Out]

Holy Canuck Batman! I just noticed that the Canadian Dollar was within 2 cents of the Greenback. The Sky has fallen.

[Kiwon]

Stock tips, anyone?

For us capitalist pig rats, what companies are you following whose stock looks promising?

Let's get a little investment chit-chat going.

[Scott Campbell]

I've been a fan of nVidia for about 3 years.

[Kiwon]

I've been a fan of nVidia for about 3 years.

Wow! $11 - $36 in two years. Good choice. The wives must be eating well. I heard the name but never checked it out. My mistake.

When did you get in? They've had two splits in a year and a half. What were they?

It's near a 52 week high now. What are the analysts saying?

[Joemailman]

Dow is up over 400 points since Fed cut rates by half a point yesterday. Is this rally for real, or is this just more volatility that will be reversed soon?

[Freak Out]

I've been a fan of nVidia for about 3 years.

8800 GTS in my desktop rig and both laptops have Nvidia chips. I bought both Nvidia and ATI some years ago but sold the ATI stuff after it was bought by AMD. It jumped way up in 06 so I dumped it.

Another stock that has been good is Seacor - CKH...doubled since I first started buying it and Rowan drilling - RDC...you have to watch it pretty close though.

I have been focusing in the "Minerals Extraction" business for some years and it has..well...been berry berry good to me!

The oil field service sector has historically been very cyclic and you need to catch it on the down slope and be prepared to just hang on for a bit.

[Scott Campbell]

Wow! $11 - $36 in two years. Good choice. The wives must be eating well. I heard the name but never checked it out. My mistake.

When did you get in?


I'm not looking at my records, but I think it was about 2 years ago. I got into AMD and nVidia at the same time. I held them both for about 4 months and got spooked and sold them both. It turned out to be a good move on AMD, but way too early onVidia. I'm normally not a short term guy.

[Tyrone Bigguns]

Dow is up over 400 points since Fed cut rates by half a point yesterday. Is this rally for real, or is this just more volatility that will be reversed soon?

Anytime the fed cuts rates the market goes up. Pretty much historical.

[LL2]

Is "exuberance" in the air again? I enjoy the rally as much as the next guy, but does the real marketplace support it? I advise possibly making a few moves at the end of the year with your funds and stocks.

[Freak Out]

Is "exuberance" in the air again? I enjoy the rally as much as the next guy, but does the real marketplace support it? I advise possibly making a few moves at the end of the year with your funds and stocks.

Is it time to buy some PLA?

http://marketwatch.nytimes.com/custom/nyt-com/html-companyprofile.asp?symb=PLA&x=0&y=0

I've always appreciated the exuberance in your choice of avatars. :D

[Freak Out]

More fun in the new world.

http://www.ft.com/cms/s/0/e331d7f2-6758-11dc-9443-0000779fd2ac.html

[Freak Out]

Gold. :D I'll say it again....Gold.

[LL2]

What's the price of gold at? I'm having a phenomal year with our mutual funds, with them up 38% for the year so far! I need to move the money into different funds to lock in those gains. China's high flying market isn't going to last forever.

[Freak Out]

What's the price of gold at? I'm having a phenomal year with our mutual funds, with them up 38% for the year so far! I need to move the money into different funds to lock in those gains. China's high flying market isn't going to last forever.

Gold closed at $743.10 up $4.40 on the day.

Fucking soybeans were up $24.75 to $950.25!

[Freak Out]

Bin Laden and every oil-mans dream is coming true....oil closed at $80.26.

[Freak Out]

Wow. It's painful to even look at the currency market. I bought a bunch of Euros in Germany the winter of the switch...it was crazy monopoly money time vs the dollar (not as good as the old $1 = 4 DM but still) and my wife and I thought WTF and we converted about $8500 to use the next couple of years while traveling....I always knew that the rate would tighten up...but this is sad.

http://www.bloomberg.com/apps/news?pid=10000087&refer=top_world_news&sid=amQBwDBSDvBE

[LL2]

Wow. It's painful to even look at the currency market. I bought a bunch of Euros in Germany the winter of the switch...it was crazy monopoly money time vs the dollar (not as good as the old $1 = 4 DM but still) and my wife and I thought WTF and we converted about $8500 to use the next couple of years while traveling....I always knew that the rate would tighten up...but this is sad.

http://www.bloomberg.com/apps/news?pid=10000087&refer=top_world_news&sid=amQBwDBSDvBE

Here's a good sight for you. I agree that China is a good investment right now and our mutual funds are doing great because of China, but I also think China is a little overheated right now. Reminds me of the dot.com era.

http://www.oanda.com/convert/classic?expr2=&script=..%2Fconvert%2Fclassic&language=en&lang=en&SUBMIT=Convert%20Now&value=1&date=10%2F24%2F07&date_fmt=us&expr=CNY&margin_fixed=0&exch2=&exch=USD

[Freak Out]

Thank you George and Dick for helping to jack oil prices up to $90 + !

[Kiwon]

Thank you George and Dick for helping to jack oil prices up to $90 + !

Who? George Feng and Dick Tiezhu? When you give credit you have to provide the full notation,

Wait 'til Hillary "Rob'em" Clinton becomes el-Presidente and Charles Rangel gets done with your taxes. You'll be paying more for gas and you can kiss your capital gains goodbye.

[Freak Out]

Thank you George and Dick for helping to jack oil prices up to $90 + !

Who? George Feng and Dick Tiezhu? When you give credit you have to provide the full notation,

Wait 'til Hillary "Rob'em" Clinton becomes el-Presidente and Charles Rangel gets done with your taxes. You'll be paying more for gas and you can kiss your capital gains goodbye.

Damn....you've got her in the Whitehouse just a little early.....many things can happen on the way to the forum.
I wonder if the conventions in 2008 are going to be as pathetic as "reporting for duty" was in 2004?

[Kiwon]

Thank you George and Dick for helping to jack oil prices up to $90 + !

Who? George Feng and Dick Tiezhu? When you give credit you have to provide the full notation,

Wait 'til Hillary "Rob'em" Clinton becomes el-Presidente and Charles Rangel gets done with your taxes. You'll be paying more for gas and you can kiss your capital gains goodbye.

Damn....you've got her in the Whitehouse just a little early.....many things can happen on the way to the forum.
I wonder if the conventions in 2008 are going to be as pathetic as "reporting for duty" was in 2004?

She's already in, baby (unless Bill is a special guest in an yet to-be- released "Girls Gone Wild" tape and, even if he is, that is a resume enhancement in certain Democratic circles).

And Hillary's far too polished to repeat Lurch's "I'm John Kerry and I'm reporting for duty" opening. Her Hollywood friends would never let her embarrass herself that way. The Chinese dancers will be interesting, though. The Chinese government has already funneled enough money to her campaign to get a spot on the program.

Hold on to those Euros and gold. You'll need them as corporate America gets ready to take one on the chin via new taxes. Universal healthcare is free, right?

[Freak Out]

Thank you George and Dick for helping to jack oil prices up to $90 + !

Who? George Feng and Dick Tiezhu? When you give credit you have to provide the full notation,

Wait 'til Hillary "Rob'em" Clinton becomes el-Presidente and Charles Rangel gets done with your taxes. You'll be paying more for gas and you can kiss your capital gains goodbye.

Damn....you've got her in the Whitehouse just a little early.....many things can happen on the way to the forum.
I wonder if the conventions in 2008 are going to be as pathetic as "reporting for duty" was in 2004?

She's already in, baby (unless Bill is a special guest in an yet to-be- released "Girls Gone Wild" tape and, even if he is, that is a resume enhancement in certain Democratic circles).

And Hillary's far too polished to repeat Lurch's "I'm John Kerry and I'm reporting for duty" opening. Her Hollywood friends would never let her embarrass herself that way. The Chinese dancers will be interesting, though. The Chinese government has already funneled enough money to her campaign to get a spot on the program.

Hold on to those Euros and gold. You'll need them as corporate America gets ready to take one on the chin via new taxes. Universal healthcare is free, right?

The Chinese through George Soros right? Sure baby.

[Kiwon]

The Chinese through George Soros right? Sure baby.

No, the Chinese don't need George Soros' money to buy influence. They've been friends with the Clintons for a long time.

Where are busboys and dishwashers in NYC and mailmen (the Paw family) in California getting thousands of dollars to donate to the Clinton campaign? $380,000 in April alone from one Chinatown fundraising event.

Illegal aliens and others not registered to vote are often inclined on their own to fork over their hardearned money to a political candidate that they can't vote to elect. Oh no, nothing shady there.

You know that something stinks for both the L.A. Times and the Washington Post to actually report it.
.................................................. ......................................

Dishwashers for Clinton

Once again, a zeal for campaign cash trumps common sense.

Washington Post
Monday, October 22, 2007

DONORS WHOSE addresses turn out to be tenements. Dishwashers and waiters who write $1,000 checks. Immigrants who ante up because they have been instructed to by powerful neighborhood associations, or, as one said, "They informed us to go, so I went." Others who say they never made the contributions listed in their names or who were not eligible to give because they are not legal residents of the United States. This is the disturbingly familiar picture of Hillary Rodham Clinton's presidential campaign presented last week in a report by the Los Angeles Times about questionable fundraising by the New York senator in New York City's Chinese community. Out of 150 donors examined, one-third "could not be found using property, telephone or business records," the Times reported. "Most have not registered to vote, according to public records."

This appears to be another instance in which a Clinton campaign's zeal for campaign cash overwhelms its judgment. After the fundraising scandals of President Bill Clinton's 1996 reelection campaign, the dangers of vacuuming cash from a politically inexperienced immigrant community should have been obvious. But Ms. Clinton's money machine seized on a new source of cash in Chinatown and environs. As the Times reported, a single Chinatown fundraiser in April brought in $380,000. By contrast, 2004 Democratic presidential nominee John F. Kerry raised $24,000 from Chinatown in the course of his entire campaign.

As with the warnings it dismissed about the mega-bundles being brought in by fundraiser Norman Hsu, the Clinton campaign saw the red flags here. After the April fundraiser, when some of the donors' stated occupations seemed out of line with the amounts they were giving, the Clinton campaign wrote to contributors asking them to confirm that the money was their own. In the case of seven $1,000 contributions, donors did not respond and their checks were returned, according to the campaign. The campaign says that the others, including one who told the Times that he did not give the money, reaffirmed the legitimacy of their contributions.

[Freak Out]

So its ok for the Red Chinese to bankroll the country but not the Clintons? :lol:

[Kiwon]

So its ok for the Red Chinese to bankroll the country but not the Clintons? :lol:

Well, I'm all for a free market economy, but not quite that free. :P

What's slicker than Teflon? Bill and Hillary.

Check it Out (http://video.google.com/videoplay?docid=7007109937779036019&q=%22Hillary+Uncensored%2C%22&total=5&start=0&num=10&so=0&type=search&plindex=0)

.................................................. ...............................
On another note..... this is a market correction thread.

The market had a brief dip only to return to record highs. This thing has been chuggling along through war, record oil prices, home loan defaults, some of the worst leadership in Congress ever, weakness in the dollar, etc.

When do you think the REAL market correction will take place? What will trigger it, Dr. Freak Out?

[MJZiggy]

Thank you George and Dick for helping to jack oil prices up to $90 + !

Who? George Feng and Dick Tiezhu? When you give credit you have to provide the full notation,

Wait 'til Hillary "Rob'em" Clinton becomes el-Presidente and Charles Rangel gets done with your taxes. You'll be paying more for gas and you can kiss your capital gains goodbye.

Damn....you've got her in the Whitehouse just a little early.....many things can happen on the way to the forum.
I wonder if the conventions in 2008 are going to be as pathetic as "reporting for duty" was in 2004?

She's already in, baby (unless Bill is a special guest in an yet to-be- released "Girls Gone Wild" tape and, even if he is, that is a resume enhancement in certain Democratic circles).

And Hillary's far too polished to repeat Lurch's "I'm John Kerry and I'm reporting for duty" opening. Her Hollywood friends would never let her embarrass herself that way. The Chinese dancers will be interesting, though. The Chinese government has already funneled enough money to her campaign to get a spot on the program.

Hold on to those Euros and gold. You'll need them as corporate America gets ready to take one on the chin via new taxes. Universal healthcare is free, right?

Maybe there'll be new taxes, but at least spending is likely to go down...


McClatchy Washington Bureau
Print This Article Print This Article

Posted on Wed, Oct. 24, 2007
Bush is the biggest spender since LBJ
David Lightman | McClatchy Newspapers

last updated: October 23, 2007 07:34:58 PM

WASHINGTON — George W. Bush, despite all his recent bravado about being an apostle of small government and budget-slashing, is the biggest spending president since Lyndon B. Johnson. In fact, he's arguably an even bigger spender than LBJ.

“He’s a big government guy,” said Stephen Slivinski, the director of budget studies at Cato Institute, a libertarian research group.

The numbers are clear, credible and conclusive, added David Keating, the executive director of the Club for Growth, a budget-watchdog group.

“He’s a big spender,” Keating said. “No question about it.”

Take almost any yardstick and Bush generally exceeds the spending of his predecessors.

When adjusted for inflation, discretionary spending — or budget items that Congress and the president can control, including defense and domestic programs, but not entitlements such as Social Security and Medicare — shot up at an average annual rate of 5.3 percent during Bush’s first six years, Slivinski calculates.

That tops the 4.6 percent annual rate Johnson logged during his 1963-69 presidency. By these standards, Ronald Reagan was a tightwad; discretionary spending grew by only 1.9 percent a year on his watch.

Discretionary spending went up in Bush's first term by 48.5 percent, not adjusted for inflation, more than twice as much as Bill Clinton did (21.6 percent) in two full terms, Slivinski reports.

Defense spending is the big driver — but hardly the only one.

Under Bush it's grown on average by 5.7 percent a year. Under LBJ — who had a war to fund, too — it rose by 4.9 percent a year. Both numbers are adjusted for inflation.

Including costs for fighting in Iraq and Afghanistan, defense spending under Bush has gone up 86 percent since 2001, according to Chris Hellman of the Center for Arms Control and Non-Proliferation.

Current annual defense spending — not counting war costs — is 25 percent above the height of the Reagan-era buildup, Hellman said.

Homeland security spending also has soared, to about $31 billion last year, triple the pre-9/11 number.

But Bush's super-spending is about far more than defense and homeland security.

Brian Riedl, a budget analyst at the Heritage Foundation, a conservative research group, points to education spending. Adjusted for inflation, it's up 18 percent annually since 2001, thanks largely to Bush’s No Child Left Behind act.

The 2002 farm bill, he said, caused agriculture spending to double its 1990s levels.

Then there was the 2003 Medicare prescription drug benefit — the biggest single expansion in the program’s history — whose 10-year costs are estimated at more than $700 billion.

And the 2005 highway bill, which included thousands of “earmarks,” or special local projects stuck into the legislation by individual lawmakers without review, cost $295 billion.

“He has presided over massive increases in almost every category … a dramatic change of pace from most previous presidents,” said Slivinski.

The White House counters by noting that Bush took office as the country was heading into a recession, then reeled from the Sept. 11, 2001, terrorist attacks.

“This president had to overcome some things that required additional spending,” said Sean Kevelighan, a White House budget office spokesman.

Bush does have other backers.

Diana Furchtgott-Roth, a senior fellow at the Hudson Institute, a conservative research group, blamed a ravenous Congress that was eager to show constituents how generous it could be. (Republicans ran that Congress until January. Bush never vetoed a single GOP spending bill.)

The White House points out that, nearly four years ago, Bush vowed to cut the deficit in half by 2009, and he's well on his way to achieving that goal. The fiscal 2004 deficit was a record $412.7 billion; the 2007 figure plunged to $163 billion.

But the deficit drop may be fleeting, experts say, since lawmakers are likely to extend many of Bush’s tax cuts, which expire by the end of 2010, and the imminent retirement of the baby boom generation will send Medicare and Social Security costs soaring in the years ahead.

Now, near the end of the seventh year of his presidency, Bush is positioning himself as a tough fiscal conservative.

He says Congress is proposing to spend $22 billion more in fiscal 2008 than the $933 billion he requested for discretionary programs — and that the $22 billion extra would swell over five years to $205 billion.

Eventually, Bush said, “they’re going to have to raise taxes to pay for it.”

And so, the president told an Arkansas audience earlier this month, people should brace for “what they call a fiscal showdown in Washington.

“The Congress gets to propose and, if it doesn’t meet needs as far as I’m concerned, I get to veto,” he said. “And that’s precisely what I intend to do.”

Bush is getting tough on fiscal policy — after running up a record as the most profligate spender in at least 40 years.

“The spending did happen,” said Keating, “and a lot of it shouldn’t have happened.”

McClatchy Newspapers 2007

[Joemailman]

The Chinese through George Soros right? Sure baby.

No, the Chinese don't need George Soros' money to buy influence. They've been friends with the Clintons for a long time.

Where are busboys and dishwashers in NYC and mailmen (the Paw family) in California getting thousands of dollars to donate to the Clinton campaign? $380,000 in April alone from one Chinatown fundraising event.

Illegal aliens and others not registered to vote are often inclined on their own to fork over their hardearned money to a political candidate that they can't vote to elect. Oh no, nothing shady there.

You know that something stinks for both the L.A. Times and the Washington Post to actually report it.
.................................................. ......................................

Dishwashers for Clinton

Once again, a zeal for campaign cash trumps common sense.

Washington Post
Monday, October 22, 2007

DONORS WHOSE addresses turn out to be tenements. Dishwashers and waiters who write $1,000 checks. Immigrants who ante up because they have been instructed to by powerful neighborhood associations, or, as one said, "They informed us to go, so I went." Others who say they never made the contributions listed in their names or who were not eligible to give because they are not legal residents of the United States. This is the disturbingly familiar picture of Hillary Rodham Clinton's presidential campaign presented last week in a report by the Los Angeles Times about questionable fundraising by the New York senator in New York City's Chinese community. Out of 150 donors examined, one-third "could not be found using property, telephone or business records," the Times reported. "Most have not registered to vote, according to public records."

This appears to be another instance in which a Clinton campaign's zeal for campaign cash overwhelms its judgment. After the fundraising scandals of President Bill Clinton's 1996 reelection campaign, the dangers of vacuuming cash from a politically inexperienced immigrant community should have been obvious. But Ms. Clinton's money machine seized on a new source of cash in Chinatown and environs. As the Times reported, a single Chinatown fundraiser in April brought in $380,000. By contrast, 2004 Democratic presidential nominee John F. Kerry raised $24,000 from Chinatown in the course of his entire campaign.

As with the warnings it dismissed about the mega-bundles being brought in by fundraiser Norman Hsu, the Clinton campaign saw the red flags here. After the April fundraiser, when some of the donors' stated occupations seemed out of line with the amounts they were giving, the Clinton campaign wrote to contributors asking them to confirm that the money was their own. In the case of seven $1,000 contributions, donors did not respond and their checks were returned, according to the campaign. The campaign says that the others, including one who told the Times that he did not give the money, reaffirmed the legitimacy of their contributions.

Stories like this are why a lot of people on he left don't want Hillary. However, Obama doesn't seem willing to take her on and point out that this kind of activity is more of the same. Obama wants to stay above the fray, but he'll have to get in the fray if he wants to win.

[Freak Out]

There really needs to be a salary cap on campaign $$$. Take the corruption and influence out of it.

[Kiwon]

Maybe there'll be new taxes, but at least spending is likely to go down...

Bush is the biggest spender since LBJ

That's exactly right. He's been spending like a Democrat and that's why he has lost the Republican base. He didn't pull out his veto pen until five years into his presidency.

However, the stock market has been cookin', interest rates are low, employment is high, investors are keeping more of their capital gains, and the IRS is collecting record revenues as are many state governments.

The Dems are going to let the cap gain tax cuts expire and raise taxes on global warming fears, to provide universal health care coverage, benefits for illegals, on and on. Oh yes, and of course, education. We never spend enough on education.

The Dems are going to raise taxes to not spend them?

Congress' approval rating is at 11 percent! Do you really want those guys to be stewards of YOUR money? Why not try to keep as much of it yourself rather than send it off to Washington?

[Joemailman]

Actually Kiwon, the problem is that Bush has been spending like a Republican. Over the last 30 years, it is Republican presidents who have produced the largest budget deficits. And we now now that it doesn't matter which party controls Congress:

http://www.futurepower.org/Deficits.gif

[HarveyWallbangers]

Actually Kiwon, the problem is that Bush has been spending like a Republican. Over the last 30 years, it is Republican presidents who have produced the largest budget deficits. And we now now that it doesn't matter which party controls Congress:

http://www.futurepower.org/Deficits.gif

I think it's funny when Democrats say this. Like it means that the Republicans are bigger spenders than Democrats. Deficit spending is spending more than the revenue you collect. If you collect more (e.g. collect significantly more in tax revenue), it stands to reason that deficit spending would be less likely. If not, you are really raping the people.

I agree that Bush spends too much. I agree that Democrats spend way too much, and more on the things that I don't want my money spent on.

Typical Republican recently:
Lower taxes, lower spending than Democrats (but still too friggin' much)

Typical Democrat forever:
Higher taxes, higher spending (but closer to their budget)

Personally, I'll take low taxes over a small deficit.

[Joemailman]

That's fine Harvey as long as you don't think there is anything wrong with burdening future generations with a huge national debt so that we can enjoy ourselves now.

[Kiwon]

That's fine Harvey as long as you don't think there is anything wrong with burdening future generations with a huge national debt so that we can enjoy ourselves now.

Joe, if sacrifice is what you want, then may I suggest you consider John Edwards.

He's got all kinds of plans for spending your money.
.................................................. ...........................................

John Edwards says if he's elected president, he'll institute a New Deal-like suite of programs to fight poverty and stem growing wealth disparity. To do it, he said, he'll ask many Americans to make sacrifices, like paying higher taxes.

Edwards, a former Democratic senator from North Carolina, says the federal government should underwrite universal pre-kindergarten, create matching savings accounts for low-income people, mandate a minimum wage of $9.50 and provide a million new Section 8 housing vouchers for the poor. He also pledged to start a government-funded public higher education program called "College for Everyone."

(edit)

At every stop, Edwards said, he tells voters he'll ask them to sacrifice. Asked to describe what he means, he described his plan for increases in capital gains taxes, saying taxes on "wealth income" should be in line with those on work income.

"I think if we want to fund the things that I think are important to share in prosperity, then people who have done well in this country, including me, have more of a responsibility to give back," he said. Later, he added: "There are no free meals."

(edit)

Both Edwards and Clinton have proposed universal health care plans that mandate insurance for everyone, while Obama has proposed a plan that requires coverage only for children. Edwards, who was first to propose a plan, called Clinton's a "carbon copy" of his but said he is better positioned to negotiate because he has the "clean hands of not taking money from lobbyists."

"Senator Clinton has over the years has taken millions of dollars from lobbyists and defends the status quo system," he said. "She just basically says the system works and her argument is, 'I'm experienced, I can operate within the system.' "

Clinton spokeswoman Kathleen Strand questioned the line Edwards has drawn. He takes money from state lobbyists and from a variety of industry groups; according to a Washington Post roundup, he's taken more than $8 million this year from lawyers and law firms, including some that also employ lobbyists.

(edit - end)

http://www.concordmonitor.com/apps/pbcs.dll/article?AID=/20071026/FRONTPAGE/710260384

[mraynrand]

Lower taxes does NOT mean lower tax revenues. In fact, it is the exact opposite. As taxes are reduced (down to about 10-15% tax rate), the economy will continue to be stimulated, and taxes on the increased earnings EVEN AT the lower tax rate reaps higher revenues. That's why the annual budget deficit has been dramatically reduced over the past several years (this is the budget deficit, not the national debt). The national debt, as a function of GDP, is actually very low.

Clearly the government spends too much - like 280 billion over 5 years (just passed!) on the Agricultural Bill - that's almost 60bil per year on mostly the top 10% of ag earners. WTF? And people complain about the 100bil/yr on Iraq and Afghanistan. Entitlement programs go for about 600bil/year, yet people want to expand S-CHIP into the middle class. Bush wanted to expand it by 5bil, but it wasn't enough - the dems wanted 'free' health ins for people earning 2x poverty and above up to 60 and 80 K depending on the state. Any of you know the reason many people who qualify for S-CHIP don't get it? They don't sign up. If they want the coverage, it's there for them. Even if not, hospitals (in general) will not turn them away if uninsured. The children are covered.

The dems are a real problem for the economy, because they want everything controlled through the government. It's really that simple. HillBilly really thinks government can make better choices for your health care than you. HillBilly really thinks government can make better choices for your earnings than you - that's why they want to tax and redistribute more - even to people who don't actually need it.

[Freak Out]

Crude oil climbed above $93 a barrel for the first time

The Associated Press
Monday, October 29, 2007

SINGAPORE: Crude oil climbed above $93 a barrel on Monday for the first time, extending this month's gain to 16 percent, after Mexico shut a fifth of its production and the dollar fell to a record low.

The state-owned Petróleos Mexicanos, one of the three largest suppliers of crude to the United States, halted output of about 600,000 barrels a day because of storms, a spokesman, Carlos Ramirez, said in Mexico City.

The euro rose to $1.4426, the strongest level ince the introduction of the 13-nation common currency in 1999. The dollar's descent against major currencies has drawn investors to crude futures as a hedge against the weakening currency and made dollar-denominated oil futures less expensive to people dealing in other currencies.

Crude oil for December delivery rose as much as $1.34, or 1.5 percent, to an all-time high of $93.20 a barrel in after- hours electronic trading on the New York Mercantile Exchange. It was at $92.71 by early evening in Singapore.

"The momentum for $100 crude is strong," said Dariusz Kowalczyk, chief investment strategist with CFC Seymour in Hong Kong. "With a lot of physical risks and the supply disruption, we should move higher."

Crude has jumped 52 percent this year, driven by concern that demand for heating fuel during the peak winter demand will draw down U.S. oil inventories. Tensions between Turkey and Iraq over Kurdish militants as well as U.S. sanctions over Iran's nuclear program have also helped drive oil prices higher.

Mexico produces about 3.1 million barrels of crude oil a day. About 80 percent of the output is from the Gulf of Mexico, according to Petróleos Mexicanos, known as Pemex.

The company shut output of 200,000 barrels at noon New York time Sunday and was planning to idle wells that produce a further 400,000 barrels by midnight Sunday in Mexico, said Ramirez, the company spokesman. The wells are to be closed until at least Tuesday, Ramirez said, without elaborating.

The closure was in the Bay of Campeche, the same area where 21 workers died after another storm last week caused an oil rig to hit a platform.

The decline in the dollar is helping lift crude oil prices, said Rowan Menzies, an analyst at Commodity Warrants Australia in Sydney. The dollar fell to its lowest level against the euro on speculation that the U.S. Federal Reserve would cut interest rates this week as a U.S. housing slump threatens economic growth.

"The U.S. dollar is going down at a rate of knots," Menzies said. "You've seen inflation-linked buying across the commodities, in oil, gold, silver and grains."

Oil prices have passed the previous all-time, inflation-adjusted record reached in 1981, when Iran cut exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, the Energy Department said, or $84.73 in today's money.

The Turkish prime minister, Recep Tayyip Erdogan, warned Saturday that his country might order wider military attacks against the group's camps if needed, according to Turkish media. Turkey said it bombed guerrilla units in northern Iraq last week and sent troops across the border in pursuit of the militants.

On Friday, the United States accused the Iranian military of supporting terrorism and announced new sanctions on the country. The United States wants Iran to halt uranium enrichment that it suspects is a cover for developing nuclear weapons.

Iran is still "at least a few years away" from being able to build a nuclear bomb, and there is time for diplomacy to head off a military confrontation, the head of the United Nations nuclear agency said Sunday.

The International Atomic Energy Agency chief, Mohamed ElBaradei, said on CNN that he had not seen "any concrete evidence" of a secret Iranian weapons program.

[swede]

The International Atomic Energy Agency chief, Mohamed ElBaradei, said on CNN that he had not seen "any concrete evidence" of a secret Iranian weapons program.



Stand down, America. Mohamed AlBaradei told CNN there is no concrete evidence of any secret Iranian Weapons Program.

The military-industrial complex gets in so much trouble by not watching Anderson Cooper regularly.

[Freak Out]

The International Atomic Energy Agency chief, Mohamed ElBaradei, said on CNN that he had not seen "any concrete evidence" of a secret Iranian weapons program.



Stand down, America. Mohamed AlBaradei told CNN there is no concrete evidence of any secret Iranian Weapons Program.

The military-industrial complex gets in so much trouble by not watching Anderson Cooper regularly.

:lol: I knew you guys would get a kick out of that line. You always focus on the good news!

[Kiwon]

The International Atomic Energy Agency chief, Mohamed ElBaradei, said on CNN that he had not seen "any concrete evidence" of a secret Iranian weapons program.



Stand down, America. Mohamed AlBaradei told CNN there is no concrete evidence of any secret Iranian Weapons Program.

The military-industrial complex gets in so much trouble by not watching Anderson Cooper regularly.

:lol: I knew you guys would get a kick out of that line. You always focus on the good news!

Whoa....hold the phone, people. That's HH's distinguished Nobel Peace Prize winner speaking. He's above second-guessing.

Actually, he's right. Iran's weapons programs aren't secret any longer.....they just talk about them ALL THE TIME!!

(Looking at satellite photos: "You see that large square there in the desert that looks like a launching pad and that thing on it that looks like a rocket?

"Yeah"

"Well, looks can be deceiving. We can't say concretely what it is. Those silly Iranian mulahs are always kidding with us about the destruction of Israel and hatred for the West. Is it lunch time yet? I've got an appointment at the Four Seasons.")

[Freak Out]

There is no doubt that Iran has the vehicles to deliver some pretty serious shit....thanks to the help of North Korea and I believe Russia....but how close they are to a bomb that they can actually strap to one of those vehicles is the question. It's one thing to build a bomb and it's another to get it small enough to deliver with a missile. I saw a poll somewhere that stated something like 52 percent of Americans would support a strike on Iran to "disable" it's nuclear capabilities. Considering how hard the administrations war/spin machine has been working and from what I've seen the last seven years I guess I shouldn't be surprised.

[Kiwon]

Where is the war/spin office located? I want to send them a complaint letter because they've been doing a lousy job during the last several years.

(Freak Out, I've got a mini rant I want to share. Not directed to you personally.)

President Bush is "conservative-lite," a real disappointment in combating the dominant Left-wing and bias mainstream media. A real conservative president would regularly highlight the good things taking place in Iraq and explain to the sizeable portion of Americans that are both ignorant and indifferent to anything taking place outside of their own lives what the big picture is and what the stakes are.

President Bush is too much of an appeaser when for 7 years he should have been more like Buford Pusser in the key "Walking Tall" scene where he takes his big stick and smashes everything and everyone in sight.

Screw the media, screw the Leftists, liberals, pacifists and America-haters all. Bush would have been vilified and hated for years but history will vindicate him. He's tried the appeasement route and he's hated anyway. The problem isn't him; it’s the uniformed and self-absorbed segment of the American people that have never experienced hardship or sacrifice.

The "Greatest Generation" its not.....and yet, the VOLUNTEER MILITARY continues to grow. Men and women from all walks of life are enlisting and serving their country. They KNOW that they are heading for combat and hardship and they join anyway.

If Bush is such an idiot and the war on terrorism is such a disaster and all that is so painfully obvious then why do American citizens continue to enlist in the VOLUNTEER ARMED FORCES? Why would they choose to put themselves in harm’s way and possibly die for a pointless cause?

Because you're smart and they're stupid, right? (Thank you for the wisdom, John Kerry, Matt Damon, and the brains on "The View.")

More importantly, why doesn't the Democrats just cut off the funding and end the war? Why won't these great, humanitarian leaders, the smartest people in the room take charge, use their constitutional powers and "protect our brave soldiers and bring them home" even though they joined to fight and defend their country on the battlefield? The Democrats can practically end the war anytime they want to. They can push and push for a vote to cut off funding until they get what they want. They can, but they don't. Why?

The Democrats won't end the war but they will complain about it and rip Bush every chance they get. Cindy Sheehan was their darling before they took control of Congress. Where is she now that they the Democrats have the power to end the war but won't? Oh, Cindy Sheehan has served her purpose and is now persona non grata. Just a useful idiot for them to exploit for political gain and then cast away.

Well, guess what? President Hillary Clinton, when elected, won't pull the troops out either.

The military will still be in Iraq and the "illegal occupation" will continue. Clinton and the Dems will not pull the troops out and watch on television as Islamic fascists slaughter Iraqi civilians and Iran take control of the Iraqi oil fields. The Dems won't take the responsibility for America's military defeat in Iraq and the disaster to come. They won't do it now and they won't do it when one of their own assumes the presidency.

Hillary's election won't change much of anything. The war in Afghanistan and Iraq will continue.

It's time for more of the President Bush-haters to wake up and face reality. This isn't a political debate. It's real life. Your country and its interests are actively being targeted by Islamic terrorist networks, have been attacked repeatedly, have been the subject of a number of thwarted attacks, and will probably be attacked successfully in the future. It isn’t “war spin.” It’s reality.

America doesn't follow. It leads. We don't need other countries' permission to do the right thing. Leaving Iraq in defeat and shame isn't an option for any American with self-respect or who values his security. Most Republicans and Democrats alike understand this.

Gripe and complain all you want. It doesn't accomplish anything but discourage those protecting you from harm and encourage the people that would like to see you dead. You would do better to quit welcoming defeat and start thinking about an American military victory. The world is the world. Humanity is basically twisted and screwed up. But, at least, you have the privilege to be a citizen of the greatest country on earth. Why not take a little pride in that?

[Freak Out]

Shocking! :lol: :lol:

Oil's Recent Rise Not as Familiar as It Looks
Traders, Not Political or Supply Concerns, May Be Pushing Fuel Toward $100

By Steven Mufson
Washington Post Staff Writer
Monday, November 5, 2007

After a week of new records for crude oil prices, the question is: How high can they go?

In the past 10 weeks, the price of crude oil has shot up $25 a barrel, closing at $95.93 in New York on Friday, near an all-time inflation-adjusted peak. Unlike earlier spikes in oil prices, which came on the heels of war in the Middle East, this latest ascent does not appear to be linked to any one conflict or to any physical shortage.

Instead, traders who treat oil like any other commodity are widely thought to be driving prices upward, bolstered by a weak dollar and money flowing out of stock markets and other investment vehicles.

So far U.S. consumers have not felt the full impact. Sluggish U.S. gasoline demand over the past two months has made it hard for oil giants to pass through higher costs; refinery profit margins, which hit records in the spring, have been squeezed. But if high crude oil prices persist, they will flow through to the gas pump. Yesterday, the Lundberg Survey reported that the average retail price of regular gasoline is up 16 cents in the past two weeks to $2.96 a gallon.

Many veteran oil analysts say this is a bubble. Oil is historically a cyclical business. Modestly higher production by the Organization of Petroleum Exporting Countries, a warm winter, slower U.S. economic growth and a flattening of demand in the United States could puncture these lofty prices.

"It just seems that the market is spasming here," said Adam Robinson, an oil analyst at Lehman Brothers. If slowly declining petroleum inventories start to build again, he said, "the radical increase we've seen to the upside can repeat on the way down." Oppenheimer & Sons analyst Fadel Gheit says oil is $30 a barrel overpriced.

But analysts also say that the past 10 weeks have demonstrated the power of traders at investment houses. Deutsche Bank oil economist Adam Sieminski, who spent six months on the bank's trading desk, said it is important not to underestimate the role of sentiment and technical factors, such as patterns of price movements and the need to hedge risks in other markets. Now, when investors hold a large number of options to buy oil at a price of $100, he says, "it's almost like magnetism. It draws prices to that level."

Traders say that they are not buying and selling on whims, however. The unusually thin cushion of excess oil production around the world and the rapid growth in consumption in China and India make this rise in prices different from earlier oil price spikes, they argue. That combination, the traders add, leaves the oil markets one incident away from an even steeper increase.

"There is no current shortage, but no one deals on today's market. They make deals based on tomorrow's market. And that's what they're worried about," said Joseph Stanislaw, an oil consultant and senior adviser to the accounting firm Deloitte & Touche.

The weekend declaration of a state of emergency in Pakistan, which has no direct effect on global oil supplies, won't calm nerves.

"It would be silly if we waited until things were not available," said a veteran energy trader at a U.S. hedge fund, who spoke on the condition of anonymity to protect his business relationships. He said traders have become convinced that military conflict between the United States and Iran is inevitable. He added, "People react to perceptions of what will happen. That's not idle speculation."

Last week, nonprofit group Securing America's Future Energy engaged in some speculation. The group invited former Cabinet members and top U.S. officials to act out how a U.S. administration might respond to an oil supply disruption. The exercise assumed that a key oil pipeline was cut by explosions in Azerbaijan, an insurgency continued in Nigeria's oil-rich Niger Delta, and cuts in oil output were made by Iran and Venezuela as a result of souring U.S. relations. In this hypothetical scenario, oil prices hit $160 a barrel.

What makes the scenario more plausible than ever is that the world is consuming 85.9 million barrels of oil a day, but there are only about 2 million barrels a day of extra production capacity, almost all of it in Saudi Arabia. Much of that excess is a low-quality crude oil that can be used only in the most modernized refineries. That leaves the oil market sensitive to threats that might have been disregarded in earlier years.

Some experts say that high prices will change the balance, creating new supplies and lower demand.

"It's hard to keep in mind that things do move in cycles and that the laws of supply and demand are unlikely to have been abolished," said Daniel Yergin, chairman of Cambridge Energy Research Associates. "High prices, particularly if they become very high prices, will catalyze responses in supply and demand, and innovation," he said.

Indeed, just five years after their 1981 peak, oil prices slumped, prompting then-Vice President George H.W. Bush to lament to Saudi leaders about how that was hurting the Texas economy. Eight years after Iraq's invasion of Kuwait drove prices up again, the Asian financial crisis pushed them to new lows.

But many oil experts say that this cycle isn't like earlier ones. A few argue that world oil is running out. Others note that China and India's economic advances and the growth of U.S. suburbs and exurbs have built in oil demand, even at high prices. Moreover, between 2005 and 2015, China and India's populations are expected to grow by about 240 million. That could soak up new production capacity that Saudi Arabia is currently adding.

In addition, countries rich in oil have not been fully exploiting their reserves. War-torn Iraq is producing almost 2 million barrels a day less than its 1970s peak. Production has declined in Venezuela because of government disputes with workers and foreign oil firms. Insurgents in Nigeria's oil-rich Niger River delta have kidnapped foreign oil workers and attacked installations, forcing companies to suspend about 700,000 barrels a day of production. In Mexico, United Arab Emirates, the Caspian Sea and elsewhere, maintenance and weather has at times curtailed production.

Supply and demand might not respond as usual. Ironically, high taxes in Europe that helped reduce consumption in past years now dilute the effect of rising crude oil prices. And high taxes in producing countries mean that oil firms don't get much more incentive to explore as prices rise. At a recent conference in Moscow, one oil executive said that, above certain thresholds, Russian taxes siphon off $19.15 of a $20 a barrel price increase.

OPEC may have also miscalculated. Its most moderate members -- Saudi Arabia and Kuwait -- trimmed production a year ago to prop up then-sagging oil prices at $55 to $60 a barrel. According to the International Energy Agency, Saudi output has been running about half a million barrels a day lower than last year. Saudi Arabia may have delayed a production boost this fall out of fear -- wrong so far -- that the recent credit crisis would slow the U.S. economy.

OPEC countries maintain, however, that the recent run-up in oil prices isn't their fault and point to speculators. "What more can we do?" asks Nader Sultan, an oil consultant and former president of state-owned Kuwait Petroleum Corp. "The taps are open."

The power of traders and investors over the vast oil market has been growing since the early 1980s. Until then, international oil companies had long-term contracts with exporting countries that established prices and volumes. Relatively modest amounts of oil were traded daily on what was known as the spot market.

But after the two 1970s oil shocks and outbreak of war between Iran and Iraq, that system broke down. An ill-disciplined OPEC stopped setting prices and struggled to stick to output quotas to manage prices. Gradually prices declined, because of more efficient use of oil in industrialized countries and extra output from non-OPEC countries and OPEC's swing producer, Saudi Arabia.

In March 1983, the century-old New York Mercantile Exchange started a market for crude oil that has grown steadily. Now most major oil companies simply peg their sales and purchases of crude oil to the fluctuating prices on the exchange.

"I can't explain why the price is where it is today," Henry Hubble, Exxon Mobil vice president of investor relations, said Thurday during a press call about the company's earnings. "The market is going to dictate . . . and we're a taker of those prices."

Exxon has a spacious trading floor in Fairfax, Va., where about 80 people trade crude oil and another 80 trade products. But they don't negotiate prices; instead they try to take advantage of oil quality differences, tanker locations and tiny gaps between markets to meet Exxon's refinery needs as cheaply as possible. The final prices are set relative to those on the New York Mercantile Exchange or similar markets on the day of delivery.

One surprise about oil prices: So far, the economy seems to be coping. Despite an average crude oil price of $75 a barrel, the economy grew at a brisk 3.9 percent pace in the third quarter. Unemployment is low, and inflation is modest.

By contrast, the oil price spikes in the 1970s fueled high inflation and weakened growth, a combination known as stagflation.

Improved automobile mileage, more efficient manufacturers and greater reliance on services have made the U.S. economy more resilient. The United States now uses half the energy it did in 1980 for every unit of economic output. Energy costs make up a smaller portion of household budgets than in 1981.

In a recent paper, "Who's Afraid of a Big Bad Oil Shock?" Yale University economics professor William Nordhaus credited smarter monetary policy and better general economic conditions. Moreover, he said, in percentage terms, the oil shocks of the 1970s were much bigger than the steady price increases since 2002.

But Nordhaus wrote before the latest jump in prices, and many economists are wondering how high will be high enough to hurt the broader economy. Since 2000, oil prices have quadrupled.

Robert Rubin, who repeated that "markets go up, markets go down" while he was President Bill Clinton's Treasury secretary, said last week that "when oil was at $35, people said $60 oil would have tremendous effects on the economy, and at $90 we still have robust growth." But he added, "there comes some point where we will feel that vulnerability to high oil prices."

[LL2]

Where can I get a car that runs on water? electricity?

[Freak Out]

Where can I get a car that runs on water? electricity?

Well...according to Chevrolet from them.

[Freak Out]

I miss watching the McLaughlin group because of this guy:

Pat Buchanan!


Sinking Currency, Sinking Country
Fri Nov 2, 3:00 AM ET

The euro, worth 83 cents in the early George W. Bush years, is at $1.45.

The British pound is back up over $2, the highest level since the Carter era. The Canadian dollar, which used to be worth 65 cents, is worth more than the U.S. dollar for the first time in half a century.

Oil is over $90 a barrel. Gold, down to $260 an ounce not so long ago, has hit $800.

Have gold, silver, oil, the euro, the pound and the Canadian dollar all suddenly soared in value in just a few years?

Nope. The dollar has plummeted in value, more so in Bush's term than during any comparable period of U.S. history. Indeed, Bush is presiding over a worldwide abandonment of the American dollar.

Is it all Bush's fault? Nope.

The dollar is plunging because America has been living beyond her means, borrowing $2 billion a day from foreign nations to maintain her standard of living and to sustain the American Imperium.

The prime suspect in the death of the dollar is the massive trade deficits America has run up, some $5 trillion in total since the passage of NAFTA and the creation of the World Trade Organization in 1994.

In 2006, that U.S. trade deficit hit $764 billion. The current account deficit, which includes the trade deficit, plus the net outflow of interest, dividends, capital gains and foreign aid, hit $857 billion, 6.5 percent of GDP. As some of us have been writing for years, such deficits are unsustainable and must lead to a decline of the dollar.

A sinking dollar means a poorer nation, and a sinking currency has historically been the mark of a sinking country. And a superpower with a sinking currency is a contradiction in terms.

What does this mean for America and Americans?

As nations realize that the dollars they are being paid for their products cannot buy in the world markets what they once did, they will demand more dollars for those goods. This will mean rising prices for the imports on which America has become more dependent than we have been since before the Civil War.

U.S. tourists traveling to the countries whence their ancestors came will find that the money they saved up does not go as far as they thought.

U.S. soldiers stationed overseas will find the cost of rent, gasoline, food, clothing and dining out takes larger and larger bites out of their paychecks. The people those U.S. soldiers defend will be demanding more and more of their money.

U.S. diplomats stationed overseas, students and businessmen are already facing tougher times.

U.S. foreign aid does not go as far as it did. And there is an element of comedy in seeing the United States going to Beijing to borrow dollars, thus putting our children deeper in debt, to send still more foreign aid to African despots who routinely vote the Chinese line at the United Nations.

The Chinese, whose currency is tied to the dollar, and Japan will continue, as long as they can, to keep their currencies low against the dollar. For the Asians think long term, and their goals are strategic.

China — growing at 10 percent a year for two decades and now growing at close to 12 percent — is willing to take losses in the value of the dollars it holds to keep the U.S. technology, factories and jobs pouring in, as their exports capture America's markets from U.S. producers.

The Japanese will take some loss in the value of their dollar hoard to take down Chrysler, Ford and GM, and capture the U.S. auto market as they captured our TV, camera and computer chip markets.

Asians understand that what is important is not who consumes the apples, but who owns the orchard.

Other nations that have kept cash reserves in U.S. Treasury bonds and T-bills are watching the value of these assets sink. Not fools, they will begin, as many already have, to divest and diversify, taking in fewer dollars and more euros and yen. As more nations abandon the dollar, its decline will continue.

The oil-producing and exporting nations, with trade surpluses, like China, have also begun to take the stash of dollars they have and stuff them into sovereign wealth funds, and use these immense and growing funds to buy up real assets in the United States — investment banks and American companies.

Nor is there any end in sight to the sinking of the dollar. For, as foreigners demand more dollars for the oil and goods they sell us, the trade deficit will not fall. And as the U.S. government prints more and more dollars to cover the budget deficits that stretch out — with the coming retirement of the baby boomers — all the way to the horizon, the value of the dollar will fall. And as Ben Bernanke at the Fed tries to keep interest rates low, to keep the U.S. economy from sputtering out in the credit crunch, the value of the dollar will fall.

The chickens of free trade are coming home to roost.

[Freak Out]

Closing in on $100 a barrel!

[LL2]

Closing in on $100 a barrel!

$4 for a gallon of gas coming to a gas station near you by next summer!

[Joemailman]

Dow drops over 200 points
It's a week of big losses as Wachovia, Fannie Mae are the latest lenders caught in the real estate mess. Nasdaq slides over 2.5 percent.

By Steve Hargreaves, CNNMoney.com staff writer
November 9 2007: 5:02 PM EST



NEW YORK (CNNMoney.com) -- Stocks fell sharply Friday, with the Dow ending over 200 points lower, mortgage-induced losses at Wachovia and Fannie Mae riled traders already nervous the woes could spread to the wider economy.

The 30-share Dow Jones industrial average (Charts) lost about 1.7 percent and the broader S&P 500 index (Charts) fell 1.4 percent.

The tech-fueled Nasdaq (Charts) got hammered, tumbling 2.5 percent.

"It got pretty ugly," said Alec Young, an equity strategist at Standard and Poor's Equity Research. "There's just an unprecedented number of negatives coming at the market.

Those negatives include the triple threat of restricted access to credit, a downturn in the housing sector and near record oil prices, said Young.

"People are more and more worried about recession," he said.

For the week, the Dow lost 4.1 percent, while the S&P fell 3.7 percent. The Nasdaq was the biggest loser, dropping 6.9 percent.

Here's what moved markets on Friday:

Wachovia (Charts, Fortune 500), the nation's fourth-largest bank, said this morning the complex debt instruments it held in its portfolio declined in value by an estimated $1.1 billion before taxes in October, leading to a $600 million loan-loss charge for the current quarter. The bank had reported $1.3 billion in pre-tax losses in the third quarter tied to pools of debt backed by home loans.

Fannie Mae (Charts), the largest buyer and backer of home loans in the country, said Friday its profits fell by half over the last nine months.

The government-sponsored company said it earned $1.17 a share from January through September, down from $3.5 billion, or $3.16 a share, in the same period last year. Its shares fell over 6 percent.

Stocks have sold off as traders worried about the wider economic impact of losses at financial companies and the growing ranks of consumers saddled with expensive mortgages and high energy bills.

"The fear is spreading," said Joe Battipaglia, Chief Investment Officer at Ryan Beck & Co. "Investors think profits may have hit thier peak, not just in finacials but across other sectors of the economy."

The losses from Wachovia and Fannie come after Citigroup (Charts, Fortune 500) said last week it expects to write down a further $8 billion to $11 billion in the fourth quarter due to credit- and mortgage-related problems. Citigroup and warnings of more write downs from other banks caused the Dow to lose 362 points last week.

On Wednesday, the Dow posted one of its biggest single-day declines, falling 361 points on further credit market fears.

In recent months, banks and other financial institutions have taken big losses on mortgage-backed securities, which package individual home loans and sell them as an investment.

Those investments soured when people started defaulting on loans because of the decline in the real estate market, which ended their hopes of refinancing on the back of rising home values.

Adding to investor woes was a weak growth forecast from the 27-nation European Union, which said growth is expected to slow to 2.4 percent next year and in 2009, down from 2.9 percent this year. The EU attributed weaker growth to problems stemming from the subprime mess in the United States and the rise in oil prices.

The University of Michigan report on consumer sentiment came in well below estimates, but did little to move markets.

A bit of positive news: The U.S. trade deficit fell to the lowest level in 28 months as a falling dollar helped boost exports.

Among stocks in the news Friday, Merck (Charts, Fortune 500) announced it will pay $4.85 billion to resolve most of the the 27,000 claims involving its blockbuster pain medication Vioxx. Merck shares climbed nearly 4 percent.

Disney (Charts, Fortune 500) reported earnings that beat expectations on sales that were roughly in line with analysts' estimates.

Clearwire (Charts) and Sprint Nextel (Charts, Fortune 500) said they ended an earlier agreement to build a high-speed wireless network.

Meanwhile, oil prices resumed their assault on $100 a barrel. U.S. light crude for December delivery rose 86 cents to settle at $96.32 a barrel on the New York Mercantile Exchange.

The dollar fell against the euro but rose slightly against the yen. Treasury prices rose, with the yield on the benchmark 10-year note falling to 4.22 percent. Bond prices and yields move in opposite directions.

Major markets in Asia and Europe finished lower on mounting credit fears.

Market breadth was negative. Losers topped winners by 2 to 1 on the New York Stock Exchange as 1.35 billion shares traded hands. Decliners beat advancers by 2 to 1 on volume of 2.32 billion shares.

COMEX gold lost $2.80 to settle at $834.70 an ounce. To top of page
Bernanke warns on economic growth

[Freak Out]

I'm running out of hiding places. I've been looking to buy some land in Oregon as a place to hide some dollars but have been unable to find anything that still isn't overpriced. My daughter is going to school in Bend (at least for this winter :lol: ) so I thought about a condo but shit, even crap range land is spendy.
Looks like I've found a nice lot in Waitsburg, WA (near Walla Walla) and I think I am going to jump on it. Keeping my fingers crossed that prices start to drop in Portland.

[Freak Out]

I know....the sky is falling.


A Pearl Harbor without War

By Gabor Steingart in Washington, D.C.

The dollar crisis has politicians alarmed worldwide. The US currency has lost 24 percent of its value since the introduction of the euro, and now there is even a chance that China could abandon its policy of pegging its currency to the dollar -- a problem the United States should take very seriously.

Translated into Texan, what the Chinese politely told the Americans last week simply means: Unless something happens, all hell will break loose.
DPA

Translated into Texan, what the Chinese politely told the Americans last week simply means: Unless something happens, all hell will break loose.
What do Brazilian supermodel Gisele Bündchen and the People's Republic of China have in common? The answer, as of last week, is that both distrust the dollar.

Patricia Bündchen, the twin sister and manager of the world's top model, announced that Gisele now prefers to be paid in euros rather than dollars. Almost simultaneously, the Chinese central bank predicted that the dollar is likely to lose its status as the world's leading currency.

One could easily overlook a supermodel's currency preferences, but China is a different story. It's the beast breathing down America's neck.

The most important country in the world for the United States isn't Great Britain, Germany, Saudi Arabia, Russia or Iraq. China holds that dubious distinction, because it is also the country the US can least do without. Without its willingness to buy an almost unlimited supply of US treasury bonds, there would be no American spending miracle. Without a spending miracle there would be no economic growth. In other words, without China the US superpower would lose a significant share of its economic clout.

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So far Beijing has behaved like the benevolent shopkeeper who willingly extends credit to his customers. The Americans receive shipments of Chinese-made television sets, toys and underwear, but the Chinese do not import a comparable volume of US goods. The gap between buying and selling amounts to about $5 billion every week.

The Chinese are satisfied with buying US treasury bonds, partly to keep their most important customer afloat. The central bank in Beijing already holds currency reserves of $1.4 trillion.

The Chinese have looked on with great patience as their best customer has gradually lost its ability to supply goods.

But the men in power in Beijing cannot be indifferent to the dollar's decline. It devalues their central bank's dollar reserves, the monetary embodiment of some of the fruits of China's export machine.

For the United States, a Chinese decision to abandon the dollar would be tantamount to Pearl Harbor without the war. It would represent a challenge to the world's biggest economy by the world's fastest growing economy. Millions of people would see their standard of living suffer as a result, and American self-confidence, already shaky, would crumble even further. The United States would suffer a serious blow on its very own turf, the economy.

Americans can hardly blame Beijing for their troubles. The Chinese aren't exactly kamikaze politicians, concocting some secret plan to attack the dollar. On the contrary, the preparations are taking place in full view. Translated into Texan, what the Chinese politely told the Americans last week simply means: Unless something happens, all hell will break loose.

For years the US economy has suffered one dramatic setback after another. A historic trend reversal began with the rise of the Asian economies -- first Japan, then China and now India. The United States, a once-proud exporting nation, became the world's biggest importer. In only 15 years, from 1992 to 2007, the US balance of trade deficit has surged from $84 billion to $700 billion.

Within a single generation, the world's biggest lender has become its biggest borrower, a circumstance the United States has made no serious attempts to change. And what has been Washington's standard take on the shift? The dollar is our currency, but it's your problem.

Thus, the tone of the US government's callous and thick-skinned reaction to China's announcement last week came as no surprise. There was a reason the dollar became the world's reserve currency, US Treasury Secretary Hank Paulson said in a slightly offended tone.

But the truth is that the United States would be better off if Paulson and the administration of President George W. Bush would take decisive action instead of sulking. The US's ability to deliver goods should be increased and its industrial base should be reinvigorated. Government and consumer spending, which in reality is doing nothing but eating away at the country's future, should be curbed. Although growth would decline as a result, it would be a more sustainable form of growth.

Last week's remark by a Chinese central bank official should be interpreted as a warning, not a threat. Indeed, China has no choice but to respond, given the dollar's ongoing weakness.

For these reasons, an attack on the US economy is probably the most easily predictable event of the coming years. And if it happens, the attacker will even be able to justify its actions as self-defense.

What is the difference between the US government in 1941 and the administration in Washington today? Perhaps there is none. A Japanese attack on the US Pacific Fleet at Pearl Harbor was unimaginable, even though US intelligence had picked up clues that it could happen. Washington, at the time, was convinced that the Japanese wouldn't dare stage an attack on a target 5,000 miles away, and that they wouldn't succeed if they did.

The crews on America's ships were sleeping as the Japanese bombers approached Pearl Harbor.

Translated from the German by Christopher Sultan

[esoxx]

Where is the loud headline for how the market did today?
Or is that just for when it tanks.

[Joemailman]

Where is the loud headline for how the market did today?
Or is that just for when it tanks.

Big rally on Wall Street!!!!! :wave:
The Dow gains nearly 320 points, its second-best day of the year, as Wal-Mart's earnings, Goldman Sachs' outlook and falling oil prices spark a big advance.

NEW YORK (CNNMoney.com) -- Stocks surged Tuesday, with the Dow climbing nearly 320 points, after comments from executives at Goldman Sachs and other major banks reassured investors worried about the ongoing fallout from the credit market crisis.

Wal-Mart's earnings report and a nearly 4 percent slide in oil prices also played a role in the day's advance.

The Dow Jones industrial average (Charts) added just under 320 points, posting its second-biggest, single-day advance of the year. The S&P 500 (Charts) index added 2.9 percent and the Nasdaq composite (Charts) added 3.5 percent.

The Russell 2000 (Charts) small-cap index jumped 2.9 percent.

Treasury prices slipped, raising the corresponding yields. The dollar fell against the euro and gained against the yen. Oil and gold prices plunged.

Wal-Mart got the ball rolling at the open, but the advance picked up steam as the session wore on and investors took in comments from Goldman Sachs, Morgan Stanley, JP Morgan and other big banks speaking at a Merrill Lynch-organized financial conference. (Full story.)

"I think you saw relief today that the financial companies didn't indicate any looming meltdowns at the Merrill conference," said Ben Halliburton, chief investment officer at Tradition Capital Management. "And Goldman had some decent news, although it wasn't surprising."

Nonetheless, the banks are far from out of the woods, Halliburton said. "The financial stocks have come down sharply, and clearly there was a fair amount of short covering today."

Short covering refers to a process by which investors who have sold shares short to take advantage of a falling market need to buy them back.

That process was evidenced by the quality of the day's corporate news, which was good, but not as good as the stock market reaction would suggest, said Fred Dickson, chief market strategist at D.A. Davidson.

"I think we had an oversold market due for a bounce," Dickson said.

Stocks have been sliding, since the Dow and S&P 500 peaked at record highs in October and the Nasdaq hit a nearly 7-year high. On Monday, the Dow closed below 13,000 for the first time since August.

While the day's advance was positive, it doesn't indicate a new direction for the market going forward, the analysts said.

"If you look at the market over the last month, it doesn't take much to get investors whipped into a frenzy," said Chris Johnson, chief investment officer at Johnson Research Group.

"A 300-point day on the Dow a few years ago would have been a bigger deal than it is today," he said. "We're seeing these kinds of days more often now, with investors willing to step in and have a feeding frenzy on relatively light news."

Johnson said that because of this trend, and because of lingering questions about the economy, the bank sector, oil prices and consumer spending, stocks will stay choppy between now and the end of the year.

He said he doesn't expect stocks to finish the year much higher than where they stand now, with the S&P 500 likely to end in the 1475 to 1500 range.
What's sinking the dollar?

The financial sector was one of the session's best performers, thanks to a combination of technical factors and the comments coming out of the Merrill Lynch conference.

Among the standouts: Goldman Sachs CEO Lloyd Blankfein said that the company won't take any further significant charges related to the subprime mort

[Freak Out]

Where is the loud headline for how the market did today?
Or is that just for when it tanks.

This is a doom and gloom black Friday kind of thread man.....

We had a thread for a big rally and Champagne....where the hell did it go...?

[Freak Out]

Some interesting numbers in this opinion piece.

Geopolitics At $100 A Barrel

By Robert J. Samuelson
Wednesday, November 14, 2007; A19

Oil is flirting with $100 a barrel. Do not think this just another price spike. It suggests a new geopolitical era when energy increasingly serves as a political weapon. Producers (or some of them) will use it to advance national agendas; consumers (or some of them) will seek preferential treatment. We already see this in Hugo Ch¿vez's discounting of Venezuelan oil to favored allies, China's frantic efforts to secure guaranteed supplies, and Russia's veiled threats to use natural gas -- it supplies much of Europe -- to intimidate its neighbors and customers.

Since World War II, the United States has sought to keep energy -- mainly oil -- widely available on commercial terms. America's foreign policy has been, in effect, to prevent other nations from using oil to advance their foreign policies. On the whole, this has minimized conflicts over natural resources and favored global economic growth. Producing countries focused on maximizing their wealth; consuming nations relied on the market to get their oil. But shifts in supply and demand now threaten this system.

Just last week, the International Energy Agency in Paris projected that world oil demand would grow to 116 million barrels a day by 2030, up from 86 million in 2007. About two-fifths of the increase would come from China and India; other developing countries would account for much of the rest. The number of cars and trucks worldwide would more than double, to 2.1 billion. There's only one catch: Oil supply probably won't satisfy projected demand.

The bottleneck is not scarcity of oil in the ground. Someday that will happen; it hasn't yet. Proven oil reserves -- discovered oil, deemed recoverable -- total about 1.2 trillion barrels, says the National Petroleum Council, a U.S. government advisory group of industry and academic experts. That's 38 years of supply at present consumption rates. Next is undiscovered oil; the NPC reckons another trillion barrels. Finally, there's about 1.5 trillion barrels of "unconventional" reserves of heavy oil, tar sands and oil shale recoverable at higher prices.

Producing this oil is another matter. Low prices in the past (1985-2002 average: $21 a barrel) discouraged exploration. Companies consolidated; Exxon merged with Mobil, Chevron with Texaco. Cutbacks have left shortages of drilling rigs, pipes, engineers, geologists and drilling crews. In the late 1990s, a deep-water rig could be leased for less than $200,000 a day, says Peter Robertson, Chevron's vice chairman; now the cost can run $600,000.

With time, these shortages should ease. A bigger obstacle is access to reserves. Government-owned national oil companies control perhaps three-quarters of proven oil reserves. But they often need private companies (the world's Exxons and BPs) to explore and develop. Perversely, high prices make negotiations longer, harder. Governments already have more oil money than expected. In 2007, OPEC nations are projected to have revenue of $658 billion, up from about $195 billion in 2002. Governments can afford to be tough and patient.

Indeed, higher prices have caused them to raise royalty rates and taxes on private oil firms. Some companies have pulled out rather than accept tougher terms. In the past year, Exxon Mobil and ConocoPhillips left Venezuela, reports analyst Simon Wardell of Global Insight. All these problems suggest that world oil output will advance slowly. For various reasons, Venezuela, Iran and Iraq are all producing below previous peaks and below potential.

At some point, higher prices will dampen demand; changes in the weather and business cycle could also lead to lower prices. Still, a major turning point has been reached. Until now, oil's main geopolitical threat lay in the concentration of reserves in the unstable Persian Gulf. Supply disruptions (1973, 1979-80, 1990) coincided with wars and revolutions. Otherwise, surplus capacity cushioned losses from accidents and weather. Now, most of that surplus has vanished. The pivotal year was 2004, when global demand, propelled by China, rose about triple the expected rate, says Larry Goldstein of the Energy Policy Research Foundation.

So the tightened gap between supply and demand has shifted power to producers. "Will competition for scarce resources lead to political or even military clashes among major powers?" asks a report by the National Petroleum Council. "Will bilateral arrangements among nations become common as governments attempt to 'secure' energy supplies outside of traditional market mechanisms?"

Here is what we might do: Raise fuel economy standards for new cars and trucks; gradually increase the gas tax (possibly offset with tax cuts) to induce people to buy those vehicles; expand oil and natural gas production in Alaska, the Gulf of Mexico, and off the Atlantic and Pacific coasts. These steps would, with time, temper the power of oil producers while also checking greenhouse gases. But many liberals, conservatives and environmentalists oppose parts of a sensible compromise. The stalemate hurts mainly us.

[Freak Out]

Almost there.....got close to $99 a barrel for a bit today.

[Kiwon]

Yep. I'm ready for a market correction.....in the right direction.

Dow Gets Biggest 2-Day Gain in 5 Years

http://biz.yahoo.com/ap/071129/wall_street_s_rally.html

[Freak Out]

Yep. I'm ready for a market correction.....in the right direction.

Dow Gets Biggest 2-Day Gain in 5 Years

http://biz.yahoo.com/ap/071129/wall_street_s_rally.html

I hope it continues but I think these traders are just grasping at any little comment or piece of news that puts a positive light on the markets and overall economic situation. If you listened to the entire speech by the FED who had everyone running to buy after his little "hint" about interest rates it was pretty gloomy.

[Joemailman]

What a bag of mixed news right now. Economic growth is up, but the news out of the real estate market is all bad. There were 50,000 home foreclosures in October, and new home sales were down 13%, which was the worst drop since 1970. There will probably be more pain in 2008, although I don't see anyone trying to predict when the real estate market will bottom out and start to rebound.

[LL2]

What a bag of mixed news right now. Economic growth is up, but the news out of the real estate market is all bad. There were 50,000 home foreclosures in October, and new home sales were down 13%, which was the worst drop since 1970. There will probably be more pain in 2008, although I don't see anyone trying to predict when the real estate market will bottom out and start to rebound.

A lot of real estate speculators and flippers and seeing thier dreams of big money gains go right down the drain. Most of those people are real stupid. If you study the economic history of real estate for 10 minutes you will see that historically real estate only appreciate at around 3-4% a year. People that were getting 10% or more in gains a year for the last five years believed that was sustainable and they were going to be millionaires! Poof! The bubble burst!

[LL2]

INVEST NOW!!!

Now Is the Best Time of the Year to Invest
http://www.fool.com/investing/small-cap/2007/12/04/now-is-the-best-time-of-the-year-to-invest.aspx

Bill Barker
December 4, 2007


If you like historical stock market data and are looking to invest new money in the market, you can't just like this time of year -- you've got to love it.

Judged by the past 57 years, we're now in the middle of the three very best months of the year for the stock market. And they are followed by two of three next best.

I'm not making it up
Here's the data, as collected by moneychimp.com -- home of sometimes obscure, sometimes highly relevant numbers:

Month
Return

November
1.60%

December
1.61%

January
1.25%

February
-0.11%

March
0.87%

April
1.14%

May
0.19%

June
0.17%

July
0.74%

August
-0.14%

September
-0.77%

October
0.79%


Add that all up (or multiply to get the correct answer), and here's what you get:

Average return, November to April: 6.52%.
Average return, May to October: 0.98%.

Yowza.

Surprised?
That's one of the lesser-reported stock market stats I've ever seen.

Of course, you've probably heard the old Wall Street adage to "sell in May and go away." So, there's some conventional wisdom that the summer has historically poor returns. Many are also aware that October (mother of a pair of Black Mondays, and more than a few other Black Days of the Week) is a scary month.

November, on the other hand, has clearly been a very good month for market returns, perhaps juiced by the weak three months that typically precede it. For 11 of the past 13 Novembers, the market has had positive returns. Of course, 2007 was one of the two where form did not hold.

There has to be an explanation for this
Are there reasons why there should be any disparity in the seasonal returns of stocks? Well, you can create some if you want. January buying, for example, could be explained by people spending their year-end bonuses and New Year's resolutions to be more financially responsible.

On the other side, the summer is a good time to get out of the home and office and concentrate on the weather rather than discounted cash flow equations. We can create any number of rationales for the numbers without any good way of proving them.

That said, I decided to look at some of the more prominent stocks in the market to see how they've fared over the past three six-month periods:

Company
May 2006-Oct. 2006
Nov. 2006-Apr. 2007
May 2007-Oct. 2007

American International Group (NYSE: AIG)
3.8%
4.7%
-9.9%

AT&T (NYSE: T)
30.9%
14.7%
7.6%

Procter & Gamble (NYSE: PG)
9.5%
2.2%
10.4%

Johnson & Johnson (NYSE: JNJ)
15.0%
-4.4%
1.0%

Verizon (NYSE: VZ)
12.8%
3.3%
19.6%

Chevron (NYSE: CVX)
9.9%
16.1%
16.8%

Market average
4.45%
8.95%
2.40%

Historical market average
0.98%
6.52%
0.98%


Obviously, when you get down to the level of individual stocks over short time periods, the results will not conform exactly to the historical averages -- and some of these companies illustrate that well. That said, the broader cycle of the past 19 months, with the exception of this past November, has resembled what we've seen over the past 50 years.

Ready to go
And that's one of the reasons why our Motley Fool Hidden Gems small-cap investing team is so excited. After a volatile past four months, the Russell 2000 small-cap index lags the S&P 500 and has lost 3.5% on the year. In other words, the stocks we focus on -- small caps -- are trading at cheaper relative valuations than they have since late 2005. Add to that the historical outperformance of small caps and the fact that we're entering a favorable time of the year for stocks, and we're looking forward to not only the next six months, but the opportunity to hold the great stocks we discover for the next decade or more.

[MJZiggy]

So what you're saying is that we should have bought in October.... :?

[LL2]

So what you're saying is that we should have bought in October.... :?

I think the article is good to see the historical trends. The best thing to do is dollar cost averaging (invest the same amount every month), and that has been proven to give people the best return. So, if you have been investing now is a good time to stay invested.

[swede]

The Canadian dollar, which used to be worth 65 cents, is worth more than the U.S. dollar for the first time in half a century.


The chickens of free trade are coming home to roost.

This also explains why I'm not finding any of those goddammed Canadian quarters slipped into my change by unscrupulous vendors. They're finally worth a quarter!

[the_idle_threat]

The Canadian dollar, which used to be worth 65 cents, is worth more than the U.S. dollar for the first time in half a century.


The chickens of free trade are coming home to roost.

This also explains why I'm not finding any of those goddammed Canadian quarters slipped into my change by unscrupulous vendors. They're finally worth a quarter!

Well, if that's the case then they're not so goddamned anymore. :lol:

[LL2]

So, will Bush's plan to prevent thousands more from going into foreclosure? The news sure has helped the stock market today. I have two family members that have already lost their homes to foreclosure. Who's to blame for all of this? The mortgage brokers (Bretsky)? The buyers? The lenders? The blame goes in many directions and most people just were not wise and got in over their heads, but many are losing their homes due to unfortunate circumstances like losing a job.

[Freak Out]

Is it time for the hardhats?

http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=A1YourView&xml=/money/2007/12/11/cnusa111.xml

Morgan Stanley issues full US recession alert

By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 7:28am GMT 11/12/2007


Morgan Stanley has issued a full recession alert for the US economy, warning of a sharp slowdown in business investment and a "perfect storm" for consumers as the housing slump spreads.

Fed chairman Ben Bernanke will be hoping he can keep the US economy from recession

In a report "Recession Coming" released today, the bank's US team said the credit crunch had started to inflict serious damage on US companies.

"Slipping sales and tightening credit are pushing companies into liquidation mode, especially in motor vehicles," it said.

"Three-month dollar Libor spreads have jumped by 60 to 80 basis points over the last month. High yield spreads have widened even more significantly. The absolute cost of borrowing is higher than in June."

"As delinquencies and defaults soar, lenders are tightening credit for commercial, credit card and auto lending, as well as for all mortgage borrowers," said the report, written by the bank's chief US economist Dick Berner. He said the foreclosure rate on residential mortgages had reached a 19-year high of 5.59pc in the third quarter while the glut of unsold properties would lead to a 40pc crash in housing construction.

"We think overall housing starts will run below one million units in each of the next two years -- a level not seen in the history of the modern data since 1959," he said.

Although the US job market has apparently held up well, an average monthly fall of 138,000 in the number of self-employed workers over the last quarter suggests it may now be buckling. "Consumers face what could be a perfect storm," said Mr Berner.

The partial freeze on subprime mortgage rates announced last week by US treasury secretary Hank Paulson may help cushion the blow for some banks, but it could equally backfire by adding a "risk premium" that drives even more lenders out of the mortgage market.

Like Goldman Sachs, and Lehman Brothers, the bank no longer believes Asia and Europe will come to the rescue as America slows.

It has slashed its 2008 growth forecast for Japan from 1.9pc to 0.9pc, and warned that credit stress will weigh heavily on the eurozone.

Mr Berner said US demand is likely to contract by 1pc each quarter for the first nine months of 2008, but the picture could be far worse if the Federal Reserve fails to slash rates fast enough. It is betting on a quarter point cut this week, with three more cuts by the middle of next year. "We expect the Fed to insure against the worst outcome," he said.
advertisement

Morgan Stanley is the first major Wall Street bank to warn that it is may now be too late to stop a recession, though most have shifted to an ultra-cautious stance in recent weeks.

The bank at first treated the August crunch as a "mid-cycle correction", much like the financial storm after Russia's default in 1998. But the collapse of the US commercial paper market has now continued for seventeen weeks, suggesting a "fundamental deleveraging of the banking system."

Mr Berner - known at Morgan Stanley as the "resident bull"- is one of the most closely watched analysts on Wall Street. While he began to turn bearish last April as the credit markets turned nasty, the latest report is written in tones that may is rattle the fast-diminishing band of optimists.

[Joemailman]

I wonder if this report had anything to do with the Dow being down 294 today. Analysts are blaming the drop on the fact that the Fed only dropped interest rates a quarter point, rather than a half point they were hoping for. There is also a report today that holiday shopping has come to a screeching halt after a good start in November. People are getting nervous about the economy. I saw tonight on ABC News that for the first time since the occupation of Iraq, more Americans list the economy as their primary concern rather than Iraq.

[Joemailman]

Citigroup loses 10B in quarter and all stock indexes drop sharply. Dow and S&P are down about 6% YTD. Oh well, sort of like the Packers game. Plenty of time to recover. But then, Favre's not running the economy.
; http://money.cnn.com/2008/01/15/markets/markets_0500/index.htm?postversion=2008011517

[MJZiggy]

I could have foreseen that happening to Citigroup since I canceled my card this year...

[Freak Out]

I could have foreseen that happening to Citigroup since I canceled my card this year...

Pretty funny... :lol:

..but not really...that has to be one of the biggest losses ever for a bank.

[Freak Out]

I could have foreseen that happening to Citigroup since I canceled my card this year...

Pretty funny... :lol:

..but not really...that has to be one of the biggest losses ever for a bank.

Wow.....cut 4200 jobs...just not his.

http://www.bloomberg.com/apps/news?pid=20601087&sid=apcQNeUgOLwA&refer=home

[Joemailman]

Humongous Market Rally!!!
:wave: :bump: :alc: :five: :flag:
http://money.cnn.com/2008/03/18/markets/markets_newyork/index.htm?postversion=2008031817