^
Oooo, that was post #1000! :banana:

Checks, Checks, and more Checks
Yahoo (http://biz.yahoo.com/ap/080124/economy_stimulus.html)

Great 2Q
Yahoo (http://biz.yahoo.com/ap/080124/earns_microsoft.html)

It's a Tie!
Industry Week (http://www.industryweek.com/ReadArticle.aspx?ArticleID=15676)

^
Oooo, that was post #1000! :banana:
nice!

btw, i love your signature.
:applause:

http://www.post-gazette.com/pg/08027/852280-407.stm

As orders rise, shipbuilders in U.S. face labor shortage

Sunday, January 27, 2008
By Daniel Lovering, The Associated Press

ERIE, Pa. -- Dirk VanEnkevort wanted to take advantage of a shipbuilding boom when his family's company leased one of the largest dry docks in the Great Lakes region in 2005. But now he is so short-handed he has turned to robots to help keep up.

His company, Erie Shipbuilding LLC, has since hired about 150 workers and equipped the facility on Lake Erie with sophisticated metalworking tools -- including robots. It now has orders to build eight oceangoing barges and plans to hire additional workers as needed.

But as his order book fills, Mr. VanEnkevort faces a problem hampering dozens of other mid-size commercial shipyards across the country: a shortage of skilled, experienced workers capable of assembling and welding freight ships.

To fight the shortage, Mr. VanEnkevort and other shipbuilders have scoured the country and recruited from afar. They have appealed to prospective employees at local high schools and started in-house training programs. VanEnkevort says his company plans to use robotic welders extensively.

"There hasn't been any shipbuilding in Erie for quite some time," said Mr. VanEnkevort, 52. "So those people that were here are doing other things or moved away. We've just got to find people and train them, which is what we're doing."

After topping 100,000 in 1998, employment in the U.S. commercial shipbuilding and repair industry hovered around 91,000-92,000 for six years before climbing to 93,600 in 2006, according to the U.S. Bureau of Labor Statistics.

At the same time, demand has soared, mostly at mid-size shipyards. The industry -- though tiny on a global scale and prone to dramatic boom-and-bust cycles -- has seen its largest expansion since the 1970s in recent years.

The growth has been propelled by demand from shipping companies that are replacing or expanding fleets of aging tankers, tugboats, offshore supply vessels and other boats, in some cases to meet the fast-changing needs of the energy sector.

Single-hull tankers must be phased out and replaced with double-hulled tankers by 2015 under a federal law passed after the single-hull Exxon Valdez ran aground and spilled 11 million gallons of oil in Alaska in 1989.

And oil and gas companies are ordering ever larger and more complex ships to support drilling activities in deeper waters of the Gulf of Mexico, said John Snyder, editor of the New York-based trade publication Marine Log.

The labor crunch in U.S. shipyards has been spawned by several factors, including competition from other trades that offer lucrative work, such as construction in areas hit by Hurricane Katrina in 2005, said Matthew Paxton, president of the Shipbuilders Council of America, a Washington-based trade group that represents more than 35 companies that operate about 100 shipyards nationwide.

"What we've found is there's been a lack of interest in some of the work that our shipyards are doing," Mr. Paxton said, citing government figures showing there are about 180 commercial shipyards across the country.

Industry representatives have fought back by trying to promote the trade in communities near shipyards, and some firms have established training programs for welders and shipfitters -- workers who construct vessels from parts, Mr. Paxton said.

"We have had to look at foreign labor when things get extremely tight," he said, noting that shipyards have tapped workers from Mexico and Eastern European countries with a history of shipbuilding, such as Croatia.

Bollinger Shipyards Inc. of Lockport, La., which operates 12 shipyards in Louisiana and one in Texas, has spent millions on housing for laborers, said Robert Socha, the company's executive vice president of sales and marketing.

"It's not a cost-saving measure," he said. "It's a measure to keep your business flowing."

Bollinger's use of contract labor has also risen significantly, with contractors now comprising roughly 65 percent of its 3,200-strong work force compared with about 20 percent in the past, Mr. Socha said. "It's all based on people shortage."

The company's chief administrative officer, Craig Roussel, said he could realistically "hire 400 people today," if they were qualified and available.

Tim Colton, an independent consultant based in Florida, said the labor shortage arose partly because the industry has never been high-paying. It's not a particularly large industry, he said, and most companies are family owned.

A top welder at Erie Shipbuilding earns $18.50 an hour, comparable to pay offered by other companies in the industry, Mr. VanEnkevort said.

The shortage extends not only to hourly paid workers, but to supervisors, planners and engineers, "all the people that make the shipyard function," Mr. Colton said. "It's terrible."

Sean T. Connaughton, head of the U.S. Maritime Administration, said it was difficult to open a new commercial shipyard, even in the current robust market, because of regulatory hurdles. And the revival of existing facilities may be unattractive, he said.

"They can make a lot more money selling that land to a condominium developer," he said.

But Mr. VanEnkevort hopes his company, with a 44-acre facility where ships had not been produced for decades, will become internationally competitive. He said he plans to expand his work force to 200.

Employees' cars and trucks hint at the competition for labor within the industry, carrying license plates from Pennsylvania, Louisiana and Ontario.

One of the company's welders, Charlie Potter, 59, of Erie, said he had worked at a shingle factory for 24 years before it closed last year and he entered a training program at Erie Shipbuilding.

"I learned flat welds, verticals, horizontals, overheads," he said. "I love it. It's a young man's game, but I didn't have any choice."

New home sales plunge 26 percent in 2007
Yahoo! News (http://news.yahoo.com/s/nm/20080128/us_nm/usa_economy_newhomes_dc;_ylt=Ah4wV5wUcdLko9ysfxz6CKCyBhIF)

http://online.wsj.com/article/SB120147855494820719.html?mod=opinion_main_commentaries

COMMENTARY
The Economy Is Fine (Really)
By BRIAN WESBURY
January 28, 2008; Page A15

It is hard to imagine any time in history when such rampant pessimism about the economy has existed with so little evidence of serious trouble.

True, retail sales fell 0.4% in December and fourth-quarter real GDP probably grew at only a 1.5% annual rate. It is also true that in the past six months manufacturing production has been flat, new orders for durable goods have fallen at a 0.8% annual rate, and unemployment blipped up to 5%. Soft data for sure, but nowhere near the end of the world.
[Wesbury]

It is most likely that this recent weakness is a payback for previous strength. Real GDP surged at a 4.9% annual rate in the third quarter, while retail sales jumped 1.1% in November. A one-month drop in retail sales is not unusual. In each of the past five years, retail sales have reported at least three negative months. These declines are part of the normal volatility of the data, caused by wild swings in oil prices, seasonal adjustments, or weather. Over-reacting is a mistake.

A year ago, most economic data looked much worse than they do today. Industrial production fell 1.1% during the six months ending February 2007, while new orders for durable goods fell 3.9% at an annual rate during the six months ending in November 2006. Real GDP grew just 0.6% in the first quarter of 2007 and retail sales fell in January and again in April. But the economy came back and roared in the middle of the year -- real GDP expanded 4.4% at an annual rate between April and September.

With housing so weak, the recent softness in production and durable goods orders is understandable. But housing is now a small share of GDP (4.5%). And it has fallen so much already that it is highly unlikely to drive the economy into recession all by itself. Exports are 12% of the economy, and are growing at a 13.6% rate. The boom in exports is overwhelming the loss from housing.

Personal income is up 6.1% during the year ending in November, while small-business income accelerated in October and November, during the height of the credit crisis. In fact, after subtracting income taxes, rent, mortgages, car leases and loans, debt service on credit cards and property taxes, incomes rose 3.9% faster than inflation in the year through September. Commercial paper issuance is rising again, as are mortgage applications.

Some large companies outside of finance and home building are reporting lower profits, but the over-reaction to very spotty negative news is astounding. For example, Intel's earnings disappointed, creating a great deal of fear about technology. Lost in the pessimism is the fact that 20 out of 24 S&P 500 technology companies that have reported earnings so far have beaten Wall Street estimates.

Models based on recent monetary and tax policy suggest real GDP will grow at a 3% to 3.5% rate in 2008, while the probability of recession this year is 10%. This was true before recent rate cuts and stimulus packages. Now that the Fed has cut interest rates by 175 basis points, the odds of a huge surge in growth later in 2008 have grown. The biggest threat to the economy is still inflation, not recession.

Yet many believe that a recession has already begun because credit markets have seized up. This pessimistic view argues that losses from the subprime arena are the tip of the iceberg. An economic downturn, combined with a weakened financial system, will result in a perfect storm for the multi-trillion dollar derivatives market. It is feared that cascading problems with inter-connected counterparty risk, swaps and excessive leverage will cause the entire "house of cards," otherwise known as the U.S. financial system, to collapse. At a minimum, they fear credit will contract, causing a major economic slowdown.

For many, this catastrophic outlook brings back memories of the Great Depression, when bank failures begot more bank failures, money was scarce, credit was impossible to obtain, and economic problems spread like wildfire.

This outlook is both perplexing and worrisome. Perplexing, because it is hard to see how a campfire of a problem can spread to burn down the entire forest. What Federal Reserve Chairman Ben Bernanke recently estimated as a $100 billion loss on subprime loans would represent only 0.1% of the $100 trillion in combined assets of all U.S. households and U.S. non-farm, non-financial corporations. Even if losses ballooned to $300 billion, it would represent less than 0.3% of total U.S. assets.

Beneath every dollar of counterparty risk, and every swap, derivative, or leveraged loan, is a real economic asset. The only way credit troubles could spread to take down the entire system is if the economy completely fell apart. And that only happens when government policy goes wildly off track.

In the Great Depression, the Federal Reserve allowed the money supply to collapse by 25%, which caused a dangerous deflation. In turn, this deflation caused massive bank failures. The Smoot-Hawley Tariff Act of 1930, Herbert Hoover's tax hike passed in 1932, and then FDR's alphabet soup of new agencies, regulations and anticapitalist government activity provided the coup de grace. No wonder thousands of banks failed and unemployment ballooned to 20%.

But in the U.S. today, the Federal Reserve is extremely accommodative. Not only is the federal funds rate well below the trend in nominal GDP growth, but real interest rates are low and getting lower. In addition, gold prices have almost quadrupled during the past six years, while the consumer price index rose more than 4% last year.

These monetary conditions are not conducive to a collapse of credit markets and financial institutions. Any financial institution that goes under does so because of its own mistakes, not because money was too tight. Trade protectionism has not become a reality, and while tax hikes have been proposed, Congress has been unable to push one through.

Which brings up an interesting thought: If the U.S. financial system is really as fragile as many people say, why should we go to such lengths to save it? If a $100 billion, or even $300 billion, loss in the subprime loan world can cause the entire system to collapse, maybe we should be working hard to build a better system that is stronger and more reliable.

Pumping massive amounts of liquidity into the economy and pumping up government spending by giving money away through rebates may create more problems than it helps to solve. Kicking the can down the road is not a positive policy.

The irony is almost too much to take. Yesterday everyone was worried about excessive consumer spending, a lack of saving, exploding debt levels, and federal budget deficits. Today, our government is doing just about everything in its power to help consumers borrow more at low rates, while it is running up the budget deficit to get people to spend more. This is the tyranny of the urgent in an election year and it's the development that investors should really worry about. It reads just like the 1970s.

The good news is that the U.S. financial system is not as fragile as many pundits suggest. Nor is the economy showing anything other than normal signs of stress. Assuming a 1.5% annualized growth rate in the fourth quarter, real GDP will have grown by 2.8% in the year ending in December 2007 and 3.2% in the second half during the height of the so-called credit crunch. Initial unemployment claims, a very consistent canary in the coal mine for recessions, are nowhere near a level of concern.

Because all debt rests on a foundation of real economic activity, and the real economy is still resilient, the current red alert about a crashing house of cards looks like another false alarm. Warren Buffett, Wilbur Ross and Bank of America are buying, and there is still $1.1 trillion in corporate cash on the books. The bench of potential buyers on the sidelines is deep and strong. Dow 15,000 looks much more likely than Dow 10,000. Keep the faith and stay invested. It's a wonderful buying opportunity.

Mr. Wesbury is chief economist for First Trust Portfolios, L.P.

http://www.theglobeandmail.com/servlet/story/RTGAM.20080125.wcoessay0126/BNStory/specialComment/home?cid=al_gam_mostemail

The coming rust-belt recovery

Manufacturing will play a surprise lead role in the turnaround of the resilient U.S. economy

BARRIE MCKENNA

From Saturday's Globe and Mail

January 26, 2008 at 12:03 AM EST

WASHINGTON — The natural state of an economy is to grow. We work more, we earn more, we spend more and we produce more.

Occasionally, however, economies stall and go into recession. And, for a stretch, perhaps a few months, everything goes into retreat.

Wages, spending and output shrink.

That's what appears to be happening to the mighty U.S. economy.

Thankfully, recessions are a rare and brief event in this country.

Since the Second World War, the United States has experienced just 10 recessions, lasting an average of 10 months each.

Amid the financial gyrations of the past few weeks, it's comforting to know that the foundation of the next growth phase is already being laid. And it could come from the most unlikely of places: the dirty business of manufacturing, and trade.

You can thank the remarkable resilience of the American economy, the largest, most diverse and open economy on the planet.

It isn't easy to keep the United States down for long. The same, often reckless, dynamism that causes this country to repetitively binge — on real estate, technology stocks or some other bauble du jour — is precisely what will pull the economy out the other side.

It's far too early to write an obituary for the U.S. economy.

Just remember: This isn't Japan, which suffered three recessions during its "lost decade" of the 1990s.

Japan's economy was red-hot. And no one thought the boom would ever end. The price of everything from stocks and real estate to a cup of coffee was badly out of whack. So much so, that by 1990 the Imperial Palace in central Tokyo was estimated to be worth more than the entire continental U.S.

When the bubble inevitably burst, Japanese banks and policy-makers were ploddingly slow to acknowledge they even had a problem

And so, during the decade that it took all the bad debts to work their way through Japan's hide-bound corporate structure, worthy borrowers couldn't get loans and the economy stagnated.

Americans are far too impatient to ever let that happen.

They got into their current mess by letting the housing industry run amok. Too much money was pumped into one sector with predictable consequences: overbuilding, loans to people who couldn't afford them and grossly inflated prices.

Brutal and wrenching as it is, the unwinding process is already well under way. Homeowners can't pay their mortgages, so banks foreclose and homes are auctioned off at fire-sale prices. Falling prices make loans turn bad, which causes losses for lenders and their shareholders.

In just a few months, American banks have written off tens of billions' worth of investments. They have also sought out big Asian and Middle Eastern investors to repair their tattered balance sheets.

The light at the end of the tunnel is the U.S. dollar. A steady five-year decline in its value against most other currencies, including the Canadian dollar, is rapidly restoring the United States' competitive place in the world. It has made American products look cheap again, along with American workers.

The United States already has what is arguably the most efficient service economy in the world, an impressive transportation infrastructure and sophisticated financial markets.

Now, the country is poised to reassert itself as a manufacturing powerhouse.

EXPORTING TO CHINA

Consider Richards Industries of Cincinnati, Ohio. It makes valves — pressure valves, control valves, temperature valves. These little machine-tooled devices are what keep modern factories humming and in perfect balance.

The company's business has never been in better shape, thanks to a thriving export business, insists Bruce Broxterman, president and part owner. When he joined the company in 1980, exports accounted for about 2 per cent of sales. Now, with thriving sales to China and other Asian countries, exports make up nearly 40 per cent of its $30-million (U.S.) a year business. And the cheaper U.S. dollar is enabling the company to make big inroads in Europe, too.

"We're doing all the right things operationally," Mr. Broxterman says. "I'm pretty optimistic."

Within five years, more than half its sales will be outside the United States. The company has been aggressively hiring salespeople in key overseas markets to tap the growth.

And even more remarkably, with roughly the same number of employees (125) it had a decade ago, Richards Industries is cranking out more valves than ever.

The company isn't alone. The Merrill Lynch economist David Rosenberg recently predicted a revival of the U.S. rust belt as part of a "renaissance" in U.S. manufacturing. "Dollar depreciation is already redistributing growth back to the United States," he said.

Many experts had given up on manufacturing in states such as Ohio, Pennsylvania and Michigan. In a world of cheap labour, there was very little that you could produce competitively there any more, skeptics argued.

LEARNING TO BE NIMBLE

Well, something remarkable has happened. Overvalued for so long, the U.S. dollar has forced companies to become a lot more productive to survive in the global economy. Manufacturers such as Richards Industries learned to become nimble and agile, rather than just big.

Now, with the lower dollar, they are poised to reap rich rewards.

Suddenly, foreign companies want to put their factories here, not the other way around. The European aircraft-maker Airbus, Craftsman Tools of Britain, the German chainsaw maker Stihl AG & Co. and the German tire-maker Continental AG have all announced U.S. plant expansions in recent months.

In the home market, too, American manufacturers are discovering that they can compete again. A 30 per cent drop in the dollar in the past five years is huge. A European buyer looking at buying a U.S. product priced at $100 needs to come up with just 67 euros, compared to nearly 100 euros before.

Surprisingly to some, the United States makes more manufactured goods today than at any time in its history — three times more than it did in the mid-1950s boom. And since 1980, the value of U.S. manufacturing has tripled to roughly $5-trillion.

Here's a newsflash: The entire manufacturing sector has not up and moved to China or Mexico. With less than 5 per cent of the world's population, the United States accounts for nearly 25 per cent of all manufacturing — No. 1 in the world. Japan, No. 2, has lost ground and is fading. Fast-growing China still accounts for less than 10 per cent.

The catch is that American companies have learned to produce more with fewer, better-skilled workers. The country's factory work force peaked at about 19 million before the 1980-81 recession. It has since shrunk to about 14 million.

And yet the overall unemployment rate, now at 5 per cent, has fallen as factories have shed jobs. This suggests that surplus workers are being absorbed into the rest of the economy.

And manufacturers are successfully selling to the rest of the world.

American exports grew in double digits in 2005 and 2006, and are on track to grow by 13 per cent in 2007. Manufactured exports are at a record high.

Even the embattled U.S. auto industry is showing signs of turning the corner. The Detroit Three auto makers have shown impressive productivity gains. Over the past five years, General Motors has reduced the hours needed to build a car by 15 per cent. Ditto for Ford and Chrysler.

The United States is quietly becoming an attractive place to build cars again — significantly cheaper than in Ontario, it turns out. With the Canadian and U.S. dollars near parity, Canada has become the high-priced location to assemble cars. Experts predict Ontario could lose 600,000 cars of production by 2012, as U.S. production is ramped up.

It's the same for a lot of the other products that the U.S. makes in abundance, including aircraft, steel, power equipment, machinery, food products and pharmaceuticals. Production is rising; exports are up.

Even in Ohio — the centre of the rust belt — there's a bit of a manufacturing revival under way. Since 2000, more than 200,000 manufacturing jobs have disappeared in the state. And yet it's the only state that has increased exports in each of the past eight years.

"The lower dollar has really changed the game, particularly in Europe," agrees Bruce Broxterman of Richards Industries. "I strongly believe in U.S. manufacturing."

Just like the company's valves, other sectors of the economy are now poised to pick up the slack and return the U.S. to its natural growth equilibrium.

There are a lot of people in this country who would not have thought this renaissance possible. All three leading Democratic presidential candidates — Hillary Clinton, Barack Obama and John Edwards — have spoken skeptically about the benefits of trade, while lamenting the "decline" of manufacturing.

And yet to choke off trade, by moving the United States down a more protectionist path, would snuff out one of the key strengths of the economy, based on a badly flawed premise.

^
Let's hope he's right.

And speaking of rust belt manufacturing . . .

Factory orders strongest in five months
CNN (http://money.cnn.com/2008/01/29/news/economy/bc.apfn.durablegoods.ap/index.htm?postversion=2008012908)

But consumers aren't too happy . . .

Consumer confidence falls in January
CNN (http://money.cnn.com/2008/01/29/news/economy/consumer_confidence/index.htm?postversion=2008012912)

http://uk.reuters.com/article/oilRpt/idUKN2922284120080129

Alaska North Slope may hold 36 bln bbl oil-US DOE
Tue Jan 29, 2008 7:52pm GMT

WASHINGTON, Jan 29 (Reuters) - Oil and natural gas production at Alaska's North Slope has been declining since 1988 but the region holds promise if energy prices stay high and Congress opens key areas to exploration, the U.S. Energy Department said in a report released on Tuesday.

Through 2050, the North Slope could yield up to 36 billion barrels of oil and 137 trillion cubic feet of natural gas under optimistic assumptions, the Energy Department said.

That would be enough to meet current U.S. oil demand for about five years and natural gas for a year and a half, but some major obstacles stand in the way of hitting those goals.

Projections assume that a North Slope pipeline is operational by 2016, oil and gas prices near current levels, the opening of parts of the Arctic National Wildlife Refuge and National Petroleum Reserve to oil drilling, and drilling access to the Beaufort and Chukchi seas, the study said.

If those assumptions are met, production from the North Slope could extend well beyond 2050, and require a refurbishment of the Trans Alaska Pipeline System and building of a pipeline to bring natural gas from the North Slope to Lower 48 states.

Plans to build a natural gas pipeline from the North Slope have been delayed for years due to bickering between oil companies like ConocoPhillips (COP.N: Quote, Profile, Research) and Alaskan officials.

Without opening ANWR -- where drilling is currently banned -- the total economically recoverable supplies would drop to about 30 billion barrels of oil and 135 trillion cubic feet of gas, the study said.

Through 2015, exploration efforts could add about 2.9 billion barrels of oil and 12 trillion cubic feet of natural gas to economically recoverable ANS supplies, the report said.

Without new field development, the TAPS will hit is minimum flow rate of 300,000 bpd in 2025, and shutting down the line could strand about 1 billion barrels of oil reserves, the study said.

Building a pipeline capable of carrying 4.5 billion cubic feet per day of natural gas from Prudhoe Bay and Point Thomson fields could nearly double revenues to pipeline stakeholders, the report said.

Oil production on the North Slope began in 1977 and peaked at 2.2 million barrels per day in 1988 -- about 25 percent of U.S. production at the time. ANS production fell below 900,000 bpd in 2005 but still represents about 17 percent of U.S. domestic production, the report said. (Reporting by Chris Baltimore, editing by Matthew Lewis)

------------------------------------------------------------------------

Here's a link to the DOE report:
http://www.fossil.energy.gov/news/techlines/2008/08002-DOE_Releases_Alaska_Report.html

Economy grew just 0.6% in the 4th quarter, according to the initial estimate.
Yahoo! News (http://news.yahoo.com/s/ap/20080130/ap_on_bi_go_ec_fi/economy;_ylt=AuoXqonhUIyMkCrsvizpEe2yBhIF)

Definitely not good news: 17,000 jobs lost in January . . . though the unemployment rate also dropped to 4.9%:
CNN (http://money.cnn.com/2008/02/01/news/economy/jobs_january/index.htm?postversion=2008020113)

However, December's gain of only 18K was revised upward to 82K.

Manufacturing activity rebounds
CNN (http://money.cnn.com/2008/02/01/news/economy/ism/index.htm?postversion=2008020112)

Oops, forgot this one yesterday. Also not good news:

Initial unemployment claims rise by 69,000 to 375,000
Yahoo! News (http://news.yahoo.com/s/nm/20080131/us_nm/usa_economy_dc;_ylt=AkJDrYeRIFaWsZ1A14bPKdTv5rEF)

^^^a question: employers found 17k jobs redundant, initial unemployment picked up but "general" uneployment declined from 5% to 4,9%. How? Is it an aging society effect (a lot of people quit job market and got retired, therefore vanishing from unemployment statistics)?

^
In a downturn, many people voluntarily leave the workforce (go to school, take early retirement, etc). That could account for the decreased size of the workforce, and thus, the lowered unemployment rate.

Thx! It seems probably...

Is a FED insolvent?

http://www.federalreserve.gov/releases/h3/Current/
position "not borrowed reserves" -8751 at the end of January
It never happen, at least since 1959:
http://www.federalreserve.gov/releases/h3/hist/h3hist1.txt

A graph:
http://bp1.blogger.com/_nSTO-vZpSgc/R57ax-UG3EI/AAAAAAAAB_0/LoeoDxkgXCs/s1600/non-borrowed-reserves.png

BTW, here are links to my (hmm, I took a lot from Richard Duncan "The Dollar Crisis") hipotetical model of global boom 2002-2007 and bust 2009 - ????:
http://www.skyscrapercity.com/showpost.php?p=17784168&postcount=106
http://www.skyscrapercity.com/showpost.php?p=17808776&postcount=116

For US, unfortunetly, it will be impossible to have export growth like in Asia.
The rest of world is sick too, UE slows down, even in Asia there are visible signs of slowing down (Singapur in recession, Chinese export down).
Moreover, some countries are really in very bad shape: UK, Spain (in case of Spain, this country is already bailed out by ECB, it buys garbage called RMBS from Spanish banks allowing them for "normal" functioning...).

Job cuts on the rise - report
CNN (http://money.cnn.com/2008/02/04/news/economy/job_cuts/index.htm?postversion=2008020409)

Factory orders up in December
Yahoo! News (http://news.yahoo.com/s/ap/20080204/ap_on_bi_go_ec_fi/economy;_ylt=AlT69oe4DFBcddncg_pqtK.yBhIF)

More bad news . . .

Service sector activity plummets
CNN (http://money.cnn.com/2008/02/05/news/economy/ism_service_sector/?postversion=2008020513)

Productivity hits lull in fourth quarter
CNN (http://money.cnn.com/2008/02/06/news/economy/bc.us.economy.ap/index.htm?postversion=2008020608)

Initial jobless claims decline by 22,000
CNN (http://money.cnn.com/2008/02/07/news/economy/bc.economy.ap/index.htm?postversion=2008020708)

Retailers Report Weak January Sales
NY Times (http://www.nytimes.com/aponline/business/AP-Retail-Sales.html?_r=1&oref=slogin)

Rebates Could Stave Off Long Recession
Yahoo (http://biz.yahoo.com/ap/080209/rebates_will_they_work.html?.v=2)

Retail sales rise 0.3% in January
CNN (http://money.cnn.com/2008/02/13/news/economy/retail_sales/index.htm?postversion=2008021310)

Business built inventories at fastest pace in 17 months
CNN (http://money.cnn.com/2008/02/13/news/economy/bc.apfn.businessinventor.ap/index.htm?postversion=2008021310)

Paulson, Bernanke: No recession in '08 (http://money.cnn.com/2008/02/14/news/economy/bernanke_paulson/index.htm?postversion=2008021411)

Trade Deficit eased in 2007 (http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD8UQ4K501)

However, America's trade deficit with China increased by over 10 percent.

Trade deficits with Canada and the European Union declined.

U.S. jobless claims lower than expected
CNN (http://money.cnn.com/2008/02/14/news/economy/bc.us.joblessclaims.ap/index.htm?postversion=2008021409)

Trade Deficit eased in 2007 (http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD8UQ4K501)

However, America's trade deficit with China increased by over 10 percent.

Trade deficits with Canada and the European Union declined.

This is no time to pick on China!

^^He is just saying that our trade deficit with China increased.

I don't see how you saw that as picking on China.

Industrial production up slightly
CNN (http://money.cnn.com/2008/02/15/news/economy/industrial_production/index.htm?postversion=2008021509)

This is no time to pick on China!

I'm not "picking on China".

It's interesting that while our trade deficit declined, our main trade imbalance is still increasing.

Consumer prices jump more than forecast
CNN (http://money.cnn.com/2008/02/20/news/economy/cpi/index.htm?postversion=2008022011)

New single-family homes at 17-year low
CNN (http://money.cnn.com/2008/02/20/news/economy/housingstarts/index.htm?postversion=2008022011)

Fed sees economy slowing
CNN (http://money.cnn.com/2008/02/20/news/economy/fed_minutes/index.htm?postversion=2008022014)

Jobless claims fall by 9,000
Yahoo! News (http://news.yahoo.com/s/ap/20080221/ap_on_bi_go_ec_fi/jobless_claims;_ylt=AjE10dvuT8SlyPC5JgqkqyLv5rEF)

Philly Fed, leading index point to recession
Yahoo! News (http://news.yahoo.com/s/nm/20080221/bs_nm/usa_economy_dc;_ylt=AjL5JQQtbCuwd9i7YBjTGDXv5rEF)

http://uk.reuters.com/article/oilRpt/idUKN2922284120080129

Alaska North Slope may hold 36 bln bbl oil-US DOE
Tue Jan 29, 2008 7:52pm GMT

WASHINGTON, Jan 29 (Reuters) - Oil and natural gas production at Alaska's North Slope has been declining since 1988 but the region holds promise if energy prices stay high and Congress opens key areas to exploration, the U.S. Energy Department said in a report released on Tuesday.

Through 2050, the North Slope could yield up to 36 billion barrels of oil and 137 trillion cubic feet of natural gas under optimistic assumptions, the Energy Department said.

That would be enough to meet current U.S. oil demand for about five years and natural gas for a year and a half, but some major obstacles stand in the way of hitting those goals.

Projections assume that a North Slope pipeline is operational by 2016, oil and gas prices near current levels, the opening of parts of the Arctic National Wildlife Refuge and National Petroleum Reserve to oil drilling, and drilling access to the Beaufort and Chukchi seas, the study said.

If those assumptions are met, production from the North Slope could extend well beyond 2050, and require a refurbishment of the Trans Alaska Pipeline System and building of a pipeline to bring natural gas from the North Slope to Lower 48 states.

Plans to build a natural gas pipeline from the North Slope have been delayed for years due to bickering between oil companies like ConocoPhillips (COP.N: Quote, Profile, Research) and Alaskan officials.

Without opening ANWR -- where drilling is currently banned -- the total economically recoverable supplies would drop to about 30 billion barrels of oil and 135 trillion cubic feet of gas, the study said.

Through 2015, exploration efforts could add about 2.9 billion barrels of oil and 12 trillion cubic feet of natural gas to economically recoverable ANS supplies, the report said.

Without new field development, the TAPS will hit is minimum flow rate of 300,000 bpd in 2025, and shutting down the line could strand about 1 billion barrels of oil reserves, the study said.

Building a pipeline capable of carrying 4.5 billion cubic feet per day of natural gas from Prudhoe Bay and Point Thomson fields could nearly double revenues to pipeline stakeholders, the report said.

Oil production on the North Slope began in 1977 and peaked at 2.2 million barrels per day in 1988 -- about 25 percent of U.S. production at the time. ANS production fell below 900,000 bpd in 2005 but still represents about 17 percent of U.S. domestic production, the report said. (Reporting by Chris Baltimore, editing by Matthew Lewis)

------------------------------------------------------------------------

Here's a link to the DOE report:
http://www.fossil.energy.gov/news/techlines/2008/08002-DOE_Releases_Alaska_Report.html

Related:
http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-23221794.htm

BP sees further 2 bln barrels of oil in Alaska field
February 22, 2008: 11:59 AM EST

LONDON, Feb. 22, 2008 (Thomson Financial delivered by Newstex) -- BP PLC said it expects to unearth a further 2 bln barrels of oil at its giant oil fields in Alaska.

BP previously thought the fields, which include the 400,000-barrel-a-day Prudhoe Bay, could only pump up to 9 bln barrels when drilling started in the 1970s.

'That has gone up to 11 bln barrels (a few years ago). Now, we're looking at an extra 2 bln barrels,' said a BP spokesman, adding that this was partly due to new technology which helped the group unlock more resources from the ground.

This will bring the recovery factor to around 70 pct from 60 pct previously, he said, adding that the group continues to drill around 60-70 wells at the site each year.

[...]

Related:
http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-23221794.htm

BP sees further 2 bln barrels of oil in Alaska field
February 22, 2008: 11:59 AM EST

LONDON, Feb. 22, 2008 (Thomson Financial delivered by Newstex) -- BP PLC said it expects to unearth a further 2 bln barrels of oil at its giant oil fields in Alaska.

BP previously thought the fields, which include the 400,000-barrel-a-day Prudhoe Bay, could only pump up to 9 bln barrels when drilling started in the 1970s.

'That has gone up to 11 bln barrels (a few years ago). Now, we're looking at an extra 2 bln barrels,' said a BP spokesman, adding that this was partly due to new technology which helped the group unlock more resources from the ground.

This will bring the recovery factor to around 70 pct from 60 pct previously, he said, adding that the group continues to drill around 60-70 wells at the site each year.

[...]

With the crude soaring to above $100/bl, unlocking more resources would help some consolidation at those levels though, demand is not retreating a least bit!

Consumer confidence lowest in 5 years
CNN (http://money.cnn.com/2008/02/26/news/economy/consumer_confidence/index.htm?postversion=2008022613)

Manufactured goods orders plunge
CNN (http://money.cnn.com/2008/02/27/news/economy/durable_goods.ap/index.htm?postversion=2008022709)

Wholesale prices surge in January
CNN (http://money.cnn.com/2008/02/26/news/economy/PPI.ap/index.htm?postversion=2008022611)

Mortgage applications slide again
CNN (http://money.cnn.com/2008/02/27/real_estate/mortgage_application.ap/index.htm?postversion=2008022707)

Revised 4th quarter GDP shows no change, still up 0.6%
CNN (http://money.cnn.com/2008/02/28/news/economy/gdp_revision/index.htm?postversion=2008022809)

Munis Have Worst Month Since '03 on Auction-Rate Woes (Update1) By Jeremy R. Cooke

Feb. 29 (Bloomberg) -- U.S. municipal bonds are headed for their worst month in more than four years after collapsing demand for securities with rates set at periodic auctions sent debt costs for state taxpayers and hospitals as high as 20 percent. (...)


http://www.bloomberg.com/apps/news?pid=20601009&sid=aW6twners.Ho&refer=bond

Vacant Homes in U.S. Climb to Most Since 1970s With Ghost Towns
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=au67GKPyS_Dg

U.S. Michigan Consumer Index Falls to 16-Year Low (Update2)
By Courtney Schlisserman

Feb. 29 (Bloomberg) -- U.S. consumers lost confidence in February as the labor market cooled and inflation picked up.

The Reuters/University of Michigan final index of consumer sentiment decreased to 70.8, from 78.4 in January. The measure is the lowest final reading since February 1992 and compares with a preliminary measure for February of 69.6 reported two weeks ago. (...)
http://www.bloomberg.com/apps/news?pid=20601068&sid=aau5O2A4818E&refer=economy

California City Moves Closer to Bankruptcy Filing (Update3)
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajxCNoS2DEzE

U.S. Consumer Spending Picked Up Along With Inflation (Update4)

Feb. 29 (Bloomberg) -- Consumer spending in the U.S. rose more than forecast in January, reflecting a jump in prices that is eroding Americans' buying power.
The 0.4 percent increase in purchases followed a 0.3 percent gain in December, the Commerce Department said today in Washington. The Federal Reserve's preferred measure of inflation climbed 0.3 percent, the most in four months.

After adjusting for higher prices, spending stalled for a second month, increasing concern that the biggest part of the economy is faltering. Confidence among consumers is waning as fuel costs jump, property values decline and banks restrict lending. (...)
(my comment - so real spending is flat)
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayQoR6waDC_I&refer=home

Foreign markets, important for US news:
Russia quietly prepares to switch some oil trading from dollars to rubles
http://www.iht.com/articles/2008/02/25/business/place.php

Euro zone sentiment falls, inflation confirmed
http://biz.yahoo.com/rb/080229/eurozone_economy.html?.v=1
(UE will not ride and rescue USA by importing US goods - will sink too)

Manufacturing lowest in nearly 5 years (http://money.cnn.com/2008/03/03/news/economy/ism_manufacturing/index.htm?postversion=2008030311)

Construction spending nosedives (http://money.cnn.com/2008/03/03/news/economy/Construction_spending.ap/index.htm?postversion=2008030312)

Fed says economy has weakened this year
Yahoo! News (http://news.yahoo.com/s/ap/20080305/ap_on_bi_go_ec_fi/fed_economy;_ylt=AmrX2o4seH7YTCVwH7JUxwOyBhIF)

Factory orders see largest fall since August
CNN (http://money.cnn.com/2008/03/05/news/economy/factory_orders.ap/index.htm?postversion=2008030510)

Productivity slows, labor costs rise
CNN (http://money.cnn.com/2008/03/05/news/economy/productivity_report/index.htm?postversion=2008030511)

Stagflation here we come!

China becomes U.S. third largest export market in 2007

http://news.xinhuanet.com/english/2008-03/05/content_7718315.htm

This is good, the richer China gets the more we will export.

February retail sales rise
CNN (http://money.cnn.com/2008/03/06/news/economy/retailsales_feb/index.htm?postversion=2008030610)

New claims for jobless benefits fall
CNN (http://money.cnn.com/2008/03/06/news/economy/initial_claims/index.htm?postversion=2008030609)

Anybody from insurance/brokerage company here?

Job losses: Worst in 5 years (http://money.cnn.com/2008/03/07/news/economy/jobs_february/index.htm?postversion=2008030710)

net loss of 63,000 jobs

^
Definitely not good news. But, strangely . . .

Despite the loss, the unemployment rate improved to 4.8% from the 4.9% reading in January
I can't help but wonder if some retiring baby boomers are starting to take effect here.

Every cloud lol

I can't help but wonder if some retiring baby boomers are starting to take effect here.

A lot of people have stopped looking for work too, so they aren't included in the unemployed list.

Trade gap widens less than expected
CNN (http://money.cnn.com/2008/03/11/news/economy/trade_gap/index.htm?postversion=2008031109)

Fed pumps more money into financial markets
CNN (http://money.cnn.com/2008/03/11/news/economy/fedauction/index.htm?postversion=2008031115)

Derivatives the new 'ticking bomb'
Buffett and Gross warn: $516 trillion bubble is a disaster waiting to happen

ARROYO GRANDE, Calif. (MarketWatch) -- "Charlie and I believe Berkshire should be a fortress of financial strength" wrote Warren Buffett. That was five years before the subprime-credit meltdown.
"We try to be alert to any sort of mega-catastrophe risk, and that posture may make us unduly appreciative about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside. In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."
That warning was in Buffett's 2002 letter to Berkshire shareholders. He saw a future that many others chose to ignore. The Iraq war build-up was at a fever-pitch. The imagery of WMDs and a mushroom cloud fresh in his mind.
Also fresh on Buffett's mind: His acquisition of General Re four years earlier, about the time the Long-Term Capital Management hedge fund almost killed the global monetary system. How? This is crucial: LTCM nearly killed the system with a relatively small $5 billion trading loss. Peanuts compared with the hundreds of billions of dollars of subprime-credit write-offs now making Wall Street's big shots look like amateurs.
Buffett tried to sell off Gen Re's derivatives group. No buyers. Unwinding it was costly, but led to his warning that derivatives are a "financial weapon of mass destruction." That was 2002.
Derivatives bubble explodes five times bigger in five years
Wall Street didn't listen to Buffett. Derivatives grew into a massive bubble, from about $100 trillion to $516 trillion by 2007. The new derivatives bubble was fueled by five key economic and political trends:

1.
Sarbanes-Oxley increased corporate disclosures and government oversight
2.
Federal Reserve's cheap money policies created the subprime-housing boom
3.
War budgets burdened the U.S. Treasury and future entitlements programs
4.
Trade deficits with China and others destroyed the value of the U.S. dollar
5.
Oil and commodity rich nations demanding equity payments rather than debt

In short, despite Buffett's clear warnings, a massive new derivatives bubble is driving the domestic and global economies, a bubble that continues growing today parallel with the subprime-credit meltdown triggering a bear-recession.
Data on the five-fold growth of derivatives to $516 trillion in five years comes from the most recent survey by the Bank of International Settlements, the world's clearinghouse for central banks in Basel, Switzerland. The BIS is like the cashier's window at a racetrack or casino, where you'd place a bet or cash in chips, except on a massive scale: BIS is where the U.S. settles trade imbalances with Saudi Arabia for all that oil we guzzle and gives China IOUs for the tainted drugs and lead-based toys we buy.
To grasp how significant this five-fold bubble increase is, let's put that $516 trillion in the context of some other domestic and international monetary data:

*
U.S. annual gross domestic product is about $15 trillion
*
U.S. money supply is also about $15 trillion
*
Current proposed U.S. federal budget is $3 trillion
*
U.S. government's maximum legal debt is $9 trillion
*
U.S. mutual fund companies manage about $12 trillion
*
World's GDPs for all nations is approximately $50 trillion
*
Unfunded Social Security and Medicare benefits $50 trillion to $65 trillion
*
Total value of the world's real estate is estimated at about $75 trillion
*
Total value of world's stock and bond markets is more than $100 trillion
*
BIS valuation of world's derivatives back in 2002 was about $100 trillion
*
BIS 2007 valuation of the world's derivatives is now a whopping $516 trillion

Moreover, the folks at BIS tell me their estimate of $516 trillion only includes "transactions in which a major private dealer (bank) is involved on at least one side of the transaction," but doesn't include private deals between two "non-reporting entities." They did, however, add that their reporting central banks estimate that the coverage of the survey is around 95% on average.
Also, keep in mind that while the $516 trillion "notional" value (maximum in case of a meltdown) of the deals is a good measure of the market's size, the 2007 BIS study notes that the $11 trillion "gross market values provides a more accurate measure of the scale of financial risk transfer taking place in derivatives markets."
Bubbles, domino effects and the 'bad 2%'
However, while that may be true as far as the parties to an individual deal, there are broader risks to the world's economies. Remember back in 1998 when LTCM's little $5 billion loss nearly brought down the world's banking system. That "domino effect" is now repeating many times over, straining the world's monetary, economic and political system as the subprime housing mess metastasizes, taking the U.S. stock market and the world economy down with it.
This cascading "domino effect" was brilliantly described in "The $300 Trillion Time Bomb: If Buffett can't figure out derivatives, can anybody?" published early last year in Portfolio magazine, a couple months before the subprime meltdown. Columnist Jesse Eisinger's $300 trillion figure came from an earlier study of the derivatives market as it was growing from $100 trillion to $516 trillion over five years. Eisinger concluded:
"There's nothing intrinsically scary about derivatives, except when the bad 2% blow up." Unfortunately, that "bad 2%" did blow up a few months afterwards, even as Bernanke and Paulson were assuring America that the subprime mess was "contained."
Bottom line: Little things leverage a heck of a big wallop. It only takes a little spark from a "bad 2% deal" to ignite this $516 trillion weapon of mass destruction. Think of this entire unregulated derivatives market like an unsecured, unpredictable nuclear bomb in a Pakistan stockpile. It's only a matter of time.
World's newest and biggest 'black market'
The fact is, derivatives have become the world's biggest "black market," exceeding the illicit traffic in stuff like arms, drugs, alcohol, gambling, cigarettes, stolen art and pirated movies. Why? Because like all black markets, derivatives are a perfect way of getting rich while avoiding taxes and government regulations. And in today's slowdown, plus a volatile global market, Wall Street knows derivatives remain a lucrative business.
Recently Pimco's bond fund king Bill Gross said "What we are witnessing is essentially the breakdown of our modern-day banking system, a complex of leveraged lending so hard to understand that Federal Reserve Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August." In short, not only Warren Buffett, but Bond King Bill Gross, our Fed Chairman Ben Bernanke, the Treasury Secretary Henry Paulson and the rest of America's leaders can't "figure out" the world's $516 trillion derivatives.
Why? Gross says we are creating a new "shadow banking system." Derivatives are now not just risk management tools. As Gross and others see it, the real problem is that derivatives are now a new way of creating money outside the normal central bank liquidity rules. How? Because they're private contracts between two companies or institutions.
BIS is primarily a records-keeper, a toothless tiger that merely collects data giving a legitimacy and false sense of security to this chaotic "shadow banking system" that has become the world's biggest "black market."
That's crucial, folks. Why? Because central banks require reserves like stock brokers require margins, something backing up the transaction. Derivatives don't. They're not "real money." They're paper promises closer to "Monopoly" money than real U.S. dollars.
And it takes place outside normal business channels, out there in the "free market." That's the wonderful world of derivatives, and it's creating a massive bubble that could soon implode.
Comments? Yes, we want to hear your thoughts. Tell us what you think about derivatives: as "financial weapons of mass destruction;" as a "shadow banking system;" as a "black market;" as the next big bubble dangerously exposing us to that unpredictable "bad 2%." End of Story

http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid=%7BB9E54A5D%2D4796%2D4D0D%2DAC9E%2DD9124B59D436%7D&dist=TNMostRead

Apparently, major risk comes from financial sector. Shadow bank system, too much leberaged take overs, massive indebtness in all "English" countries (US, UK, Ireland, Australia, NZ), huge property bubbles, popping with pain for consumers and banks - all makes many bearish, some so deep than talk about "most significant crisis since Great Depression" appeared among official economists.

Big question is a BRIC theory. Few data supports it - US export, IVQ Japan growth data, German export data - all shows significant growth of demand from Brazil, Russia, China, India and other emerging economies. Will it support US and world economy, or those emerging economies will tumble as well, ensuring deep and nasty Great Depression 2?

OMG!:
Feb budget gap balloons to record $175.56 bln
Reuters
Feb budget gap balloons to record $175.56 bln
Wednesday March 12, 2:05 pm ET

WASHINGTON (Reuters) - The U.S. government turned in a $175.56 billion budget deficit for February, a record for any month, as federal spending grew but a slowing economy caused receipts to fall 12.1 percent from a year earlier, the U.S. Treasury said on Wednesday.

The February deficit soundly beat the previous all-time single-month deficit of $119.99 billion in February 2007 and also exceeded Wall Street economists' consensus estimate of a $160.0 billion deficit in a Reuters poll.

February receipts fell to $105.72 billion from $120.31 billion in February 2007, the Treasury said as both corporate and individual income tax payments slowed.

February outlays grew to $281.29 billion, a record for February, from $240.30 billion in February 2007, the Treasury said.

(Reporting by David Lawder; Editing by Neil Stempleman)

http://biz.yahoo.com/rb/080312/usa_budget.html?.v=1

Also:
Dollar Falls to Record Low on Concern Fed Package Won't Succeed
http://www.bloomberg.com/apps/news?pid=20601083&sid=aNyT132EVbTA&refer=currency

New jobless claims hold steady
CNN (http://money.cnn.com/2008/03/13/news/economy/Initial_claims/index.htm?postversion=2008031310)

Inventories rise in January
Seattle Times (http://seattletimes.nwsource.com/html/businesstechnology/2004279749_apinventories.html)

http://www.nytimes.com/2008/03/14/business/14econ.html?hp

Economy Hammered by Toxic Blend of Ailments

http://graphics8.nytimes.com/images/2008/03/13/business/14econ01_600.jpg
Elaine Thompson/Associated Press
The dollar’s fall and gold’s rise were felt at a gas station in Seattle where prices were being changed.

By VIKAS BAJAJ
Published: March 14, 2008

Almost everything seems to be going wrong for the American economy at once. People are buying less, but most things are costing more. Mortgage rates are rising, the dollar is falling and prices of key commodities like oil are leaping from one record high to the next.

http://graphics8.nytimes.com/images/2008/03/14/business/14econgraphic2.650.jpg

On Thursday, the dollar plumbed new lows against the Japanese yen and several other major currencies; the price of an ounce of gold jumped above $1,000 for the first time; and lenders raised home loan rates once again. Government figures showed retail sales fell in February as consumers cut back on cars, furniture and electronics.

Stocks fell sharply after the retail sales report was released early in the day, and a large investment fund said it was nearing collapse. The volatility that has defined the market lately continued unabated.

The Standard & Poor’s 500-stock index fell 2 percent in the morning, then rebounded partly in reaction to a report that said banks were nearing the end of subprime mortgage losses. It was up nearly 1 percent in the afternoon before paring that gain to close up 0.5 percent, to 1,315.48 points. The Dow Jones industrial average closed up 35.5 points, to 12,145.74 points.

http://graphics8.nytimes.com/images/2008/03/13/business/14econ02_650.jpg
Shizuo Kambayashi/Associated Press
The Tokyo foreign exchange market.


http://graphics8.nytimes.com/images/2008/03/13/business/14econ03_650.jpg
Sukree Sukplang/Reuters
A shop in Bangkok’s Chinatown where gold bars were being sold.

A toxic blend of economic and financial developments is testing policy makers and lawmakers who are struggling to contain the slump brought on by the collapse of the mortgage market, a downturn that now looks sure to push the economy into a recession. Though current conditions are a far cry from the 1970s, resurgent inflation is raising the threat of stagflation — a condition in which unemployment and the price of goods and services both rise.

Since the credit markets began to seize up in August, the steps taken by the Federal Reserve and the rest of the federal government have often bolstered stocks briefly, but so far they have done little to stem the larger downward drift.

http://graphics8.nytimes.com/images/2008/03/14/business/14econgraphic1.190.jpg

Many specialists say policy makers can do only so much to protect the economy and warn that the government should be careful not to exacerbate inflation and create a new bubble like the one in housing that has burst. Lower interest rates and increased federal spending may not be enough to shore up growth, and some suggest that the only remedy for the pain may be the pain itself. A Standard & Poor’s report predicted that subprime mortgage write-downs at banks were nearly done, though losses in other areas might continue.

“We have to be careful about what medicines we throw at this, whether it’s stimulus packages or a bailout,” said Liz Ann Sonders, chief investment strategist at Charles Schwab & Company. “A lot of what we are dealing with is a solvency problem. We need to let the system wash it out.”

http://graphics8.nytimes.com/images/2008/03/14/business/14graphic3.190.jpg

By this way of thinking, the markets will eventually correct themselves. The housing and mortgage markets will pick up once home prices have fallen far enough to attract buyers. The dollar will keep falling until the weaker exchange rate increases American exports and, in turn, the broader economy.

Stocks and bonds will decline until weaker players who rely heavily on borrowed money are driven out of the markets, allowing those who were more conservative to invest cheaply.

http://graphics8.nytimes.com/images/2008/03/14/business/14graphic4.190.jpg

“It’s not a silver lining; it’s a platinum lining,” Carl B. Weinberg, chief economist at High Frequency Economics, said about the falling dollar and exports.

In the past 12 months, the dollar has slid nearly 14 percent against six major world currencies, reaching its lowest levels since the American exchange rate was allowed to float freely in the 1970s. Exports in January, by comparison, were up 16.3 percent from a year earlier; imports were up 10.9 percent.

On Thursday, one dollar fetched 100.69 yen, the lowest level since the mid-1990s and down 13.4 percent over the last year. The dollar has slipped 8.4 percent against the Chinese yuan and 18.4 percent against the euro.

The fall of the dollar has contributed to the surge in commodity prices, many specialists say. Oil, foodstuffs and many other raw materials are priced in dollars, and as the currency falls in value, suppliers of these commodities demand higher prices just to stay even.

The weakness of the dollar partly explains why oil prices have jumped $23 a barrel in the past six weeks alone. Oil futures touched $111 a barrel for the first time on Thursday and settled at $110.33 a barrel on the New York Mercantile Exchange, up 41 cents. Gold prices surged past $1,000 a troy ounce but closed at $993.80, up 1.4 percent for the day.

“Where do you go?” said John Kilduff, senior vice president for energy at MF Global in New York. “Where do investors go? Obviously, they are fleeing the dollar and seeking out hard assets like commodities. And that’s pushing up oil prices.”

For American consumers, the surge in commodity prices comes on top of falling home prices, tightening credit conditions and, lately, a weakening job market. The national average 30-year fixed mortgage rate climbed to 6.13 percent on Thursday, from 6.03 percent a week earlier, according to Freddie Mac. The rate on five-year adjustable rate loans jumped to 5.58 percent, from 5.34 percent.

It is no wonder, economists say, that retail sales and other measures of consumer spending are falling.

“We are nearing levels where it’s probably not a great thing for the dollar to keep weakening,” said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Conn.

The Federal Reserve’s decisions to cut short-term interest rates to 3 percent, from 5.25 percent last year, is one of the biggest factors driving the dollar lower, experts say. Interest rates in Europe and much of Asia are higher, drawing investors to those currencies.

Policy makers at the Fed have acknowledged concerns about the dollar and inflation but have stressed that they are far more worried about a significant slowdown in economic growth. Ben S. Bernanke, the chairman of the Fed, will give a speech Friday in Washington in which he is expected to provide an update on the central bank’s thinking. The Fed is widely expected to reduce interest rates again next week.

The Fed is in an unenviable position. Even as it has to guard against inflation, parts of the financial system are under severe pressure.

On Thursday, Carlyle Capital, an affiliate of the private equity firm the Carlyle Group, said that its negotiations with lenders had broken down and that it was in default on $16.6 billion in loans. Carlyle had borrowed the money to buy mortgage securities backed by Fannie Mae and Freddie Mac. All appeared well until the prices of those bonds declined and the lenders made a margin call — a demand that Carlyle put up more collateral to cover the loans.

Andrew Feltus, a bond fund manager at Pioneer Investments in Boston, said the banks were reducing the amount of money they lend to the financial system. Few investors want to buy in the middle of this process, because they expect even lower prices as funds are forced to sell.

“You have not seen the rush to risk at all,” he said. “People are still scared.”

Anthony Lembke, a portfolio manager at MKP Capital Management, a hedge fund, said one of the biggest uncertainties in the bond market is the size of the losses in mortgage securities. Banks and investors are both expected to remain jittery, even about safer investments, until they have a firmer answer.

“We have got to get to the bottom of the housing market,” he said, “before we know how big the losses are going to be.”

Bond prices fell as stocks rose Thursday. The benchmark 10-year Treasury note dropped 16/32, to 99 25/32. The yield, which moves in the opposite direction, rose to 3.53 percent, from 3.46 percent.

Following are the results of Thursday’s Treasury auction of 10-year notes:

Jad Mouawad contributed reporting.

http://online.wsj.com/article/SB120542625389033765.html

It's a Buyers Market for Banks

Credit Woes Scare Off
Would-Be Acquirers;
National City's Search

By DAVID ENRICH and VALERIE BAUERLEIN
March 14, 2008; Page C3

The credit crunch is forcing some banks to reluctantly conclude that the only way out is to find an acquirer. There's just one problem: a shortage of buyers.

http://s.wsj.net/public/resources/images/MI-AP498_NATCIT_20080313192056.gif

Usually, banks that hit an earnings wall or blunder their way into a pile of bad loans don't have much trouble arranging a takeover for at least a modest premium to their stock-market value. But the pool of potential buyers has dwindled since the subprime crisis emerged last summer, making takeovers harder to afford for banks with shriveled share prices. Many would-be acquirers also are terrified of what might be lurking on the books of potential targets.

"We don't have a white horse right now," says Gerard Cassidy, a banking analyst at RBC Capital Markets. "The white horses have all been covered in mud."

The dreary environment for deal-making was underscored by the stock market's reaction to yesterday's report by The Wall Street Journal that regional bank National City Corp. is looking for a buyer, according to people familiar with the situation. Shares of the Cleveland bank quickly jumped as much as 13%, but then pulled back as reality set in.

In 4 p.m. New York Stock Exchange composite trading, National City rose 2%, or 30 cents, to $15.01, leaving the shares down 58% in the past year. A National City spokeswoman declined to comment.

National City, with a market capitalization of around $9 billion, faces some daunting challenges. It posted a loss of $333 million in the fourth quarter, battered by its push into subprime mortgages and the Florida real-estate market. To bolster its depleted capital, National City has slashed its dividend by 49% and hired Goldman Sachs Group Inc. in January as its "capital advisor." Goldman has helped National City raise about $1.6 billion by selling securities to outside investors.

It's possible that National City will find enough fresh capital that directors and senior executives decide to keep going it alone, according to people familiar with the situation. But the bank's interest in exploring sale possibilities reflects how much conditions in the U.S. banking industry continue to deteriorate.

First-quarter earnings due next month are widely expected to suffer from deepening losses on a wide range of real-estate loans -- not just mortgages.

The makeup of National City's loan portfolio "suggests things get worse before they get better," says Terry McEvoy, an Oppenheimer & Co. analyst.

Huge financial institutions such as Citigroup Inc. and Merrill Lynch & Co. have been able to attract capital infusions from Asian and Middle Eastern government investment funds. Those investors generally aren't interested in smaller fish like National City, since those banks wouldn't move the needle for funds with sometimes hundreds of billions of dollars at their disposal.

That leaves selling as the next logical option for struggling banks. Among the lenders long mentioned as possible buyers or merger partners for National City are Fifth Third Bancorp of Cincinnati and Cleveland-based KeyCorp. The strength of foreign currencies against the dollar might help entice Royal Bank of Canada and Toronto-Dominion Bank, both of which have a presence in the U.S. All four banks declined to comment.

But Mr. Cassidy, the RBC analyst, expects to see few deals pop soon. Only deeply troubled banks would sell while prices are distressed, and only a handful of banks could buy because of capital and credit problems, he adds.

Accounting rules may add another complication. Under purchase-accounting guidelines that take effect at the end of this year and will apply to deals closing in 2009, an acquirer effectively will have to mark a bank's loan portfolio to market prices, even though those loans currently are carried at their cost, or par value.

Since many bank loans are under pressure and at risk of default, that process would require the buyer to pony up additional equity, essentially inflating the deal's price tag. Bankers say that purchase-accounting rules could become an impediment to financial-services deals.

Instead, an increasing number of small and midsize banks are trying to raise cash by selling shares to the public. While that boosts capital levels, it also erodes the value of existing shareholders' positions.

Some banks are expected to line up outside investors to "backstop" such offerings by agreeing to buy a certain amount of the new stock. Those arrangements are meant to reassure investors who are wary of putting their money in financial stocks.

Last month, Security Bank Corp., based in Macon, Ga., announced a $35 million offering of common stock in order "to improve its capital and liquidity position." To make the offer more attractive, the bank enlisted two shareholders, including one of the company's directors, to buy up to $18 million of the shares.

--David Reilly contributed to this article

.

Write to David Enrich at david.enrich@wsj.com and Valerie Bauerlein at valerie.bauerlein@wsj.com

Inflation under control - for now
CNN (http://money.cnn.com/2008/03/14/news/economy/cpi/index.htm?postversion=2008031410)

Thanks to the low dollar we can afford a 2nd vacation to the US! In 2006 we went to the Westcoast and now we are going to check out the Deep South!!

The US tourist market is booming right here in the Netherlands. A 42% increase in bookings since last year :nuts:

Unemployment claims surge in latest week
CNN (http://money.cnn.com/2008/03/20/news/economy/initial_claims/index.htm?postversion=2008032010)

well i think that the US economy has already been going down.. not sure it can get better as much as it was in 90s!

Somewhat Good News
Yahoo (http://biz.yahoo.com/ap/080324/economy.html)

The Tables Have Turned
Biz Journal (http://www.bizjournals.com/buffalo/stories/2008/03/24/daily2.html?ana=from_rss)

The Tables Have Turned
Biz Journal (http://www.bizjournals.com/buffalo/stories/2008/03/24/daily2.html?ana=from_rss)
Wow cool! Go Buffalo!! :banana:

^^Interesting to see how condos had such an effect down there.

Buffalo didn't have much of a housing boom (and crash) in the first place, right?

Good news. Apparently, Upstate New York may end up one of the better off places during a downturn this time.

I checked the BLS website. Hartford gained 9,200 jobs in that period. Decent, I guess.

Maybe some innovations would help US economy.

Therefore I am asking, if here is or anybody knows a person (position product/marketing manager) from any insurance company in US.

http://www.chicagotribune.com/business/chi-sunday_regulationmar30,0,1016772.story

Time ripe for financial overhaul, experts say
By Mark Silva, Joshua Boak and Becky Yerak | TRIBUNE REPORTERS
3:00 PM CDT, March 30, 2008

WASHINGTON — Coming in the midst of an economic crisis that has shaken Main Street homeowners and Wall Street investment bankers, the Bush administration's sweeping proposal to overhaul the financial regulatory system sounds like an emergency measure, but it is the culmination of a longer-running debate about how best to nurture American free-market capitalism.

Some of the most dramatic elements of the plan, to be formally unveiled Monday, rethink the oversight of banking, insurance, the mortgage business and the financial markets. One blockbuster component is the proposed merger of the Securities and Exchange Commission with the Commodity Futures Trading Commission, which would amount to a complete redesign of the regulatory framework that enabled Chicago to transform itself from a home of steel mills and slaughterhouses into a global financial capital.

While the goals are broad and the details sketchy, it is clear the Bush administration faces a tough sell, because much of what will be spelled out by Treasury Secretary Henry Paulson will require congressional action this year and in the years ahead.

On Saturday, a day after Treasury officials began describing the plan, industry players and political figures began voicing opinions. The tone taken by many was that a broad rethinking is appropriate, given the increasing complexity of the financial world and the fact that a mortgage industry meltdown threatens to land the economy in recession. But the trick, Treasury and others warned, is ensuring the reforms don't go so far that they stifle innovation.

"You've got complex new products, evolving combinations of intermediaries, exchanges and clearinghouses, instant global technology, and all these elements are moving at once," said Arthur Hahn, chairman of the national financial services practice for law firm Katten Muchin Rosenman LLP in Chicago. "The challenge for financial services regulators is to keep up with all that and to ensure safety and soundness, while not hamstringing the U.S. industry so it can't compete globally."


New oversight powers

The Paulson plan envisions anointing the Federal Reserve as the go-to authority for stabilizing the markets, granting it oversight powers beyond its role as the central bank. Two new agencies would get enhanced status, one to regulate federally chartered banks and insurers and the other to be responsible for consumer protection.

But that structure would take time to create. Most immediately, the treasury secretary will propose closer coordination among federal regulators that the president can order without additional legislation.

Paulson also is recommending that the president appoint a Mortgage Origination Commission to evaluate the adequacy of each state's licensing and regulation of mortgage lenders. The goal would be to prevent a repeat of the high levels of delinquencies, defaults and foreclosures that have done so much damage to the economy.

The plan—a "Blueprint for Financial Regulatory Reform"—arrives as housing foreclosures ripple through the economy, already undermining a major Wall Street investment firm, Bear Stearns Cos. But the broader goal of modernizing regulation to keep pace with changing global markets has been under study for more than a year.

"There's a temptation to view this through the lens of what's in the newspapers today," David Nason, assistant treasury secretary for financial institutions, said in an interview Saturday. "But this is a project that we've been working on for over a year."

Still, the recent efforts by Fed Chairman Ben Bernanke to steer the economy using creative, aggressive measures exposed the perceived limitations of the current regulatory system. For example, when the Fed orchestrated Bear Stearns' takeover using a $30 billion guarantee, it raised questions about how much the government should intervene when Wall Street players get in trouble.

Coming in the midst of a presidential campaign in which the economy is at center stage, the Bush administration's moves seem inevitable.

"This is not a real surprise since the Fed has now opened the window allowing investment banks to borrow," said David Casper, co-head of U.S. investment and corporate banking for BMO Capital Markets in Chicago. "It seems only logical that they would also consider regulations to protect their investment—and maintain some equity between investment banks, which are not regulated by the Fed, and commercial banks, which are regulated.

"Hank Paulson is a very smart and practical guy who has run one of the most successful investment banks, Goldman Sachs, in the world," Casper said. "My guess is the regulations he and the president would propose would not be viewed as particularly burdensome given the concern about the strength of our financial institutions and the recent high-profile failure."


Uncertainties remain

Indeed, despite the scope of what is now on the table, there are uncertainties about what is being offered. For example, the proposed consumer protection agency is described as setting standards for hedge funds, private equity funds and venture capital firms. That could be significant, given that the $1 trillion hedge fund industry is now very lightly regulated. But the language appears vague.

The reference to insurance also leaves open the question of how much might change. The Treasury Department report suggests that insurers could choose to be regulated by the federal government or the existing state-by-state system; it doesn't mandate Washington-based oversight.

A merger between the SEC, which regulates the equity markets, and the CFTC, which regulates commodity markets, has divided Chicago's exchange community. The CME Group has said a combination would hurt its competitiveness worldwide, while the Chicago Board Options Exchange said the existing structure already damages its ability to introduce new products.

"This recommendation is obviously embracing the reality of the situation that has existed for many years," said CBOE Chairman and Chief Executive William Brodsky, a past president of the Chicago Mercantile Exchange. "The strength of the words, the clarity of the language and the logic are very compelling."

The CME said it would comment after Paulson presents his plan in a speech Monday morning at the Treasury Department.

Paulson has maintained since being named treasury secretary in 2006 that federal regulation wasn't keeping pace with a rapidly changing market, and reform discussions began to take shape a year ago.

He proposes using the existing President's Working Group on Financial Markets to promote more communication among regulators and minimize "systemic risk to the financial system." Other recommendations require congressional action, such as having the Fed do examinations of state-chartered banks with federal deposit insurance.



Politicians weigh in

Sen. Dick Durbin (D-Ill.) says action is essential and committees will begin hearings on the proposals within weeks.

"I think we have to" attempt to approve some reforms before the end of this year, Durbin said. "Many large companies are now turning to the federal government for borrowing. It is only reasonable for the taxpayers to know that they are being carefully managed and using these funds wisely."

With the Bush administration in its final year and initiating debate with a Democrat-controlled Congress, it likely will fall to the president's successor to pursue further reforms.

Republican Sen. John McCain's campaign calls the modernization of financial regulation and oversight one of the "pressing issues for the 21st Century."

"In light of recent events, the recommendation to create a Mortgage Origination Commission that also evaluates states' systems for licensing and regulation of the mortgage origination process is of note," Jill Hazelbaker, a spokeswoman for the campaign, said Saturday.

Sen. Barack Obama, speaking to reporters after a town hall meeting in Johnstown, Pa., criticized the financial regulatory package as "inadequate" because it allows investment banks to borrow from the Federal Reserve without subjecting them to stricter capital and liquidity requirements.

"It promises the possibility of investment banks or other institutions like hedge funds continuing to take excessive risks knowing that the Fed might come in and bail them out," Obama said.

Rival Sen. Hillary Clinton was not quoted on the financial plan Saturday at campaign stops in Indiana and Kentucky where, according to The Associated Press, she spoke out on the economy, vowing to help manufacturers transition to new industries like clean energy and ending tax breaks for American companies that ship jobs overseas.

Tribune White House correspondent Mark Silva reported from Washington. Tribune reporters Joshua Boak and Becky Yerak reported from Chicago. Tribune reporters Mike Dorning and Jill Zuckman contributed.

mdsilva@tribune.comjboak@tribune.combyerak@tribune.com..

^EVERY American should be scared to DEATH of what this "overhaul" could mean.

Do you guys know what the Federal Reserve is? How it was formed? How it works? If not, google it. Then you'll understand why they should NOT be given more power.

Absolutely scary stuff happening right now.

This was interesting:
http://www.moneymorning.com/2008/03/27/have-we-hit-the-bottom/

Thursday, March 27th, 2008
Have We Hit The Bottom?
By Keith Fitz-Gerald
Investment Director
Money Morning/The Money Map Report

Since March 17th, when the S&P 500 tested a low of 1256.98, the markets have traded higher.

As a result, we’ve received lots of email from readers concerned about the same thing:

"Have we hit the bottom?"

We don’t know.

But what we do know is that what happened three days later offers a tantalizing look at what could be a very bullish possibility.

Let me explain.

On March 20th, the S&P 500 Index rose 2.30%, while gold futures dropped -2.5%. Such big disparate moves hardly ever happen in isolation, let alone at the same time. When viewed against the annals of market history, the moves are an anomaly.

As such, they’re worth noting - and further study. And that got me wondering.

How often have such moves happened in the past? And, more importantly, are the markets likely to demonstrate a bullish or bearish bias after they happen?

According to Logical Information Machines (www.lim.com (http://www.lim.com)), a company that tallies and analyzes this sort of thing, there have been 23 prior occurrences of the S&P 500 rising more than 1% on the same day gold futures dropped by more than 2.5% (omitting repeat occurrences within 10 days).

One hundred percent of the time - or 23 out of 23 occurrences if you’d prefer to think about it that way - the S&P 500 has shown a distinct bullish bias that peaks 100 trading days after the "event."

How bullish?

LIM data suggests that the index’s average overall return during that timeframe has been 11.6%. Based on the March 20th close of 1329.51, that indicates an S&P 500 price target that could be as high as 1483.73 by August 12, 2008.

We’ll take that with a big grain of salt, as we’re sure you also will. But at the same time, we’ll note that the two most recent occurrences prior to March 20, 2008 for this very bullish set up were 1/17/91 and 3/13/03 - dates which, if you look back through your market history books, preceded two of the strongest bull runs in recent memory.

The bottom line is that while we can make the case that the markets will go either way in the next 100 days based on any number of factors, the data suggests the possibility of a move we don’t want to miss.

[...]

^EVERY American should be scared to DEATH of what this "overhaul" could mean.

Do you guys know what the Federal Reserve is? How it was formed? How it works? If not, google it. Then you'll understand why they should NOT be given more power.

Absolutely scary stuff happening right now.

It's deja vu, only 100 years later.

And nobody realizes it...or nobody cares. Nowadays, it's more important to know what Brittany Spears is up to.

What is Britney up to?

Anyway, IMF has just forecast that the US economy will have crap growth rates of only 0,5% in 2008 and 0,6% in 2009, i.e. a negative per capita GDP growth for two successive years (-0,5% in 2008 and -0,4% in 2009).

Yeah, 2009 doesn't look very nice either.

The inflation that the Fed wants to ignore will probably be back with a vengeance, maybe actually causing them to raise rates, which would probably hit the economy. The problems of the economy are now bigger than sub-prime. I suspect that population growth will decline a bit in that time though, because usually during recessions, immigration drops.

Anyway, interestingly looking at the economic data, 2007 saw more jobs than population growth here in Connecticut, and income growth was faster than the nation as a whole last year. I know that there will be a slowing or a recession, but I think that we'll escape the worst, compared to other states. :dunno:

i am sticked to this topic. love to see the comments here.

Jobless claims: Highest since Katrina
CNN (http://money.cnn.com/2008/04/03/news/economy/initial_claims/index.htm?postversion=2008040310)

Service sector rebounds slightly
CNN (http://money.cnn.com/2008/04/03/news/economy/ism_services/index.htm?postversion=2008040311)

Construction spending declines - but less than expected
CNN (http://money.cnn.com/2008/04/01/news/economy/construction_spending/index.htm?postversion=2008040111)

Factory orders continue to drop
CNN (http://money.cnn.com/2008/04/02/news/economy/factory_orders.ap/index.htm?postversion=2008040210)

And please, no Federal Reserve conspiracy discussion here. Go to some other thread for that. Thank you.

Employers slashed 80,000 jobs in March
Revised totals show 76,000 jobs lost in both January and February.
Yahoo (http://news.yahoo.com/s/ap/20080404/ap_on_bi_go_ec_fi/economy)

Jobless claims: Highest since Katrina
CNN (http://money.cnn.com/2008/04/03/news/economy/initial_claims/index.htm?postversion=2008040310)

Service sector rebounds slightly
CNN (http://money.cnn.com/2008/04/03/news/economy/ism_services/index.htm?postversion=2008040311)

Construction spending declines - but less than expected
CNN (http://money.cnn.com/2008/04/01/news/economy/construction_spending/index.htm?postversion=2008040111)

Factory orders continue to drop
CNN (http://money.cnn.com/2008/04/02/news/economy/factory_orders.ap/index.htm?postversion=2008040210)

And please, no Federal Reserve conspiracy discussion here. Go to some other thread for that. Thank you.

Conspiracy discussion? It's no conspiracy. It's reality. The Fed is a privately owned bank that is NEVER audited and controls our entire economy. It prints more and more money whenever the government needs more money to spend (hence the inflation). It doesn't back our paper money with a gold standard...and best yet, the Fed CHARGES US INTEREST for the paper money it prints for us. As of late, we've seen the Fed take aggressive steps to keep its peers (namely, the big banks) from collapsing...the bailout of Bear Stearns, the constant lowering of the prime rate, fed funds rate, and discount rate, opening the discount window to broker-dealers, etc...without considering the ramifications of their actions on the lower and middle classes. The Fed is clearly watching out for the upper class and big banks with these tactics. These are all true statements, and they all have EVERYTHING to do with the US economy and its current struggles. What makes that a conspiracy theory?

As for Bear Stearns, whatever happened to "survival of the fittest"? Isn't that kinda the "risk versus reward" premise of a free market economy? If you make bad decisions, you suffer the consequences. Same of all those homeowners that took out mortgages they knew they couldn't afford. This country needs more accountability right now...not more BAILOUTS.

Nostyle, your opinion is a conspiracy theory whether you believe it to be or not. At any rate, the legal status of the Federal Reserve is off-topic and discussion on it in this thread will not be allowed. If you want to discuss it, take it to another thread. Thank you.

getting worse with full speed!