Hey Gang, Is That a Double Top in Gold?

Accumulation and Distribution. It was ever thus. The conspiracy wing of the goldbug camp is starting to get louder-gold only goes down because of manipulation. Central banks, Goldman Sachs, Queen Elizabeth, the Rothschild's etc. Who knows? Without volume information it's a bit tough to divine much from the price action (although Lord knows I've tried). I've found it easier to use gold's moves as part of the currency/inflation picture rather than as some mystical intrinsic good (or evil).
The first chart is from Kitco:

click to enlarge

And from EconomPic:
Gold... Has It Really Stored Value?

In response to yesterday's inflation adjusted S&P 500, we were asked:

Could you present the same plot but with inflation-adjusted gold overlayed on the data? It would be interesting to see if stocks really do outperform over the long-term...

Over the past 34 years, the price of gold is only 25% higher in real terms.

Compare this to yesterday's chart to equities...MORE

The answer, I've come to believe, is yes gold does store value.
It does not, however, produce wealth. The first point is well made in The Golden Constant: The English and American Experience, 1560-1976*, by Roy W. Jastram, late professor of business at the University of California, Berkeley:

"Gold maintains its purchasing power over long periods of time, for example, half-century intervals."

The second point is as well made by Econompic as anybody, plus it's in color.

*The book has been out-of-print and commanding $4-500 second-hand. In April it will be re-printed by Edward Elgar Publishing, with new material and updated to 2007. It's priced at

£71.96

.

Congress May Need to Fund Another Stimulus, Pelosi Says

The night the House of Representatives passed Stimulus I, we posted "House Passes Stimulus Bill, Saving Either 244 or 188 Jobs":

That was the vote tally with 0 Republicans voting for the bill and 11 Democrats also saying Nay.
On to the Senate.

This bill does not stimulate, so I will be taking prop bets on the size of the next stimulus bill.
We'll open the line at $500 Billion.

And since the betting windows are open, let's try another:
GDP growth in Q2 and Q3 2010 as the politicians try to get elected to the 112th Congress....

The current line is $750 Billion. That would be enough to kick inflation into gear. Stay tuned.
First up, the Washington Post:

House Speaker Nancy Pelosi said yesterday that the federal government may have to spend even more money to shore up the nation's ailing economy, on top of the more than $1.6 trillion so far approved by Congress.

With the jobless rate rising and the economy continuing to slow, Pelosi (D-Calif.) told reporters: "We have to keep the door open to see how this goes."

Pelosi's remarks came after senior House Democrats met behind closed doors with four prominent economists, who praised the actions taken by Washington to ease the effects of a recession that threatens to be the most severe since the 1930s. The $787 billion stimulus package, a $700 billion bailout for the U.S. financial system and President Obama's proposal to stem the tide of residential foreclosures are all sound policies that should begin to make a difference in the coming months, they told lawmakers....MORE

And from the San Francisco Chronicle:

S.F. pushes hard for big slice of stimulus cash

Now that the $787 billion stimulus package is the law of the land, San Francisco is joining the rush of cities and counties lobbying for a big share of the money.

The city is making its pitch in Washington this week with a delegation led by the San Francisco Chamber of Commerce and composed of six members of the Board of Supervisors, top aides to Mayor Gavin Newsom and 55 business and labor leaders.

Their wish list is lengthy: The city has identified more than $2 billion in funding requests for high-speed rail, Muni, broadband access for the city's poorer neighborhoods, health care technology and green jobs. Los Angeles, which also has a delegation in town to lobby, is asking for $6.8 billion.

Much of the stimulus package is being distributed in formula grants, but the city will compete for other pots controlled by federal agencies. San Francisco officials are counting on help from a powerful congressional delegation led by House Speaker Nancy Pelosi, D-San Francisco.

Good timing

"We think our timing could not be better to make a strong case to get San Francisco to the top of the list," said Steve Falk, the chamber's president and CEO.

Pelosi, at an event at Crissy Field in San Francisco last week, pledged that stimulus funds would help fill a $100 million funding gap to finish rebuilding Doyle Drive, the 1.2 mile-long southern approach to the Golden Gate Bridge.

City officials are looking to carve out a piece of the $7.2 billion in the stimulus package for broadband access to extend service to underserved areas, such as Bayview-Hunters Point. San Francisco also is seeking a slice of the $19 billion in the plan to modernize medical records, which could help in the city's efforts to offer universal health coverage....MORE

NASDAQ Soars to Levels Not Seen Since.... Last Wednesday

Great headline from EconomPic. Here's the pic:
While the NASDAQ returned a whopping 7.1% yesterday (and I hope yesterday is something "we can build on"), I warn all investors not to get too far ahead of themselves. As the title above and chart below details, the closing value of the NASDAQ returned it to a level last seen just 4 days previous.


More, including a scatter plot* of returns after various one day moves.

*Here's a teaching example from UI-Chicago:

Scatter plot matrix: Given a set of variables, the scatter plot matrix contains all the pair-wise scatter plots of the variables on a single page in a matrix format. The example generated by XmdvTool shows a 4x4 scatter plot matrix of the variables medhvalue (median house value), rooms (# of rooms), bedrooms (# of bedrooms), and households (# of households).

Top row in the graph shows 1. the scatter plot of medhvalue and rooms, 2. the scatter plot of medhvalue and bedrooms, and 3. the scatter plot of medhvalue and households. The second row in the graph shows 4. the scatter plot of rooms and bedrooms and 5. the scatter plot of rooms and households. The third row in the graph shows 6. the scatter plot of bedrooms and households.

This scatter plot matrix shows that rooms, bedrooms, and households are highly correlated. Note that when there is a high correlation between A and B and between A and C, there is a high correlation between B and C.

PowerShares WilderHill Clean Energy vs. Russell 2000 vs Nasdaq (PBW)

Although there were some good moves in individual names (Evergreen and Suntech both up 21%, SunPower up 15%) as a group they did not outperform as much as one might expect considering their prior massive underperformance.
Here are 1 day and 6 month charts, I've also included the CLAYMORE/MAC GLOBAL Solar ETF (TAN):

Six month

One day

These are dynamic charts so the example will only be visible on the 1 day until March 11. Both charts from Yahoo Finance.

Jokes as a Market Indicator

Leading is more valuable than coincident but we take what we can get.
Yesterday, in "Top 10 headlines that could signal a market bottom", I noted:

One possible sign will be the humor. I haven't heard many jokes that compare with these from China.

Today Portfolio.com's Daily Brief posted:

And the Cab Driver Was ... Rick Wagoner!

Economic jokes are flying thick and fast again on late-night TV.

David Letterman on The Late Show last night:

"Stock market keeps going down and down and down. Today I tipped my cabdriver with 100 shares of GM stock."

Letterman added:

"The New York Stock Exchange, by the way, if you are interested, is now a 99 cent store so get down there and do what you can."

Jay Leno on the Tonight Show was also weighing in on Wall Street:

"Astronomers say they have discovered enormous black holes 5 billion light years from Earth that is sucking up everything in their path. They name the black holes 'AIG-1'" and "AIG-2."

S&P 500 5% Days

From Bespoke Investment Group:

...Before getting too far ahead of ourselves though, we would note that today's gain is the eighth one-day rally of 5% or more since the S&P 500 peaked in October 2007, and we're lower now than we were at the close of any of those seven other days.

I'll go with Faber on the timeline, at least three, maybe six weeks before we see a change in direction, i.e. more than a one day move.

Oil: Contango smashing

From FT Alpaville:

The contango between the front-month April contract and the second-month May contract has been severely smashed over the last day.

Having averaged a difference of about $2 per barrel over the last couple of weeks, the two contracts are now trading at an interval of around $1 — April at some $47.54 per barrel and May at $48.52 per barrel.

The big question now is does this mark the sign of a renewed rally or is it simply a good opportunity to short oil?>>>MORE

US Stocks Hold Gains As `Uptick Rule` Could Be Reintroduced

You heard it here first.
(unfortunately, it was Feb. 25 and the S&P was at 752)
From MarketWatch:

Optimistic comments from U.S. Federal Reserve Chairman Ben Bernanke and news that Citigroup was profitable in the first two months this year helped banks spearhead a broad rally Tuesday, sending the Dow Jones Industrial Average up more 300 points.

"This kind of broad-based move is encouraging, but the question becomes will it be sustained? At this point, it certainly feels that way," said Gordon Charlop, managing director at Rosenblatt Securities.

Traders also pointed to comments from Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, who said he expects the "uptick rule" - used to require investors to wait until a company's stock rises before it could be sold short - to be restored within about one month.

If reintroduced, the rule will serve as a stabilizer of the market "because people can't pile on a stock all at once," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. Still, the rule isn't going to prevent failing companies from going down under, Rovelli noted....MORE

Oh well, we had Sly & the Family Stone doing "I Want to Take You Higher", live, at Woodstock.

Happy Anniversary Baby: Nine Years Ago Today, The Nasdaq Closed at 5048.62

That was it's all-time high. It was recently trading at 1339.92, up 71.
So nine years later we are still down 73.45%.
Any thoughts on how old an analyst, who was 25 in 2000, will be when the Nas regains it's old high.
(hint: the rule of 72 says another 14 years at 10%/yr.)

Here's a press release that has to rank with the Death of Equities cover as a contrary indicator:

INTERNET.COM'S ISDEX, THE INTERNET STOCK INDEX, BREAKS 1,000, A GAIN OF 1000% IN LESS THAN FOUR YEARS

(New York, NY-March 10, 2000)-internet.com Corporation's (Nasdaq: INTM) ISDEX(r), the Internet Stock Index (http://www.isdex.com), rose above 1,000 for the first time last week. Since its inception in 1996, ISDEX has posted a 1,012% gain, outpacing the Dow and S&P 500, which have only increased 104% and 120%, respectively, during the same period. The ISDEX has also outpaced these indices for this year, with the ISDEX up 29% and both the Dow and S&P down 13% and 5%, respectively.

"With a gain of more than 29% since January 1 alone, it is clear that Internet stocks continue as one of the overall economy's strongest sectors," said Alan M. Meckler, chairman and CEO of internet.com Corporation....

Linked at our April '07 post "Indexes, ETF's and Global Warming"

Marc Faber: More Boom, Less Gloom and Doom

We first noted Mr. Faber's growing bullishness last week in "Marc Faber: Stocks Poised to Rally", relaying a February 24 Bloomberg story with the observation that the market had fallen 9% in the intervening week.

The market continued to fall, to Friday's S&P low of 666.79, for a total of 14% since Mr. Faber first raised the issue.

At a recent 713.13, up 36.60, the market is still 7.7% lower than when he initially made the call. Here's the story from ClusterStock:

After years of being famous for the Gloom & Doom part of his Gloom, Boom & Doom report, Marc Faber was sounding a different note on Bloomberg television this morning. The investor and newsletter said that all the new government spending and money creation, might not fix the economy but would cause a stock-market rally from now to the end of April. What's more, he said that now that the S&P was off 56 percent from its high, investing in equities was likely to be profitable over the next ten years.

“Equities could rally between here and the end of April,” Faber said. “The government’s efforts will fail to boost economic activity. They can boost stocks. Stocks have adjusted meaningfully.”

Faber thinks the rally will likely be short-lived, saying that after the March to May rally, the S&P 500 could drop 27 percent to below 500. But on a long-term perspective, he sounded very bullish, saying investors will make money over the next 10 years....MORE

I am Such an Optimist: Global Financial Assets Lost $50 Trillion Last Year

Last Friday, in "Early Rally Peters Out: U.S. Markets Down $11 Trillion in 17 Months" I guessed that the hit had been $30 Trillion. Pollyanna D. Climateer, that's me. Here's the story from Bloomberg:

The value of global financial assets including stocks, bonds and currencies probably fell by more than $50 trillion in 2008, equivalent to a year of world gross domestic product, according to an Asian Development Bank report.

Asia excluding Japan probably lost about $9.6 trillion, while the Latin American region saw the value of financial assets drop by about $2.1 trillion, said Claudio Loser, a former International Monetary Fund director and the author of the report that was commissioned by the ADB. The report didn’t give a breakdown of asset declines in other regions.

“The loss of financial wealth is enormous, and the consequences for the economies of the world will unfortunately commensurate,” said Loser, now the Latin American president of strategic advisory firm Centennial Group Inc.. “There are serious economic and political stumbling blocks that may well cause the recovery to be costly and slow to consolidate.”>>>MORE

Cisco to help cities go green (CSCO)

We have been intrigued as all get out by CSCO's approach. Use the 'Search Blog' box if you're interested in what else they're up to.
From the San Jose Mercury News:

Cisco Systems is quietly preparing for markets that don't exist — yet.

On Friday, the company announced it had signed a memorandum of understanding with Metropolis, an organization of 106 large cities mostly outside the United States, to collaborate on a project to help leaders use technology to be more efficient and less polluting.

Cisco sees such alliances as part of its larger plan of moving beyond its core products — routers and switches accounted for about half the company's revenue during its most recently completed quarter — to meet Chief Executive John Chamber's aggressive growth targets of 12 to 17 percent a year.

For now, such news is not on Wall Street's radar.

"I don't think Wall Street is paying any attention to it. It's not anything that seems to move the needle," said Mark McKechnie, analyst with American Technology Research. But he noted that public entities account for about 20 percent of Cisco's business....MORE

Bubbles, Jobs and Investment Tips: Jeremy Grantham visits Wharton

From The Wharton Journal:

"Career risk and bubbles breaking, that is all that matters."

This was how Jeremy Grantham, cofounder, Chairman and active member of the asset allocation division of GMO, began his presentation to Wharton students on February 17, 2009. Thanks to the recurring "Speaker Series" sponsored by Wharton's Investment Management Club, students were invited into a colorful discussion about stock market bubbles and market in-efficiency. These are topics that are typically taboo in our finance classrooms, perhaps with the exception of Professor Franklin Allen's FNCE 601 class where bubbles were in fact discussed.

So how does Mr. Grantham feel about how most universities cover market efficiency? He began to address this topic by saying "science advances one funeral at a time," which was a famous statement made by Max Planck, the late German physicist. Mr. Grantham continued by commenting on how a University of Pennsylvania alumnus, Mr. Charles Kindleberger, once claimed that academics too often ignore the facts in defense of a theory. This makes sense given that Mr. Kindleberger was an economic historian. In fact in his book Manias, Panics, and Crashes, he relied on narrative exposition and knowledge of history rather than mathematical models to prove his point....MORE

HT: Value Investing World

Chart du Jour: Current State of the Asset-backed Commercial Paper Market

From Alea:

Chavez: "Obama vaya a lavarse ese palto"

Via Daily Kos:

Rough translation:
Obama, go wipe your ass.
(at 04:05)

Buffett: Cap-and-Trade Is a ‘Regressive’ Tax

From the New York Times' Green Inc. blog:

Warren Buffett has waded into the debate about a cap-and-trade system for slowing greenhouse gas emissions in the United States — something for which President Obama is pushing hard.

Interviewed today on CNBC (transcript), Mr. Buffett responded to a question about cap-and-trade by saying that regulated utilities would pass the costs on to customers, effectively resulting in a carbon tax.

“In the utility business, it’s going to be borne by customers. And it’s a tax like anything else,” he said.

Mr. Buffett, the chief executive of the conglomerate holding company Berkshire Hathaway, also said that the “tax is probably going to be pretty regressive,” and that public utility commissions in various states would determine “what customers it gets passed through to.”>>>MORE

Mathematical Model and the Mortgage Mess

From the New York Times:

There was no mathematical elegance to the mortgage-backed securities that helped lead to the market crash of recent months. In these deals, interest and principal payments from mortgages were bundled into different packages called tranches, each with different risks and interest rates.

The only tricky part of these deals, quants say, was in estimating how often people would default on these mortgages, and how correlated those defaults were. For that you need a model. The more people act in concert, the less diversity in your investment and the greater the chances of disaster. The model for correlation came from other securities in which corporate bonds were pooled in tranches. In 2000, David X. Li, a banker with a doctorate in statistics who was then at RiskMetrics, part of J. P. Morgan Chase, began using mathematical functions called Gaussian copulas to estimate the likelihood of corporations’ dying in unison. (It was an idea borrowed from the life insurance industry, where copulas measure the correlations between deaths of spouses.)>>>MORE

McClellan Oscillator: Oversold Bounce Time

From the Financial Ninja:

Looks like that oversold bounce is being attempted (again) this morning...

The NYSE McClellan Oscillator (NYMO) has been a good predictor of short term oversold bottoms on spikes to -100. The spike down in NYMO results in a push higher in equities that starts 3 - 5 days later.

Feds To Take Control Of Electric Superhighway

A couple weeks ago, in "Ruling gives power line authority back to states" we said:

Expect to read a lot about FERC, Kelo v. City of New London, NIMBY, Green vs. green, etc. in the next six months....

Here it comes. From Forbes:

Proposed bill could give U.S. government authority to grant permits for transmission lines when states delay approval.

Chalk up one for the federalists. Last week Senate Majority Leader Harry Reid (D-Nev.) introduced a bill that would give the federal government authority to grant permits for new electric transmission lines, trumping states' jurisdiction on the matter.

Reid's bill, the Clean Renewable Energy and Economic Development Act, provides a regulatory framework for the development of a national electric superhighway, a network of high-voltage power lines that would transmit electricity from remotely located wind and solar farms to energy-hungry urban areas....MORE

Climateer Line of the Day: One Way or Another, Dow Jones Takes the Prize

I can't decide. From Tech Trader Daily's "Ex-Yahoo Engineer Now Terror Suspect In India":

So, uh, this would not be your traditional career path for Yahoo (YHOO) engineers....

And from MarketBeat's "Four at Four: Fishing for a Bottom, or Compliments":

...While many start to head for the hills, the bulk of the losses of late in the Standard & Poor’s 500-stock index come from three sectors in particular — industrials, financials, and consumer-discretionary shares.
A pessimist would point out that these companies account for most of the U.S. economic growth these days, but pessimists tend to operate in the bond market anyway....

Top 10 headlines that could signal a market bottom

One possible sign will be the humor. I haven't heard many jokes that compare with these from China.
From MarketWatch:

With few technical or fundamental road signs left, two equity strategists have devised a top 10 list for investors searching for signs of a bottom, not to be confused with a bear-market rally.

At turns both serious and tongue-in-cheek, BNY ConvergEx Group analysts Nicholas Colas and Oren Klachkin offer the following as their top 10 signs of a market bottom:

1. A significant (more than 10%) one- or two-day drop in the market. The current orderly decline, while severe, is largely running in line with the deteriorating U.S. economy, said Colas and Klachkin. Therefore, an even sharper drop would position stocks as cheap, relative to fundamentals -- "perhaps even cheap enough to make a bottom," the analysts said.
2. Timothy Geithner is replaced with Paul Volcker. Fairly or not, the market does not have a lot of confidence in Treasury Secretary Geithner, while former Federal Reserve Chairman Volcker's "proven abilities in a crisis could play better with investors," the analysts said. Volcker currently heads the Economic Recovery Advisory Board under President Barack Obama....Eight MORE

Roubini on CNBC: Could be 36 Month Recession (but raises S&P target to 600)

From Calculated Risk:

From CNBC: Roubini: US Recession Could Last Up to 36 Months. A few excerpts and video:

"We could end up ... with a 36-month recession, that could be "L-shaped stagnation, or near depression," Roubini said. He puts the chance of a severe U-shaped recession at 66.7 percent, and a less severe L-shaped recession at 33.3 percent.
...
"We are in the 15th month of a recession," said Nouriel Roubini, a professor at New York University's Stern School of Business, told CNBC in a live interview. "Growth is going to be close to zero and unemployment rate well above 10 percent into next year.">>>MORE

And from ZeroHedge:

In a slightly less pessimistic statement today, Nouriel "Dr. Doom" Roubini said an S&P level of 500 "is less likely, but there is some possibility you get there" and put his S&P target at 600. Roubini's target is based on an S&P 2009 earnings of $50 and a 12x multiple. "My main scenario is that it is highly likely it goes to 600 or below" Roubini said in an interview at the CBOE Risk Management Conference in Dana Point (which one presumes did not have any Citigroup employees present).

“Even if you do everything right with fiscal and monetary policy, we’re still going to be in a recession through the end of this year and into next year,” Roubini said earlier during his speech at the options-industry conference. “The recession train left the station over a year ago, and it’s going to continue.”>>>MORE

JPMorgan Chase to Increase India Outsourcing 25%

JPM received $25 Billion in TARP bailout funds on top of the backstop on the assets they got in the Bear Stearns deal.
This may be smart operationally but politically it is dumber than the auto execs flying to Washington for their handout.

From BusinessWeek:
America's second-largest bank plans to spend $400 million on work outsourced to India to streamline its IT operations...MORE

From The Raw Story:

Rather than using federal bailout money to reinvigorate lending to consumers, some banks that received funds from TARP have spent it on questionable items that have done little to improve the health of the country’s financial sector but have certainly helped out foreign economies such as Dubai and China.

For instance, Citigroup Inc, which received $50 billion in Troubled Asset Relief Program funds, made an $8 billion December loan, not to an American entity, but to a Dubai public sector company, according to a newly released Monday memo by Rep. Dennis Kucinich (D-OH), chairman of the House Domestic Policy Subcommittee.

In mid- November, Bank of America spent $7 billion investing in the China Construction Bank Corporation. Bank of America received $25 billion in TARP funds.

J.P. Morgan Treasury Services spent $1 billion investing in cash management and trade finacie solutions in India also in November. J.P Morgan Chase & Co. received $25 billion in TARP funds....MORE

Folks are not happy. A crowd (8000 in Fullerton) in California chanted "Head on a stick" while protesting against Arnold Schwarzenegger this weekend. And these were conservatives who had probably never protested in public before!
It is getting ugly. Sort of like watching Baptists dance.

Dress Like the Great Depression

From the Ludwig von Mises Institute:

A conspicuous cultural change we can look forward to is a dramatic change in men's dress style. Guys, you might as well get ahead of the curve. The free-fall economy means a boon for better fashion for men who intend to survive the onslaught.

We will be highly fortunate if the second Great Depression turns out to be as stylish as the first, in which even the bums sleeping in the park benches looked better than the average workers and even CEOs today.

Just look at this guy in this Depression-era photo. See the 1 ¾ inch cuffs on his trousers, the snappy crease in his pants, the great hat, and the woolen trousers? And the shoes: leather and laces resting on a solid foundation. If I found any of his clothes in the vintage shop, I would snap them up and be ready for today's tight job market, which seeks serious men, not goofs in sweats and polos....MORE

N. Korea threatens war if satellite shot down

Why do I picture a four-year-old jumping up and down screaming "Look at me, Loook attt meee!".
From Yahoo:

SEOUL, South Korea –North Korea put its armed forces on standby Monday and threatened "a war" if anyone tries to shoot down what regional powers suspect is an imminent test-firing of a long-range missile.

Pyongyang also cut off a military hot line with the South, causing a complete shutdown of their border and stranding hundreds of South Koreans working in an industrial zone in the North Korean border city of Kaesong....MORE

Socket to me: The much-talked-of smart grid prepares to enter the home

From The Economist:

READERS may recall a futile exercise your correspondent undertook last year to go solar (“Sunny side down”, Feb 15th, 2008). Despite having a large flat roof, an unobstructed view to the south, over 300 days of sunshine a year, and access to generous tax credits, it would have still cost him $600 a month for ten years to repay the $65,000 needed to install the necessary solar panels, inverters and control equipment.

All that just to save a mouldy $75 a month of electricity from the grid. When juice can be bought in southern California for 10.8 cents a kilowatt-hour, it is hard to make the case for becoming energy independent. If you are concerned about the pollution, buy a couple of tonnes of carbon offsets each year for $70 and have done with it.

But what if, instead of being charged a flat rate for every kilowatt-hour used, consumers had to pay a market price that fluctuated by the minute—as the utilities themselves have to do in the energy wholesale market? That is a distinct possibility when the much ballyhooed “smart grid”—with its two-way communication between producers and consumers—becomes a reality.

Thanks to its heavily insulated roof and double-glazed, low-emissivity glass throughout, Mayhem Manor’s electricity consumption is a modest 8,300 kilowatt-hours a year. Even so, your correspondent would like to know more about his pattern of electricity consumption.

He would then be able to maximise the benefit when his local power company started charging him a different rate for different times of the day. He has made a start by auditing his electrical appliances and gadgets. One of the simplest tools for doing this is the P4400 “Kill A Watt” meter made by P3 International ($23 from Amazon)....MORE

Solar Stocks: Cowen Cuts Ests On ESLR, SPWRA, STP, TSL

From Tech Trader Daily:

Cowen analyst Robert Stone this morning cut his EPS estimates for Evergreen Solar (ESLR), SunPower (SPWRA), Suntech (STP) and Trina Solar (TSL) following a series of meeting at last week’s Photon conference in Germany. Stone writes that “seasonality was noted by every company we met with.” He says Germany, the world’s largest solar market, is suffering through one of the coldest winters in years, and that according to system integrators and dealers there, “customers have little interest in placing orders at this time.”>>>MORE

Extortion: AIG Told U.S. Failure May Cripple Banks, Money Funds

From Bloomberg:

American International Group Inc. appealed for its fourth U.S. rescue by telling regulators the company’s collapse could cripple money-market funds, force European banks to raise capital, cause competing life insurers to fail and wipe out the taxpayers’ stake in the firm.

AIG needed immediate help from the Federal Reserve and Treasury to prevent a “catastrophic” collapse that would be worse for markets than the demise last year of Lehman Brothers Holdings Inc., according to a 21-page draft AIG presentation dated Feb. 26, labeled as “strictly confidential” and circulated among federal and state regulators.

“What happens to AIG has the potential to trigger a cascading set of further failures which cannot be stopped except by extraordinary means,” said the presentation by New York-based AIG. “Insurance is the oxygen of the free enterprise system. Without the promise of protection against life’s adversities, the fundamentals of capitalism are undermined.”>>>MORE

Here's a graduate level example of the negotiating technique:

(inspired by a commenter at DealBreaker)

Markets: Now Is it a Bottom? What About Now? Ok, Now? (or is it Dow 5000)

From MarketBeat:

As a number of market commentators are starting to wonder if a stock-market low is nearing, equities have put together a mild rally in the early going Monday, rebounding from last week’s horrific results.

With such prognostications, one finds a litany of counterbalancing rationales for why the market is nearing a bottom or not, using someone else’s explanation for bullishness as a reason to worry about further market weakness. Eventually, a person could screw himself into the ground due to the need to act contrary to contrarians....MORE

Which reminded me of a site Infectious Greed linked to a week and a half ago: Is this the bottom?

And from today's Wall Street Journal:

Dow 5000? There's a Case for It

Just how low can stocks go?

Despite Friday's small gain, the Dow Jones Industrial Average marked its fourth consecutive week of losses as it tumbled through the 7000-point mark and spiraled to new 12-year lows. The Standard & Poor's 500-stock index is trading below 700 for the first time since 1996.

As earnings estimates are ratcheted down and hopes for a quick economic fix fade, the once-inconceivable notion of returning to Dow 5000 or S&P 500 at 500 looks a little less far-fetched.

A decline to 500 on the S&P is 183.38 points and 27% away. The index already has lost 881.77 points, or 56%, since its peak in October 2007. The index, which lost 7% last week, hasn't been below 500 since 1995, when the tech-stock bubble was just beginning. After dropping 6.2% last week, the Dow is 1626.94 points and 25% above 5000, a level it also hasn't seen since 1995.

Analysts and investors looking at valuations, history and stock-price trends are mostly predicting the indexes will avoid plumbing those lows, although all concede that, in this market, anything is possible.

Even Wall Street strategists are crunching the numbers, while sticking to forecasts of a second-half rally.

Goldman Sachs's David Kostin in late February presented three scenarios for the S&P, including a "bear case" that put the index at 400 to 500. Although Mr. Kostin says he doesn't anticipate the index will fall that low, "these are the cases that different types of investors are making," he says....MORE

GE Capital Hires Banks to Sell Government-Backed Debt

UPDATE below.
Why is the American taxpayer guaranteeing GE Capital debt?
From Bloomberg:

General Electric Capital Corp., the finance arm of General Electric Co., hired five banks to manage a bond sale under the U.S. government’s Temporary Liquidity Guarantee Program.

Citigroup Inc., Credit Suisse Group AG, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley are arranging the sale, according to an e-mail sent to investors. Deutsche Bank AG, HSBC Holdings Plc and Royal Bank of Scotland Group Plc are also helping with the “benchmark” issue. A benchmark sale typically means at least $500 million.

“The market is going to remain heavily dominated by government-guaranteed paper for many more months as people are scared of corporate defaults and the lack of liquidity in non- guaranteed bonds,” said Guthrie Williamson, a Sydney-based money manager with Principal Global Investors, which oversees $198 billion.

General Electric shares fell below $6 last week for the first time since December 1991 on concern GE Capital may need additional cash. GE Chief Financial Officer Keith Sherin on March 5 said he sees no need to raise additional capital, and that the company’s financial services businesses expect to be profitable in the current quarter and year.

General Electric dropped 5 cents, or 0.7 percent, to $7.01 as of 12:52 p.m. in Frankfurt trading, according to data compiled by Bloomberg.

Covenant Amendment

Stamford, Connecticut-based GE Capital has raised more than $27 billion from government-guaranteed bond sales since December, according to data compiled by Bloomberg. It is offering to buy back about $1.45 billion of debt as it petitions bondholders to amend a covenant in the securities that limits the unit’s ability to pledge property or assets to secure debt without having to secure the notes...MORE

Here's how the purveyors of this paper stack up against the list of AIG counterparties who were paid off in AIG bailout I (or was it II? III?):

Some banks that were paid by AIG after it was bailed out by the government

• 
  

• Goldman Sachs- -check
  
• Deutsche Bank- -check
  
• Merrill Lynch
• Société Générale
• Calyon
• Barclays
• Rabobank
• Danske
• HSBC- -check
  
• Royal Bank of Scotland- -check
  
• Banco Santander
• Morgan Stanley- -check
  
• Wachovia
• Bank of America
• Lloyds Banking Group

Source: WSJ research

The usual suspects.
Update: Here is Fortune's list of Aig counterparties:

Société Générale (France)

Goldman Sachs (GS, Fortune 500)

Merrill Lynch International

Deutsche Bank (Germany)

Calyon, Crédit Agricole (France)

UBS (Switzerland)

Barclays (England)

Coral Purchasing, DZ Bank (Germany)

Bank of Montreal (Canada)

Rabobank (the Netherlands)

Royal Bank of Scotland

Bank of America

Wachovia

HSBC (England)

Barclays Global Investors

How long can a Bear Market Last? Nikkei marks lowest close in 26 years

Got that Ray "No 15-year period..." Lucia? Watch out Warren.
From MarketWatch:

Japanese shares gave up early gains to end lower Monday, with the benchmark Nikkei 225 Average marking its lowest closing level in 26 years as investors sold down financials and pharmaceutical shares amid a weak economic outlook.

The Nikkei ended 1.2% lower at 7,086.03, the lowest finish since October 1982. At its latest close, the Nikkei is at less than a fifth of its all-time high of 38,915.87, which it touched nearly two decades ago. The broader Topix index slipped 1.5% to 710.53....MORE

Rising sea levels from global warming 'could wipe out Norfolk Broads'

Cherchez la femme*.
Story from the Telegraph.**

*Gary Trudeau had one of his characters translate the phrase as "Keep an eye peeled for broads", ca. 1977. Not sure he'd do it ca. 2009.

**But then again... here's what comes up when you search the Telegraph's site for "Norfolk Broads":

Sponsored Links

Norfolk Broads Boat Hire

WaterwaysHolidays.com/norfolkbroads1500 Boats - Direct Booking Prices. Check Live Availability Online Now.

Local Chicks

Norfolk.Local.comOnline Local Search for Norfolk. Find Chicks Here.

Telegraph.co.uk search results

Sort by date / Sort by relevance

Results 1 - 10 of about 502

Rising sea levels from global warming 'could wipe out Norfolk ...

08/03/2009 | By Sarah Knapton | earth

Rising sea levels caused by global warming could destroy the Norfolk Broads and Thames Estuary within a hundred years, climatologists will warn this week.

Banksters: How to take back the money

Interfluidity says:

Justin Fox has been asking how we might make the miscreants pay (and here). I have two ideas to throw out.

My first thought is an old doctrine. If we could get the people who supposedly represent the people to formally acknowledge the insolvency of the institutions we are bailing out, there is a wide-ranging doctrine known as "fraudulent conveyance" that might help. Payments by a bankrupt firm during the period preceding the bankruptcy are subject to challenge and reversal, under the theory that preferential transfers by insolvent firms to some parties rather than others are inequitable. I don't know, from a legal perspective, how far back and how broadly the doctrine of fraudulent transfer could be applied to insolvent financials, but it's possible that a formal insolvency (e.g. a nationalization or receivership) could put a lot of people who got paid by banks during the boom at risk.

Yves Smith pointed this out a while back. I think it's worth taking a moment to wonder whether and how much the political resistance to formal nationalization is due to fears on the part of well-connected executives of being clawed-back via this doctrine. (Has fraudulent conveyance been aggressively pursued with respect to the Lehman bankruptcy? If not, why not?)

I hasten to add that I know very little about the legal details of fraudulent conveyance, whether it could in fact be applied to large, insolvent financials, what if any legislative action would be required to make the doctrine bite effectively, etc. I do know that even good-faith sellers of firms into leveraged buyouts are quite terrified of fraudulent conveyance, since even healthy firms become risky after the levering up and capital extraction that often followed these deals, and the former owners of previously viable firms can be made to take a serious hit. People who might know stuff about this (Buce?) are encouraged to weigh in. If we treated nationalizations as insolvency for the purpose of fraudulent conveyance, could we do some clawing back? Or is this a ridiculous idea?>>>MORE

This idea has been kicked around for a while now. As early as September 15, 2008, the very day of Lehman's bankruptcy, CFO.com, in the article "Creditors Could Go After Lehman Bonuses" said:

..."The key question is whether Lehman was solvent when it paid out the bonuses," wrote Adam Levitin, a law professor at Georgetown University, on his bankruptcy blog Credit Slips. "On an equity basis, almost assuredly yes, but on a balance sheet basis, that might be a closer call, depending on how things like MBS and CDOs are valued."

If the bank was not solvent when the bonuses were awarded, Levitin explained, the payout could be considered a "fraudulent transfer." One successful claim could challenge all of the bank's bonuses....MORE

In early October '08, Professor Jesse Fried, Boalt Hall School of Law, University of California, Berkeley posted "Uncle Sam should claw back Wall Street bonuses" on the Harvard Law School Corporate Governance Forum blog:

...The challenge would be finding legal authority to recover pre-meltdown bonuses. If a bailed-out firm were to file for bankruptcy, several provisions of the Bankruptcy Code could be used to recover pre-bankruptcy bonus payments to its executives. But if the rescue plan is successful, most of these bailed-out firms won’t be forced to file for bankruptcy. Is there a way to attack the bonuses paid by the firms that, thanks to government assistance, are able to steer clear of bankruptcy?

One possible source of authority is New York’s “fraudulent conveyance” statute, which applies to all firms in that state, including those that have not filed for bankruptcy. The statute gives creditors the right to recover a payment to an insider if, for example, the paying firm (1) did not receive fair consideration for the payment and (2) at the time had unreasonably small capital for its business operations. Some courts have held that managerial services do not constitute fair consideration for purposes of this type of statute. The statute may thus permit the government, to the extent it is considered an unpaid creditor of a bailed-out firm, to recover a bonus payment to one of that firm’s executives.

Will the federal government be able to recoup bonuses paid to Wall Street executives before the meltdown? We won’t know for sure until the government litigates these cases. But if the government loses money on the bailout, bringing these cases is the least the government can do for taxpayers - both those on the hook for the $700 billion rescue plan and those who may be asked to pay for a future bailout.

The comments are interesting:

1. Yes, on 9/23, I suggested for these reasons that we should build a phantom bankruptcy regime into the bailout bill. See http://uchicagolaw.typepad.com/faculty/2008/09/bailouts-and-ph.html

   Comment by Randy Picker — October 4, 2008 @ 10:21 am

2. There is a provision in Sarbanes-Oxley for clawing back ill-gotten bonuses. Just get the SEC to do their job. I wrote about it here. http://www.retheauditors.com/2007/12/hey-sec-clawback-those-stolen-bonuses.html

   Comment by Francine McKenna — October 4, 2008 @ 11:29 am

It appears that former Lehman CEO Dick Fuld has thought this through (via the Times of London):

Ex-Lehman chief sold $13m home to wife for $100

Use the law.

Bottom Caller: Cramer on Markets

Via Mish's Global Economic Trend Analysis:

August 2008: CNBC's Jim Cramer announces that the market has hit bottom

click on chart for larger image

"I am indeed sticking my neck out right here, right now, declaring emphatically that I believe the market will not revisit the panicked lows it hit on July 15. and I think anyone out there who’s waiting for that low to be breached is in for a big disappointment and [they’re] missing a great deal of upside. Stop waiting, [and] buy the next dip because I think it might be the last big one."

Europe banks silent on reported AIG bailout gains

So the American taxpayer is sending money to stupid European bankers.
Why use such a harsh (and accurate) word, "stupid"?

One of the basic rules of banking and finance is to know your counterparty. If you have a contract with someone you ask "Are they able to uphold their end of the bargain?".
No one forced Deutsche Bank and the others to do deals with AIG, they voluntarily entered into these speculations, either to place bets for profit or to hedge other speculations. And profit they did, to the tune of hundreds of billions of dollars (euros, pounds).

You pays your money and you takes your chances.
Except when you can get your finance/politician buddies to take the money from the chumps in Peoria (or Topeka, Tuscaloosa, Schenectady and Bozeman).
These self-selected elites are very close to facing popular wrath and it won't be pretty.

Following up on "Goldman, Deutsche Bank and Others Got AIG Aid" we have this story from Reuters:

European banks declined to discuss a report that they were beneficiaries of the $173 billion bail-out of insurer AIG that has sparked political furor in the United States.

Goldman Sachs, Morgan Stanley and a host of other U.S. and European banks had been paid roughly $50 billion since the Federal Reserve first extended aid to AIG, the Wall Street Journal reported on Friday.

French banks Societe Generale and Calyon on Sunday declined to comment on the story, as did Deutsche Bank, Britain's Barclays and unlisted Dutch group Rabobank.

Other banks mentioned in the Journal's article include HSBC , Wachovia, Merrill Lynch, Banco Santander and Royal Bank of Scotland.

Separately, French newspaper Le Parisien newspaper on Sunday said that SocGen might have got $4.8 billion from the bailout and Calyon $1.8 billion....MORE

Speaking of Politicians...

Oh hell, I might as well go directly to America's Finest News Source:

Husband, Wife Unaware They Are A Comedy Team 03.07.09

San Francisco Historians Condemn 1906 Earthquake Deniers 03.06.09

play video

Congressman Offers Preemptive Apology For Extramarital Affair

Rock-Bottom Loser Entertaining Offers From Several Religions

Are Violent Video Games Adequately Preparing Children For The Apocalypse?

Potential Baldness Cure Leads Man To Reverse Position On Stem-Cell Research

...More Opinions

• People Of Earth, I Lack Basic Social Skills

  By Robert Stubinsky
  10.01.08

• This Year's Tri-County Agribusiness Awards Were A Damn Travesty

  By Doak Cumberland
  03.31.99

• We're Investing So Much In Alternative Fuels, Sometimes We Almost Forget To Pump Oil!

  By Tony Hayward
  07.09.08

• My Son And His Friends Will Never Find My Secret Playboy Stash

  By Matt Solomon
  12.05.07

• Today's Neo-Nazis Have No Respect For Tradition

  By Karl Quandt
  01.24.07

• Converting To The Metric System Starts With The Individual

  By Theresa Kincaid
  10.27.04

Corrections

Last week, The Onion reported that in exchange for a prominent position in the New World Order, it had given its unconditional allegiance to the leaders of Operation Omega. That was a typo. There is no Operation Omega. Everyone should go about their business as usual on Mar. 24.

• 
  

Congress Approves Bill to Prevent Government

Shutdown.

If it weren't so serious, watching these clowns (left and right) would be hilarious.
From Bloomberg:

The U.S. Congress approved a stopgap funding measure to keep the government from shutting down as lawmakers work to resolve last-minute disputes over a $410 billion “omnibus” spending package.

President Barack Obama signed into law tonight the legislation extending through March 11 a resolution that funds most federal agencies. It was scheduled to expire tonight....

...If any changes are made to the omnibus bill, the House would have to approve it again. Reid said House Speaker Nancy Pelosi, a California Democrat, warned him she won’t do that. Pelosi said if the Senate makes any changes to the bill, she will drop the legislation in favor of a measure extending the current stopgap funding legislation for the rest of the year, Reid said.

“She said, ‘We have put our members through a lot over here on this appropriations bill -- I am not going to put them through any more,’” he said.

The Democrats who control the House barred lawmakers from offering floor amendments to the spending plan as it proceeded through their chamber, a rule a Republican noted during today’s debate on the stopgap measure.

“The Senate is doing what the House could only dream of doing -- offering and debating amendments to the omnibus bill,” said Representative Jerry Lewis, the top Republican on the House Appropriations Committee. “It’s no wonder so many members of the House aspire to serve in the Senate.”>>>SOURCE

From Politico:
Reid to Obama: Let us keep earmarks

There are 8000 of the suckers in the spending bill.

More Risk to Bank Investor? Consulting the CDS Oracle

From Baseline Scenario:

Whatever Did The CDS Market Mean By That?

The credit default swap market is a modern Delphic Oracle. It speaks loudly and profoundly - these days at reuglar intervals - albeit using somewhat arcane terminology. And after major statements such as yesterday (or perhaps this week in general), it’s worth pausing to reflect on, and argue about, what it really means.

Thursday’s statement, to me, was about US banks (graph).

The risk of default for US banks, according to this market, is rising back towards levels not seen since mid-October. That is striking enough - but remember what has changed since then: (1) the G7 promised not to let any more systemic banks fail, (2) Treasury has provided repeated recapitalization funds on generous terms, and (3) the Fed offers massive, nontransparent funding to anyone in distress. How can it be that the credit market still or again feels the risk of default rising so sharply and to such high levels?....MORE

HT: Marginal Revolution, who links to the followup and whose commenters are sharper than average.

Goldman, Deutsche Bank and Others Got AIG Aid

So that's where our $173 Billion went.
A late-breaking story from the Wall Street Journal:
(and a nice followup to this morning's "Who’s Really Being Propped Up in the A.I.G. Bailout?")

The beneficiaries of the government's bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant.

Among those institutions are Goldman Sachs Group Inc. and Germany's Deutsche Bank AG, each of which received roughly $6 billion in payments between September and December 2008, according to a confidential document and people familiar with the matter....MORE including the list.

UPDATE: The Journal gated the story, here's the list:

Covered Counterparties

Some banks that were paid by AIG after it was bailed out by the government

• Goldman Sachs
• Deutsche Bank
• Merrill Lynch
• Société Générale
• Calyon
• Barclays
• Rabobank
• Danske
• HSBC
• Royal Bank of Scotland
• Banco Santander
• Morgan Stanley
• Wachovia
• Bank of America
• Lloyds Banking Group

Source: WSJ research

China's oil imports limited by storage capacity ...

China seems pretty committed to oil.
From Xinhua:

Limited storage facilities are hampering China's efforts to import large volumes of oil while world prices are relatively low, an official with the Guangzhou customs house told an energy conference here Friday.

Zhong Yanming, head of data analysis of the statistical department of the customs office, said he reached this conclusion based on monthly import figures last year....MORE

From Petrochemical News:

China to build 9 refining bases in 3 years

China, the world's No. 2 enegy consumer, plans to build nine crude oil refining bases in coastal areas during the next three years, local media reported Thursday, citing the National Development and Reform Commission, China's top economic planning agency.

According to China Knowledge news service, under the country's petrochemical stimulus plan, three of the new bases, each designed with refining capacity of 30 million tons of crude oil annually, will be built in coastal cities of Ningbo, Nanjing and Shanghai....MORE

Infrastructure Investing: Full Steam Ahead?

From the Wall Street Journal's Private Equity Beat:

The Obama administration’s stimulus package includes significant proposed spending on infrastructure, which has infrastructure investors intrigued. But they know that this package alone isn’t going to open the floodgates to private infrastructure investing in the U.S. Joe Seliga, partner with law firm Mayer Brown LLP, walks us through what’s going on in the industry.

What do you think of the planned infrastructure spending in the stimulus package?

The infrastructure stimulus debate has helped focus attention on the tremendous infrastructure needs of the U.S. and the challenges related to funding those needs. The stimulus funds only a fraction of the costs needed to address American infrastructure development and rehabilitation. For example, $29 billion is provided for road and bridge projects, while estimates indicate more than $100 billion is needed annually. The stimulus will not solve America’s infrastructure challenges, but will focus Americans on the need to solve those challenges....MORE

White House Says No Silver Lining On Jobless Rate. Au Contraire Says Hillary

From CNBC:

A top White House economic aide said Friday no silver lining could be seen in a surge in unemployment in February but that pieces of a recovery plan are in place and the country needs to "power through" hard times.

"There's no way that we could or should put a positive spin on these," Christina Romer, chair of the White House Council of Economic Advisers told CNBC, referring to a report that the jobless rate hit 8.1 percent.

"The American people are clearly, we're suffering.">>>MORE

From Reuters India:

Never waste a good crisis, Clinton says on climate

Secretary of State Hillary Clinton told an audience Friday "never waste a good crisis," and highlighted the opportunity of rebuilding economies in a greener, less energy-intensive way.

Highlighting Europe's unease the day after Russia warned that gas flows via Ukraine might be halted, she also condemned the use of energy as a political lever.

Clinton told young Europeans at the European Parliament that global economic turmoil provided a fresh opening. "Never waste a good crisis ... Don't waste it when it can have a very positive impact on climate change and energy security," she said....MORE

"I Will Survive" (GE, not Gloria Gaynor)

What the heck, Gloria too:

First I was afraid
I was petrified
Kept thinking I could never live
without you by my side
But I spent so many nights
thinking how you did me wrong
I grew strong
I learned how to carry on...

Here's the vid, below it, Bronte Capital seems to think GE will make it.


From Bronte Capital:
Voodoo maths and GE

...However if they take the extra provisions over three years then pre-tax, pre-provision earnings (ie Voodoo maths) will see them through.

Oh, if the losses are where the bears think ($60 billion range) and if the government supports GE’s liquidity (likely in my view) then voodoo maths will still see GE through – but the time period is five years and the dividend gets cut to zero.

The stock may not be a buy - but on those sort of numbers the CDS is unnecessarily wide - and Warren Buffett will make money on his preferred.

Manipulating the Dow Jones Industrial Average

Back in the bad old days, the specialists* in the Dirty Thirty would move their own books around to their personal benefit but from time to time would coordinate their efforts.

The classic move would be to position for a decline while giving the impression to the investing public that "Hey, the water's fine, come on in".

They would do this by shorting the lower priced DJIA components while maintaining the higher priced stock, or even taking those up a bit.

When the trap was sprung, those higher priced stocks would be collapsed, triggering stop loss limit orders to feed the fear, and nary a specialist bid in sight. As the ticker spread the story to the country, the sell orders would come pouring in and accelerate the down move. Then the margin calls would go out, literally stripping stock from the accounts of the unwary.

This history came back to me as I watched IBM today. Big Blue is the highest priced stock in the DJIA. It was down $1.67 to $85.81. The current divisor is 0.1255527090 which means a $1.00 move in any component stock is worth just under 8 points on the index.

Thus a 1.16% move in IBM is worth as much to the index as a 97% move in Citi (closed at $1.03).

If these were the bad old days, and one were looking for the opposite move, up rather than down, then one would look for a way to paint a negative picture, perhaps by taking a high priced stock down while the lower priced issues were firming up.

That's how they used to do it in the old days*.

Here's an interesting picture found at Dow Jones Indexes (note the moving averages):

Dow Jones Industrial Average

• Today
• 5d
• 1m
• 3m
• 1y
• 5y
• 10y

UPDATE: From MarketBeat, "One-Fifth of Dow Components Under $10".

*Speaking of specialists in the old days, one of my favorite stories is how Joe Kennedy and the boys decided to form a pool to manipulate the Google of the 1920's, RCA. From our June '07 post "Robert Kennedy Jr., Global Warming and Wall Street":

...Already a wealthy man Joe Kennedy had another Wall Street trick up his sleeve, a classic pump-and dump. In 1929 he and some other rascals got together to run the .com of the day, Radio Corporation of America.

What a run it was! The pool picked up $5 million in ten days. My BLS inflation calculator says that's a bit over $60 million today (although the PBS special linked below says $100 million).

When the question arose as to who should manage the pool the answer was easy. Who better than the specialist in the stock, Michael J. Meehan! PBS did a good job on their show "The Crash of 1929", even interviewing Meehan's grandson. Here are some of my links, Senate Hearings (4 page PDF), 1948 SEC chief counsel memo on the Act of '33 (5 page PDF), Colliers story on the early SEC.

One of Joe Kennedy's most quoted comments:
"It's easy to make money in this market," said Kennedy, famously, to an associate. "We'd better get in before they pass a law against it."

GM Shares Crater As Auto Team Meets At White House

From CNBC:

Shares of GM have been getting hammered due to growing speculation the beleaguered auto maker is edging closer to filing for bankruptcy.

The stock dropped as low as $1.28 (down 58 cents/more than 30%). At that price, GM shares were trading at their lowest level since April of 1933.

Today's sell off is fueled largely by fears GM executives are more open to the idea of filing for bankruptcy. Going into chapter 11 would wipe out GM shares, and those who still hold GM stock are thinking it's probably better to get something instead of nothing for their investment. GM maintains that it would prefer to restructure the company outside of bankruptcy court, with the assistance of the Federal government....MORE

See also our post: "Short GM to Zero: Obama Auto Team Drives Imports"

Early Rally Peters Out: U.S. Markets Down $11 Trillion in 17 Months

Part of the reason the massive bailouts and money creation haven't lit the inflation fuse yet. Between deleveraging, credit writedowns and worldwide wealth destruction we might be looking at a $30 Trillion hit to the world's balance sheet.
From the Wall Street Journal:

Markets remained locked in a familiar pattern on Friday as an early stock rally evaporated nearly as quickly as it began, leaving indexes near their worst levels in more than 12 years.

At 11:00 a.m., the Dow Jones Industrial Average was down 45 points, giving up all of its early triple-digit advance. American Express, General Motors and Hewlett-Packard were among the companies pulling down the benchmark. The S&P 500-stock index sank about 0.4% while the Nasdaq Composite Index slid 1.2%....

...Stocks have lost $11 trillion in market value since the October 2007 peak, based on the Dow Jones Wilshire 5000 index, which includes nearly every U.S.-listed stock. Losses since the start of 2009 are $2.6 trillion. Nearly half of all stocks in the index are now trading at less than $5, and 37% are under $3....MORE