The crashing of the US.......most interesting

[Chris Ryser]

U.S. drivers cut back on gasoline amid high prices

Wed May 28, 2008 4:11pm EDT

By Rebekah Kebede

NEW YORK (Reuters) - Americans, notorious for their love of the open road, are cutting back on gasoline consumption as prices at the pump continue to break records.

During the week leading up to the Memorial Day holiday, the traditional start of vacation season, Americans pumped 5.5 percent less gasoline than a year ago as average prices hit a peak $3.84 a gallon, MasterCard Advisors said in a report.

"It's in uncharted territory," said Michael McNamara, vice president of MasterCard Advisors. "As prices have gone up, consumer behavior has changed and it looks like it's continuing to change," McNamara said.
Average retail gasoline prices have jumped above $4 per gallon in 10 states and are running about 25 percent higher than last year, according to travel and auto group AAA.

So far this year, Americans have pumped about 1.7 percent less gasoline than in the same period a year ago, MasterCard said in its report.
The findings follow last week's U.S. Department of Energy data which showed highway miles driven in March fell 4.3 percent from a year earlier, the first March decline since the last major oil shock in 1979..................................

See whole article: http://www.reuters.com/article/domes...080528?sp=true

[Chris Ryser]

Luxury firms hope to sail through global slowdown
Fri May 30, 2008 4:28am EDT

By Sophie Hardach
TOKYO (Reuters) - Luxury goods makers are hoping to weather a consumption slowdown in the United States and Japan, their two biggest markets, with the help of shoppers in emerging economies and super-rich clients who do not feel the economic pinch.

Industry experts have questioned how long fashion companies, yacht and sports car makers and other luxury goods makers can resist the wider consumption slump. The very wealthy, after all, comprise a small group of people, and China, India and Russia are not yet spending enough to replace U.S. shoppers.

But chief executives at a luxury goods conference in Tokyo showed optimism, saying that sales were holding up.

"The luxury business has grown faster than the general economy and I think that trend is here to stay," said Toni Belloni, managing director at LVMH, the world's largest luxury group.

So far, the evidence has been mixed. LVMH reported solid first-quarter revenues, but others have seen slower sales. Bulgari, the jeweler, saw sales rise 3 percent in the third quarter, while net profit was down.
Ermenegildo Zegna, chief executive of the eponymous Italian suit maker, said his company was expanding into sportswear and accessories but also made-to-measure services for wealthy clients to woo new customers.
"Despite the crisis, we've been able to sustain single-digit sales growth. We can still grow despite the slowdown of two of the most important luxury goods markets," he told reporters at the conference.
"The business model has to be changed. We are adding leather accessories, glasses, perfumes."

Zegna is also the latest European fashion group to invest in a huge new flagship store in Tokyo. Armani, Bulgari and Gucci have already built glitzy retail towers in Ginza and Omotesando, Tokyo's main luxury playgrounds. With sparkling facades, designer restaurants and spas, the shops attract luxury fans from all over Asia -- most crucially, rich Chinese tourists who would rather shop in trendy Tokyo than in Beijing or Shanghai...................................................

See whole article: http://www.reuters.com/article/ousiv...080530?sp=true

[jediron1]

U.S. drivers cut back on gasoline amid high prices

Wed May 28, 2008 4:11pm EDT

By Rebekah Kebede

NEW YORK (Reuters) - Americans, notorious for their love of the open road, are cutting back on gasoline consumption as prices at the pump continue to break records.

During the week leading up to the Memorial Day holiday, the traditional start of vacation season, Americans pumped 5.5 percent less gasoline than a year ago as average prices hit a peak $3.84 a gallon, MasterCard Advisors said in a report.

"It's in uncharted territory," said Michael McNamara, vice president of MasterCard Advisors. "As prices have gone up, consumer behavior has changed and it looks like it's continuing to change," McNamara said.
Average retail gasoline prices have jumped above $4 per gallon in 10 states and are running about 25 percent higher than last year, according to travel and auto group AAA.

So far this year, Americans have pumped about 1.7 percent less gasoline than in the same period a year ago, MasterCard said in its report.
The findings follow last week's U.S. Department of Energy data which showed highway miles driven in March fell 4.3 percent from a year earlier, the first March decline since the last major oil shock in 1979..................................

See whole article: http://www.reuters.com/article/domes...080528?sp=true

Albany NY reports reg. gas at $4.08 and Diesel at $5.19. I still remember the days of driving my Corvair to college putting in $.75 for 3 gallons and going almost all week.

[Chris Ryser]

Jobs growth has "ground to a halt"

Wed Apr 30, 2008 12:34pm EDT

NEW YORK (Reuters) - Jobs growth has "ground to a halt" and employment will remain weak for several months said the chairman of Macroeconomic Advisers on Wednesday, after the release of its joint private sector jobs report with ADP.

While the downturn in manufacturing and construction employment showed little sign of abating, growth in service sector employment was offsetting that, though it was hardly robust, Joel Prakken told Reuters.

A private report, jointly developed by ADP Employer Services and Macroeconomic Advisers LLC, earlier on Wednesday showed U.S. private-sector employers unexpectedly added 10,000 jobs in April.

The result was much better than economists' median expectation for a drop of 60,000 jobs in April, according to a Reuters poll, but hardly a sign of a strong job market.

"We will probably see several more months of numbers like this before you can see ... more impressive gains," Prakken said.

"I think it is pretty clear that employment has ground to a halt and that the contractions in both manufacturing and construction employment are still ongoing and little sign really of any abatement in that contraction."

The April ADP report showed employment in the service-providing sector of the economy grew by 64,000. Manufacturing employment fell by 26,000 in April and marked the 20th consecutive monthly decline.................................

See whole article:
http://www.reuters.com/article/ousiv...EN533920080430

[For-Life]

heck, it was not long ago when I was upset that gas went up to half of what I am paying now.

[Chris Ryser]

Facing $4 gasoline, more Americans take mass transit
Mon Jun 2, 2008 12:19pm EDT

NEW YORK (Reuters) - More Americans are leaving their cars at home and jumping on buses, trains, and trolleys as retail gasoline prices approach $4 per gallon, according to a report released Monday by the American Public Transportation Association.

American mass transit use increased 3.3 percent during the first quarter of 2008 while Americans drove 2.3 percent less during the same period, the report said.

The trend builds on last year's record increases when U.S. mass transit use reached a 50-year high as consumers tried to temper the impact of soaring gasoline prices.

"More and more people have decided that taking public transportation is the quickest way to beat the high gas prices," APTA president William W. Millar said in a press release.

"There's no doubt that the high gas prices are motivating people to change their travel behavior," he added.

Average retail gasoline prices have topped $4 per gallon in 13 states and are running about 25 percent higher than last year, according to travel auto group AAA.

Travel on light rails, which includes streetcars and trolleys, showed the highest increase with a 10.3 percent bump in ridership, according to APTA.
Commuter rails came in second with a 5.7 percent increase in usage during the first quarter in large metropolitan areas. Seattle's commuter rail system had the highest jump with nearly 28 percent more riders in the first quarter.

Buses had the least increase in ridership at 2 percent, although cities with populations under 100,000 saw a large increase.................................

See whole article:
http://www.reuters.com/article/newsO...080602?sp=true

[jediron1]

heck, it was not long ago when I was upset that gas went up to half of what I am paying now.

I just went to the grocery store and almost everything I bought was up 20% and top of that my gas and electric bill just up another 20%. UNBELIEVABLE

[Chris Ryser]

UAL to announce more fleet, job cuts: report
Wed Jun 4, 2008 12:49am EDT

(Reuters) - UAL Corp (UAUA.O: Quote, Profile, Research), parent of United Airlines, plans to reduce its mainline fleet by another 70 aircraft by the end of 2009 and announce further job cuts, the Wall Street Journal said on Wednesday.

The airline is expected to announce the planned cuts to its fleet of 460 aircraft later on Wednesday, the paper reported, citing people familiar with the matter.

The airline will drop 64 Boeing 737s by the end of next year, and also remove six jumbo 747s, the paper said.

UAL could not be reached immediately for comment.
UAL will also announce additional cuts of salaried and management workers, with cuts of unionized positions to follow later, the paper said.
UAL said in April it would cut 500 salaried and management workers and eliminate 600 union jobs by the end of 2008. It had also said it would cut 30 aircraft.

The newspaper said while the move would help the Chicago-based airline to deal with surging fuel costs, it would result in furloughs of unionized workers and a major reduction in routes that may be less profitable............................

See whole article:
http://www.reuters.com/article/ousiv...42147920080604

[Chris Ryser]

Credit recession may last over 2 years: strategists
Wed Jun 4, 2008 10:19am EDT

NEW YORK (Reuters) - A "credit recession" sparked by a downturn in the U.S. housing market and excesses in structured finance may last more than two years, and the financial sector may undergo "massive consolidation," according to two leading Wall Street strategists.

The downturn may last for "two, two and a half years" which may help lead to a healthier market, Jack Malvey, Lehman Brothers' chief global fixed income strategist, said during a conference in New York.

"Structured finance is not new. It is the case in credit that (the market) hungered to get in this space 20 years ago," Malvey said. "This is the biggest blowup that we've had."

(Reporting by Walden Siew; Editing by James Dalgleish)


http://www.reuters.com/article/gc06/...44560820080604

[Chris Ryser]

May see bigger U.S. bank failures in future: FDIC
Thu Jun 5, 2008 10:31am EDT

WASHINGTON (Reuters) - Future U.S. bank failures linked to the downturn in the real estate market may include "institutions of greater size" than in the recent past, Federal Deposit Insurance Corp Chairman Sheila Bair said on Thursday.

In testimony prepared for a Senate Banking Committee hearing on the state of the banking industry, Bair said an increasing number of problem banks face high exposure to commercial real estate and construction lending.

"There is also the possibility that future failures could include institutions of greater size than we have seen in the recent past," Bair said. "Uncertainties in today's economic environment continue to pose significant challenges for the banking industry, households, and bank regulators."................................................ ..

See whole article:
http://www.reuters.com/article/ousiv...00409720080605

[Chris Ryser]

Jobless rate leaps to 3-1/2 year high in May
Fri Jun 6, 2008 12:20pm EDT

By Glenn Somerville

WASHINGTON (Reuters) - The U.S. unemployment rate surged to 5.5 percent in May, its highest in more than 3-1/2 years, as the barely growing economy lost jobs for the fifth straight month.

It was the biggest jump in the monthly jobless rate in 22 years and raised concerns the economy was at increased risk of stalling into recession.
"The unemployment rate is the shocker," said Robert MacIntosh, chief economist at Eaton Vance Management in Boston.

"The actual payrolls number itself was consistent with what we have been seeing in terms of a slowdown but not quite a recession. But the employment rate gives you a much weaker economic outlook than the payrolls number," said MacIntosh.

The Labor Department on Friday said 49,000 jobs were shed by employers last month on top of 28,000 in April -- for a total of 324,000 lost since the beginning of the year. May's unemployment rate was up from 5 percent in April and was the highest since October 2004.

The soft jobs data helped drive stock prices steeply lower, but it sent U.S. Treasury debt prices soaring as investors bet it pushed back any chance that the Federal Reserve might raise interest rates before November's presidential election.

WHITE HOUSE UNEASE

It added to discomfort at the White House, where spokesman Scott Stanzel said the unemployment rate was "too high for our liking," though he noted it stemmed partly from more job-seekers and "not from a broad increase in layoffs"..............................................


See whole article:
http://www.reuters.com/article/ousiv...080606?sp=true

[jediron1]

Jobless rate leaps to 3-1/2 year high in May
Fri Jun 6, 2008 12:20pm EDT

By Glenn Somerville

WASHINGTON (Reuters) - The U.S. unemployment rate surged to 5.5 percent in May, its highest in more than 3-1/2 years, as the barely growing economy lost jobs for the fifth straight month.

It was the biggest jump in the monthly jobless rate in 22 years and raised concerns the economy was at increased risk of stalling into recession.
"The unemployment rate is the shocker," said Robert MacIntosh, chief economist at Eaton Vance Management in Boston.

"The actual payrolls number itself was consistent with what we have been seeing in terms of a slowdown but not quite a recession. But the employment rate gives you a much weaker economic outlook than the payrolls number," said MacIntosh.

The Labor Department on Friday said 49,000 jobs were shed by employers last month on top of 28,000 in April -- for a total of 324,000 lost since the beginning of the year. May's unemployment rate was up from 5 percent in April and was the highest since October 2004.

The soft jobs data helped drive stock prices steeply lower, but it sent U.S. Treasury debt prices soaring as investors bet it pushed back any chance that the Federal Reserve might raise interest rates before November's presidential election.

WHITE HOUSE UNEASE

It added to discomfort at the White House, where spokesman Scott Stanzel said the unemployment rate was "too high for our liking," though he noted it stemmed partly from more job-seekers and "not from a broad increase in layoffs"..............................................


See whole article:
http://www.reuters.com/article/ousiv...080606?sp=true

In the paper today it said GM will close Canadian truck plant because of falling sales. The plant has 2500 workers.

[Chris Ryser]

Jobs recovery at least 6 months away

Fri Jun 6, 2008 5:00pm EDT

By Nick Zieminski - Analysis

NEW YORK (Reuters) - A surprisingly large jump in the U.S. unemployment rate during May sparked a sell-off in shares of staffing and employment services stocks on Friday, signaling that the length and depth of the current labor market downturn may well be worse than anticipated.
The Standard & Poor's HR Employment Services index was down 3.4 percent in morning trading.

Another several months of job losses are likely, analysts and staffing executives said, as evidence mounts that employers are more reluctant to hire.

But many also cautioned that some bright spots remain, and job losses remain relatively modest when compared with the millions of jobs added during the economic upturn.

The U.S. economy shed jobs for the fifth consecutive month in May, down 49,000 outside the farm sector, and job losses in April and March were wider than initially reported. The unemployment rate jumped to 5.5 percent from 5 percent, its biggest monthly rise in 22 years.

One explanation for the jump in people looking for work, which drove up the unemployment rate, is that more people are returning to the work force as their budgets get crimped by high food and gasoline prices.
"We do see more and more candidates because of gas prices and their inability to easily relocate; they're looking for work, but frankly they need something close to home," said Tig Gilliam, head of staffing company Adecco SA's U.S. operations.

"Costs are going up, so a bunch of people are going back and saying, 'OK, I've got to get serious,'" Gilliam saidJon Zion, who heads eastern U.S. operations at specialty staffing firm Robert Half International Inc, agreed.
"As a practitioner in the staffing business, my sense of the economy of what's going on -- energy prices, the housing industry -- has probably forced a population of people to come back into the market."

As more workers look for jobs close to home, so more employers are thinking locally to cope with $4 per gallon gasoline.

Adecco clients are increasingly looking for candidates locally, Gilliam said, rather than doing nationwide searches. Some are offering gas cards to employees or organizing ride sharing and bus programs.

NO RECOVERY YET

A drop in professional payrolls in the government report was a troubling sign, said Scot Melland, CEO of Dice Holdings Inc, which runs jobs web sites focused on the technology and finance fields.

"That could be a leading indicator of a weakening in the labor market overall," Melland said. "We're probably looking at a couple of quarters before we see a change in the labor outlook."

The biggest change in recent months is that employers are taking longer to make decisions, said William Grubbs, executive vice president and chief operating officer of Spherion Corp. A permanent placement that may have taken 35 days six months ago now takes about 60 days.

"We're not on the road to recovery ......................................

See whole article: http://www.reuters.com/article/ousiv...080606?sp=true

[Chris Ryser]

U.S. has few options as oil nations tighten grip
Fri Jun 6, 2008 3:32pm EDT

By Chris Baltimore - analysis

WASHINGTON (Reuters) - Resource nationalism in oil producing countries is cordoning off valuable supplies and the United States has precious few options to battle the trend amid a looming supply crunch.

As U.S. oil prices CLN8 marched above $135 a barrel last month -- and settled up 8.4 percent at a record-high $138.54 on the New York Mercantile Exchange on Friday -- international firms have found themselves faced with tougher terms and shut out of the globe's most promising oil basins, a trend known as "resource nationalism."

The United States -- the world's biggest oil consumer -- stands mostly powerless as national oil companies like Venezuela's PDVSA and Russia's Gazprom block access to key oil reserves and demand a larger share of the profits in exchange for allowing international oil companies to drill.
"There are few good foreign policy options because oil really is our economic jugular," said Anne Korin, co-director of the Institute for the Analysis of Global Security, a nonprofit energy think tank.

Conventional wisdom in past years has been that when oil prices rise high enough, oil companies will have the profit motive to spend the billions of dollars needed to bring new supply sources online.

UNCONVENTIONAL WISDOM

But resource nationalism has turned such wisdom on its head, investment bank Goldman Sachs said in a recent report.

Resource nationalism "imposes significant policy constraints on the free flow of capital, labor and technology that are substantially limiting supply growth," Goldman Sachs said in its report, which also called for benchmark U.S. oil prices to average $141 a barrel in the second half of 2008............................................

See whole article:
http://www.reuters.com/article/reute...080606?sp=true

[jediron1]

U.S. has few options as oil nations tighten grip
Fri Jun 6, 2008 3:32pm EDT

By Chris Baltimore - analysis

WASHINGTON (Reuters) - Resource nationalism in oil producing countries is cordoning off valuable supplies and the United States has precious few options to battle the trend amid a looming supply crunch.

As U.S. oil prices CLN8 marched above $135 a barrel last month -- and settled up 8.4 percent at a record-high $138.54 on the New York Mercantile Exchange on Friday -- international firms have found themselves faced with tougher terms and shut out of the globe's most promising oil basins, a trend known as "resource nationalism."

The United States -- the world's biggest oil consumer -- stands mostly powerless as national oil companies like Venezuela's PDVSA and Russia's Gazprom block access to key oil reserves and demand a larger share of the profits in exchange for allowing international oil companies to drill.
"There are few good foreign policy options because oil really is our economic jugular," said Anne Korin, co-director of the Institute for the Analysis of Global Security, a nonprofit energy think tank.

Conventional wisdom in past years has been that when oil prices rise high enough, oil companies will have the profit motive to spend the billions of dollars needed to bring new supply sources online.

UNCONVENTIONAL WISDOM

But resource nationalism has turned such wisdom on its head, investment bank Goldman Sachs said in a recent report.

Resource nationalism "imposes significant policy constraints on the free flow of capital, labor and technology that are substantially limiting supply growth," Goldman Sachs said in its report, which also called for benchmark U.S. oil prices to average $141 a barrel in the second half of 2008............................................

See whole article:
http://www.reuters.com/article/reute...080606?sp=true

American Free Press ran this article 2 years ago that in the American west we have over 2 trillion gallons of oil, but at the time the oil companies said oil would have to go to around 60 or 70 per barrel to make it economical to go after. Well I believe oil is now at 133 per barrel, double what they said they needed and are they drilling yet?
http://www.americanfreepress.net/html/u_s__has_massive_oil.html

[Chris Ryser]

Amid economic gloom, where can investors hide?
Fri Jun 6, 2008 5:06pm EDT

By Jennifer Ablan

NEW YORK (Reuters) - Fears of a U.S. recession amid a weakening labor market, further credit tightening by sick financial institutions, and consumers constrained by soaring gasoline prices and deteriorating home values leaves investors with few places to hide.

The Dow Jones Industrial Average .DJI plunged almost 400 points on Friday as crude oil prices surged an astounding $10.75 to $138.54 a barrel on a new forecast that oil could hit $150 by July 4, as America's unemployment rate in May showed the sharpest monthly increase in 22 years.

Against that very ugly backdrop for the consumer, Wall Street banks face gloomy prospects.

Next week Reuters hosts 16 leading analysts, economists and strategists at its annual Reuters Investment Outlook Summit in New York who will discuss how much longer the credit crisis is likely to go.
"We went through systemic financial risk concerns and I would argue we are headed toward more idiosyncratic risk concerns of where it is more company specific," Tobias Levkovich, Citigroup's chief U.S. equity strategist, said in an interview with Reuters.

The sudden collapse of Bear Stearns in March continues to reverberate through the financial markets, as many wonder if Lehman Brothers (LEH.N: Quote, Profile, Research) could go the way of its former rival.
"It seems that a lot of people want to break Lehman, but in my opinion that will be hard to do," Greg Peters, global head of fixed-income research and economics at Morgan Stanley (MS.N: Quote, Profile, Research) in New York, said after Lehman shares snapped three days of painful declines on Wednesday.

Indeed, losses at Lehman as well as rating downgrades of the world's two largest bond insurers, MBIA Corp (MBI.N: Quote, Profile, Research) and Ambac Financial Group Inc (ABK.N: Quote, Profile, Research) have reminded investors that credit problems are not in the past.

See whole article:
http://www.reuters.com/article/Inves...33857820080606

[jediron1]

Maybe this is the answer:http://www.engdahl.oilgeopolitics.ne...peculation.HTM

[Chris Ryser]

Why It’s Worse Than You Think

By Daniel Gross | NEWSWEEK
Jun 16, 2008 Issue

For months, economic Pollyannas have looked beyond the dismal headlines and promised a quick recovery in the second half. They're dead wrong.

The forgettable first half of 2008 is stumbling to a close. On Friday, the Labor Department reported that American employers axed 49,000 jobs in May, the fifth straight month of job losses—an event that signals a recession sure as the glittery ball dropping on Times Square augurs a New Year. The report, which inspired a 394-point decline in the Dow Jones Industrial Average Friday, was the latest in a run of bad news. Auto sales, the largest retailing sector in the U.S., were off 10.7 percent in May from the year before. And housing? Ugh. Nationwide, according to the Case-Shiller Index, home prices in the first quarter fell 14 percent.

Yet hope springs eternal that the second half will be better than the first. Economists polled by the Federal Reserve Bank of Philadelphia in May believe the economy will grow at an annual rate of 1.7 percent and 1.8 percent in the third and fourth quarters, respectively. Lawrence Yun, chief economist at the National Association of Realtors, tells NEWSWEEK that "home sales and prices in most of the country will improve during the second half of 2008." (Yun is the Little Orphan Annie of forecasters. He's always sure the sun will come out tomorrow.) Last month, Treasury Secretary Henry Paulson said, "We expect to see a faster pace of economic growth before the end of the year."

The cause for optimism: the U.S. has called in the economic cavalry, which has responded in textbook fashion. The Federal Reserve has aggressively cut interest rates, bringing the Federal Funds rate down from 5.25 percent last September to 2 percent. Earlier this spring, Congress and President Bush, in a rare moment of bipartisan accord, passed a stimulus package, which will shove nearly $100 billion into the pockets of American consumers by mid-July.


But this downturn is likely to last longer than the eight-month-long recession of 2001. While the U.S. financial system processes popped stock bubbles quickly, it has always taken longer to hack through the overhang of bad debt. The head winds that drove the economy into this dead calm— a housing and credit crisis, and rising energy and food prices—have strengthened rather than let up in recent months. To aggravate matters, the twin crises that dominate the financial news—a credit crunch and the global commodity boom—are blunting the stimulus efforts. As a result, the consumer-driven economy may not bounce back as rapidly as it did in the fraught months after 9/11.

As it seeks to regain its footing in the second half, the U.S. economy faces two significant obstacles, neither of which was evident in 2001. The first is entirely homegrown: the self-inflicted wounds of the promiscuous extension and abuse of credit in the housing and financial sectors. The second is a global phenomenon that has comparatively little to do with American behavior: rampant inflation in commodities such as oil, food and steel. These trends have conspired to inflict genuine economic pain and deflate consumer confidence. The Conference Board's Consumer Confidence Index in May slumped to a 16-year low.

While the treatment of the current malaise has been essentially identical to the reaction to the 2001 slump—aggressive Federal Reserve rate cuts and tax rebates—the symptoms are quite different. In 2001, an implosion in the technology sector and a slump in business investment pushed the economy over the edge. Even though some 3 million jobs were shed between 2001 and 2003, consumers soldiered on through the downturn. "We had a massive reduction in both long- and short-term interest rates, which set off the housing and consumption boom," says Ian Morris, chief U.S. economist at HSBC. (Remember zero-percent car loans?) This time, it's the opposite. While businesses—especially those that export—are holding up, the economy is being dragged down by the cement shoes of a freaked-out consumer and a punk housing market.

The difficulties today start—as they began last year—with housing and housing-related credit. Last Thursday, the Mortgage Bankers Association quarterly report showed that the percentage of mortgage borrowers behind on their payments—6.35 percent—was the highest since the MBA began tracking the number in 1979. It's not just subprime. In the first quarter of 2008, 36 percent of all foreclosures initiated were on prime adjustable-rate mortgages in California. Mark Zandi, chief economist of Moody's Economy.com, says the decline in home prices has slashed $2.5 trillion from household wealth, or about $25,000 per homeowner. The fall has also removed an important source of support for consumer spending, as Americans who grew accustomed to borrowing against rising home equity to finance car purchases or vacations now find themselves bereft. Banks are extricating themselves from the home-equity-line-of-credit business in the same way college students get themselves out of relationships gone bad: abruptly. Judi Froning, a second-grade teacher in San Diego, was surprised last week when she received a letter from Chase informing her that it was terminating her untapped HELOC. "In the light of declining home values, they said they are stopping, effective May 31, any draw on my line of credit," she says.

Despite repeated claims that the damage has been contained, the banks that recklessly financed the housing boom—and then traded mortgage debt even more recklessly—are still cleaning up the mess. But it turns out (surprise!) the same sort of clouded judgment led banks to excesses in commercial lending, and in loans to private-equity firms. The battered financial system, which has raised tens of billions of dollars on onerous terms from new investors to shore up balance sheets, is still likely to suffer more pain from the popped credit bubble, said Bruce Wasserstein, the CEO of the investment bank Lazard, speaking at a New York breakfast. "The harm will radiate for another year." The latest victim: Wachovia CEO G. Thompson Kennedy, cashiered after the North Carolina-based bank suffered a string of losses. Next up: write-offs for bad credit-card and commercial real-estate debt. After a serene period between 2004 and '07 in which the Federal Deposit Insurance Corp. went without a single bank failure, four have gone under so far this year. FDIC chairperson Sheila Bair warned of the "possibility that future failures could include institutions of greater size than we have seen in the recent past." In preparation, the agency has brought staffers out of retirement.................................

See whole article:
http://www.newsweek.com/id/140553

[Chris Ryser]

Banking crisis spreads from Wall St to Main St: James Saft
Wed Jun 11, 2008 2:53am EDT

James Saft is a Reuters columnist. The opinions expressed are his own-
LONDON (Reuters)

-The health of America's banks continues to worsen, with lending to real estate developers an emerging threat and more failures in the offing.
While it is too early to say that the fire fighting on Wall Street is over, there is growing evidence that the extended fall in real estate is putting stress on Main Street as well.

Commercial banks in the U.S. face a complex and difficult situation: margins are compressed and there is increasing stress on a range of assets, from mortgages to consumer loans to debt backing commercial and residential real estate development.

For bank investors this means that we are only at the beginning of lower dividends, more dilutive capital raisings and share price falls, as well as the odd failure.

These failures aren't likely to be widespread enough to be a systemic threat, but the capital raisings, distressed mergers and write downs that are part of the solution will further crimp lending.
This credit crunch will run and run.

It was striking just how negative top banking regulators were last week in an appearance before the Senate Banking Committee.

"We expect bank holding companies to continue to report weak earnings and further asset valuation writedowns ........................

Se whole article:
http://www.reuters.com/article/reute...080611?sp=true

[jediron1]

#1 Highest Price $5.30
GROVELAND, CA

#2 Highest Price $5.16
SPRING VALLEY, NY

[jediron1]

:cheers:

[Chris Ryser]

#1 Highest Price $5.30
GROVELAND, CA

#2 Highest Price $5.16
SPRING VALLEY, NY

Here in Montreal Canada a US Gallon now cost's $ 5.625

[Chris Ryser]

Desperate times require sensible measures
15:09 ET, Wed 11 Jun 2008

By Linda Stern

WASHINGTON (Reuters) - The economy is in a bad place and people are casting about, sometimes desperately, for ways to ease the crunch. I know this because of the contents of my e-mail inbox, which grows more outlandish all the time.

Some of the ideas I've seen this week include: How to invest in Chinese real estate; using options to increase returns in your retirement account; how to sell your lawsuit before you collect; and how to use a debit card to hit up your 401(k) account for cash.

Much of this reflects not the desperation of working people with spending and savings needs, but the desperation of folks who must sell them financial products.

Stocks are disappointing, conventional mortgages are tight, student loans are unprofitable. Why not get more arcane?
Here are some of the pitches currently being aimed at financial consumers, and why you should pass on most of them.

• The 401(k) convenience card: Borrowing from tomorrow to get through today is generally not good financial strategy. Some exceptions, such as carefully undertaken debt for appreciating assets like an education or a house, make sense.

It can even make sense to borrow against your own 401(k) plan to cover those items: The interest you pay goes back into your own account and the home equity or degree you pick up will help support your retirement too.

But getting a plastic debit card that pulls money out of your 401(k) plan whenever you swipe it is a dangerous proposition. So much so that the Financial Industry Regulatory Authority (FINRA) recently warned consumers against it. "Remember that with every swipe comes the potential to wipe out a portion of your hard-earned retirement savings," the self-regulatory group said. Using your retirement assets to pay for car repairs, vacations, the kids' soccer shoes and other consumables can cause a host of problems, including lost investment opportunities, added fees, a smaller-than-necessary nest egg when you need it most, and extra tax burdens, for example, if you do not pay it back on time. Skip the card, and if you need to make an emergency loan against your retirement plan, think it through very carefully.

• The invest-in-China plan: Not a day goes by that I don't get some kind of "amazing buying opportunity in China" e-mail. And maybe it is, but China has its own financial problems -- growing inflation, an aging population, the same dependence on energy the United States is dealing with, a weak currency, not to mention shortcomings in its manufacturing and inspection processes and labor markets that could cost investors a lot of money.

As for the real estate, it's hard enough to pick a solid .............................

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http://features.us.reuters.com/perso...-F9ECDEDD.html

[Chris Ryser]

Inflation up sharply on gasoline
Fri Jun 13, 2008 2:14pm EDT

By Mark Felsenthal

WASHINGTON (Reuters) - Soaring gasoline prices helped drive up consumer prices in May at the fastest rate in six months, the government said on Friday, but core prices remained tame, easing inflation fears in financial markets.

A separate report showed U.S. consumer sentiment tumbling to a 28-year low in June, with some lessening of expectations on inflation one year out and a steady reading on long-term inflation expectations, which held at a 13-year high.

The Labor Department said the Consumer Price Index rose a steep 0.6 percent in May, a touch more than Wall Street had expected, after a modest 0.2 percent gain in April.

However, so-called core prices, which exclude volatile food and energy cost, edged up just 0.2 percent.

Surging gasoline prices and soft labor market conditions have depressed consumer spirits. The Reuters/University of Michigan sentiment index for this month dropped to 56.7 from 59.8 in May. Wall Street economists had expected a decline to only 59.5.

"Today's inflation numbers do not put any additional pressure on the Fed to hike interest rates," said Mark Vitner, senior economist at Wachovia Corp. in Charlotte, North Carolina. "The Fed is not nearly as behind the curve as some people currently believe."

U.S. bond prices rose and the dollar slipped as traders scaled back expectations of Federal Reserve interest rate hikes. The stock market welcomed the news on core inflation and the blue chip Dow Jones industrial average was up about 130 points in the first half hour of trade.
The reassuring data followed a series of inflation warnings from central bankers around the globe, and capped off a ...................................

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http://www.reuters.com/article/newsO...080613?sp=true

[Chris Ryser]

Retailers try to thrive in tumultuous climate

Fri Jun 13, 2008 1:16pm EDT

By Nicole Maestri

NEW YORK (Reuters) - Retailing is normally not for the faint of heart, but the current state of the industry is enough to make even the most time-tested veteran swoon.

In the United States, consumer spending has slowed as the average price of a gallon of gas has topped $4, the housing market sags, access to credit has tightened and food prices have jumped.

J.C. Penney Co Inc (JCP.N: Quote, Profile, Research, Stock Buzz) Chief Executive Myron Ullman has called this the most unpredictable environment in his 39-year retail career, while Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz) CEO Lee Scott said last week that if the company had not been able to win shoppers by flexing its discounting muscles, he would probably be out of a job.

"I thank God we are positioned like we are this year," Lee Scott told analysts.

At the Reuters Consumer and Retail Summit in New York and London June 16-18, executives from Borders Group Inc (BGP.N: Quote, Profile, Research, Stock Buzz), Perry Ellis International Inc (PERY.O: Quote, Profile, Research, Stock Buzz), Jones Apparel Group Inc (JNY.N: Quote, Profile, Research, Stock Buzz), Toys "R" Us, Best Buy Co Inc (BBY.N: Quote, Profile, Research, Stock Buzz) and other companies will discuss how they are navigating these uncertain times.

They must juggle inflationary pressures, reluctant shoppers and intense competition while facing the looming challenge of enticing people to spend during the crucial holiday season without sacrificing too much profit.

SQUEEZED BY JOB MARKET, ENERGY PRICES

For the four months through May, the average monthly rise for U.S. retail chain sales at stores open at least a year is 2 percent. That trails the 2.1 percent advance notched at this point last year and the 3.6 percent rise in 2006, according to the International Council of Shopping Centers.
Excluding Wal-Mart's results, which have been outpacing competitors, sales are up just 0.9 percent -- far below the gains of 2.6 percent last year and 4.8 percent the year before.

"Households are becoming squeezed as the harsh job market holds down wage growth while the costs of energy and food rise rapidly," Mark Zandi, chief economist for Moody's Economy.com, wrote in a note.

The difficult conditions are shaking up the retail sector. Linens 'n Things, Sharper Image and Goody's Family Clothing have filed for bankruptcy, while Starbucks Corp (SBUX.O: Quote, Profile, Research, Stock Buzz), AnnTaylor Stores Corp (ANN.N: Quote, Profile, Research, Stock Buzz), Home Depot Inc (HD.N: Quote, Profile, Research, Stock Buzz) and others have closed stores or slowed expansion plans.
Borders Group, the No. 2 U.S. bookseller after Barnes & Noble Inc (BKS.N: Quote, Profile, Research, Stock Buzz), has put itself up for sale. Meanwhile, it has been closing underperforming stores and taking steps to turn around its business, which has suffered from the pullback in consumer spending.

Jones Apparel has formed a joint venture to develop, market and license the fashion brand Rachel Roy, a move that broadens its exposure to higher-end shoppers, who are often less worried by a weak economy.
"We see tremendous opportunity in Rachel Roy as a designer and brand," Chief Executive Wesley Card said on Thursday.

GLIMMER OF HOPE?

Stocks got a boost on Thursday after the U.S. Commerce Department said May retail sales rose 1 percent, much higher than expected, as many consumers had more cash in their wallets from government tax rebate checks...................................

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