[rohry]

Today Abbey Joseph Cohen lowered her Dow expectations from 11,300 to 10,800. What world do these people live in?

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[rohry]

Market WrapUp is delivered...

...and IBM hits $55, 5 more points and my $50 prediction happens. Did everyone get out at $100+ when I made my $60 prediction? Hope so...

[teletech]

Today Abbey Joseph Cohen lowered her Dow expectations from 11,300 to 10,800. What world do these people live in?

So what this guy is saying basically is that we're cooked! Stick a knife in us cause we're done. Nothing can save us so the last one out turn off the lights. We can't recover--- EVER?!! Everyone will lose EVERYTHING! Does that about cover it?

[Texas_Jarhead]

someone please tell me how it is that precious metals (gold) are still flat.

[Lazamataz]

On the bright side, at least we'll all be dead in a few decades or so.

[Davea]

Reuters Market News

US CREDIT OUTLOOK - Almost no place to hide

Wednesday October 9, 4:58 pm ET

By Eric Burroughs

NEW YORK, Oct 9 (Reuters) - Each day seems to bear more grim news for high-strung U.S. capital markets and provide U.S. Treasuries yet more reason to hit new historic low yields.

As stocks keep hitting five-year lows and mounting worries about credit quality have pummeled widely held names like Ford Motor Co. (NYSE:F - News) and J.P. Morgan Chase (NYSE:JPM - News), investors are seeking shelter in only the safest of capital hide-outs.

Thus benchmark Treasury yields keep plunging to levels not seen since the 1950s and two-year note yields hit record lows, and analysts see nothing to stop the trend on the horizon.

Spreads on corporate bonds, agency debt, mortgage-backed securities and emerging market debt all widened against Treasuries on Wednesday -- and with good reason.

The Dow fell 215 points on an analyst warning about General Electric's (NYSE:GE - News) future performance. Ford's bonds were hit hard. Moody's downgraded J.P. Morgan Chase's credit rating, while the rating of Germany's Allianz Group was also knocked down by both Moody's and Standard & Poor's. Junk bond yields soared to record highs near 11 percentage points over Treasuries.

more: http://biz.yahoo.com/rf/021009/markets_bonds_outlook_1.html

[Davea]

Reuters Business Report

J.P. Morgan Cut by Moody's, Affects Debt

Wednesday October 9, 4:56 pm ET

By Jonathan Stempel

NEW YORK (Reuters) - Moody's Investors Service on Wednesday cut J.P. Morgan Chase & Co.'s (NYSE:JPM - News) long-term debt ratings, reflecting concern about the No. 2 U.S. bank's near-term ability to maintain "acceptable profitability" as investment banking revenue falls and loan losses mount.

The downgrade, affecting about $42 billion of debt, follows a similar downgrade on Sept. 17 by Standard & Poor's Ratings Services. J.P. Morgan shares fell nearly 7 percent on Wednesday, suffering most of that decline after Moody's early afternoon downgrade.

Moody's cut J.P. Morgan's senior unsecured debt one notch to "A1," its fifth highest grade, from "Aa3," and also cut several other ratings. Its rating outlook is now stable.

MORE: http://biz.yahoo.com/rb/021009/financial_jpmorgan_moodys_7.html ==============================================================

[Vidalia]

The formulaic derivatives niche was disproved as flawed over a decade ago, but the analysts and especially the brokerage firms don't want you to know that...

[Davea]

Reuters Business Report

Ferguson: Fed Can't Fix Stocks Swings

Wednesday October 9, 8:49 pm ET

NEW YORK (Reuters) - The Federal Reserve is limited in what it can do to help smooth economic ups and downs, the U.S. central bank's vice chairman said on Wednesday as analysts fretted about the strength of the recovery and stocks tumbled to fresh multiyear lows.

In remarks prepared for delivery to the Bond Market Association, Fed Vice Chairman Roger Ferguson also stressed that the central bank cannot target stock prices, even though some analysts have suggested it should take on more of a role in managing swings in the markets.

"Nobody would deny that central banks can be quite powerful and that monetary policy works, over time," Ferguson said. "But in the scheme of things, a central bank's ability to smooth asset prices (if it wanted to) or to buffer shocks to spending or production is somewhat limited."

He added that "monetary policy action cannot appropriately be targeted to benefit one industry, region or economic group."

Ferguson's discussion of "Central Banks and Markets" came as major U.S. stock indexes tumbled to new multi-year lows in the aftermath of a huge run-up during the late 1990s.

The blue-chip Dow Jones industrial average sank 2.87 percent to 7,286.27 on Wednesday, a low not seen since October 1997. The index is down more than 37 percent from its January 2000 high. The broad Standard & Poor's 500 Index fell 2.73 percent while the Nasdaq Composite slipped or 1.34 percent to hit a new six-year closing low.

Some economists have criticized the Fed for not doing more to try to burst the late 1990s stock market bubble before it got out of hand. Such critics have said higher interest rates might have helped to contain what Greenspan once referred to as "irrational exuberance" in the markets and, thus, possibly have prevented the ensuing hangover.

But Ferguson said the Fed focuses squarely on the macroeconomy and the broad level of prices of goods and services, aiming to avoid either excessive rises or broad declines in prices.

"Some have suggested that under some circumstances central banks should adjust the overnight funds rate to affect intentionally the relative price of another asset class, namely equities," he said, acknowledging the criticism.

"UNINTENDED CONSEQUENCES"

But he cited two drawbacks to trying to make stock prices the focus of interest-rate actions: the fact that there is no clear link between rate changes and stock movements and also that there could be "unintended consequences" for the economy from efforts to influence equity markets.

Ferguson did stress that stock market movements factor into Fed decisions, even if they are not the target of policy.

"To be clear, this is not an argument for never considering prices in asset markets when determining how well we are likely to do in achieving our goals," he said.

Just as the Fed's powers are limited concerning stock movements, it cannot always fully counter surprise events or "shocks" that might hit the economy. Ferguson cited the recent sharp pullback in business investment spending as an example.

"The reality is that when the shortfall in desired spending is large or arises quite quickly, as was the case last year when businesses slashed their investment plans in light of a perceived overhang of capital, the initial monetary policy offset can be only partial and not necessarily synchronous," the Fed vice chairman said.

The U.S. central bank last year slashed interest rates 11 times to a 40-year low of 1.75 percent as it sought to fight a recession triggered largely by the business spending pullback.

Although a recovery appears to be under way, it has been choppy and slow to hit its stride.

Ferguson did not discuss the current economic outlook, nor did he delve into the issues of recent Fed policy discussions. At the central bank's last meeting on Sept. 24, the majority of Fed policymakers decided to leave interest rates steady.

But two officials dissented, arguing for cuts in rates.

Without specifically mentioning the two recent dissents, Ferguson said he has been "pleased" with the Fed's decision, announced in March, to disclose to the public any dissents at monetary policy meetings at the time that they occur.

Previously, such dissents were disclosed with a time lag of several weeks. That lag sometimes led to confusion about the context in which dissents were made.

"We decided to eliminate that potential source of misunderstanding, and, for a central bank, we made that decision relatively quickly," he said. "I am pleased with the Committee's quick response."

[Ken H]

DJ Utilities took another hit today, down about 10%. Lowest level since '88.

[Mute]

Today Abbey Joseph Cohen lowered her Dow expectations from 11,300 to 10,800. What world do these people live in?

Ed Yardeni is the Chief Investment Strategist at Prudential. He says that the stock market is 49% undervalued as of today's close. That puts fair value for the S&P around 1520, and the Dow around 14,300.

I think his model may need some tweaking.

[STONEWALLS]

"Today Abbey Joseph Cohen lowered her Dow expectations from 11,300 to 10,800. What world do these people live in?"

apparently not the same world the Japanese live in....the Nikkei's down 263 points[3.08%] as I type this...

as always, thanks Rohry and good luck to everybody!

Stonewalls

[Lunatic Fringe]

What is a 10-sigma event- I tried to search for a definition but could not find one.

[Dick Bachert]

(I wrote this a number of years ago when things were NOT going well with the economy. Trust me: They WILL get ugly once again as man -- or certain men -- cannot resist playing God. We continue to violate the universal, immutable laws of economics at our great peril.)

Despite the apparent economic strength of the American economy, history proves that EVERY house of cards eventually comes down. And the higher the card house, the harder the fall when it finally comes. And when it does, the more freedoms we will voluntarily surrender to "restore order." It was the Founders' concern about this historically valid problem which prompted their attempt -- now ignored -- to keep American "money" sound and honest.) Dick Bachert 1998

* * * * * * * *


The Forgotten History of Money
This is the fascinating story of the efforts by certain of the Founding Fathers to prevent the economic distress we find all about us today. It is also a sad story on the basis that modern, "sophisticated" Americans have abandoned the corrective institutional mechanism that remains in place to this day. As you read it, think about a world with many fewer S&L, banking and political scandals and economic problems now considered the norm.
"Blood running in the streets. Mobs of rioters and demonstrators threatening banks and legislatures. Looting of shop and home. Strikes and unemployment. Trade and distribution paralyzed. Shortages of food. Bankruptcies everywhere. Court dockets overloaded. Kidnappings for heavy ransom. Sexual perversion, drunkenness, lawlessness rampant. The wheels of government are clogged, and we are descending into the vale of confusion and darkness. No day was ever more clouded than the present. We are fast verging on anarchy and confusion. (George Washington in a 1786 letter to James Madison, describing the effects of fiat paper money inflation then ravaging America in the pre-Constitutional period.)

"The annihilation (of the paper money) was so complete that barber-shops were papered in jest with the bills; and sailors, on returning from cruises, being paid off in bundles of this worthless money, had suits made of it, and with characteristic lightheartedness, turned their loss into frolic by parading through the streets in decayed finery which in its better days had passed for thousands of dollars." (Contemporary writer, Breck, 1786)

"Paper money polluted the equity of our laws, turned them into engines of oppression, corrupted the justice of our public administration, destroyed the fortunes of thousands who had confidence in it, enervated the trade and husbandry, and the manufactures of our country, and went far to destroy the morality of out people." (Peletiah Webster, 1786)

At the drafting of the U.S.Constitution, there were many "Friends of Paper Money" present. On August 16, 1787, when the discussion arose on Article 1, Section 8, the proposed wording was this: "The Legislature of the United States shall have the power to...coin money...and emit bills of credit of the United States."

A hot argument ensued on the power to emit bills of credit, which is another way of saying "printing paper money".

Here are the actual words James Madison wrote describing the debate in his diary: "Mr.G.Morris moved to strike out *and emit bills of credit.* If the United States had credit, such bills would be unnecessary; if they had not, unjust and useless.

MADISON: Will it not be sufficient to prohibit the making them a tender? This will remove the temptation to emit them with unjust views. And promissory notes in that shape may in some emergencies be best.
MORRIS: Striking out the words will leave room still for notes of a responsible minister which will do the good without the mischief. The monied interest will oppose the plan of the Government, if paper emissions be not prohibited.
COL.MASON: Though he had a mortal hatred to paper money, yet as he could not foresee all emergencies, we was unwilling to tie the hands of the Legislature [Legislature = Congress].
MR.MERCER:(A friend to paper money) It was impolitic...to excite the opposition of all those who were friends to paper money.
MR. ELSEWORTH thought this was a favorable moment to shut and bar the door against paper money. The mischiefs of the various experiments which had been made, were now fresh in the public mind and had excited the disgust of all the respectable part of America. By withholding the power from the new Government, more friends of influence would be gained to it than by almost anything else...Give the Government credit, and other will offer. The power may do harm, never good.
MR.WILSON: It will have a most salutary influence on the credit of the United States to remove the possibility of paper money. This expedient can never succeed whilst its mischiefs are remembered, and as long as it can be resorted to, it will be a bar to other resources.
MR.READ thought the words, if not struck out, would be as alarming as the mark of the Beast in Revelation.
MR.LANGDON had rather reject the whole plan than retain the three words *and emit bills*".

The motion for striking out carried.

Historian George Bancroft later wrote: "James Madison left his testimony that *the pretext for a paper currency, and particularly for making the bills a tender, either for public or private debts, was cut
off.* This is the interpretation of the clause, made at the time of its adoption by all the statesmen of that age, not open to dispute because too clear for argument, and never disputed so long as any one man who took part in framing the constitution remained alive."

ROGER SHERMAN(1721-1793)should be a name familiar to every American. As familiar as Washington, Madison, Jefferson and Adams. He is the only man to have signed all 4 documents surrounding the formation of the United States of America: The Continental Association of 1772, The Declaration of Independence, The Articles of Confederation and The United States Constitution. He was a Judge of the Superior Court in New Haven, Connecticut, serving that office with distinction from 1766 until 1788. He served as Treasurer of Yale University from 1765 to 1776. He was renouned for his high intelligence and unswerving honesty and was described by John Adams "as honest as an angel and as
firm in the cause of American independence as Mount Atlas." He served in the U.S.Senate from 1791 until his death in 1793.

Why is Roger Sherman*s name unfamiliar? HE WAS AN ENEMY OF PAPER MONEY!! In 1751, Roger Sherman and his brother William sued James Battle for paying a debt to their shop in New Milford, Connecticut, in depreciating paper currency. Over a period of 15 months, Battle had charged "divers wares and merchandizes" amounting to 129 pounds of what
Sherman assumed were pounds of Connecticut "Old Tenor", a stable currency whose value were well-preserved by taxation taking it out of circulation. But Battle assumed the debt was denominated in pounds of ever-depreciating Rhode Island currency, tendered in same, and the Shermans took a beating in the payment and sued for recovery of loss by depreciation. The Shermans lost when Battle argued that he was merely following the accepted custom of the day. In 1752, Sherman wrote his book "A Caveat Against Injustice or An Inquiry into the Evils of a Fluctuating Medium of Exchange" indicting UNBACKED PAPER MONEY.

It was this experience that Sherman brought to the Constitutional Convention and prompted him to rise on August 28,1787 and propose new, more restrictive wording to Article 1,Section 10. The standing version under consideration was worded this way: "No state shall coin money; nor grant letters of marque and reprisal; nor enter into any Treaty, alliance, or confederation; nor grant any title of Nobility." (From Madison’s Notes of the Convention) "Judge Sherman and Mr. Wilson moved to insert the words *coin money* the words *nor emit bills of credit, nor make any thing but gold and silver coin a tender in payment of debts* making these prohibitions absolute, instead of making the measures allowable with the consent of the Legislature of the U.S. Mr. Sherman thought this a FAVORABLE CRISIS FOR CRUSHING PAPER MONEY. If the consent of the Legislature could authorize emissions of it, the friends of paper money would make every exertion to get into the Legislature in order to license it." Mr. Sherman*s and Mr. Wilson*s motion was quickly agreed to and became the supreme law of the land.

Some additional quotations to ponder:

"All the perplexities, confusion and distress in America arise not from defects in the constitution or confederation, nor from a want of honor or virtue so much as from downright ignorance of the nature of coin, credit and circulation" (John Adams in a letter to Thomas Jefferson, 1787)

"I deny the power of the general government to making paper money, or anything else, a legal tender." (Thomas Jefferson)

"You have been doubtless been informed, from time to time, of the happy progress of our affairs. The principal difficulties seem in great measure to have been surmounted. Our revenues have been considerably
more productive than it was imagined they would be. I mention this to show the spirit of enterprise that prevails." (George Washington in a letter to the Marquis de LaFayette, June 3, 1790 AFTER the United States Constitution prohibited unbacked paper money at Article 1, Section 10)

"Since the federal constitution has removed all danger of our having a paper tender, our trade is advanced fifty percent. Our monied people can trust their cash abroad, and have brought their coin into circulation." (December 16, 1789 edition of The Pennsylvania
Gazette)

"Our country, my dear sir, is fast progressing in its political importance and social happiness." (George Washington in a letter to the Marquis de LaFayette, March 19, 1791)

"The United States enjoys a sense of prosperity and tranquility under the new government that could hardly have been hoped for." (George Washington in a letter to Catherine Macaulay Graham, July 19,1791)

"Tranquility reigns among the people with that disposition towards the general government which is likely to preserve it. Our public credit stands on that high ground which three years ago would have been
considered as a species of madness to have foretold." (George Washington in a letter to David Humphreys, July 20, 1791)

"It is apparent from the whole context of the Constitution as well as the times which gave birth to it, that it was the purpose of the Convention to establish a currency consisting of the precious metals.
These were adopted by a permanent rule excluding the use of a perishable medium of exchange, such as certain agricultural commodities recognized by the statutes of some States as tender for debts, or the still more pernicious expedient of PAPER CURRENCY." (Andrew Jackson, 8th Annual Message to Congress, December 5, 1836)

DESPITE WHAT YOU WERE TAUGHT IN SCHOOL, THE HISTORICAL RECORD IS CRYSTAL CLEAR: AMERICA WAS TO HAVE BEEN SPARED THE DESTRUCTIVE EFFECTS OF AN UNBACKED PAPER MONEY SYSTEM. MOST OF THE PROBLEMS WE FACE TODAY CAN BE TRACED TO WHAT ANDREW JACKSON CALLED "THE PERNICIOUS EXPEDIENT OF PAPER MONEY".

HISTORY TEACHES THAT AN "ARTIFICIAL" MONEY CREATES AN "ARTIFICIAL" WORLD WHERE THE PRICE FOR SOME ITEM...EVEN OUR MOST POPULAR WELFARE "PROGRAM"...CAN BE DEFERRED TO FUTURE GENERATIONS (OUR $11 TRILLION
NATIONAL DEBT) OR PAID WITH A "MONEY" CREATED OUT OF THIN AIR WHICH ROBS THE VALUE FROM THE MONEY WE MIGHT BE UNFORTUNATE ENOUGH TO HAVE IN OUR POCKETS AT THAT MOMENT (INFLATION). AND ONE THING YOU MUST REMEMBER
ABOUT INFLATION IS THAT IT IS NOT AN "EQUAL OPPORTUNITY" DESTROYER: THOSE FIRST IN LINE TO GET THEIR HANDS ON THE NEW MONEY ROLLING OFF THE PRESSES (THE MODERN FRIENDS OF PAPER MONEY) HAVE A CHANCE TO SPEND IT BEFORE IT LOSES ITS VALUE. THE LITTLE PEOPLE (THAT’S US, FOLKS!) FARTHEST DOWN THE LINE ARE THE ONES WHO FEEL THE FULLEST EFFECTS OF THIS DESTRUCTIVE PROCESS.
filename:$history

Dick Bachert
Norcross, GA