Depression Watch (Dec. 26 2008)

     
Dow Close (Fri Dec.26)            8,515.55    47.07 (+)
Dow Close (Fri Dec.19)            8,579.11    25.88 (-)   
Dow Close (Fri Dec.12)       8,629.68    64.59 (+)
Dow Close (Fri Dec.5)      8,637.09    260.85 (+)
FFC (Fri Dec.26) =                            63.56 (-)
FFC (Fri Dec.19) =                            50.57 (-)
FFC (Fri Dec.12) =                              7.41 (-)
FFC (Fri Dec.5) =                            191.91 (-)
VIX (Fri)                           44.93            2.41  (-)
VIX (wk-avg Dec.26)                   44.597         8.017 (-)
VIX (wk-avg Dec.19)                   52.614         3.561 (-)
VIX (wk-avg Dec.12)                   56.175
Oil (Fri)                  $37.71  
Oil (Last Fri)                 $33.87      
Oil (FFC)                $5.47 (-)

Merry Christmas and A Happy New Year!

Analysis will return on Jan 12th 2009

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Depression Watch (for Dec. 22 to Dec. 25 2008)

Dow Close (Thurs)         closed - Xmas
Dow Close (Wed)         8,468.48    48.99 (+)  
Dow Close (Tues)         8,419.49    100.28 (-)     
Dow Close (Mon)       8,519.69    59.42 (-)   
S&P 500 (Thurs)            closed - Xmas
S&P 500 (Wed)            868.15        4.99 (+)
S&P 500 (Tues)            863.16         8.47 (-)
S&P 500 (Mon)            871.63         16.25 (-)
VIX (Thurs)                      closed - Xmas
VIX (Wed)                      44.21        0.81   (-)
VIX (Tues)                     45.02        0.46 (+)
VIX (Mon)                     44.56                0.37 (-)
VIX (wk-avg)                56.175
VIX Normal                   30  {The normal, reaches a peak of 30 during Presidential Admin changes }
Oil (Thurs)                     $closed - Xmas
Oil (Wed)                     $35.35  
Oil (Tues)              $39.17  
Oil (Mon)              $39.27 


Merry Christmas and A Happy New Year!

Analysis will return on Jan 12th 2009

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Depression Watch (Dec. 19 2008)

     
Dow Close (Fri)            8,579.11    25.88 (-)   
Dow Close (Fri Dec.12)       8,629.68    64.59 (+)
Dow Close (Fri Dec.5)      8,637.09    260.85 (+)
Fri-to-Fri Change =                            50.57 (-)
FFC =                                                    7.41 (-)
FFC (previous) =                            191.91 (-)
VIX (Fri)                           44.93            2.41  (-)
VIX (wk-avg)                   52.614         3.561 (-)
VIX (wk-avg-prev)          56.175
Oil (Fri)                  $33.87
Oil (Last Fri)                 $46.28      
Oil (FFC)                $5.47 (-)

{re-cap}[Now we can being to correlate events on the two charts, and add a third indicator. The new chart posted here has two periods listed A and B. A is pre-Reaganomics and B is Reaganomics. It also as two points c and d; the Bush 2003 tax cuts and the start of the 2008 crash. There are two lines, one is the Dow and the other the 10 year Treasury note. Next, the difference between physics based modeling and economic based modeling; just the numbers matter, not the theory. Raw numbers and charting determine what's happening, not theory. In the Dow historical chart the result of Reaganomics, and subsequent tax policy, is very clear. We also see that Clinton's economic success was merely continuation of Reaganomics. When A is compared to B, which is socialism vs the free market (the Reagan adaption), we see that individual wealth creation is significantly greater than in A. In fact, in A, individual wealth was lost. We can use the 10 year Treasury line in comparison to point b, to understand the impact of increased taxation on inflation. From this we see in A, as taxation increases so does the 10 year Treasury (as compared to the obvious increase in the Dow at point b - the Bush tax cuts).]

[To Continue]

[g1- A] shows us what a long term recession looks like. While [g1 - B] shows us what the growth of personal wealth looks like. The reason being, pre [g1 - A] shows us a profile of the industrial age (defined by the large megolithic corporations that supported large unions). During this period, wealth was confined to a relative few. A study of the mutual fund industry shows it's birth in [g1 - B] and reflects a significant growth in personal wealth. When we look at the functions [Dow and the 10 year Treasury], we see the birth of the 10 year treasury in pre [g1 - A]. We also see the two functions converging just prior to the [g1 - A], and intersecting (as well as, inverting) during [g1 - A]. We, further see, that the trend in [g1 - A] continues until just about 1985 [g1 - B]. Given that the convergence behavior [g1 - A] occurs at recessions, this is now our profile of recession. Further, given the length of [g1 - A] we can now define a prolonged recession.

This allows us to move forward, and profile [g1 - B] economic conditions against [g1 - A]. The first feature that can be looked at is the Fed's policy of interest rate reductions to push back recessionary conditions. In [g1 - B] the Treasury function shows a step-wise decrease, as the Treasury function and the Dow function diverge. Further, in [g1 - B], we see the Bush tax cuts [g1 - B - point c] and the beginning of the current economic crisis [g1 - B - point c]. The profile of the crisis (although called a recession by economists) does not meet the profile of a recession - as defined by [g1 - A]. This is were we add in the VIX. The VIX is something that history could not have predicted, because it was a product of electronic trading and the pc. The birth of the VIX, in 1990, reflects the influence of computer trading on the market (as a whole).

[g2] is the historical chart of the VIX, and [g3] is an approximate. The goal of [g3] is to determine a general path that a curve (function) fits. If an approximate can be found, this means, on this curve, market conditions are normal. It's then the anomalies (the out of normal points) that can be looked at as of interest, or more specifically deviations from the normal - of which this economic crisis clearly is (the large jump in the VIX at the right side of [g2]). The peaks, which also appear to see deviations, oddly occur at administration changes. Thus, a deviation should have been expected during the 2008 transition. However, the scale of the deviation was not previously indicated.

Graphs

[1]



[2]



[3]

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Depression Watch (Dec. 18 2008)

Dow Close (Thurs)         8,604.99    219.35 (+)    vol.   322.35M
Dow Close (Wed)         8,824.34    99.80 (-)    vol.   327.92M
Dow Close (Tues)         8,924.14    359.61 (+)    vol.   328.53M     
Dow Close (Mon)       8,564.53    65.15 (-)    vol.   329.85M
S&P 500 (Thurs)            885.28         19.14 (-)
S&P 500 (Wed)            904.42         8.76 (-)
S&P 500 (Tues)            913.18         44.61 (+)
S&P 500 (Mon)            868.57         11.16 (-)
VIX (Thurs)                      47.34        2.50 (-)
VIX (Wed)                      49.84        1.45 (-)
VIX (Tues)                     52.37        4.39 (-)
VIX (Mon)                     56.76               2.48(+)
VIX (wk-avg)                56.175
Oil (Thurs)                     $36.50
Oil (Wed)                     $40.06
Oil (Tues)              $44.31
Oil (Mon)              $45.09 

[{recap}Using VIX approximate trig function, we can make an initial determine that normally the VIX oscillates between a low of 10 and high of 30. This put the weekly VIX average above (or off) the function. It can further be said that we are in a more volatile economic market, even though the average (on a weekly scope) now represents a flat market. It also means that calls like quote [1 , 2] need to be understood within this context. The Madoff fraud, so far, has not had a significant effect on the market (as to move the market outside of the flat range). However, we do see, on the historical graph of the VIX, a massive sudden anomaly near Oct 2008 (range on the x-axis is; major ticks are 1 year and minor ticks are 1/2 year). The sharp move to slightly above 80, come about 1/2 way between the 08 minor tick and the 09 major tick. {recap}]

[To Continue]

Now we can being to correlate events on the two charts, and add a third indicator. The new chart posted here has two periods listed A and B. A is pre-Reaganomics and B is Reaganomics. It also as two points c and d; the Bush 2003 tax cuts and the start of the 2008 crash. There are two lines, one is the Dow and the other the 10 year Treasury note. Next, the difference between physics based modeling and economic based modeling; just the numbers matter, not the theory. Raw numbers and charting determine what's happening, not theory. In the Dow historical chart the result of Reaganomics, and subsequent tax policy, is very clear. We also see that Clinton's economic success was merely continuation of Reaganomics. When A is compared to B, which is socialism vs the free market (the Reagan adaption), we see that individual wealth creation is significantly greater than in A. In fact, in A, individual wealth was lost. We can use the 10 year Treasury line in comparison to point b, to understand the impact of increased taxation on inflation. From this we see in A, as taxation increases so does the 10 year Treasury (as compared to the obvious increase in the Dow at point c - the Bush tax cuts).

U.S. Treasury
BenchMarks   

                              /16/                              /17/
         
1 Month Bill     0.01%     0.00             0.01%    0.19
3 Month Bill     0.03%     0.00             0.02%       0.16
6 Month Bill     0.22%     0.10             0.20%     -0.03
2 Year Note     0.66%     -0.06          0.74%     0.08
5 Year Note     1.29%     -0.07          1.37%     0.03
10 Year Note     2.27%     -0.10         2.19%     -0.07
30 Year Note     2.74%     -0.08         2.66%     -0.07


Graphs

[1]



[2]



[3]

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Depression Watch (Dec. 15 2008)

Dow Close (Mon)       8,564.53    65.15 (-)    vol.   329.85M
Dow Close (Fri)          8,629.68    64.59 (+)    vol.   331.25M
S&P 500 (Mon)            868.57         11.16 (-)
VIX (Mon)                     56.76               2.48(+)
VIX (wk-avg)                56.175
Oil (Mon)              $45.09 

[{recap}Historical charts sets the environment (context) for which analysis needs to be done. This means that because the VIX starts after the beginning of the Dow, the VIX historical chart [g2] sits within the context of the Dow [g1]. Here's were things get tricky, not all technical analysis is the same. There are two fundamental divides; 1) physics and 2) mathematical. Under physics, models cannot be purely mathematical, but must be an approximation of reality. However, this does not hold for mathematical models. The statistics that the public sees in the media is of the mathematical model, and noth the physics model. The problem here, effects in the model, may not be real - but generated by the mathematics. This is how the VIX and options traders could miss the Oct 2008 market collapse. --- [g1] shows us what a long term recession, like the 70's looks like, and it showed the 81-82 recession. However, beyond that, economic conditions were not as obvious, and at the time, neither were any of the recessions. This now takes us further into technical analysis of the market. The technical analysis is basically - math and graphs. On the more extreme end is probability theory and a mathematical model of the market. This comes with the introduction to the VIX [g2]. {recap}]

Physics and mathematics overlap in many areas, so there will be similarities in approach. The VIX begins at 1990 [the left margin] and in standard mathematics is the origin. However, because we are building a dynamic model, the origin is not static, but moves with the right most side of the graph. The graph (for those who can't remember their math) is also called a function. What we have to do (in this analysis) is quantify human behavior - analyze the economy on the numbers, not by theory. Using the VIX historical we look for a function (graph) that approximates what we see. The VIX approximates a trig function. [g3] This is were mathematics departs from physics. The graph [g3] is an approximation, and the points above and below the function, represent the unknown - or uncertainty. In physics, the observation of order and structure is dependent on scope (or focus). For example, gold looks different using the eye (one focus) as compared to an electron microscope, and yet still different from the atomic level. This means, for physics, errors (of the normal function) are not just errors to be ignored, but anomalies to be explored.

Using VIX approximate trig function, we can make an initial determine that normally the VIX oscillates between a low of 10 and high of 30. This put the weekly VIX average above (or off) the function. It can further be said that we are in a more volatile economic market, even though the average (on a weekly scope) now represents a flat market. It also means that calls like quote [1 , 2] need to be understood within this context. The Madoff fraud, so far, has not had a significant effect on the market (as to move the market outside of the flat range). However, we do see, on the historical graph of the VIX, a massive sudden anomaly near Oct 2008 (range on the x-axis is; major ticks are 1 year and minor ticks are 1/2 year). The sharp move to slightly above 80, come about 1/2 way between the 08 minor tick and the 09 major tick.

[more will be written tomorrow]

U.S. Treasury
BenchMarks    12/15/2008
         
1 Month Bill     0.01%     0.00
3 Month Bill     0.03%     0.03
6 Month Bill     0.22%     -0.02
2 Year Note     0.74%     -0.03
5 Year Note     1.49%     -0.05
10 Year Note     2.51%     -0.04
30 Year Note     2.97%     -0.04

Quotes

[1]
U.S. stocks end lower amid worries of Madoff fraud fallout - MarketWatch

[2]
Stocks fall as firms detail exposure to Madoff - MarketWatch

Graphs

[1]


[2]


[3]

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Depression Watch (Dec. 12 2008)

Dow Close (Fri) 8,629.68 64.59 (+) vol. 331.25M
Last Friday's close 8,637.09 260.85 (+)
Fri-to-Fri Change = 7.41 (-)
previous FFC = 191.91 (-)
VIX (Tues) 58.91 0.42 (+)
VIX (Wed) 55.73 3.18 (-)
VIX (Thurs) 55.78 0.05 (+)
VIX (Fri) 54.28 1.50 (-)
VIX (wk-avg) 56.175
Oil (Fri) $46.28
Oil (Last Fri) $40.81
Oil (FFC) $5.47 (+)

While, Main Street is concerned with the jobs that it's losing - and not with Wall Street - understanding Wall Street is key understanding why jobs are being lost. However, the real reason for the disconnect between Wall Street and Main Street is never seriously addressed. Yet, if people want to have a job, or keep theirs, then Main Street must come to an understanding of how Wall Street works.

First comes the understanding of Wall Street. Wall Street is the bank, and the bank makes doing business possible: the business that creates your job. We can, and have shown [g1], that as the market goes up, the number of jobs goes up and, conversely, as the market goes down, the number of jobs goes down. The next question that has to be asked is - can the direction of the market be predicted?

[g1] shows us what a long term recession, like the 70's looks like, and it showed the 81-82 recession. However, beyond that, economic conditions were not as obvious, and at the time, neither were any of the recessions. This now takes us further into technical analysis of the market. The technical analysis is basically - math and graphs. On the more extreme end is probability theory and a mathematical model of the market. This comes with the introduction to the VIX [g2].

Historical charts sets the environment (context) for which analysis needs to be done. This means that because the VIX starts after the beginning of the DOW, the VIX chart sits within the context of the DOW. Here's were things get tricky, not all technical analysis is the same. There are two fundamental divides; 1) physics and 2) mathematical. Under physics, models cannot be purely mathematical, but must be an approximation of reality. However, this does not hold for mathematical models. The statistics that the public sees in the media is of the mathematical model, and not the physics model. The problem here, effects in the model, may not be real - but generated by the mathematics. This is how the VIX and options traders could miss the Oct 2008 market collapse.

Treasury 12/12/2008

1 Month Bill 0.01% -0.01
3 Month Bill 0.01% 0.00
6 Month Bill 0.21% 0.05
2 Year Note 0.76% 0.01
5 Year Note 1.52% 0.02
10 Year Note 2.57% -0.02
30 Year Note 3.05% -0.02

Graphs

[1]



[2]

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Depression Watch Dec. 11 2008

Dow Close (Tues)      8,691.33    242.85 (-)     Volume
Dow Close (Wed)         8,761.42        70.09 (+)     Volume    332.32M
Dow Close (Thurs)       8,565.09        196.33 (-)     Volume    330.58M
Oil (Tues)                $42.40
Oil (Wed)                $43.88  
Oil (Thurs)                $47.98
S&P 500 (Tues)            888.67         21.03 (-) 
S&P 500 (Wed)             899.24        10.57 (+)
S&P 500 (Thurs)           873.59        25.65 (-)
VIX (Tues)                    58.91             0.42 (+)
VIX (Wed)                     55.73             3.18 (-)
VIX (Thuus)                  55.78          0.05 (+)

Identifying rallies or sell offs (anomalies in trends) can be very tricky. Option traders, often use volatility just for profit, without a specific desire for up or down. This means that sufficient such trades can effect the market - contrary to the trend. The next issue, which obviously extends from trends, is market momentum.  Market momentum (up and down trends) is slope (steepness) of trend line. The next issue is tops, bottoms and plateaus. Each could be presented as a peak, valley, or plateau. Peaks and valleys are obvious. Plateaus are very complex. Plateaus present themselves a flat markets (identified by a flat - horizontal - trend line). The problem with a plateau is they are directionless (neither up or down). For example, there are some economists call this week a bottom of the market, because it had some flatness. However, there is a lot more negative market news to come. This means that instead of a bottom, it's a plateau; it could move up signally an end to the recession; or  move down deepening the recession. The difficulty in identifying trends is choosing the right scope.

Treasury Track

12/10/2008
         
1 Month Bill     0.01%     -0.01
3 Month Bill     0.01%     -0.02
6 Month Bill     0.21%     -0.05
2 Year Note     0.85%     -0.01
5 Year Note     1.61%     0.00
10 Year Note     2.69%     0.02
30 Year Note     3.09%     0.05

12/11/2008

1 Month Bill      0.02%      0.01
3 Month Bill     0.02%     0.01
6 Month Bill     0.20%     -0.01
2 Year Note     0.82%     -0.03
5 Year Note     1.56%     -0.05
10 Year Note     2.63%     -0.06
30 Year Note     3.08%     -0.01

Supporting Quotes

[1]
1. What exactly is the VIX? --- In 1993, the Chicago Board Options Exchange® (CBOE®) introduced the CBOE Volatility Index®, VIX®, and it quickly became the benchmark for stock market volatility. It is widely followed and has been cited in hundreds of news articles in the Wall Street Journal, Barron's and other leading financial publications. Since volatility often signifies financial turmoil, VIX is often referred to as the "investor fear gauge". - [http://www.cboe.com/micro/vix/faq.aspx]


[2]
In a recent interview with Richard Russell, the author of “The Dow Theory Today”, Russell suggested that the January 2008 lows in the US equity markets was not a bear market bottom and that we remain in a bull market that started in the early 1980’s.  Further he thinks that we could accomplish new highs in the major indicies somewhere between 2008 and 2010.  He cites two reasons for this perspective, (a) the incredible amount of liquidity being injected into the world markets, and (b) the trillions of dollars parked in money market funds, sovereign wealth funds, and other non-equity investments.  - [http://www.joergercapital.com/ManagersBlog/ - May 2008]

[3]
Standard and Poor’s is definitely in the short and shallow recession camp.   They continue to see fourth quarter 2007 as the trough in S&P 500 opearting earnings and predict record S&P 500 operating earnings per share of $96 for 2008, yielding a current PE ratio in the 14-15 range.   Definitely reasonable by historic standards.   They have also released a $115 per share operating earnings forecast for 2009 – a whopping 20% gain over their 2008 forecast and a forward PE ratio of 12.   It seems clear that if the market were to accept these forecasts as reasonable, money flows into US equities would be substantial.   So, for the time being, earnings fundamentals and forecasts seem to support the bullish view. - [http://www.joergercapital.com/ManagersBlog/ - May 2008]

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Depression Watch Dec. 08 2008

Dow Close (Mon)       8,934.18    +298.76
Oil                     $43.71

On Bloomberg, early today, the rally in the stock market was being called the Obama rally. However, the positive news was only short term. The problem here is identifying drives of rallies in this bear market. There was a discussion of Dow theorists looking at the S&P 500 for the end of this rally. The irony is revealed in [2] (written in just May) calling for continuation of the bull market, with new highs looking forward. Looking back, we even see that the venerable Moody's missed this recession too.  A brief look at the MarketWatch Community top point earners - reveals a pick average of 50%. This means that currently pick a daily (or short term) direction (on average) is no more accurate than flipping a coin.

The question here, if things were going well in May, and there were good technicals - what happened over the summer? The losses that we are now seeing - just appeared (seemingly). Well, let's see Clinton's race in the Democrat primary was at an end, and Obama's nomination was approaching. It was also in this time frame (June to Nov) that he wanted to; 1) Tax the rich ; 2) Share the wealth ; 3) Creat a new "Green" economy.

Supporting Quotes

[1]
The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. Since its introduction in 1993, VIX has been considered by many to be the world's premier barometer of investor sentiment and market volatility. - [http://www.cboe.com/micro/vix/introduction.aspx]

[2]
In a recent interview with Richard Russell, the author of “The Dow Theory Today”, Russell suggested that the January 2008 lows in the US equity markets was not a bear market bottom and that we remain in a bull market that started in the early 1980’s.  Further he thinks that we could accomplish new highs in the major indicies somewhere between 2008 and 2010.  He cites two reasons for this perspective, (a) the incredible amount of liquidity being injected into the world markets, and (b) the trillions of dollars parked in money market funds, sovereign wealth funds, and other non-equity investments.  - [http://www.joergercapital.com/ManagersBlog/ - May 2008]

[3]
Standard and Poor’s is definitely in the short and shallow recession camp.   They continue to see fourth quarter 2007 as the trough in S&P 500 opearting earnings and predict record S&P 500 operating earnings per share of $96 for 2008, yielding a current PE ratio in the 14-15 range.   Definitely reasonable by historic standards.   They have also released a $115 per share operating earnings forecast for 2009 – a whopping 20% gain over their 2008 forecast and a forward PE ratio of 12.   It seems clear that if the market were to accept these forecasts as reasonable, money flows into US equities would be substantial.   So, for the time being, earnings fundamentals and forecasts seem to support the bullish view. - [http://www.joergercapital.com/ManagersBlog/ - May 2008]

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Depression Watch (Dec. 5 2008)

Dow Close (Fri)       8,637.09    260.85
Last Friday's close      8829          102.50
Fri-to-Fri Change =    191.91 (-)
previous FFC  =         450.89 (-)
Oil (Fri)              $40.81 
Oil (Last Fri)             $52.00     
Oil (FFC)            $11.19 (-)

Last Friday's "spectacular" close up was credited, by popular media, as a positive outlook on Obama's announcement that he would announce his White House economic position choices on Monday. However, if you looked at the week to week trend - it was still a downward trend.

This week, a market bottom was sited as being in view [1]. However, the moves of Goldman Sachs and Morgan Stanley, tell a different story [2,3]. This is not just a flight to quality, but a fundamental market shift. It's perhaps, the clearest signal as to what is coming - and it's not good.

Take a look at [4], look for the time frame, 1970 to about 1985. Next look at the time frame from 1985 to the present. For this recession to be like the 70's decade long recession, the Dow and the 10 year Treasury lines will have to converge. The real anticipation of this occurring could explain the moves of Goldman Sachs and Morgan Stanley. In other words, the economic situation is far worse then being talked about by media economists.

Supporting Quotes

[1]
"Unemployment tends to be a lagging indicator. I do think we're probably getting to the point where we're hitting a bottom," said Owen Fitzpatrick, head of U.S. equity group at Deutsche Bank. - MarketWatch

[2]
Goldman Sachs and Morgan Stanley mark the end of an era this month when they post their first earnings since becoming commercial banks, and investors resigned to the dismal results on tap are restless for any indications about the companies' plan to grow with the less risky business model. - MarketWatch



[3]
As Goldman and Morgan Stanley brace for loses, investors look to firms' future as regulated banks.... - MarketWatch

[4]

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Depression Watch Dec 4 2008

Dow Close (Wed)       8,591.69    172.60
Dow Clsoe (Thurs)         8,376.24      215.45 (-)
Oil (Wed)                    $46.79
Oil (Thurs)                         $43.85

The Big 3 were back on Capital Hill today - "hat-in-hand", playing the contrite popper. This after being chided for the last visit in their corporate jets! One question pops to mind, though --- What about Ghettofinger? (ya I know - Gettelfinger) are they assuming by his name that he is poor? The question missing from the Hill was, what are the Union exec's perks? Our are they expecting a big payout from their puppet, Chris Dodd? ("Read David Callaway on why Congress will say yes.")

Supporting Quotes

[1]
Big 3 car executives agree to take orders from Washington --- They said their companies are commited to fundamentally changing the way they do business. - MarketWatch

[2]
After sending more detailed restructuring plans to Congress earlier this week, top corporate executives from General Motors Corp., Ford Motor Co. and Chrysler LLC and the leader of the United Autoworkers union testified again to the committee Thursday about the companies' request for an urgent bailout totaling $34 billion.

[3]
Mark Zandi, chief economist for Moody's Economy.com, testified that the companies would need $75 billion to $125 billion over the next two years to avoid bankruptcy. He said allowing any of the Big 3 to fail would be "catastrophic."

[4]
 Dodd and Shelby said the Treasury had mismanaged the $700 billion financial bailout and has not protected the taxpayers' interests or required the banks to change the way they do business. Senators said stricter oversight would be essential in either an auto bailout or in disbursement of the second half of the $700 billion for the banks.

[5]
Instead of an oversight board, Congress should invest one person with oversight authority, said Sen. Charles Schumer, D-N.Y.

[6]
"We are willing to do our part," said Ron Gettelfinger, president of the United Auto Workers.

[7]
If the executives are persuasive enough during the two days of hearings this week, the House and Senate could schedule a vote next week. Passage in the House seems likely, but the vote in the Senate could be nail-biter, with approval by 60 of 100 senators needed. Read David Callaway on why Congress will say yes.

[8]
They will be scolded, scapegoated and otherwise kicked about like barnyard animals, ridiculed for their beliefs by a group of high-minded politicians wearing fake wings and holding the keys to the Bailout Inn. Then they will be granted their wish for a federal rescue of some sort that will inject billions of dollars into their companies and save Christmas for the equity markets.

[9]
If the federal government can find hundreds of billions of dollars to rescue financial companies, it ought to be able to come up with a far smaller amount for the auto companies, said Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee.

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Depression Watch Dec 2 2008

Dow Close (Tues)       8,419.09    270.00
Oil                     $47.91

Even the appearance of instability can push a market down, as seen in both Thailand and Canada. Barack, seemingly has learned this and gave the nod to what looks like a centered cabinet. However, the devil is always in the details.

Once again the "Big 3" are scheduled to return to the Hill - looking like beggars. The unions think that this will solve their problems. Little do they know that this has been done before - and not worked. Lee Iacocca got a hand out, that gave Chrysler a few years - before being taken over by Daimler. Michael Moore [7] thinks  things will be different - if the companies are nationalized [8]. However, he has not seen the hand-outs and deals given to the "Big 3" by his beloved Canada - and they still failed. He believes that the other socialist countries like Canada are actually friends. (Although, he contradicts this view in [8].) So, it may come as a shock to see the Canadian Coup, lead by the dictators Stephane Dion, Jack Layton and Gille (Jill) Duceppe - with yet another deal for the "Big 3" at the center.

[9] Stephane Dion, with Jack Layton and Gille Duceppe, plan to seize control of the Canadian government (without an election) by the end of the month. Reading the paper, like the Toronto Star, it's amazing to see how the socialist Canadians don't care that the ideals of democracy, which were fought for with the blood of Canadian soldiers, are now gone. [10] Just given away! Ironic that this is the model that the Democrats look to!

[1]
Thailand's stocks fall, as ruling party is dissolved --- Protesters say after court ruling that they will end occupation of airport --- Equities in Bangkok ended with losses Tuesday, as Thailand's constitutional court ordered the dissolution of the ruling party and banned the prime minister from politics for five years, marking the latest stage in the nation's long-running political turmoil.  - MarketWatch

[2] S&P/TSX      8406.21      8327.81      -78.40  - Toronto Star

[3] The Conservatives today released radio ads that accuse Liberal Leader Stephane Dion, soundly defeated in the Oct. 14 vote, of wanting to take power "through the back door." - The Toronto Star

[4] The Liberals and the NDP have signed a formal, unprecedented pact to replace the minority Conservatives, who were re-elected just seven weeks ago, with a (unelected/monarch appointed) coalition government. - The Toronto Star

[5] Governor General Michaelle Jean said she is cutting short a European tour and returning to Canada, where she could be called on to decide the fate of the embattled Conservative government. --- Jean was also asked if she had any message for Canadians about the current crisis and the way governance is going to be achieved. --- "I think this is part of our democratic system. This is happening and it certainly requires a lot of attention, and the role of the governor general is to ensure that our governance is on the right path, so as soon as I'm back I will fulfill my duties and in total sound judgment." - The Toronto Star

[6] Since Confederation there has only been one federal coalition government in Canada's history: the Union Government of World War I, which lasted from 1917-1920. This was a coalition between the Conservative Party, led by Robert Borden, and Liberals and independents. Faced with strong opposition to conscription and with other major difficulties during WWI, Borden sought to broaden his wartime political base by bringing several conscriptionist Liberals and other public figures into his government. In the December 1917 general election, this government won a decisive victory over Sir Wilfrid Laurier's Liberals. The Union coalition did not long survive its triumph: the end of the war brought many Liberals back to their old affiliation, while other Unionists supported the new Progressive party. - The Toronto Star

[7] MOORE: Well, because -- because we can't let all these people lose their jobs because of the bad decisions, the stupid decisions made by the management of these auto companies. So I think what has to happen here is that Congress needs to pass some legislation, and our president-elect needs to do what Roosevelt did. --- When Roosevelt came in and when World War II faced the country, Roosevelt said to General Motors and Ford, you're not going to build cars anymore. You're going to build airplanes and tanks and guns and the things that we need for this war because we have a national crisis. And so General Motors had to do what Roosevelt told them they had to do. - Larry King Live, CNN

[8] MOORE: Absolutely. Absolutely. I'll tell you, it was hilarious just watching these CEOs there yesterday and today testifying in Congress, saying that, you know, that the problem wasn't their -- you know, the cars they were building. It was the financial situation that we're in now. --- [The problem is the cars they've been building.] They've never listened to the consumers. They've just gone about it their own wrong way. And I'll tell you, you know, I'm of mixed mind about this bailout, Larry, because I don't think these companies, with these management people, should be given a dime, [because they're -- that's just going to be money going up in smoke or off to other countries. I mean, G.M. is currently building a $300 million factory in Russia right now to build SUVs, right outside of St. Petersburg.] - Larry King Live, CNN

[9]  An aid package to help Ontario's struggling automakers is still being discussed with Ottawa despite worries about turmoil in the country's capital. --- "I'm confident that I'll continue to work with the federal government on this," Economic Development Minister Michael Bryant said today. --- "Given the circumstances around the auto industry, it's particularly important for myself and our government to remain non-partisan when it comes to dealing with the federal government. I'll let Parliament resolve its issues itself." --- Bryant's comments came as the federal Liberals agreed today to support a tentative deal with the NDP – backed by the Bloc Quebecois – to form a coalition government with Stephane Dion as interim prime minister. - The Toronto Star

[10] THANK YOU -- I am so glad that you decided to post this Q&A. I can only hope that it will put a end to all those ridiculous words like "illegal, undemocratic, hijacked and coup" that have been bandied about by those who appear not to understand their own parliamentary system. Having said that, I find it incredibly sleazy of Harper and the Conservatives to launch a vociferous media campaign against his own constitution and parliamentary system - The Toronto Star, Comment

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Depression Watch Dec 1 2008

Dow Close (Mon)       8,149.09    679.95 (-)
Oil                     $48.27

After entering the Thanksgiving holiday, on what looked like a positive note, the pessimistic outlook has returned (in force) to the Dow. So, just what was the Thanksgiving bump? Hindsight is easy! Understanding mechanism mixed with group psychology is not.

Using a historical chart of the Dow (Blue) vs the 10 year treasury bond (Red), we can clearly see the decade long recession of the 70's, we can also see what happened during the Carter Administration. Even Reagan's first term (81-82) recession is there. This trend does not exist now. So have things changed, and the lines have significantly diverged that they will not meet again, or is there much worse to come - and the lines will converge.

Reference Chart

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