I have thought it odd that the traditional rally by the financial markets was not happening this Presidential cycle. To support the GOP and the economy, make the voters happy for the November election.  Basically the Fed and Wall Street have been cleaning house in an election year. This is unusual this usually happens in the first year of a Presidential term to clear the decks for the rally into the election in year 4.  But what happened this week helps explain why.

Friday was a tough day on Wall Street. The Dow (which I spoke of it's actual worthlessness yesterday) spent most of the day down over 200 points and hitting its lowst point in over two years. This was due primarily to worries about the solvency of Freddie Mac and Fannie Mae. Then, at about 2:45, a rumor started that was reported on by all of the financial press:

*Every day, you read and hear about how
the Dow Jones Industrial Average (DJIA)
and Standard & Poor’s (S&P 500® is
used in reference not only to the index
but also to the 500 actual companies, the
stocks of which are included in the index)
performed for the day with the
information sometimes leading the nightly news.

It is hyped, promoted, obsessed over and
followed passionately, but let me ask you
a question:

What exactly is the Dow Jones?

The high priests in the Wall Street Church of Corporatism have issued another op-ed fatwa against the majority of Americans who connect their faith to our environment.

In today's Wall Street Journal piece, "Global Warming as Mass Neurosis," editorial board member Bret Stephens brings the logic:

In addition to bonddad's excellent diaries, I thought I'd throw in my two cents, literally and figuratively.

We'll start with one of my favorite quotes from HL Mencken:

"Democracy is the theory that the common people know what they want and deserve to get it good and hard."

Now the fact that Del Monte is selling Starkist tuna to the South Koreans may not be the hugest deal, but it's a sign that the term "globalization" which once meant US buying of foreign assets due to Clinton-era dominance is going to mean quite the reverse. And those who advocated most fiercely for it are going to get it good and hard. We hope for the lesser-paid that they keep their jobs and have better corporate masters.

Yes, we all know that Exxon skated out of their punitive damages for the Valdez spill. The $500 million punishment, once $5 billion, then $2.5 billion, is a paltry drop in the bucket compared to their annual profits, and almost nothing compared to revenues.

If Exxon's profits were a family box of frozen fish sticks (40 sticks), the plantiffs would get half of one fish stick. If those guys on Dangerous Catch had to stay out in the Alaskan waters for 6 weeks to earn Exxon's profits, they would earn enough to pay the Exxon damages in one morning.

But this decision is not about Exxon...

The Financial Times recently reported that the total open interest in the 2008 crude oil contracts on May 21 was 849.472 contracts, which equals 849m barrels, or nearly 10 times the daily crude oil production. Additionally, the daily volume in the 2008 contracts on May 21 was 657.391 contracts, equivalent to 657m barrels or nearly 8 times the daily crude oil production.

On The Chris Matthews Show transcript for June 22, you will find some of the most concentrated hope of the entire cycle.  I was especially emboldened by the opinions on the Economy issues.  Jim Cramer (yes, THAT Jim Cramer) of the "Mad Money" show said that Wall Street will embrace Barack Obama.

Jim Cramer: I think it's going to work. I think people recognize that the whole Bush plan turned out to be a facade, a charade, because most Americans don't own stock. It's not an ownership society. We don't care how our stocks do because they don't do well. So I think--I think Obama's making a lot of sense.

It's not class warfare anymore. We don't feel like that if we get rich, we're going to pay. We feel like, you know what, the rich have had such a great ride and what has it done for us. It's time for other people to do well.

That's what Wall Street thinks too.  (With Bush) Everybody got screwed except for a couple people who make more than $2.8 million a year.

My colleague David Sirota has a new diary today about the topic that's on just about everyone's mind where I work in NYC: what's going to happen now that stalwart Republican Senate Majority Leader Joe Bruno is on the way out?

If you want to catch the most up-to-date dirt on the shady FBI investigation subplot to Bruno's exit or the swirling gossip around his likely successor, be sure to check out the Albany Project, which, as always, are keeping it on lock when it comes to tracking even the smallest minutiae of New York State politics.

However, if, like Mr. Sirota, you agree that Bruno's exit is a major opportunity for progressives to make a national impact through state-level, then you'll want to do a little more than that.  

This is simply to draw attention away from the crooked deal that Paulson struck to get Bear Stearns into the hands of JP Morgan Chase.

Well, the smart money is on Obama winning. FWIW, his biggest individual fundraiser seems to be a guy from Goldman Sachs. I believe the "smart money" knows he's going to win, and, despite the conservative naysayers, any return to financial normalcy aka the Clinton years is actually a boon to these guys. How much of a boon and how it plays out, we'll see.

Now I'm not an investment rep, and I'll disclose what I think below the fold. I welcome all comments. I'm of the school of thought that you do need to invest but it would be great to invest in great companies. However, the due diligence is all your own.

I know there are people here that are hurting and without jobs. My first hope from an Obama Administration is jobs, jobs, jobs. Healthcare is next. But a few of us have a coupla hundred bucks or a bit more to save for our retirement, plan our kids' education. And more money in progressive investors' hands is also more money to donate too.

Sometimes people - experts even - make pronouncements that seem so out of line with reality that I've got to double take.

I was reading this article in the New York Times today, which summed up the opinions coming out of Reuter's Investment Outlook Summit this week. Here's the lead sentence:

NEW YORK (Reuters) - Republican presidential candidate John McCain's tax policies have given him an edge as the better man for the economy, various Wall Street experts said at this week's Reuters Investment Outlook Summit.

I guess that's not so surprising. Wall Street likes tax cuts, for sure. But aren't we now in a current economic crisis AFTER massive tax cuts were given by the Bush administration? I know the reasons for our current economic struggles are complex and that tax cuts by themselves were not necessarily the cause. But it sure doesn't seem like our economy has done better because of them, does it?

So I've got to wonder, how do supposedly smart people expect to do the same old thing (tax cuts) and get different results (better economy)?

More puzzlement of mine below.

Seriously, if anyone still thinks that the price of oil (and other commodities, like foodstuffs) is driven mainly by supply and demand, by peak oil and resource scarcity, is an idiot.

"Signs of unusual behavior abound across the commodities markets. Take cotton, for example. In late February, the price of cotton futures jumped by 50 percent within two weeks. But cotton farmers haven't even been able to sell half of their harvest from the previous year yet. Warehouses in the United States are fuller than they have been since 1966. Indeed, all signs point to a price decline."

Say what?

"In late February, the price of cotton futures jumped by 50 percent within two weeks. But cotton farmers haven't even been able to sell half of their harvest from the previous year yet."

Still not convinced?
"In late 2003, they invested only $13 billion (€8.4 billion) in the food commodities business. By March 2008, that number had jumped to $260 billion (€168 billion), an increase of 1,900 percent."

Still think it's peak oil, supply&demand that is responsible?

A list of my in depth articles about the speculation being the MAIN cause of the high price of oil.

There have been some whispers out there that I'd like to check out, but I don't know where to begin looking for evidence.  Specifically, I was wondering how to prove the following thesis:

Big financial players who took a bath in the real estate collapse are trying to recoup their loses by taking advantage of naturally rising oil and food prices and pushing them into a speculative bubble.

Just a brief diary about a very interesting article from today's financial news:

Wall Street Grain Hoarding Brings Farmers, Consumers Near Ruin

By Jeff Wilson
April 28 (Bloomberg) -- As farmers confront mounting costs and riots erupt from Haiti to Egypt over food, Garry Niemeyer is paying the price for Wall Street's speculation in grain markets.

Commodity-index funds control a record 4.51 billion bushels of corn, wheat and soybeans through Chicago Board of Trade futures, equal to half the amount held in U.S. silos on March 1. The holdings jumped 29 percent in the past year as investors bought grain contracts seeking better returns than stocks or bonds. The buying sent crop prices and volatility to records and boosted the cost for growers and processors to manage risk.

(jump below the fold for more...)

Here it is, directly from   ROBERT LASZEWSKI one of the most respected health policy analysts in the nation.

Wall Street finally seems to be figuring out that the health insurance business is, and has been for years, on a long walk off a short pier. What's sustainable about a business whose costs have continually exploded at 2-3 times the growth rate of the rest of the economy or the wage rate? Just where did Wall Street think this business was headed all those years the sector has been the darling of Wall Street?
http://healthpolicyandmarket.blogspo...

And here's where the fight to take back our healthcare system from the merchants of death will begin in earnest.

Mad as hell?  June 19, in S.F. fight back against AHIP and for-profit healthcare.

Lately, not a day goes by where one does not stumble upon some truly troubling economic statistic or terrifying economic news story. Today was no exception:

Wall Street May Lose 36,000 Jobs
By Joan Gralla Thu Apr 24, 1:00 PM ET

NEW YORK (Reuters) - Wall Street, the lifeblood of New York City's economy, could lose over 36,000 jobs because the financial credit crisis has rocked markets and stunned the U.S. economy, estimated James Brown, a labor market analyst with New York state's labor department.

New home sales plunge to lowest level in 16 1/2 years
By MARTIN CRUTSINGER AP Economics Writer

WASHINGTON Apr 24, 2008 (AP)
Sales of new homes plunged in March to the slowest pace in 16 1/2 years as a two-year housing downturn extended into the start of another spring sales season. The median price of a new home in March compared to a year ago fell at the fastest clip in 38 years.