Politico is reporting that while GOP leaders opposed a motion to adjourn the Home, the Democrats have shut up shop and even turned out the lights. While the lights and microphones have since been turned back on, it makes for an entertaining mental image and possibly even a few dark YouTube video spoofs. “Only about a half-dozen Republicans were on the floor when this began, but the crowd has grown to about 20 now, according to Patrick O’Connor. ‘This is the people’s House,’ Rep, Thaddeus McCotter (R-Mich.) said. ‘This is not Pelosi’s politiburo.’ Democratic aides were furious at the GOP stunt, and reporters were kicked out of the Speaker’s Lobby, the space next to the Home floor where they normally interview lawmakers.”

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coondoggie writes to tell us that NASA has apparently successfully concluded putting the new Lunar Reconnaissance Orbiter through its paces. Using vibration and rotation tests NASA scientists were able to determine the center of gravity and were also able to observe the structural integrity during the vibration tests used to simulate launch aboard an Atlas rocket. “It is expected that the LRO will by the end of the year make its way to NASA’s Kennedy Space Center in Florida for final launch preparations. The orbiter and the Lunar Crater Observation and Sensing Satellite, a mission to smack into the moon in search of water ice, are scheduled to launch atop an Atlas V rocket from Cape Canaveral Air Force Station in Florida sometime between Feb. 27, 2009 and the end of March 2009.”

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penguin_dance passes along the news that a respected anthrax researcher, about to be indicted, has committed suicide. The FBI has been investigating the case since anthrax-contaminated letters were sent to the media and various politicians in 2001. The AP’s coverage mentions that prosecutors intended to seek the death penalty. The suicide wasn’t the one you might imagine if you’ve been following the story. “A top government scientist who helped the FBI analyze samples from the 2001 anthrax attacks has died in Maryland from an apparent suicide, just as the Justice Department was about to file criminal charges against him for the attacks, the Los Angeles Times has learned. Bruce E. Ivins, 62, who for the last 18 years worked at the government’s elite biodefense research laboratories at Ft. Detrick, Md., had been informed of his impending prosecution… The breathtaking turn of events followed the government’s payment in June of a settlement valued at $5.82 million to a former government scientist, Steven J. Hatfill, who was long targeted as the FBI’s chief suspect despite a lack of any evidence that he’d ever possessed anthrax.”

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aztektum among many other readers sent us news that medical researchers have developed two drugs that can build muscle tone in mice without exercise. While such an advance might inspire dreams of a “couch potato pill,” the article mostly speaks about other medical uses, should the drugs prove safe and effective in humans. The doctor in charge of the research is working with sports authorities to develop a test to detect the drugs in athletes. “Researchers at the Salk Institute in San Diego reported that they’d found two drugs that did wonders for the athletic endurance of sofa potato mice. One drug, known as Aicar, increased the mice’s endurance on a treadmill by 44 percent after just four weeks of treatment. A second drug, GW1516, supercharged the mice to a 75 percent increase in endurance but had to be combined with exercise to have any effect. ‘It’s a tiny bit like a free lunch without the calories,’ stated Dr. Ronald M. Evans, leader of the Salk group.”

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Filed under: Major movement, Bad news, S and P 500, Housing, MBIA Inc (MBI)

In this series, we take a look at the 25 stocks on the S&P 500 Index (SPX) that have turned in the worst performance during the past decade — what went wrong, and what happens next. (See all 25).

While financial-services firms have been dragged down as a group for more than a year, few have flamed out with the spectacular ferocity of municipal bond insurer MBIA Inc. (NYSE: MBI). In fact, among equities listed on the S&P 500 during the past decade, only one stock has suffered a more severe plunge in share price.

What went wrong? At no. 2 on our list of SPX slackers, MBI lost 91% of its value during the decade that ended June 30, 2008. The stock peaked at $76.02 in January 2007, which marked the last in a series of higher highs for the formerly uptrending security.

MBIA’s troubles first started in January 2007, though its issues at the time would pale in comparison with later challenges. Then, the company concurred to pay $75 million to settle civil securities-fraud charges by federal and New York State authorities. MBIA was accused of making secret side deals with reinsurance companies to avoid stating a $170-million loss in 1998. As part of the settlement, MBIA stated it would restate earnings from 1998 through 2004 and improve its business and accounting procedures.

Pressure ramped up on MBIA when the credit crunch rattled world equity markets in the second half of 2007. The company insured collateralized debt obligations, or CDOs, saddled with subprime debt. As a bond insurer, MBIA was nearly absolutely reliant on its triple-A debt ratings; after all, if you can’t get a guarantee from an insurer, what’s the point?

The triple-A ratings were never questioned in the company’s early days, when it insured municipal bonds nearly exclusively — defaults were rare on these vehicles, to say the least. However, the CDO situation involved an entirely different risk level. By mid-2007, major investment banks had already written off billions of dollars in CDO losses, and investors began to wonder why MBIA should be any different.

Last December, Moody’s stated it was placing MBIA’s triple-A ratings under review for possible downgrade. The ratings firm said that MBIA was “at greater risk of exhibiting a capital shortfall than previously communicated,” thanks in no small part to the $11.09 billion in subprime mortgage debt to which it was exposed.

Now fully under fire, MBIA announced news of a $1-billion investment from private-equity firm Warburg Pincus. Last January, in a scramble to save its triple-A status, the company slashed its dividend and stated it would sell $1 billion in debt to raise capital. The amount the bond insurer planned to raise seemed woefully inadequate in comparison with its losses; in its quarterly earnings release that month, MBIA reported a $3.5-billion write-down on its credit derivatives portfolio.

The pressure was also rising on ratings agencies. Many on Wall Street accused the firms of turning a blind eye to the heightened risk inherent with certain types of CDOs, thereby leaving institutions and investors vulnerable to large losses. Moody’s and Standard & Poor’s capitulated, to an extent; both firms vowed to review MBIA’s ratings. However, both eventually affirmed their existing opinions. Meanwhile, Fitch Ratings was not convinced, and stated that MBIA needed more capital to support its asset-backed securities. MBIA’s response couldn’t have done much to boost investor sentiment — the battered bond insurer asked Fitch to stop issuing credit ratings altogether on its insurance units.

What next? After admitting that its ratings might have been handed out in a rather Pollyanna-ish fashion, Moody’s attempted to save face by dropping MBIA’s rating from triple-A to A2 in June. As a result, MBIA found itself selling municipal bonds to raise cash; the downgrade triggered a collateral call of $4.5 billion and termination payments of $2.9 billion on guaranteed investment contracts. A fund-raising bake sale seems like a none-too-distant possibility in the future.

Most recently, MBIA stated it had approximately $1.15 billion in exposure to three securitizations of loans backed by IndyMac Bancorp, which recently failed. In its upcoming earnings report — for which no date has yet been confirmed — analysts anticipate an operating loss of 94 cents per share.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer’s Investment Research. She’s featured in the weekly video series Option Basics on SchaeffersResearch.com.

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Filed under: Forecasts, Industry, Citigroup Inc. (C), Economic data, Housing, Federal Reserve

The suckers who purchased into bank stocks a month ago thinking the worst of the credit crisis and financial company write-offs have mostly passed have seen much of their investment hammered.

And that is about to get worse. The easy-to-see reason is that mortgage paper is still losing value as housing prices continue to drop.

More ominous is the borrowing that banks are making at the Fed. According to Reuters, “Banks borrowed a record amount of funds from the Federal Reserve in the latest week as the year-old credit crisis took a persistent toll.” That number hit $17.45 billion per day. In other words, the bank balance sheet problem is extending into the third quarter and might be getting worse.

The IMF has commented that the total write-off due to the mortgage debacle will hit $1 trillion. Only about 40% of that has been written off, which means that the next two or three quarters of earnings could be devastating.

Citigroup (NYSE: C) now trades at $18.59, against a 52-week low of $14.01. It has a market cap of $102 billion. If it has to raise another $15 billion to offset losses, especially if the stock sold to raise the money is below market, Citi’s shares could move down to $12 or $13. Other large money center banks face the same trouble.

Banks will hit new lows before the end of the year.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Earnings reports, Exxon Mobil (XOM), Market matters, Walt Disney (DIS), Bank of America (BAC), CBS Corp ‘B’ (CBS), Economic data, Oil, Housing, Cramer on BloggingStocks, Recession

TheStreet.com’s Jim Cramer states improving macro trends were ignored Thursday.

Tough day.

I could tell from the way the bears gang-tackled the market at the end of the day that they were simply motivated, using all the futures and ETFs at their disposal, to knock down the market after its tremendous run.

They were backed by odd bedfellows: terrible earnings from Exxon Mobil (NYSE: XOM) (Cramer’s Take) and more miserable action in the massive industrials — action so horrid that you would actually think something was happening.

In truth, the oils are acting so poorly that they’re freaking people out. I think we are in the “you can’t have it both ways” moment where you can’t hate it when the oils go up and hate it when the oils go down.

It’s a large industry, and its coincident plays of ag and mining feel the pain, too. But oil’s pain is now a real gain for everything from the transports to the soft goods. So there should have been a modicum of cheering.

The Street wasn’t buying that pricing is up and margins are up courtesy of the collapse in oil, and that’s a trend I suspect will continue.

Thursday was a ridiculously “glass half empty” day. Take Disney (NYSE: DIS) (Cramer’s Take). A small comment about advertising had this company in a total tizzy although it was clear from CBS (NYSE: CBS) (Cramer’s Take) that advertising is holding up well and it isn’t like CBS is any different.

Meanwhile, we got an breathtaking number from theme parks, which was last week’s worry. Again, we can develop worries anywhere and they sure did with Disney.

I continue to believe that housing, oil and employment are the issues here. Housing is in the process of stabilizing courtesy of the “Bank of America (NYSE: BAC) (Cramer’s Take) relief act” (don’t forget that BAC wrote the Countrywide mortgages down to 30% and can now write them back up by flipping them to the FHA for 80%.)

That legislation continues to be overlooked, and the encouraging sales in former housing bad boy Stockton, CA, remind me of the bottom in Bradenton, FL, earlier this year.

Oil? Next stop $110. It will be hard to get below that just because we have seen such a dramatic decline in oil that’s pumped this year from major companies like ExxonMobil and major countries like Norway, Britain and Mexico.

Still, it started the year at under $100, and if you plot the trajectory of XOM, it is showing that we could take out that price. Given that energy is a key part of what is wrong with the economy, a huge decline has to be bullish.

Which leaves us with the wildcard of employment. I suspect, given the bears’ motivations at the end of Thursday, that no matter what the number, they will try to crack it. That’s what they do.

So today’s summer session could get a tiny nutty. All that stated, we are getting two out of three themes that are better, and they caused the weakness in the third.

Remember, we don’t need to see housing go up. We just need to see the rate of foreclosures go down.

If you look at the bulge of the mortgages that were bad — in the third quarter of 2006 — and note that they’re two and 20, with the two being the teaser, you should anticipate to see the maximum foreclosures this quarter and then some trending down. With the housing bill, that better trend should be accelerated.

All in all, remember when the bears try to trash it today, that there are giant macro themes that have been against this market for the year since I allegedly went nuts, but actually went clairvoyant, and that should play a role in any buying.

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RELATED LINKS:
All You Need to Know About Oil
U.S. Housing Prices: When’s the Bottom?
—————————-

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Filed under: Major movement, Bad news, S and P 500, Housing

In this series, we take a look at the 25 stocks in the S&P 500 Index (SPX) that have turned in the worst performance during the past decade — what went wrong, and what happens next.

I’ll give you just one hint at the nature of the problems MGIC Investment Corp. (NYSE: MTG) is facing: MGIC stands for Mortgage Guaranty Insurance Corporation. In other words, things were going just fine for the Milwaukee-based firm until about, oh, mid-2007, when the slime known as subprime hit the proverbial fan.

What went wrong? At number 4 on our list of SPX stragglers, MTG lost 89% of its value from June 30, 1998 through June 30, 2008. From its July 2004 peak at $78.95, the stock is down 93%, and is now trading near all-time low territory.

In the first quarter of 2007, it was business as usual for MTG. The company announced plans to acquire its sector peer, Radian Group (NYSE: RDN), for $4.9 billion in the stock. The merger would have created a big mortgage giant with about $15 billion in assets. Unfortunately, the deal was never consummated.

MTG shares plunged 33% in July 2007, as the credit crunch hit the U.S. equities market with a vengeance. The next month, the stock lost another 22% — not only did mortgage lender First Magnus Financial file for Chapter 11, but MTG also sued Radian in an attempt to exit the planned merger. Already, the companies had admitted that their $1.03 billion investment in C-BASS, a subprime mortgage joint venture, could be rendered worthless in the face of mounting defaults and margin calls.

In September, the litigation was dropped. MTG and Radian, both smarting from severe stock and loan-portfolio losses, walked away from the merger. CEO Curt Culver warned that there was no bidder for the C-BASS business, and that the whole of the investment would likely be written off. Over the course of 2007, MTG shares shed 64%.

What next? The pain continues at MTG, which Culver recently stated will probably not return to profitability until 2009. The company reported a loss of $97.9 million in its recently concluded second quarter, as mortgage delinquencies and foreclosures continue to take their toll. Culver added that delinquencies are expected to peak at some point later this year, or possibly into the first quarter of next year.

However, there’s something to be said for low expectations — the stock actually gained following the earnings report. Analyst Howard Shapiro of Fox-Pitt summed it up thusly: “I guess the way to say it is, it was less bad than the market was expecting. And in this market, less bad is enough to send your stock price up.”

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer’s Investment Research. She is featured in the weekly video series Option Basics on SchaeffersResearch.com.

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Accountant admits embezzling from employers - Newsday
HARTFORD, Conn. - A Westport accountant has admitted to embezzling more than $1.5 million from his employers. Federal prosecutors say 40-year-old Noel Desingco Lara pleaded guilty Thursday in federal court in Hartford to one count of interstate

Tim Russert’s son to join NBC convention team - MSN MoneyCentral
LOS ANGELES (AP) - The late Tim Russert’s son will take up a family tradition for NBC News, helping to cover the Democratic and Republican conventions. Luke Russert’s assignment as a convention correspondent focusing on “youth issues” is his first

More Money Squeezed From Potter Series - AOL
LONDON (July 31) - News alert for Harry Potter fans: A book of wizard fairy tales written and illustrated by J.K. Rowling is to be published for charity. A British charity said Thursday it hopes to raise 4 million pounds ($8 million) through sales of

Says face tough choices as budget crisis deepens; budget deficits - Newsday
SACRAMENTO, Calif. (AP) _ Gov. Arnold Schwarzenegger is laying off as many as 22,000 say employees. New York’s governor is raising the possibility of selling — or more accurately, leasing — the Brooklyn Bridge. Nevada is burning through its

MPs ordered to pay back money used for ‘propaganda’ - Daily Telegraph
Five were ordered to repay funds, including three Plaid Cymru MPs, Elfyn Llwyd, Hywel Williams and leader Adam Price, who were each required to give back more than £5,000, and Sidiq Khan, a Government whip, and Malcolm Bruce, Liberal Democrat MP for

Money fund assets fell to $3.502 trillion - CNN Money
NEW YORK (Associated Press) - Total money market mutual fund assets fell by $5.08 billion to $3.502 trillion for the week, the Investment Company Institute said Thursday. Assets of the nation’s retail money market mutual funds fell by $5.15 billion

THURSDAY: Station money locked in (3:38 p.m.) - Tonawanda News
A pot of federal funding intended for the construction of a new railroad station in Niagara Falls is no longer in danger of being diverted for other purposes. U.S. Rep. Louise Slaughter, D-Niagara Falls, and U.S. Sen. Charles Schumer, D-New York

Merrill Defrauded Auction-Rate Investors, Say States (Update5) - Bloomberg
July 31 (Bloomberg) — Merrill Lynch & Co. was accused by Massachusetts Secretary of State William Galvin of misleading investors about the stability of the auction-rate market at the same time the investment bank was marketing the securities. New

Community art class scheduled for Friday - San Diego Union-Tribune
EL CAJON: Sophie’s Art Gallery will offer a community art class Friday as part of the city’s First Fridays program, which encourages downtown businesses to offer special activities on the first Friday of the month. The rock-painting class, with

British Museum buys medieval astronomy tool - Boston Globe
LONDON— A rare astronomy tool that helped medieval scientists tell time will remain in Britain after the British Museum scrambled to come up with the money to buy it. The brass device, called an astrolabe quadrant, had been sold at auction last

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narramissic writes “The awkwardly named Halting Airplane Noise to Give Us Peace (HANG UP) Act was approved by the Home Transportation and Infrastructure Committee on a voice vote Thursday. The bill would make permanent the long-standing ban on in-flight cell phone calls by the FAA and FCC. ‘Polls show the public overwhelmingly doesn’t want to be subjected to people speaking on their cell phones on increasingly over-packed airplanes. However, with World wide web access just around the corner on U.S. flights, it won’t be long before the ban on voice communications on in-flight planes is lifted,’ stated Representative Peter DeFazio, a Democrat from Oregon who co-sponsored the HANG UP Act in a statement. ‘Cash-strapped airlines could end up charging some passengers to use their phones while charging others to sit in a phone-free section of the plane,’ he stated.”

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