Losing money is not the end of the world, but it can often feel that way.

Mums and Dads currently have almost $6 billion frozen in over 177,000 accounts in 43 finance companies, mortgage trusts and investment funds, according to this “Deep Freeze” list.

These numbers tell only part of the story. They represent countless sleepless nights, tears, shocked phone calls, family meetings and all sorts of stress on marriages and families. Of course, this sort of financial loss can’t be compared to the loss of a loved one, but there are similarities. There is a grief of sorts.

But most importantly, these Mums and Dads need some sensitivity. It’s easy to blame them for being greedy and stupid. This was often not the case. Many were extremely poorly advised by greedy and stupid financial advisers. Many were taken advantage of by greedy and not-so-stupid

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Paulson says no to automakers…  Currencies trade in a tight range…  Richard Russell on a Wednesday!  TIC Flows improve… And Now… Today’s Pfennig!

Good day… And a Wonderful Wednesday to you! OK… Are you up on these “pirates” stories going on right now? That’s pretty unbelievable, eh? And… We are all fans of “pirates” here on the Currency Trading Desk, but these guys now are giving “our pirates” a black eye!

The currencies range traded yesterday in a very tight range, as Treasury Sec. Paulson, didn’t give in to the lawmakers and allocate $25 Billion of the TARP (Troubled Asset Relief Program) funds to automakers. King Henry said, “The rescue (read bailout!) package was not intended to be an economic stimulus or an economic recovery package. The $700 Billion TARP was designed to stabilize financial markets and the flow of credit, and it not a panacea for all our economic difficulties.”

Well… For

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Here’s a picture of a crucial period in our history.  

The nation is at an unfortunate but not completely unusual political and economic crossroads. New Zealand is having a financial crisis at the same time as an election campaign. Big decisions that affect all New Zealanders for a long time will have to be made in the heat and smoke of an election campaign while it is unclear exactly who is in charge.

The protagonists are a Prime Minister who has ruled the machinery of government with a velvet gloved fist for nine years and a popular newcomer who is widely expected to win. The Prime Minister’s attacks on the newcomer have become vituperative and personal. The Prime Minister has successfully bullied and corralled the ruling party and the mandarins in the bureaucracy into accepting the Prime Minister’s views. The Prime Minister appears to be personally driving economic and financial policy.

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I argued for bank deposit insurance scheme bank in March and at the beginning of last week. But I’m beginning to wish I hadn’t encouraged the politicians to get busy because this deposit guarantee scheme dumped on us is an unholy and dangerous mess.

I realise things had to be done in a hurry because Australia was about to announce its own deposit guarantee scheme and all hell was breaking loose on global markets, but the scheme proposed by Prime Minister Helen Clark in her re-election campaign launch on Sunday is a dogs breakfast. It  must be cleaned up before it putrifies into something so ugly and painful it could:

* Kill the stock market stone dead.

* Trigger a massive shift of cash from managed equity funds and corporate bonds to banks.

* Unleash a new generation of toxic finance companies.

* Vastly increase the cost of government borrowing.

* Mean deposit rates are all the same, or to be regulated to the same level, regardless of

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The big bailout will be a key focus of the markets.

Congress is expected to meet over the weekend to discuss legislation proposed by Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The details of the proposal, and any additional measures designed to help homeowners struggling with mortgage payments, could impact market direction.

The temporary ban on short selling could also affect trading early in the week. Part of Friday's rally was the result of quadruple witching. Traders are being forced to close short positions rather than roll them over into new contracts.

On the earnings front, we have confirmed reports from 33 companies. Included in this group are S&P 500 members Autozone (AZO), Bed Bath & Beyond (BBBY), Discover Financial (DFS), Jabil Circuit (JBL), KB Home (KBH), Lennar (LEN), McCormick (MKC), Nike (NKE) and Paychex (PAYX). I expect

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Look past the headlines and you will find the Reserve Bank achieved little yesterday to lower mortgage rates for most people. The effects will dribble through to home owners over the coming year or so, but not as quickly and not as much as the Reserve Bank would like.

This is not the Reserve Bank’s fault. We are an open economy with debt-loving home buyers that are price-takers when it comes to interest rates. The price-makers are international markets. The nightly woes of Freddie Mac, Fannie Mae, Lehman Bros, Bear Stearns, Fed Chairman Ben Bernanke, Treasury Secretary Henry Paulson, European Central Bank President Jean Claude Trichet and the hapless British Chancellor of the Exchequer Alistair Darling are just as important to New Zealand home owners as anything Reserve Bank Governor Alan Bollard does. Most just don’t know it.

It is the inevitable result of our

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The US Treasury’s bailout of Fannie Mae and and Freddie Mac exposes how much trouble the global financial system is in. It shows how worried the US government is about the US housing market going into a debt death spiral where falling house prices and nervous financiers combine to trigger forced sales and a ‘deleveraging’ event that is the worst since the depression.

Here’s a video on what I think this could mean.

(www.youtube.com/watch?v=TAwHpwzgb5o)

Essentially, the more nervous foreign lenders are, the more likely it is we will have to pay higher interest rates to service the NZ$135 billion of foreign debt owed on our behalf by our banks. It may mean the widely expected interest rate cut likely this Thursday by the Reserve Bank may not be passed on in full by our banks.

I’m told there’s a hot new documentary out that’s set to do for the boring world of national debt what Al Gore’s An Inconvenient Truth did for the boring world of greenhouse gas emissions. It’s called I.O.U.S.A.

I haven’t seen it yet, but there’s certainly an amazing story to be told about how Americans have borrowed too much for too long from the rest of the world. Here’s the trailer on Youtube. Worth watching if your ‘broadband’ is better than mine. It took me 25 minutes to watch a two-minute trailer. I’ll leave a rant about broadband for another day…

Households there borrowed too much to pump up their house prices and believed the resulting growth in their home equity was real. They then spent a good chunk of it buying SUVs and flat-screen televisions and an enormous amount of fatty food.

They could do this because Federal Reserve chairman Alan Greenspan

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New Zealand businesses often have a tough time competing against larger Australian rivals.

Our corporate history is littered with failed New Zealand attempts to break into the Australian market, while large Australian companies have done well here, often buying and running dominant companies in New Zealand and increasing their profits.

The Warehouse, Telecom and Air New Zealand are the most recent examples of our corporate failures across the Tasman. Only Michael Hill comes to mind as a success.

Australian-owned media companies Fairfax (the owner of Stuff, TradeMe and the former INL chain of newspapers), APN (New Zealand Herald) and the banks (ASB, ANZ, BNZ, Westpac and National) have all done extraordinarily well since buying into New Zealand, particularly over the last five years as they profited from dominant positions in a relatively fast-growing economy.

So most assumed that when Woolworths bought the Progressive supermarket operation in 2005 it

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The final week of August will feature earnings reports from S&P 500 members Big Lots (BIG), Dell (DELL), Novell (NOVL), Sears Holding (SHLD) and Tiffany (TIF). Overall, it will be a quiet week for earnings with 77 companies confirmed to report.

The economic schedule is pretty full, led by the minutes from the August Fed meeting. I don't anticipate any surprises from the notes. Other key data will include: Monday: July existing home sales Tuesday: July new home sales, August Conference Board consumer confidence index, August Fed minutes Wednesday: July durable goods orders, weekly crude inventories Thursday: Preliminary second-quarter GDP, weekly initial jobless claims Thursday: July personal income and spending, August Chicago PMI, revised August University of Michigan consumer confidence

The Federal Reserve's web site does not list any upcoming speeches.

The U.S. financial markets will be closed on Monday, Sep 1, in observance of Labor Day. Ahead of

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