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To: Bucky Katt who wrote (37941)	8/4/2008 2:33:02 AM
From: joseffy	Respond to of 48461

Interesting: Let us look at where these unsettled trades can reside within the piping of the “factory” that is our nation’s stock settlement system, The Depository Trust & Clearing Company (“DTCC”). I will use Goldman and Morgan as hypothetical examples only. • “Desked trades” – Imagine Goldman takes your order for 1,000 shares of stock, but stashes your order in a desk and sends you statements saying that you have those 1,000 shares in your account (and use your money towards the $10 billion they pay themselves at the end of the year for being so clever). They have written a CDF to you without your knowledge: there is a 1,000 share failure-to-deliver to you at Goldman (which no one else knows about, incidentally). • Goldman has one client sell 5,000 shares and another buys 3,000. The seller never delivers. Goldman “pre-nets” the trades before submitting them to the DTCC. Hence, the DTCC sees only 2,000 shares of the failure. • “CNS netting” - Goldman submits to the DTCC’s Continuous Net Settlement system that it sold 2,000 shares that it does not deliver. Imagine Morgan Stanley was on the other side of that particular trade. But maybe Morgan has a client who sold 1,000 to a Goldman client, and which that Morgan client failed-to-deliver. The DTCC nets the two trades, and therefore sees just 1,000 shares of failure (Goldman to Morgan). • “Stock Borrow Program” (“SBP”) - The DTCC looks at that 1,000 share failure, and says, “We have 400 shares we can loan Goldman from our Stock Borrow Program”, i.e., from the accounts of other BD’s within the DTCC. That reduces the failures it sees to 600. • “Ex-clearing” - Suppose Goldman and Morgan apply to the DTCC to move 500 of those fails ex-clearing, and the DTCC approves. Those 500 FTD’s are turned into a derivative contract between Goldman and Morgan. As a private contract, it is not regulated by the SEC, and the DTCC does not even know when that contract gets cleaned up, if ever. • Offshore – Suppose someone sells 1,000 shares into this market from a foreign offshore exchange? There is a different terminology to describe such failures, and therefore the data is hard to get to. What is clear, however, is that there is little pressure to clean up failures among exchanges. deepcapture.com

To: Bucky Katt who wrote (37941)	8/4/2008 2:38:27 AM
From: joseffy	Respond to of 48461

Interesting: Let us look at where these unsettled trades can reside within the piping of the “factory” that is our nation’s stock settlement system, The Depository Trust & Clearing Company (“DTCC”). I will use Goldman and Morgan as hypothetical examples only. • “Desked trades” – Imagine Goldman takes your order for 1,000 shares of stock, but stashes your order in a desk and sends you statements saying that you have those 1,000 shares in your account (and use your money towards the $10 billion they pay themselves at the end of the year for being so clever). They have written a CDF to you without your knowledge: there is a 1,000 share failure-to-deliver to you at Goldman (which no one else knows about, incidentally). • Goldman has one client sell 5,000 shares and another buys 3,000. The seller never delivers. Goldman “pre-nets” the trades before submitting them to the DTCC. Hence, the DTCC sees only 2,000 shares of the failure. • “CNS netting” - Goldman submits to the DTCC’s Continuous Net Settlement system that it sold 2,000 shares that it does not deliver. Imagine Morgan Stanley was on the other side of that particular trade. But maybe Morgan has a client who sold 1,000 to a Goldman client, and which that Morgan client failed-to-deliver. The DTCC nets the two trades, and therefore sees just 1,000 shares of failure (Goldman to Morgan). • “Stock Borrow Program” (“SBP”) - The DTCC looks at that 1,000 share failure, and says, “We have 400 shares we can loan Goldman from our Stock Borrow Program”, i.e., from the accounts of other BD’s within the DTCC. That reduces the failures it sees to 600. • “Ex-clearing” - Suppose Goldman and Morgan apply to the DTCC to move 500 of those fails ex-clearing, and the DTCC approves. Those 500 FTD’s are turned into a derivative contract between Goldman and Morgan. As a private contract, it is not regulated by the SEC, and the DTCC does not even know when that contract gets cleaned up, if ever. • Offshore – Suppose someone sells 1,000 shares into this market from a foreign offshore exchange? There is a different terminology to describe such failures, and therefore the data is hard to get to. What is clear, however, is that there is little pressure to clean up failures among exchanges. deepcapture.com

To: Bucky Katt who wrote (37941)	8/5/2008 10:28:54 AM
From: joseffy	Respond to of 48461

U.S. Farmland Values Reach Record on High Crop Prices By Alan Bjerga Aug. 4 2008 (Bloomberg) bloomberg.com U.S. farmland values are at a record high even as the rest of the country suffers the worst housing crisis since the Great Depression, with the highest crop prices ever pushing up agricultural real estate. The value of all land and buildings on farms averaged $2,350 an acre at the start of this year, up 8.8 percent from a year earlier, the U.S. Department of Agriculture said today in an annual report. Surging corn, wheat and soybean prices boosted values in the Northern Plains, which includes Kansas, Nebraska, North Dakota and South Dakota, by 15.5 percent, the biggest increase in the country, according to the report. The boom reflects high commodity prices that may push net farm income to $92.3 billion this year from $88.7 billion last year, according to the USDA. The gains make farmers more likely to buy fertilizer and seeds from Monsanto Co. and Agrium Inc. and make new investments in tractors and trucks, said Bruce Babcock, director of the Center for Agricultural and Rural Development at Iowa State University in Ames. ``It creates a better balance sheet, that's for sure,'' he said. Expensive New England The most expensive farmland in the U.S. was in Massachusetts at $12,200 an acre, followed by Rhode Island and Connecticut. The least expensive was in New Mexico, where land prices averaged $630 an acre. Northeast states were the most expensive of the 10 regions in the lower 48 states tracked by the USDA, with an average price of $5,080 an acre. The least-expensive area remained the Northern Plains, at $1,110 an acre. Values grew fastest in South Dakota, where prices jumped 21 percent to $990 an acre. Wheat soared 77 percent last year on the Chicago Board of Trade while soybeans jumped 78 percent and corn rose 17 percent. New highs reached in all three crops this year make 2008 likely to surpass 2007's record values, Babcock said. The farmland gains come as the rest of the U.S. economy suffers from falling property values. Home prices have fallen the most since the 1930s, according to the National Association of Realtors. Meanwhile, the crop-price increases benefiting farmers have helped drive food inflation to an annual rate of up to 5.5 percent, according to the USDA. Food costs are rising at the fastest pace since 1989, compounding woes for the rest of the economy. The slumping broader economy may constrain farmers who worry that commodity prices are in the midst of a bubble similar to what housing and technology have gone through in the past decade, said Bob Young, chief economist with the American Farm Bureau Federation, the biggest U.S. farmer group. `Wealth Illusion' ``Farmers have been very loathe to take on a lot of additional debt,'' Young said in a telephone interview. ``Some of them may be like anybody else. There's a `wealth illusion' that goes with high prices that may make them more open to spending. Many are still worried about it being an illusion, though.'' The USDA report divides farmland values into cropland and pastureland categories. While cropland rose 10 percent to $2,970 an acre in 2007, pastureland rose 6 percent to $1,230 an acre, as gains in Plains and corn-producing states were offset by losses in southeastern states. Livestock prices did not perform as well as crops last year, with cattle futures up 6.4 percent and hogs down 6.2 percent. Cattle have gained 12 percent this year on the Chicago Mercantile Exchange while hogs are up 30 percent. Rising Rents The report also tracks rates for land that's rented for farming. Rents for farmland rose 13 percent last year to $96 an acre while pasture fees rose 8.3 percent to $13 an acre. Because of high demand for additional farmland and the high cost of buying, farm-rental prices may rise 20 percent to 30 percent in 2009, said Murray Wise, chief executive officer of Westchester Group Inc., a farm-asset management company based in Champaign, Illinois. ``There's a lot of under-leased land in the Midwest,'' Wise said. To contact the reporter on this story: Alan Bjerga in Washington at abjerga@bloomberg.net.