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NEGATIVE NEWS FROM EUROPE UNSETTLES MARKETS

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The FT did report a euro zone divide now exists among leaders. A negative summary of this report comes from Zero Hedge with their sober view. Bank raids from the European Commission were noted atTheStreet where price-fixing is being investigated and may produce some scalps the masses seek. Greek riots were ubiquitous and easy to watch streaming on the web. I think the public would rather default than have the austerity demanded.

One of the more interesting stories today was embedded in Morgan Stanley's earnings report. The street expected the company to earn $.30 but the company beat with $1.15 based on an accounting adjustment. How did that work? The company has debt, and plenty of it, but they adopted the unique DVA (Debt Value Adjustment) ploy. It goes like this. The company's debt has become worth much less in the open market. Ifthey bought the debt back in the open market they would gain $3.4 billion in profits--as CEO James Gorman stated: "It's a bizarre accounting anomaly". I'll say! Without this adjustment the company earned $.03. This is the kind of stuff going around these days that doesn't pass the sniff test. I wonder if you could perform this trickery as a small business person trying to borrow some money from a bank like Morgan Stanley. Not a chance in hell would be the answer.
 

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