Pretty soon things may degenrate to this:

YouTube -

Spice it up!!

Jeff Beck/Going Down

YouTube - Jeff Beck/Going Down/1983

Paulson reiterated yesterday that a strong dollar is in our nation's interest'' and that markets are the best judge of currency values, during an unscheduled session with reporters. At the same time, he fleshed out his standard statement to reject suggestions that the dollar's international standing is under threat.The dollar has been the world's reserve currency since World War II and there's a reason,'' he said. ``I put the U.S. economy up against any in the world in terms of competitiveness
Thank god Paulson is on this. Any one having problems pulling up the ABX closing on Markit beside me. Cant get the CMBX either.

Notice to all PPT members: There will be a pregame meeting on Monday at 6am EST. Please bring extra cash because we may be going into overtime. This is a big week and there will be cheerleaders for the first time in our history - many Central Bankers will be on the sidelines jumping up and down in support of our efforts.
As backup, in case we run into some tough markets, we have some helicopters on standby for later in the week.

French President Nicholas Sarkozy told American lawmakers Nov. 7 the U.S. must support the dollar or risk triggering a trade war

What a toad.

CR and "all the bears",

CME housing futures - could that be a topic for a post?

First of all I must concede I was surprised by the bear move this past week ;-( Congrats to the bears who anticipated this one. Of course, I still believe we'll make a bottom this coming week, followed by a run to new ATHs.

How to interprete the CME housing futures? Are they of any significance or too illiquid? Do I interprete them correctly that they currently state the bottom in the housing market will be in May 2010 (not so far off from CRs prognosis) and that they predict a ~15% decline from current values in the composite average?

Thanks!

O-Joe

Other countries need to follow Bhutan's lead in promoting Gross National Happiness as a gauge of national wellbeing, a World Bank official told the Himalayan nation's state newspaper.

Breitbart.com

Is everybody happy?

For the housing bubble movie soundtrack.

I apologize in advance for the unrelated user videos.

Humble Beginnings:
Lesson's from What's Poor
click on the speaker icon sixth one down.
MOG - Discover People Through Music and Music Through People

Your Parents Mortgage (How it worked):
Bibi Plone
Warp Records / Media Player

Exits Plans? No, no, no, bonusesss:
Agenda Suicide
YouTube - The Faint - Agenda Suicide

Not Your Parents Mortgage (How it works now):
Squance
Warp Records / Media Player

Loving the 80's:
Blue Monday
YouTube -  

Its Bad and Few People Know:
Cathart
Click on the first song if it doesn't play automatically
isan on MySpace Music - Free Streaming MP3s, Pictures & Music Downloads

When Things Get Bad:
Maybe Not
YouTube - Cat Power Maybe Not

"it's possible to be chairman of the most important central bank on the planet and seemingly not have a clue about what's happening to the economy, let alone what, if anything, to do about it."

The Fed is not clueless about what is happening in the economy--they are in the same position as those at the top in the Pentagon and Iraq--it is positive spin all the time. Nothing is served, especially the welfare of those at the top, if the masses are riled up by a scenario or gloom or doom.

What has happened is tht the unpalatable consequences of misguided policy are coming to roost. The damage is there to see, it is just inconvenient to admit it.

The economy has gone through years of hollowing out of the producing sector. The accompanying fall of wages in relation to true inflation and the non-competitive nature of the American worker wage has been sucessfully masked by the import of cheap foreign goods and the recent real estate inflation.

There is no-one at the top that will tell the inconvenient truth that you cannot spend more than you make and that the liklihood is that you will make less tomorrow than you will today. The underlying assumption in Aerica was that with hard work your children will be better off than you were--but that is seriously in doubt at this juncture.

The economic facts are as clear to the Fed as they are to a kid trying to set up a lawn-mowing buiness for the summer. You cannot spend more than you make and you cannot charge more than the next person willing to do that job.

The value of the dollar has largely rested on the tradition that the dollar was an accepted form of payment in most parts of the world because it had a stable, quantifiable value backed a sound govenment with a sound economy baked by a sound population.

The unwillingness to publically admit and address the issues related to global competitiveness and spending on personal and governmental levels has brought into question those assumptions of soundness. As a result, the dollar must fall--but no-one at the top will give cause and effect.

In looking at the Fed's response to the current crisis, one should note that prior to this the financial sector was heralded as one prime growth areas for the new American economy. The financial sector--as opposed to the sectors of government, health care and services--was a gleaming example of private business that actually added "good" jobs to the economy.

If you take away all of the growth related to the financial sector and the real estate inflation, beginning with the home buyer and extending to the top with the heads of the investment bank, where does it leave the economy? Where does it leave the former bright star of the private economy?

It is for that reason, the rescuing of the former bright star, that the Fed is concentrating on rescuing the investment bankers in lieu of the consumer. In their mind, no matter how much they say they value the consumer and the small busine

...no matter how much they say they value the consumer and the small businesses, in their minds it is the financial sector that provides the way forward in the new economy.

So that is why the Fed's actions are more for the benefit of the fianacial sector than the consumer or small business. Without the fiancial sector, what will be the powerhouse of the new American economy.

It is this thinking that will drive the Fed's action in the future. Inflation be damned, the finacial sector does not suffer from inflation in the manner of the consumer. Dollar devaluation, the same.

The bright star must be rescued, at any cost.

And my ode to B.S. Bernutty,

YouTube -  

Cheers,

Mauldin weekly newsletter has always underestimated the extent and damage that the RE downturn would have on consumer spending and financial related companies. He makes weekly revisions that reflect the current problems but overall his projections are always short of the mark. Here is a interesting paragraph from this weeks newsletter which reflects his and my guess the general thesis that the current problems can be contained.

"Let's take a side trip for a moment and look at a 2002 vintage AAA mortgage backed asset. It is probably still capable of being rated AAA. Why? Because the bad lending practices were not prevalent, any mortgages still in existence have been paid on for almost six years, and the underlying homes may have appreciated anywhere from 50-100%. It would take a disaster of biblical proportions for that AAA tranche to lose money. By that I mean that 60% of the loans would have to lose 50% of their 2002 value (or 75% of their 2007 value) for the investor to lose money. Not very likely."

Neal and Misean,

We need to start thinking about building our future, not venerating our past and rewarding the current crop of financial idiots who have gotten us into this mess.

If the Fed can't figure that out, it's gonna be depression time for real.

The Fed is not clueless about what is happening in the economy--they are in the same position as those at the top in the Pentagon and Iraq--it is positive spin all the time.

That's right, Neal, and to expound a bit on this analogy, I'd say Bernanke reminds me of a 4-star general behind the lines, making decisions from his comfortable perch based on outdated and incorrect information.

Meanwhile, on the front lines, the "facts on the ground" are changing too fast for his cumbersome academic style (have to agree with Cramer here, God help me.)

For example, his recent attempt to badger Congress into raising the GSE comforming limit to 1 million is far too little, too late. At this point it doesn't matter, even if Congress got off their lazy butts and did it, the price cuts have begun and all the overpriced RE in CA and FL is going to be "marked to market". He can't stop it, nobody can.

He'd be better off losing his chums in DC, and spending some time with Mike Morgan in South FL on a real real estate tour or taking a drive around my Atlanta suburb to see all the vacant spec homes and auctions.

Sebastian -
You are wrong.
Earnings declined prior to a GDP contraction in each of the past 2 recessions - we had an earnings decline commence (as compared to both prior year and prior period as we do now) prior to the 90-91 recession and the 2001 recession - please review your data - its quite clear and a pretty strong leading indicator.
You are also ignoring the fact that those historical GDP numbers prior to and during those recessions were restated downward several quarters later which further underscores the issue. I suspect we will see the same type of downward revision for Q3 2007 particularly considering the anemic GDP deflator and earnings declines.
Prior to the last 2 recessions quarterly earnings growth declined over prior year (and prior period) before we saw any decline in GDP. That is the fact - so what we are seeing now with earnings growth (or lack thereof) is exactly what we would see prior to a recession. The only time in the past 20 years where we saw a quarterly earnings decline over both prior period and prior year that didn't occur immediately prior to a recession or during a recession was late 1998 (I believe Q3) - and that was only a one quarter decline. If Q4 2007 sees another decline (which I expect it will given the financial disclosures of late) then it will be another recession indicator going off among many. Also, if you are going to bounce financial losses out of the earnings declines then back out financial earnings from historical earnings as well as foreign currency gains since they are purely financial gains. You will not see a pretty picture of earnings growth for the past several years. Back financials, MEW and credit expansion out of GDP too - that way you can back out all the benefit and the losses of the financials. That will be equally as ugly.
Dont back out financial earnings (or should I say losses) when its inconvenient - financials had an immense amount to do with the growth in both earnings and GDP that we saw in the past several years and will have an equally important role when the cycle turns. It seems to me as if the data in a myriad of places is indicating that we are at the end of expansion. You are certainly entitled to disagree, but dont try to say we will see a GDP decline before an earnings decline (that wasn't true in either of the last 2 recessions) or that the massive losses of the financials are "one-time" (they're not - read the news from the past couple weeks) or irrelevant (they are very relevant - huge loan losses lead to a contraction in credit which ALWAYS leads to a slowdown - particularly in an economy SO dependent on debt).
I dont buy much of the doom and gloom I read in these comments, but it is very clear to me that we are very close to (and possibly in) a recession that will probably last longer and be more severe than the last 2.
Sorry for sounding like a jerk.

Other than Proshares, do you guys/gals know of any "ultra short" funds?
REBear

sp 500 futures

no big fees, little commission, and no one says you need put up minimum margin
you decide how 'Ultra' you want it to be

for those keeping track of our overseas buddies-

Business Week Online > File Not Found

"You want consume more than start making something WE want... not more homes in the Inland Empire. Else consume less. Thank you. Signed - The Rest Of The World."

I think Asia is quite content with the way things are...

To Anon who finished with,

"Sorry for sounding like a jerk."

If you're going to produce such gold, post a name. If you're familiar with the Jim Rome show, you just one the financial version of the smack off:

Smack-Off - Wikipedia, the free encyclopedia

Absolutely, bloody brilliant.

Oh, and btw how was what you wrote being a jerk? If someone shouts "Looko out!" when you're about to step in front of a bus, is that someone a jerk?

Cheers,

OT - The KEY headline this week, aside from the Fed suggesting $1M limits for GSE loans is an appropriate sum to promote home ownership among the less well heeled, was Capital One's alarming increase in credit card delinquencies, up 20% in Oct alone over the Q3 number. That is the confirmation we needed to see to illustrate how reliant the consumer has been on MEW for cash flow to simply get by.

I expect that number to skyrocket in the coming months, as resets hit and cards hit the limits. American consumers are officially MAXED OUT.

dryfly,

"Just increasing the federal deficit and borrowing more money is by itself NOT constraining consumption"

Define constraining consumption. It does shift consumption forward which narrows the capital structure, as there's only so much produced at any given time, and since all gov't spending is consumption (the gov't CANNOT invest, in the entrepreneurial sense) then such spending robs the higher orders of production of capital needed for expanding capacity.

Thus those projects that might be undertaken but for Gov't spending will inhibit consumption in the private sector. Certainly, at least initially, Gov't + Private consumption will show no decline, however, productive capacity will decline, thus necessitating lower consumption down the road. Also known as eating one's seed corn.

With fiat, this shows up as growing trade deficits. When one possesses the world reserve currency things can get quite out of hand.

Gah, I'm even boring myself with this post.

Cheers,

Then a pretty good machinist in Shanghai making 8 RMB an hour would be able to buy almost the same stuff as a pretty good American machinist making $16/hr doing the same thing... but you wouldn't still have an exchange rate where one dollar equals 8 RMB.

dryfly,

I disagree. It won't happen until China has roughly the same GDP per capita as the USA. Even though this particular machinist may be as productive as the American equivalent (which is probably far from being true anyway), the whole economy is less productive and hence cannot support the same wages (even taking into account difference in prices).

dryfly,

No. Free trade and no currency manipulation is not enough. The machinist in China competes with millions of guys who are unproductive (but could be productive when given proper tools) who earn the very same 8 RMB. You cannot pay this machinist more (because the millions would gladly take his job) and you cannot make the 8 RMB buy the same stuff as $16 because these unproductive guys cannot support such wages.

Even lifting labor movement restrictions is not enough for equalizing wages.
I come form a country where you can find a lot of jobs that are as productive as in the West but pay less because the total productivity is lower. Despite no currency manipulation and (almost) free labor movement. This is due to the fact that the labor is not perfectly elastic. Even though a guy may get more doing the same job in UK, he may stay due to noneconomic (e.g cultural) reasons.

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