S&P: 1,887 Classes of Alt-A MBS may be Downgraded
Submitted by
CalculatedRisk on Fri, 02/29/2008 - 10:58am (134 comments)
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How long before they start downgrading prime?
OT:
YEN breaks 104!!!!!!!!!!!!
The question is, is there any Prime left...
RPT-FACTBOX-U.S. bankruptcy filings in 2008-BankruptcyData
By Walden Siew
NEW YORK, Feb 29 (Reuters) - The following is a total of
annual bankruptcy filings by public companies going back to
2000, and the largest public company filings in 2008, based on
BankruptcyData.com data.
[snip]
Define "Prime". (the ratings agencies can't)
Large front pg articles in Dallas Morning News today about foreclosures all over the DFW metro-plex and hard it DeSoto a southern burb with a large minority population. My daughter lives in the Arlington zip noted.
DeSoto neighborhood hit hard by foreclosures |
News for Dallas, Texas | Dallas Morning News
| Latest News
Foreclosures cut wide swath across Dallas, Fort Worth |
News for Dallas, Texas | Dallas Morning News
| Dallas Business News
As more and more cash goes up in smoke and commodities speculation pushes food prices higher and higher, and then as banks begin to fail like dominos, how long will it be before someone from somewhere wakes up to the reality of a full scale global economic collapse and realizes the danger of allowing food supplies to be used as speculative bets? Are you ready for $30 wheat, do I hear $40....$42.50...sold to the arab in the SUV with The SWF
I'm impressed by the ability of the hedgies to protect their newfound commodity bubble today.
But I'm not surprised.
I believe one of the real dangers of letting these bubbles continue on is that the agents of their creation will grow more well-adapted and robust over time, and thus more resistant to attempts to solve the problem.
With the Fed et. al. being too afraid to kill the plague of "equity locusts" outright they may be cultivating a more resistant breed that could bring us many more years of bubble happiness and economic deconstruction to come.
ac, fixed your typo:
With the Fed et. al. being too afraid to kill the plague of "equity locusts" outright they may be cultivating a more resistant breed that could bring us many more years of bubble [cr]appiness and economic deconstruction to come.
Commodities markets must be shut down today!!
On XOM cutting production
quote-o-day,IMO
Weiss said he's forecasting $22 billion in capital spending by Exxon Mobil in 2008.
Another issue Exxon has mentioned before is difficulty in hiring quality people for its various engineering positions.
"Last year they said the lack of good people is holding them back," he said.
Other issues facing Exxon Mobil include its ongoing dispute with Venezuela,
what an A******E
OT, but there must be something wrong with Yahoo's data feed:
^TNX: Basic Chart for 10-YEAR TREASURY NOTE - Yahoo! Finance
Did the yield on the 10 year T-Bill really dropping to 1/2% today?
Without hyperbole...
...should people be stocking up on flour right about now? or is that going too far?
It looks like people are starting to believe that the BAC buyout of CFC will hit some snag.
It also feels like we are on the verge of a panic as it seems no one really has a handle on what is happening.
Here we are looking in the face of a recession and we have a bubble in commodities, which is inflationary except this also tends to be deflationary and it sucks up free consumer capital.
You have Bernanke and Bush habitually wrong about the future (since they began making predictions last summer), and you have deflationists arguing with inflationists. And you have Roubini, who went from a fringe economist to a mainstream nostradamous, predicting a financial meltdown.
You have solvent borrowers walking away from their home as a financialy strategic move (proving the most bearish among us wrong--including myself)
Panic is in the air.
"might, may, possibly, sort of, so called, within days, presumably,"
Have I left any more over-used adjectives off the list???
Ciao
MS
Commodities markets must be shut down today!!
Do you mean something makes you think they are shut down, or that you believe they should be shut down? If its that you believe they should be shut down, why? Where do you think all they paper sloshing around the planet should land? It has to go somewhere.
YEN breaks 104!!!!!!!!!!!!
I saw that ron. But:
Treasury Secretary Henry Paulson said he favors a ``strong'' U.S. dollar that reflects the competitiveness of the world's largest economy in the long term.
``In my heart and soul, I just know and believe that a strong dollar is in our nation's interest,'' Paulson said
Go figure. His view is decoupling
"Define "Prime". (the ratings agencies can't)"
This year? 50 percent down, at least in the bubble areas. That's the cheapest safe bet. And lenders are supposed to be all about safety -- right?
Not many of us in that category.
Have I left any more over-used adjectives off the list???
possible, on average, from that perspective, perhaps, seems almost certian but not necessarily so, from where I it, if viewed from the context,
any more?
It Friday where is the big, great story of the day to get us through the weekend...
Ricen in Vegas hotel - hope not
ricin in Vegas hotel
That IS the good news....
MS
I've found myself scanning the big bags of flour at the supermarket lately and thinking about storage spots. Main problem is that you can only store white flour for about 12 months in a cool spot before it goes bad. Still, if you can work out your flour needs for the next year this probably isn't a bad time to go ahead and stock up.
Next Headline... 'Stocks Pull Pin and Swallow Hand Grenade While Bathing in Acid
The only Prime worth having is Prime Rib, medium rare with a baked potato!
Scratchy - hope you bought some of that flour two months ago because the price had doubled since
I guess what I'm going to do now is hope that my short investments allow me to keep up with inflation.
No look, think about this for a minute. "Speculation" cannot push commodities higher over the long term unless the commodity is being stored up by the buyers. Take wheat for example, inventories of wheat are at the lowest in over 60 years, and have fallen for 7 of the last 8 years. Production of wheat is dropping due to decreased acreage and weather problems. Speculators are not taking delivery of wheat and hording it, therefore they are only affecting the price short term as they first buy it, and then sell it prior to taking delivery. So you cannot blame speculators for the long-term (ie, multi-month) movement of wheat prices.
ALL of the wheat being produced is being consumed, and it is supply and demand dynamics that is increasing the price. It is therefore not a "bubble" in any real sense. It is dollar devaluation combined with real supply (too little) and real demand (too much) problems.
And because there is nothing coming up to change this dynamic (people need to eat, drivers need to burn food in their cars, and farmers are likely to have more and more bad weather to contend with), wheat prices are not going to collapse.
Ditto for corn and oil and natural gas - basically all foods and energy are like this, ie, NOT a bubble.
Metals may be a different story - they do not get consumed the same way that food and energy do.
The only Prime worth having is Prime Rib, medium rare with a baked potato!
Your meal comes to $700.00
Yes I know the menu says $150.00 sir, but that menu was printed this morning. Will you be payin with worthless paper or limited credit, then?
Commodities markets must be shut down today!!
Do you mean something makes you think they are shut down, or that you believe they should be shut down? If its that you believe they should be shut down, why? Where do you think all they paper sloshing around the planet should land? It has to go somewhere.
I for one am very happy that the commodity markets are there to illustrate the folly of using a 1-dimensional mechanism (rate cuts) to "fix" a 3-dimensional problem.
Re: .should people be stocking up on flour right about now?
IMHO, begin to not consume wheat products and dont get caught spending money on a commodity that is not essential. I would not fed the profits of speculators and seriously feel commodity market could destroy the world with hyper inflation. We have had a fairly efficient market in place, with wheat and other food producys being easily obtained, but what if, wheat or other commodity foods do begin to triple in cost? How will that serve humanity, versus just being the next vehicle for a destructive asset bubble? This is mega, mega serious stuff here and there is no doubt that that connecting and integrating un-regulated speculation to the mechanism of food distribution will be catastrophic , resulting in famines and death. If we were to use the subprime mess as a metaphor for commodities manipulation, perhaps you can begin to see the impact here. These markets are out of control and need to be shut down immediately!!!
Im very serious, this is going to be destructive if we allow the markets to control food costs!!!
No look, think about this for a minute. "Speculation" cannot push commodities higher over the long term unless the commodity is being stored up by the buyers.
The buyers don't have to store it themselves. The producers can do it or some third party (Singapore?) can provide the storage for a fee.
As I see it, all that is needed is for the increase in prices to be greater than the cost of leverage, transport, and storage (including building new storage).
Once again kudos to ac: you've been calling the commodities liftoff for quite a while.
Once again kudos to ac: you've been calling the commodities liftoff for quite a while.
Well my reasoning was pretty simple -- the hedge funds have to continue creating bubbles to survive, and commodities seemed to be the next obvious choice after stocks and real estate.
The buyers don't have to store it themselves. The producers can do it or some third party (Singapore?) can provide the storage for a fee.
It is not being stored. We are eating it. Global stocks of grains are decreasing, not increasing.
Who needs gold at a dealer when you can buy flour at any grocery store. Watch the cigarettes be moved from the plexiglass locker to hold bags of flour.
How will the USA live without bread and circuses?
"I've found myself scanning the big bags of flour at the supermarket lately and thinking about storage spots. Main problem is that you can only store white flour for about 12 months in a cool spot before it goes bad. Still, if you can work out your flour needs for the next year this probably isn't a bad time to go ahead and stock up."
Try white rice instead. Brown rice is healthier but it goes rancid in a few months without refrigeration. White rice stores well, can provide all your carbo needs for breakfast, lunch, or dinner. You can't make a sandwich out of it, but that's about it.
Rice prices haven't gone up substantially, either, at least not at my supermarket. Probably the Asians don't need our rice too awfully badly.
Mike,
Just as we have seen with corn, food costs (corn) are being pushed higher as a result of speculation related to corn being used as a substitute for oil, thus as oil goes up, there has been an increase in corn prices, which results in higher food prices and obviously this synthetic oil substitute for ethanol has no impact on oil prices> What happens when wheat soars as a food cost and farmers rush to plant more wheat; you might expect wheat prices to react to supply and demand, but he wheat will will be like oil, and increase in price just because it is a speculative casino chip. We cant allow that to happen!
Consider this: Whenever demand increases and renders a branch of business more profitable, production facilities are supposed instantly to expand in proportion. This view is untenable. Entrepreneurs often err. They pay heavily for their errors. But whoever acted in the way the acceleration principle describes would not be an entrepreneur, but a soulless automaton. Yet the real entrepreneur is a speculator, a man eager to utilize his opinion about the future structure of the market for business operations promising profits. This specific anticipative understanding of the conditions of the uncertain future defies any rules and systematization.
It is not being stored. We are eating it. Global stocks of grains are decreasing, not increasing.
Never mind specific commodities -- the whole lot of them is going up.
And there may well be valid fundamental reasons for prices to go up (this is usually the catalyst for bubbles to begin with), but that doesn't justify a parabolic meltup with prices leaping higher day after day.
Even OPEC argues that there's more than enough oil supply right now. So why the huge rise in prices?
Speculative leverage seems to be the most obvious explanation to me.
Just as we have seen with corn, food costs (corn) are being pushed higher as a result of speculation related to corn being used as a substitute for oil
That is not speculation. That is changing supplies and changing demand - ie more demand for corn to be used in cars, and less wheat production as farmers switch to growing corn.
What happens when wheat soars as a food cost and farmers rush to plant more wheat
Happening in some places (California), not in others (Kansas, Oklahoma). Production overall is not increasing, and is collapsing disastrously in places like Australia.
but he wheat will will be like oil, and increase in price just because it is a speculative casino chip
Again, it can only be a "casino chip" if it is being stored and not consumed, but global oil stocks have fallen in the last year. We consumed more oil than we produced last year. We are having serious difficulties increasing production back to 2005 levels. Think about that. Oil at $100 is absolutely realistic given the supply and demand dynamics. In fact, it will only go higher overall until a real economic collapse occurs and destroys a lot of demand.
Just to bring some objectivity into the discussion regarding commodity prices during the depression and beyond.
Here is a long-term copper (Dr. Copper) chart illustrating the facts :
Copper Chart
Source: U.S. Geological survey:
Now dont freak out here with commodities and this connection to a previous era, circa 1985:
Devaluing the dollar made US exports cheaper to its trading partners, which in turn meant that other countries bought more American-made goods and services. The Plaza Accord was successful in reducing the US trade deficit with Western European nations but largely failed to fulfill its primary objective of alleviating the trade deficit with Japan because this deficit was due to structural rather than monetary conditions.
Now, flash forward to next month, when wheat and other commodities are screaming, and the dollar is tanking, stocks falling, yields falling, but wheat and food costs soaring, as speculators push food costs higher....
ac you have it right. I have noted that it is not a supply problem but another speculative bubble being formed. OPEC is not interested in increasing the output because there is plenty of oil and their formost job is to have ample supply, not control prices. It has been our government who has increased these prices in commodities by not properly managing the reserves, war and subsidies.
IMHO, begin to not consume wheat products
OK. So what should I eat?
Never mind specific commodities -- the whole lot of them is going up.
Never mind painting with such a broad brush, not all commodities are the same. The fact that some traders (like you) think they are is explanation enough for the increases in gold and platinum, etc. But food and energy have real supply constraints.
but that doesn't justify a parabolic meltup with prices leaping higher day after day.
If the price stays high for 6 months, it is not speculation unless you also see builds in stocks. Otherwise, like I said, the wheat is bought and sold by the "speculators" for a net neutral effect on price. It is the supply and demand that is driving the price in the long term.
Even OPEC argues...
Seriously? OPEC is the paragon of honesty? Not self-serving at all? Go read theoildrum.com for a much better education than I could ever provide.
Speculative leverage seems to be the most obvious explanation to me.
Only for commodities where inventories are rising.
OK. So what should I eat?
Bankers.
"What happens when wheat soars as a food cost and farmers rush to plant more wheat; you might expect wheat prices to react to supply and demand, but he wheat will will be like oil, and increase in price just because it is a speculative casino chip. "
http://www.bloggingstocks.com/2008/02/28/calpers-investments-in-commodities-to-impact-the-u-s-economy/
Calpers' investments in commodities to impact the U.S. economy
Posted Feb 28th 2008 3:03PM by Joseph Lazzaro
Filed under: International markets, Commodities, Oil, Agriculture
The commodities fad took a major step toward becoming an investment trend when investment giant Calpers -- the $240 billion California Public Employees' Retirement System -- announced it may increase its commodities investments 16-fold to $7.2 billion through 2010, Bloomberg News reported Thursday.
Calpers, the largest pension fund in the United States, said it would hold between 0.5% and 3% of its assets in commodities. Last year the fund invested $450 million in commodities.
Strong emerging market growth, particularly in China and in sections of Latin America, has created a bull market in oil, commodities and raw materials, and many economists say these assets are likely to outperform both inflation and selected investment classes in 2008, and possibly for a longer time period.
citizen, whatever you can shoot
OK. So what should I eat?
Just do what I do -- go to the $5 endless pizza buffet at Cici's and complain about how rising wheat prices have made bread so unaffordable.
Ok, in 1985, America, in a reession will produce less, thus, we will have less to trade and since we have fewer goods to export, and even less food as a result of NAFTA and CAFTA, we end up with a dollar worth less and fewer bucks being sent in from across the pond. However, as our food costs increase as a result of global commodity speculation, we will get a sort of triple whammy effect like stagflation a recession and hyper-inflation where America will be the next third world country begging for food from mexico and China. Meanwhile, the wealthy that can continue speculating in wheat and commodities will become land barrons and by up farms to help tighten up margins for future food speculation.
Can anyone get me a ticket outta here?
"K. So what should I eat?
Bankers."
And the rich in general.
Eat any grain or legume besides wheat that no one's making ethanol from. Rice, oats, barley, beans, lentils, etc.
I'd be really surprised if the cost of a bowl of rice and beans ever got far from anyone's reality.
Ministry of Truth writes:
... OPEC is not interested in increasing the output because there is plenty of oil
You might want to check out other possible explanations of why OPEC might claim there is plenty of supply. Two that come to mind are A)they can't supply more and know it or B)they like the high price and are conserving their oil in the ground to increase future profits.
I actually already eat a lot of rice. For breakfast even. It sure does stick with you all morning. No hunger pangs.
Buy canned goods. I have many cases of chili and peaches left over from Y2K. Actually too many. I may have to move cases around to make room for rice and some roots.
Hahah someone on this blog having leftover cans from Y2k... Shocking! haha.
Where's Opt. Joe or Sebastian when you need them!
One of several big stories today:
Billions of dollars of sales slam muni bonds
Billions of dollars of sales slam muni bonds
| Reuters
I think that it's ok if farmers make a good profit on wheat and beans. These products are among this countries best exports. If you would like to hedge your food costs, buy some mini-grain futures. The margin is only a few hundred dollars for 1,000 bushels (compared to a normal 4,000 bushel contract, I think.) Another posibility is DBA, Deutche Bank Ag ETF. It's tied to the cost of corn, wheat, soybeans and sugar. It may be in blow off mode, but I'm glad to be holding some. DBA is volatile and does not have the risk of futures of being limit up or limit down. That's when you can't buy (or sell)because the price is going up (or down) an excess amount with no liquidity. I would not recommend trading large numbers of futures contracts, however. Evidently the trader for MF Global who lost $140 million on Wednesday manged to do it by being short a few thousand March Wheat contracts.
Best share some of those with Most lurking he maybe laughing now..but he will be begging at your front door for one of those can goods someday...guaranteed
Funny, but the price of pasta hasn't gone up all that much. I buy highish-end Italian pasta (DeCecco) for two bucks a box. It's been two bucks a box at the grocer for like the last several years. Must be those European gov't subsidies protecting me...
At any rate, we've been buying an extra box of pasta every time we go to the store. Probably have about a month's worth right now, if we ate it every night. I asked a grocer if dried pasta ever went bad, and he said no, no in his experience if kept dry and clean.
They say rice is an empty carbo but it is also a great non-digestible entity, which is a great substrate for nutrition. They call that a pre-biotic, not to be confused with a pro-biotic like as in a yogurt. These Resistant starches (RS) are used to help people with nutrition problems, so rice is a good thing and things like rye flour are amazing in this respect. Thus wheat which is linked to Celiac disease is really not good for you anyway, and things like corn flour can be added to your homemade goodies.
meanwhile, we need to shut down commodities markets before this turns out VERY ugly!!
Eat any grain or legume besides wheat that no one's making ethanol from. Rice, oats, barley, beans, lentils, etc.
So, what you're saying is "drink more beer"?
Wanna hear a real strange one? All the talk about loading up on food & guns?
Cerebus now owns Bushmaster (assault rifles), Remington Firearms (rifle, shotguns, ammunition) and Panther DPMS (assualt rifles). The big boys are loading up, too.
So, what you're saying is "drink more beer"?
I think ill start right now
"So, what you're saying is "drink more beer"?"
Yes, but not lite beer. You want those calories...
This is sad and if commodities markets do explode food costs, this will be America within a year:
It was lunchtime in one of Haiti's worst slums, and Charlene Dumas was eating mud.
With food prices rising, Haiti's poorest can't afford even a daily plate of rice, and some take desperate measures to fill their bellies.
Charlene, 16 with a 1-month-old son, has come to rely on a traditional Haitian remedy for hunger pangs: cookies made of dried yellow dirt from the country's central plateau.
The mud has long been used by pregnant women and children here as an antacid and source of calcium. But in places like Cite Soleil, the oceanside slum where Charlene shares a two-room house with her baby, five siblings, and two unemployed parents, cookies made of dirt, salt, and vegetable shortening have become a regular meal.
"When my mother does not cook anything, I have to eat them three times a day," Charlene said. Her baby, named Woodson, lay still across her lap, looking even thinner than the slim 6 pounds, 3 ounces, he weighed at birth.
Though she likes their buttery, salty taste, Charlene said the cookies also give her stomach pains. "When I nurse, the baby sometimes seems colicky, too," she said.
Food prices around the world have spiked because of higher prices for oil, which is needed for fertilizer, irrigation, and transportation. Prices for basic ingredients such as corn and wheat are also up sharply, and the increasing global demand for biofuels is pressuring food markets as well.
How can I invest in mud futures? Isn't there an ETN?
CR, I don't know if anyone posted this yet but Barry Ritholz over at his Big Picture Blog linked to a couple of articles he claimed were must reads ( from Brandeis Rosenberg Institute and WSJ Economics Blog) on the amount of leveraged loss possible from the banking institutions.
The Big Picture
Leveraged Losses: Lessons from the Mortgage Market Meltdown
David Greenlaw, Jan Hatzius, Anil K Kashyap, Hyun Song Shin
US Monetary Policy Forum Conference Draft, February 29, 2008
http://www.brandeis.edu/global/rosenberg_institute/usmpf_2008.pdf
Banks May Need to Shrink by $2 Trillion on Subprime Losses
Greg Ip
WSJ Real Time Economics, February 29, 2008, 11:59 am
Banks May Need to Shrink by $2 Trillion on Subprime Losses - Real Time Economics - WSJ
Anyone have close to a realtime on the dow . . . Bloomberg and Google finance both seem way off.
Thanks,
284
The rating agencies project higher monoline capital levels based on capital infusions anticipated to occur in the future, yet dont raise future loss expectations even as they continue to downgrade CDO's?
Using this method, the monolines could be rated AAA right up to the day they are no longer able to meet their contractual obligations.
Nice work if you can get it.
"God Help Us All (SOS)!! writes:
This is sad and if commodities markets do explode food costs, this will be America within a year:
It was lunchtime in one of Haiti's worst slums, and Charlene Dumas was eating mud."
GHUA, before that happens President Obama will declare a Change and Hope emergency in ringing, faux-evangelical tones and raid the warehouses.
That, or revolution. We aren't eating no mud here in the U S of A.
More seriously, profiteers ran up the price various staples during the revolutionary war, and at times the mob simply stormed the warehouses and took what it wanted. There's a point at which finance isn't just finance anymore.
Re: How can I invest in mud futures? Isn't there an ETN?
Many of us are sitting (or living) on gold mines!
I think alot of the bulls took solice in the fact that those who saw a housing bubble were also those who believe in Global Warming, took refuge for y2k, hoard gold, ammo, and food, and are generally the black helicopter, anarchist, conspiracy theory types.
I think the broken clock is about to tell the right time and the blind squirl is about to find the nut.
Anyone have close to a realtime on the dow . . . Bloomberg and Google finance both seem way off.
It's going up... wait, it's going down... wait...
Appologies, I posted the aluminum chart instead of the copper chart. Here is the corrected version:
Historical Copper < 2000
Cerebus now owns Bushmaster (assault rifles), Remington Firearms (rifle, shotguns, ammunition) and Panther DPMS (assualt rifles). The big boys are loading up, too.
ed in texas
that's so effed up i can't even believe it...source?
so , as the plants get shut down due to AXL strike, the firm still makes money as the workers go to the gun shop to kill mid management...
talk about prison planet.
Re historic commodity prices, the copper price peaked during WWI, I think it was the same for crops too. I was in DC when the farmers marched (well, drove tractors onto highways) I think in the 80s. They wanted prices to return to what they were in 1914 or something.
Oh come on Bob,
Have you seen the new virtual fence technology for the Mexican border? They have towers with video cameras that send realtime images of people breaking into the wheat warehouse; its great that we have lots of hungry people headed this way like a cattle stampede but they also have these new disruptive gun technologies, so Im all for a food revolt, but before this gets too crazy, I think we need to keep wheat from becoming too valuable in some ungegulated synthetic derivative products brought to us by SIFMA!!
As you may recall:
Blueprint For Reform
Archives
NFA, the futures industrys self-regulatory organization, emphasized the historical and cultural differences between the CFTC and the SEC. The CFTCs primary mission is to protect the price discovery and risk management functions of the markets, NFA said. Futures markets have mostly institutional participants, and the CFTCs philosophy and internal culture encourage innovation and competition. In contrast, the SECs primary mission is to protect investors, and its internal culture tends to be more risk adverse. One telling example of the differences in their outlook is in their views regarding short sales, NFA said. To the SEC, short sales must be restricted, while to the CFTC they are the very life blood that ensures [that] futures prices mirror prices in the cash markets. To the SEC, speculation has a negative connotation, while to the CFTC it provides the liquidity that makes futures markets run. Given the differences in their histories, philosophies, and markets, the two agencies are simply incompatible, NFA concluded.
RE, you need to run that chart forward by about eight years.
the last five years would have run it up to $3 on your chart
http://www.kitcometals.com/charts/copper_historical_large.html#5years
Try to show some more up to date than that USGS stuff.
As for SOS, why don't you tell our Treasury Sec to stop talking about a strong dollar and hire Volcker to make it a real strong dollar.
As for food getting more expensive, ah well, less money for mortgages!
Someday this war's gonna end...
what a great day for shorts. they'd better hurry up the Hail Mary.
OCC Preps for Bank Failures:
Sorry. Page not found.
Dow down 306 and soy beans headed higher. Rice remains in-grained at the low end with dirt?
Sorry, Friday OT:
This is one way to motivate your employees ....
A supervisor at a motivational coaching business in Provo is accused of waterboarding an employee in front of his sales team to demonstrate that they should work as hard on sales as the employee had worked to breathe.
In a lawsuit filed last month, former Prosper, Inc. salesman Chad Hudgens alleges his managers also allowed the supervisor to draw mustaches on employees' faces, take away their chairs and beat on their desks with a wooden paddle "because it resulted in increased revenues for the company."
Employee's suit: Company used waterboarding to motivate workers - Salt Lake Tribune
heat fell on speculation the world's farmers will seed more acres to capitalize on record prices, increasing stockpiles that are headed for the lowest level in 30 years.
Growers in the U.S., the world's largest exporter of wheat, will increase planting by 6 percent to 64 million acres in the year that begins June 1, the U.S. Department of Agriculture said last week. The price has more than doubled on concern demand will outpace production.
``The world is focused on this massive crop that's coming in,'' said Louise Gartner, owner of Spectrum Commodities in Beavercreek, Ohio.
thought i'd repeat a post from last nite for the gold debate:
idoc writes:
from Jeff Christians Commodities Rising: gold accts for 30% of worldwide commodities derivatives trading. it does not trade so much as a commodity but as a financial asset. the ratio of these derivatives to the underlying physical gold mkt is 60:1 and was as high as 100:1 in the 90's. in almost all other commodities this ratio is only 5:1 to 10:1 and for oil around 20:1. thus gold and silver have much deeper and broader forward mkts.
this begs the question as to why this is. the fact is that gold and silver trade like financial assets and not like commodities. one finds similar ratios of derviatives to physicals in currency trading and interest rate mkts like the US treasury bills and bond mkts.
idoc | 02.29.08 - 1:36 am | #
Hey, this downturn might stick, today!
Do you think mutual fund money managers are getting skittish?
I need to put my last margin purchases of SDS in place, and would prefer not to have a dead cat bounce of 5% result in a margin call.
My cash contacts say Chinese supplies are tight and purchases have been very big, so they do not know how to stop this rally,'' said Roy Huckabay, executive vice president at the Linn Group in Chicago.China has no problem with the ability to pay. They have a huge war chest of dollars.''
Oh great, we feed wmt, wmt feeds China and then China helps increase the price of food and fuels our inflation....go wmt, go Bush economy go commodities, lets crash America!!!
This has been a pretty good year so far. Every Tuesday Apple announces an upgrade or a new product and every Friday these guys announce a downgrade....
Ying and Yang!
"So, what you're saying is "drink more beer"?"
Beer prices are going up as hops and
malt prices are in short supply.
For drinkers of craft beer, prices may soon be hopping
Allan,
I know this is why I indicated "< 2000". I just wanted to illustrate the behavior of some commodities during the depression.
I believe we are in a secular trend change regarding commodities meaning that scarcity will start to dominate the price action. Quadrupling 20th century living standards puts a tremendous strain on supplies. I dont mean to imply that there cannot be sharp drops but I believe firmly in a secular commodities bull market.
Everybody take a deep breath and come out of the superbeardome.
The markets go up, they go down. There is still food on the store shelves, and let me look out the window.........yes peace and order are still being maintained.
Thanks
g
thought i'd repeat a post from last nite for the gold debate
Stop that!
Help!
Yah, I read about beer, how depressing!
isten up - your next glass or pint could cost you more.
The price increase coming to store shelves near you isn't due to rising gas prices. Hops and malted barley, two big crops for beer making, are facing major shortages.
At Red Hook Brewery in Woodinville, spokespeople say their production costs have gone way up. And they aren't alone - other microbrew makers are reporting the cost of beer making is up because hops and barley prices have shot up. And that means you'll be seeing the difference on store shelves.
Two-year yields fell 18 basis points to 1.64 percent at 3:18 p.m. in New York, capping a second month of declines, according to bond broker Cantor Fitzgerald LP. The price of the 2 percent security due in February 2010 increased 11/32, or $3.44 per $1,000 face amount, to 100 23/32. The yield has dropped 39 basis points this week.
Ten-year yields decreased 16 basis points, or 0.16 percentage point, to 3.52 percent. The weekly decline in yields of 29 basis points would be the biggest since October.
Muni hedge funds hit by margin calls, Pimco says
Muni hedge funds liquidating to meet margin calls, Pimco says - MarketWatch
Good point giacutter!
After all it is friday and borkafatty has already cracked a cold one... (must be east coast)
YouTube
- Blind Melon - No Rain (C) 1993 CAPITOL RECORDS
what a great day for shorts. they'd better hurry up the Hail Mary.
I noticed last time around when the periodic price spikes we got throughout the day stopped generating rallies and started being sold into things turned into a rout.
Stock up on flour and beer at the store tonight:
"Droughts in Europe, fire in Yakima about a year and a half ago which destroyed the hops crop," said Schuck.
Severe weather ruined hops production in Europe, causing many farmers to plant corn instead for ethanol production. It all means hops are now going for $35 to $40 a pound instead of the $3 to $5 this time last year. Barley rates are also up 25 to 40 percent.
The production costs are just now trickling to consumers. Whole Foods has posted a sign saying beer customers can expect "dramatic price" increases, about one to two dollars on every six pack.
Tanta,
Tomorrow's National Pig Day ....
Thanks for the link, c&c.
Aw, how terrible, that the muni bond hedge fund guys are getting margin calls.
Breaks my heart.
So, idoc and ac, is there a sea-change in mutual fund manager sentiment afoot?
So, idoc and ac, is there a sea-change in mutual fund manager sentiment afoot?
I don't know much about the industry. I presume much of the pressure would come through withdrawals in retirement plans etc.
A lot of people I work with that were bullish on stocks are now moving all their 401k assets to money market funds.
Thank you, sir.
We need a beer futures market
then we could drink up our assets.
in poor taste:
I got that from the Brownells guys earlier today, that were just back from the SHOT show in Vegas. Reliable?
I buy stuff from them fairly regularly and I get what I order...
I have a side question. Does anyone know any good widgets (mac) or google gadgets for the yield curve. I've love to see that daily on my homepage or desktop....
Odd; I just saw a futures purchase at below the current S&P price.
Are the hedgies trying to accelerate things downward now?
I hope so!
I don't know about muni hedge funds, but somebody must have delevered. The yen is strapped to a roket. Hard to believe it was at 123 a relatively short time ago.
The yen is also strapped to a rocket.
This weekend, read this background stuff as you stock up on wheat:
The (1985) Plaza Accord decoupled dollar interest rates from the exchange value of the dollar and also decoupled the traditional link between rising interest rates
Liquidity Boom Decouples US Equity Markets from the US Economy
Chinas latest foreign reserves data showed that there is as much as $73 billion in unexplained new reserves. The Peoples Bank of China (PBoC), the central bank, now holds over $1.2 trillion in foreign reserves, the most among the worlds central banks, except the US Federal Reserve which can create dollars at will and therefore needs not hold any foreign reserves.
Aw, how terrible, that the muni bond hedge fund guys are getting margin calls.
These aren't the swagger and cowboy hedge funds that you mostly read about.
These are sleepy little funds setup to take advantage between the duration mismatch between supply and demand of muni bonds. Most of the demand is for short-term securities while most of the supply is long term.
These funds would buy up long term muni and then issue short term munis. It actually provided a service for both the investors and issuers (while it worked). As a result, the yield curve of muni bonds flattened. The hedge fund made a very, very small profit on spread but with the leverage the returns were decent (but not wow!).
Now, with the long term munis selling off on inflation and credit concerns and short term investors rushing to cash (real cash) they are getting killed.
The result is going to be a steeper yield curve and a higher costs for municipalities that need to roll over old debt or issue new debt. End result will be fewer public construction projects and public sector layoffs (which is one thing that cushioned us in the last downturn).
Looks like ARS/VRDO market isn't going to stabilize. Money market funds may be the next to get hit.
May God Help Us All writes:"how long will it be before someone from somewhere wakes up to the reality of a full scale global economic collapse and realizes the danger of allowing food supplies to be used as speculative bets?"
Oh come on you guys. It doesn't seem to matter what CR or Tanta write about, the whole board desolves into a debate about commodities. Yesterday a 250+ post slug-fest between the gold bugs, the bullion holders and the ETF guys. Part of the reason prices are going up is because of your worthless dollar because all these commodities are priced in it, part becuase of peak oil (yes it is true) and part because of global warming (yes that exists too)leading to crappy crop yields. Not to mention the wealthier BRIC populace now wanting to eat nice food, and big areas of farmland being pulled out of food and into fuel (ethanol) production. Seriously people, this doesn't surprise any of you, does it? Can we pleeeeeeease get back on topic?
Uh, what was the topic?
Oh yeah, someting about big time downgrades of Alt-A.
(Not discussed because it's already priced in/contained/won't spread to the rest of the economy/home prices never go down/Wright model B/yes it is no it wont yes it is........)
A lot of people I work with that were bullish on stocks are now moving all their 401k assets to money market funds.
ac
Six months too late, or better late than never?
"Six months too late, or better late than never?
I vote for better late than never.
All this talk about wheat markets and commodities is reminding me of this, which came out nearly 100 years ago but still obviously resonates.
As for pasta keeping indefinitely, well. A few months ago I found some old pasta in the basement--probably about 9 years old because I apparently packed it up when we moved from our old place. Anyway, it tasted noticeably worse than the recently-purchased pasta, a difference that became less noticeable when covered with tomato sauce.
How can I invest in mud futures? Isn't there an ETN?
"Mud futures" sounds an awful lot like "real estate"...
Here's the yield curve graphic on bloomberg:
Bloomberg.com:
Government Bonds
On another topic, although wheat price volatility is very high, soft red winter wheat futures prices have fallen over 20% since Wednesday's highs.
A very high percentage of all alt-a loans that were sold in the last few years were interest only for 5 or 10 years. These effects being seen already have nothing to do with the I/O period being over. That is still afew years away.
It will get much uglier in a within the next few years as people with "fixed" rate mortgages see their payments jump and the option arms come into play. This has a long way to go.
Let's not get too crazy here. Some of you guys sound like you're getting ready to build a bunker in the backyard and cram it full of kruggerands, canned goods, and buckshot.
Interesting.
Poole: "We left rates at 1% for too long"
But... But... I thought Greenspan said they did the right thing?
Friday afternoon joy from Marketwatch:
Impact from credit crunch will be huge, study says
The economic impact of the mortgage crisis and credit crunch will be huge, and it has barely begun, a new study prepared by several prominent economists and released Friday has concluded.
"Feedback from the financial market turmoil to the real economy could be substantial," it said. Unless they can quickly recapitalize, banks are likely to cut back their lending to consumers and businesses by more than $1 trillion, cutting economic growth by more than a percentage point over the next 12 months.
...
After an initial period where several financial markets seemed immune from the crisis, the credit crunch is now gathering storm.
The report estimates that the credit crunch is expected to push down growth by 1.3 percentage points over the next 12 months.
...
...
A worse-than-expected economic outlook would cause a downward revision to these estimates.
As in, the recession that this has already caused will feedback into it. a mere 1.3 % drop in growth will be a walk in the park once the feedback loops get going.
Let's not get too crazy here. Some of you guys sound like you're getting ready to build a bunker in the backyard and cram it full of kruggerands, canned goods, and buckshot.
Many, I'm sure, built one long ago.
And that's okay, I suppose, just don't live there.
Yes, those who are just "getting ready to build a bunker in the backyard and cram it full of kruggerands, canned goods, and buckshot" are too late.
Thanks Walt
Re: O h come on you guys. It doesn't seem to matter what CR or Tanta write about, the whole board desolves into a debate about commodities.
Oh come on yourself, there are trillions of bucks in decay and there are a lot of interrelated dynamics. The commodities issue in this case is related to speculation which relates to the unregulated market conditions which have resulted in the loss of trillions, which could happen with unregulated commodities. We are on the verge of systemic failure here and if wheat becomes a really hot investment speculation idea, we are going to have serious problems beyond what the chaos we have now! The problem of out of control commodities isfar more serious than a dumbass company like Ambac going under!
I disagree. Some of us have been investing in commodities for years. So what if it goes to the moon. Enjoy the ride and make some money. Some of us gloom and doomers have been banging on about global financial meltdown for ages. Out of control commodities is merely one manifestation. It will be the tip of the iceberg. Dust off your tin foil hat and load up your bunker. The Greater Depression is on its way.
One of the problems I am fighting is how long this collapse is taking. I can see the endgame, and I just want the market to get from a to b and recognize the losses. Persistence is what is increasing the panic in the mainstream, as they have not been panicking like the folks here.
I sorta shrug at the latest downgrades of mortgage bonds on Friday now, as it is a regular occurence. Same goes for ABX/CMBS cliff diving. Commodities driving higher and higher is the same thing, wake up, check Bloomberg, note the green arrows are usually the same, go to work, get it done, check again. More of the same.
This crisis is getting monotonous.
I bet that CFC going under will change that. On the other hand, I still have to go and get some groceries, and the latest rise in prices and consequent spending of the fisc that much faster raises some concerns too.
But hey, the reason why we are now discussing PM's and food is because they are shooting up like corn in June. When crisis truly go mainstream, our very political fundament is threatened, and the bailouts will finally get going.
Long time commenters here are sorta stunned by how this is proceeding, and how few people were talking about this last year. We had regular posters talking about how there were no problems, and that housing prices would already be going up because this is an election year, etc. Have we forgotten all that optimism, misplaced as it may have been?
But first the pols need a FIRE lit under them by growing misery.
Someday this war's gonna end...
Oh, and what happens to dumbass Ambac IS relevent because that will affect what happens to the market next week, next month, next quarter. It is relevant NOW. The greater depression will consume the next decade, but we need to pay attention to the short term too.
I'm a wheat farmer and if I had a big enough gun, Id shoot everyone on this blog for taking down wheat and trying to suggest that I should grow wheat for less money. Im all for $100 wheat and I also think the Fed should give me lower rates on my loans and increase my subsidation ! As a supplemental cash crop I plan to grow the hell out of soy beans and I hope thems go up to $100 too!
I started farming almost a year ago and with the help of the state and fed Im in hog heaven!
Farm Loan InformationDepartment of
http://www.fsa.usda.gov/Internet/FSA_File/farmloanchart07.pdf
Beginning
Farmer Down
Payment Farm
Ownership
Lesser of 40%
purchase price or
appraised value
■ Term: 15 years
■ Interest rate: 4%
■ Purchase farm or ranch
Marketing assistance loans provide producers interim financing at harvest time to meet cash flow needs without having to sell their commodities when market prices are typically at harvest-time lows.
UNITED STATES DEPARTMENT OF AGRICULTURE
FARM SERVICE AGENCY
0 PSL-61R 2004-CROP WHEAT PRICE-SUPPORT LOAN ACTIVITY AS OF JAN 31 2008
0 * ALL DATA IN 1,000 BUSHELS *
TOTAL 124,347 54,037 178,384 118,342 49,968 6,005 4,072
Is farming that easy?
Doesn't this strike anyone else as just another bit of panic behavior? I don't see a lot of difference in the reaction to wheat prices shooting up uncontrollably as the previous "Buy now or be priced out forever!" mentality that swept the housing market. There might be short-term pain in food prices, but I don't think that this is some sort of new paradigm for a new economy like food 2.0. Aren't we still subsidizing American farmers because we grow too much food?
If poor people out there can't afford flour for bread,...well, let them eat cake!
Wheat engineer:
Where did you set up your farming operation? (City and State)
What was the size of operation you began with? Could you explain the costs and profit analysis? I am interested in the same, frankly.
I think that it's ok if farmers make a good profit on wheat and beans.
rc helicopter
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