Don't these guys have Wright Model B?
Can some one please help them! They're obviously missing the only thing that matters.....
And while Rome burns, Sebastian continues to fiddle.....
Well, Sebastian has been very clear and unambiguous that he believes there will be no recession. Takes guts to stick to that in this environment. If he's right, he'll gain enormous credibility in my view. If he's wrong, it will interesting to see how he adjusts his assumptions.
I have been deeply dissapointed in the administration, Bush in particular, even though I consider myself a fiscal conservative and voted for him twice.
Ironically Bush may be a contrarian play as he is likely the only obsticle to a Democrate lead federal bailout from this problem, a bailout that virtually assures a propping of housing prices, a socialization of losses, a savior to the banks/lenders most at fault, and an extension of the problem for may years
The stock market hasn't done a very good job of anticipating this recession. There was a big run up in late 2006 and through much of 2007 as the economic fundamentals were deteriorating...
The best-forecast recession in history, when everyone and their dog catches the exact beginning of the recession except me.
I would have to argue that we've got to be fast-approaching the precise opposite of "irrational exuberance," with so many people insisting there's a recession on in the absence of clear, uncontrovertible evidence.
The upside for CR if there's no recession: He'll have bragging rights that the only Internet poster who got it right was one of his loyal community-members.
Don't know whether it's been put up on the web yet, but UCLA was on the local radio news Tuesday morning continuing the line: it will feel like a recession, but employment won't fall enough for it to be technically a recession.
Well, Sebastian has been very clear and unambiguous that he believes there will be no recession. Takes guts to stick to that in this environment. If he's right, he'll gain enormous credibility in my view. If he's wrong, it will interesting to see how he adjusts his assumptions.
If he's wrong, he'll slink away in humiliation, like most trolls.
I do not think it's fair to label Sebastian a troll. I think he's been a valued member of this community for awhile (the whole fake sebastian thing aside). I also think it's important for a community to have dissenters, to keep the masses from devolving into groupthink. I personally believe we are in a recession, but I defend Sebastian's right to disagree with me.
while I think we will have a technical recession, I don't think that if we somehow through a miracle of stats avoid the technical definition, i.e. 01% growth for say 6 quarters would be avoiding a technical recession, no one who was listening to you would have any inkling of the current problems we have now.
If someone sat down on a couch with you a year ago then they never would have understood the current stock market, the credit crunch, the collapse in housing sales and prices...none of it.
Had they sat down with CR, absolutely none of this would have been a surprise.
You may continue to hang your hat on a meaningless statistic, meanwhile no one here can say that we didn't see it coming.
Sebastian there comes a point that even if an economy is doing very well if everybody goes septic on it then investment plummets and you get what that negative psychology creates.
Perhaps the view of the data from Rayleigh is still good but this is not how that data is being read around the world. Thats what counts now.
I have lost some respected for you knowing that you voted for Bush not once but twice.
Anybody who hears him speak without a prepared speech should be able to tell that this guy is an idiot and the years he spent doing alcohol and drugs has destroyed his brain. Not that he was too bright in the first place.
Can you explain why you vote for him the 2nd time?
Traders have been reluctant to engage in long-term transactions such as credit- default swaps with Bear Stearns as the counterparty, the Wall Street Journal reported.
"Sir, Mr. Margin is still holding on 1, and now the Bear is on line 2."
"Put Margin through, but I'm not taking calls from the bear!"
Did everyone already see the prediction by Wholesale Access:
Wholesale Access has estimated that all these changes mean 30% to 40% of borrowers who could have qualified for a conventional mortgage a year ago can no longer do so.
I don't want to turn this into a poltiical posting session unrelated to real estate and the economy. (politics is a valid discussion when it relates to policy affecting economic issues, at least for this blog).
I voted for Bush because I believed that republicans would be better at keeping taxes low, reducing govt, and I believed that a clean victory in Iraq would prevent problems with Iran and North Korea.
Now that the majority of business economists are forecasting a recession (which I agree with), some even musing about a severe recession (which I don't agree with), all we need now is for NAR to cave and issue a bearish housing forecast then maybe the light will start to appear at the end of the tunnel (and not the train).
Does anyone have a link to the S&P report that has the market so giddy? As for the deepness of the recession, it is going to depend on how you measure it. Unemployment will be relatively tame because of the underlying demographics. Year over year growth in employment however will turn quite negative. Real PCE will fall very sharply. Industrial production might hold up relatively well due to exports being boosted by the dollar going the way of the old peso. Real incomes will fall fairly sharply. Personal bankrupties will soar, even with the very harsh 2005 bankruptcy law, most likely setting new records. Look for a bit of a bounce in the 3Q from the stimulus checks, but that will be short lived. A W shaped recession brought to you by W. This of course is dependent on the Fed being able to paper over the failure of any major player and preventing the nightmare scenario of cascading cross defaults. If that happens, then Conjure Bag might be optimistic.
Actually nearly everyone will go down leaving on Fannie and Freddie to continue to loan money for a loss.
In this environment (falling house prices) every loan at these rates is entirely underpriced for the risk.
This is essentially a situation where these two companies are willing to be the sole provider of mortgages for a loss, the loss-leaders, who will drive everyone else out of business who is unwilling to also take losses.
Only when Freddie and Fannie fail will there be an opportunity for companies to adequately price risk and lend money for a profit to homebuyers.
This of course would mean a large spike in interest rates that would temporarily exacerbate the price drops and thus the value of assets backing current loans.
The solution for the future is market is the deathnell for the current one.
Does anyone have an understanding as to the methodology S&P used to make their conclusion that we are pretty much through with subprime write-downs?
Does this study just ignore Alt-A, or HELOC paper? How do they estimate what the losses ought to be? Do they use assumptions as to what the worst-case default rates will be?
Is the EMC in question EMC Insurance Group? There is an 8-k today announcing 2008 executive compensation. That may not be inconsistent with going out of business - some forms just have to be filed, ya know - but that is all the news I can find.
I agree with Soloman you have the right to disagree with everyone here. However if you disagree why do you come here? Why not go to a bull site and live in harmony with your own kind. I personally agree with some of what you are saying but very little. Government numbers are BS and that isn't for Bear Sterns.
I have followed Guru Lakshman Achuthan of ECRI for 5 or so years and there is no doubt that he is lying because all the things that he said mattered in the past, in forecasting recession, have already CONFIRMED the recession.
Economists who lie at critical junctures make good money!
My notes on Ratcliff
July 27, 2006
One Mr. Ratcliff, a UCLA economist, appeared on the boob-tube to talk about California housing. He said, The California home prices have never declined except when the economy was in a severe recession.
OK.
Then he continued, Since we are not forecasting a recession, the prices should level off and remain flat.
continuously rising house prices is an infinately safer environment than continuously falling house prices.
When you move from one to the other you should have an immediate repricing to account for the environment change.
It's like selling life insurance to a bunch of librarians. You and other companies price the insurance based upon historical losses. Then suppose that all the librarians were shipped to Bagdad to serve in the reserve army. Unless you immediately reprice all their life insurance you going to be unable to make money. The losses will quickly drain your cash flow from premiums.
Now suppose that one of the insurance companies will stick with the current premiums no matter the cost (fannie and freddie). They will continue to take losses and anyone competing will have to instantly give up and go out of business. So as an employee to you simply quit or do you continue to generate income by selling policies even though the losses will eventually drive you out of business. You die now or die later.
As you can see, Fannie and Freddie are picking up the slack from all those unable to get a cheap loan in the private sector.
It would be like the insurance company that was willing to take a loss on librarians turned rambo would be selling more and more insurance to all those who were dropped by the insurer who dared to price for profit.
Government is expedient, like pissing in your boots to keep your feet warm.
Right now that warm urine is cooling off and will soon exacerbate the problem and turn the cold boots into buckets of ice.
sequoia152 said: "I agree with Soloman you have the right to disagree with everyone here. However if you disagree why do you come here?..."
This is where I can do the most good. In the past, I've been "victimized" by stock market reporters, gurus, pundits, sell-side "market strategists", etc. and their poorly-researched, biased, or even fraudulent writings and presentations.
I'd like to demonstrate that it doesn't have to be that way, that people can make good decisions on their own without having to rely on anyone else, even if conditions seem confusing on the surface.
I may not agree with you but I admire you for sticking to your guns in the face of mostly good-natured ribbing.
Incidentally, a lot of the arguments seem to boil down to the technical definition of a recession. It would seem to me that negative changes in real per capita GDP would be the "true" measure, but I do not think that jibes with the official definitions.
even though I consider myself a fiscal conservative and voted for him twice.
The first time avgjoe I can understand. The second is completely beyond me, frankly. And anyone who did, i feel, has no business complaining about anything that happens. Although I do applaud that you people that put this administration in a second time have destroyed the modern conservative movement for generations to come. That's the best legacy this pathetic government will leave behind.
Sniglet said: "Does anyone have an understanding as to the methodology S&P used to make their conclusion that we are pretty much through with subprime write-downs?"
The companies make their estimates and pass them on to Standard & Poor's. So S&P is essentially saying, "the companies we follow are reporting to us that they're pretty much done with the write-downs."
"even if conditions seem confusing on the surface."
Sebastian, I cant work you out. Are you the guy who tells the other guy to rearrange the chairs on the Titanic or are you the guy who is rearranging the chairs?
I can no longer even doubt the ship is going down and yet there you are bright and breezy beavering away!
I have been logging the S&P futures purchases for one year, now, when I read that they were the preferred instrument for hedgies/PPT for 'saving' the market from a crash.
Yesterday's volume of futures purchases was in the top 3%.
Today will be the all-time high.
I hope those guys are running out of money, 'cause they sure are interrupting the natural, disorderly, foreordained meltdown.
They are losing money on each and every futures purchase as they are, in effect, chasing the market down.
Home prices will continue to drop toward 3x median income based upon current loan rates....this will take a while
Then Fannie and Freddie explode based upon years of underpriced risk.....
Loan interest rates shoot up due to the search for the true price of risk, lack of liquidity, fear, and general market turmoil.....
House prices will take a second leg down due to massive liquidation of assets and a complete absense of those able to afford huge down payments and high mortgage rates....
Prices for all cash buyers will really drop since no one wants or needs another loan....
THEN BUY! (of course you can only buy if you have lots of cash....so both of you will get a really nice house for cheap)
Even if the real estate industry (residential and commercial) were normal, $110 per barrel oil would be enough to tip the economy into recession.
There is nothing more destruction to the U.S. economy than high oil prices.
Another huge headwind is the spiraling cutbacks in government spending, which will take time to play out and won't be reversed for years.
There are huge bank hits to come from bad construction loans, especially condo construction in bubble markets. Corus Bankshares alone will stick the FDIC with more than a billion dollar tab.
I think all over the U.S. condo construction crews are being laid off. It just doesn't make sense to finish them. They are no lenders and no buyers. Every high-rise condo unit sale takes a miracle.
whoever is doing that is not using there own money. Just like the I-banks refusing to backstop over $75 billion in rated securities (that is not there money) with $3 billion of it's own money......
Sebastian, "the companies we follow are reporting to us that they're pretty much done with the write-downs."
Eek! Isn't that pretty much tautological?!? After all, if a company said, "These are the write-downs, and we think there will be more," the company would be essentially obliged to include those projected write-downs. S&P certainly ought to be doing its own analysis.
Are you the guy who tells the other guy to rearrange the chairs on the Titanic or are you the guy who is rearranging the chairs?
That's a great picture! But I do think that Seb has a couple of points. And while the bulls rationalized their own irrational exuberance to excess, perhaps the bears here are doing the same thing. Some here don't want to hear rational arguments based on datapoints. They want to argue away the datapoints as being not right, or find some reason why they are right.
So while, on the way up, I was inclined to believe you should have been more cautious than everyone was saying, on the way down I'm inclined to believe it's better. So I think we're near or in a recession, but the numbers aren't bearing out the full-fledged call.
It will be interesting to see what happens with vacation season, driving, and spending this summer. That's going to tell the story.
The endgame of which is playing out now. I don't know about anyone else here, but I'll say it again. I live in the first world and don't mind paying for first world services...even by taxes. I object when I don't get them. Tax me to pay for SS? Fine. We're a rich country and SHOULD take care of our own. Tax me to bail out stupid people? Not so much. Tax me for a bridge to no where? Forget about it. Tax me for education? I'll dig deep.
Simple talk for simple folks...lower taxes. And you wonder why people bought the "house prices will go up forever" line from realtors. Just look in the white house for the answer.
News from AP
LOS ANGELES -" Nearly 60 percent more U.S. homes faced foreclosure in February than in the same month last year, with Nevada, California and Florida showing the highest foreclosure rates, a research firm said Wednesday."
Is it the 4th inning yet?
Eric said: "Eek! Isn't that pretty much tautological?!? After all, if a company said, "These are the write-downs, and we think there will be more," the company would be essentially obliged to include those projected write-downs. S&P certainly ought to be doing its own analysis."
Tautological it may be, but that's the truth of it. S&P is more of an aggregator of the earnings and dividend data than an honest investigator.
Still, I believe their statement. This has been going on for at least a couple of quarters now, there have been all kinds of closures, bankruptcies, "re-structurings", and all that mess. There may not have been a good resolution, but it sounds like the badly-damaged ship has been made almost sea-worthy again. JMO.
Oh, heck. Sebastian is not a troll. I think he's wrong about the current economy, but that's my opinion. Trollage should not be judged by differences of opinion. If it were, then every active participant on this blog would be a troll sooner or later. A lot gets discussed on this blog, and a lot of different opinions get aired.
Stuff I like about Sebastian:
-He does not refer to astrology to explain economics.
-He generally is willing to argue his points, and in a pretty courteous way.
-He is not a wuss.
-He seems to be a fundamentally healthy and optimistic character.
-He tends to stay on topic.
-He does not indulge in conspiracy theories or bigotry.
-He does not indulge in long political rants. There are tons of good political blogs around, but few really good economics blogs. IMO, using CR for politically focused discussions is kind of like using a Stradivarius as a shovel.
Now here's what I would call a troll.
Not only does this lady refuse to concede a current recession (like Sebastian), she also is doing away with the 2001 recession, and she has the NBER's method of defining recessions completely backwards! And guess who she is? A former chief economist at the US Dept of Labor. Gurgle. This was clearly not one of Bush's best appointments.
A troll is a person who is an active enemy of truth and reasoned discourse, not a person who disagrees with most of the people posting at a site. I do have pretty strong disagreements with Sebastian personally. I think he is a bad economist and a decent stock jockey, especially on upswings. Well, bulls make money and bears make money, so Sebastian's day in the sun will come around again, and when it does, we'll probably be glad he's here.
I enjoy reading Sebastian's stuff, and it has caused me to look twice at some of my own investments. That's not necessarily a bad thing.
Bad things?
Average Joe: "... Bush in particular, even though I consider myself a fiscal conservative and voted for him twice."
This follows my own thesis about propaganda... the biggest victims of corporate propaganda, are 'real conservatives', not 'liberals'.
sebastian you vacated the debate on the previous thread right after you demanded i show you numbers.
so here are a few macro numbers for you to consider.
Sebastian wrote:
You didn't quantify a single one of these factors (current account deficit and federal debt held by foreign govs) into anything of practical use. Every point is nebulous and without a concrete, test-able data-value.
I've gotten multiple decades of economic data and quantified their impact on the U.S. economy and stock market behavior. When you do the same, I'll be glad to compare notes.
Sebastian | 03.13.08 - 1:24 pm | #
OK Seb you may have "multi decade of economic data" but you don' seem to be able to understand and interpret that data into policy decisions.
10 trillion dollars debt
50 plus billion monthly trade deficit
dollar crashing
oil over 110 per barrel when it was less than 1/4th that 7 years ago
credit default swaps more than half of the entire derivatives market,growing asymptotically since 2000 and no chance to figure out counter-party risk
endless war that cost 1/2 billion a day up front with additional medical costs and equipment replacement costs back loaded,
70% of economy is service/consumerism, our automotive economy and transportation infrastructure is badly damaged (Toyota just overtook G,M. in sales) (bridges falling down)
half trillion military budget (including off book black ops funding) that exceed spending of all other countries in the world combined.
all other countries in the world (INCLUDING OUR ALLIES!!!)
Seb.. someone set us up the (debt) bomb...launch all zigs...all your bases are belong to us
ps no amount of cowbell (on the 19th) (or tinkerbell) is gonna save the situation.
mock turtle | 03.13.08 - 1:50 pm | #
"They want to argue away the datapoints as being not right, or find some reason why they are right."
NEWSFLASH: sticking to historical data points in the face of common sense is what caused this mess!
How many people in the loan business, with access to the actual data, saw this coming!????
Geeeeeeeeez, I'm sure when Merryl bought First Franklin it was because they couldn't "ignore the data...it speaks for itself". Or when Macklowe bought New York, or when....you get the point.
I look at our freight volumes every couple of weeks. Every truck pulling from the dock is pretty much full. When we fall off 20% like during the dot com implosion I'll get a little worried.
Heck,I still have the ability to spend 500.00 on a single part or 1500.00 combined on a repair before I have to even email a manager. This is the same as 5 years ago...
Chris
P.S.- I'm very bearish on housing...Sitting on 5 years cash,just waiting for the right situation.
Eric and Sebastian - well, as the subprime writedowns end in theory, the next set of writedowns begin. There's a world of pain in LBO, CRE, Alt-Aish, bad car loans, CC, etc.
Couple of analytic points that I hope fit into the discussion. One is that year-ago GDP comparisons have nothing to do with recession determination. The rule-of-thumb about two quarters of declining output refers to quarter-over-quarter declines. It is entirely possible to have a recession without every showing a y/y decline in output.
The other is that some of the conversation seems to be at cross purposes. Sebastian, if memory serves, tends to cite historic output and employment data as a starting point, to claim that no recession is underway. Others, including our host, is to look at leading indicators to assess the odds of a future recession. That, I think, was Average Joe's point in comparing a conversation with Sebastian to one with our host.
So if I have my schematic conversation right, it comes down to "A) there is going to be a recession ... B) there is no recession now...A) but there is always a recession after X happens...B) but GDP grew last quarter, so there is no recession...A) but there is always a recession after Y happens...B) but GDP grew last quarter, so why should there be a recession this quarter?
There is nothing new in ignoring what the other guy is saying, but it runs out of fun pretty quickly.
" in the absence of clear, uncontrovertible evidence "
" They want to argue away the datapoints as being not right "
This is the point, Sebastian and ipodius:
The data was confuzzled over the past 20+ years to be whatever government politicians wanted it to say. Rather than reporting consistent quality data and let good/bad fall wherever it would, the US government has enacted what it thought was a put on equity prices.. however, this will actually end up bouncing back on them.
It wouldn't be the first time khr@p was priced as quality, though. Happens all the time throughout the history of individual businesses.
Free-market idealists will get a lesson in the value of not spinning yarns about data.
ipodius makes no sense because she/he like so many other sheep blame Bush for what is going on. There is no quantifiable difference between D or R. Bush is a figurehead only, part of the elite globalist oligarchy (same people that brought you the Federal Reserve) and so is Clinton. So are McCain and Obama. There are supposedly free election to keep the sheep distracted and to keep their eyes off the ball.
All of the leading candidates have been pre-approved by the pigmen to not challenge the system and to further the elite globalist protocols. Any person who represents a differing viewpoint will be allowed to exist only if they can be marginalized or portrayed as a crackpot ideologue (Ron Paul.) Otherwise, they will literally be assassinated, or figuratively as in the case of Spitzer.
The elite global oligarchy viral infestation creates wars to create debt that cannot possibly be repaid by the "host" county. Every central bank except 5 were founded by the Rothschilds. Any guess as to who the 5 are? Iran, North Korea, Cuba, Sudan, and Venezuela. There were 6, but Iraq was invaded to eliminate that little problem. Next up, Iran...
Average Joe said: "NEWSFLASH: sticking to historical data points in the face of common sense is what caused this mess!"
I think Tanta would back me up on this, but ignoring historical benchmarks is what caused this problem. Like applying looser mortgage lending standards when the older, tighter standards worked well over changing economic environments.
I have been logging the S&P futures purchases for one year, now, when I read that they were the preferred instrument for hedgies/PPT for 'saving' the market from a crash.
Yesterday's volume of futures purchases was in the top 3%.
Today will be the all-time high.
I hope those guys are running out of money, 'cause they sure are interrupting the natural, disorderly, foreordained meltdown.
They are losing money on each and every futures purchase as they are, in effect, chasing the market down.
My contact at Bear says that their CDS counterparties are getting nervous and that one of the ways they're hedging their risk is to short the stock. Says he doesn't think the rumours (and there are lots of 'em) are true and that shutting EMC wouldn't be that big a deal, as they're not making any loans anyway or generating any profit.
"Total January General Fund revenue
collections were $849.3 million, or (16.1)%
below January of last year. This amount was
$(226.2) million below the forecast based on
the June enacted state budget For the first 7 months of FY 2008, General Fund
collections are down (3.5)% when compared
to last year, and are $(619.2) million less than
the enacted forecast. When factoring in
Urban Revenue Sharing, year-to-date
collections are (5.1)% below last year. (See
page 13 for detail information). The January decrease represents the largest
percentage year over year decline since April
2002. The dramatic drop in January revenues
was across the board in all 3 main revenue
categories:.."
GET IT YET?
The feds have seen the same drops.
How many times do I have to say it:
The recession is here. Deal with it.
Sebastian wrote:
"...Still, I believe their statement. This has been going on for at least a couple of quarters now, there have been all kinds of closures, bankruptcies, "re-structurings", and all that mess. There may not have been a good resolution, but it sounds like the badly-damaged ship has been made almost sea-worthy again. JMO.
S.
Sebastian | 03.13.08 - 4:13 pm | #
Hey Seb, i love ya hommie, but stop drinking the koolaid...
do you look at the graphs at bloomberg, marketwatch and that CR posts here????
the biggest waves of mortgage resets have YET to happen AND there is a ton of collateral damage in the areas of consumer credit.
finally it appears that Broker-Dealers have been writing FTD /IOUs rather than clearing equities sales and purchases...ie PONZI scheme on wall street
see Yearning to learn for the link...awesome...sad...for our kids
DT: "The elite global oligarchy viral infestation creates wars to create debt that cannot possibly be repaid by the "host" county. Every central bank except 5 were founded by the Rothschilds."
Let us not ignore the incontrovertible role played by the Bavarian Illuminati, led by the monstrous Adam Weishaupt.
Who controls the British crown?
Who keeps the metric system down?
We do! We do!
Who leaves Atlantis off the maps?
Who keeps the Martians under wraps?
We do! We do!
Who holds back the electric car?
Who makes Steve Gutenberg a star?
We do! We do!
Who robs cave fish of their sight?
Who rigs every Oscar night?
We do! We do!
The older standards were discarded when data points indicating smaller and smaller default rates with less and less losses on each default meant that risk premiums could be lowered and profits could be made on volume.
It was a misinterpretation of existing data that lead to the wrong conclusions.
Exactly what is happening by those who look to current employment, inflation rates, etc to extrapolate.
I wouldn't be in the least bit surprised to hear the Treasury is ready to take any quantity from a basket of NYSE-listed stocks as collateral for its TAF/TPF or toilet paper facility or whatever its called.
That would be the next logical step, and it would complete the circle.
For Sebastion who said:
"I think Tanta would back me up on this, but ignoring historical benchmarks is what caused this problem. Like applying looser mortgage lending standards when the older, tighter standards worked well over changing economic environments."
The older standards were discarded when data points indicating smaller and smaller default rates with less and less losses on each default meant that risk premiums could be lowered and profits could be made on volume.
It was a misinterpretation of existing data that lead to the wrong conclusions.
Exactly what is happening by those who look to current employment, inflation rates, etc to extrapolate.
I didnt vote for Bush but I dont see why people are bashing him.
bong water moment here.
CR
If Bush started with a 5 Trillion deficit and is ending with 10 - but its a DOLLAR deficit not glod.. then isnt he the smarter guy??? I mean, the 10 Trillion is now worth what? 2-3 trillion in 2000-2001 dollar terms? But then again..our entire GDP is worth less in glod terms isnt it. Ok I guess thru this bongwater haze what I can say is that CR should be looking at the percentage of debt relative to GDP.. not just the 10 Trillion number because that amount doesnt mean AAA. Although even the debt / GD"P" ratio doesnt mean much because we dont "produce" much in terms of hard goods. So if your GDP includes financial engineering "products" or products sold here but made elsewhere does that even matter? Its ephemeral. mp and Conjure Bag .. another post dinner Cuban comment from you please.
It was a misinterpretation of existing data that lead to the wrong conclusions.
averagejoe, you're thinking too much. I can tell you that, at the executive level, anything that was bad was scrubbed from the data before those decisions were made. If the execs said they wanted it, by god we'll just produce the data to make them happy! So you are incorrect. The data was bent to fit the directive. No one saw the data you refer to who was in a position to change direction. I don't work that way, but I can tell you that's the culture in these companies.
Frank and Dodd's proposal out at House Financial Services Committee website.
BSC developments extremely interesting in light of Schwartz' comments. If I am a securities lawyer working the Plaintiff's side I would ask what did he know and when did he know it w/r/t statements regarding acceptance of BSC's credit (e.g. analogous to vendors not taking trade credit from KMart pre-BK years ago). Not liquidity position (not never saying never), but counterparty behavior.
I would personally like to thank Bernanke, S&P, and our very own O-Joe and Sebastian for generating all of these nice buying opportunities (put options) this week.
I am only thinking of how to convince Sebastian to ignore current data because he and others are "bending it" like you said.
Trust me, those idiots who "didn't think to much" and said...gee I wonder how that guy can afford that house? Oh, well he must be able to since they gave him the loan?"
When I stopped trying to figure it out and just accepted what my lying eyes were telling me....is when it all made sense.
"she has the NBER's method of defining recessions completely backwards! And guess who she is? A former chief economist at the US Dept of Labor. Gurgle. This was clearly not one of Bush's best appointments." MOM
I fully agree with you about Seb not being a troll, and it is good to have someone here to keep us all on our toes and not become one big bastion of group think. As to the part I cut and pasted: MOM can you think of ANY good appointments he has made. David Patreus perhaps, and maybe Big Ben, although the jury is still out on him, given the increadibly tough hand he was given to play (sort of being handed a 6 hearts bid, and holding only 11 points and a singleton Jack in Hearts)but after that the list gets pretty thin. Ashcroft, Rummy, Gonzo, Alito, Roberts, just about any former industry lobbiest regulating their former industry, O'Neil, Snow, Paulson, Rice. See any impressive names on that list?
We shall find out eventually whether the US in a recession or not. I think it probably is but there is a chance that sebastian is right, at least as far as the definition accepted by economists is concerned. (This require TWO consecutive quarters of negative changes to real GDP.) given the strength of US exports it is possible that output may be strong enough to avoid such a fall in 2008-09 - certainly this accounted for the surprising (to me) avoidance of recession last year.
The NBER has its own definition, which seems looser (a prolonged period of sub-par growth, I think) and I doubt if this can be avoided.
Forecasts i've seen recently are now pretty close to stagflation - two years of growth of 1-1.5% and inflation creeping up.
that's my point avgjoe. no one said that because you get the behavior you incentivize. the boss said "we need to make these numbers". there was no thought past that. no one wondered about how people were going to pay because their pay wasn't linked to that. No one's was.
that was the point of my "bush is for tax cuts" barb. no thought past what that actually means.
Anyone see Corzine on CNBC today (I have the flu so i was in bed all day and subjected myself to a full day session...never again).
Says we are in a recession and noted that shipping the NJ/NY port was down 15%. Not sure if that is a normal fluctuation, but sounded like a big deal to me.
when asked if he thought paulson and ben were doing a good job he said, "I think they are working very hard". Great vote of confidence in his old partner, eh?
One might note that the ratio has decreased for every Democratic president post-WW2 (although not much for Carter), while, among the "fiscally conservative party" Ike made progress, Nixon/Ford left us pretty unchanged, and all the rest spent like, well, like they expected Jesus to return tomorrow to pay off the bills.
You mentioned the world of pain coming after sub-prime, to wit, alt-A, CC, auto, etc.
On auto, allow me to opine that it'll never get nearly as bad as what you see in mortgages. I can testify that lenders were making a lot of uneconomical loans the last few years, mostly as a result of not taking into account that the economy was bound to turn and a natural tendency to let LTVs get out of hand. That said, the underlying collateral never saw the sort of bubblicious inflation you got in housing.
I think MoM may be closer to the mark when you consider the negative value roll overs that occurred - folks who owed more than trade in value refinancing the balance owed repeatedly...some of the same same we have seen with 'record low defaults' because everyone could roll a note over in the fog a mirror lending world.
All I know is that it's a major pain in the A$$ trying to make any sense out of this market. What are the Joe's supposed to do? Move our IRA's to bonds, take a hit, move them back to stocks, another hit. Go to cash or money markets and lose our shirts to a falling dollar. Every day we get some SOB throwing out a rumor and the markets go nuts. Then by the end of the day, everything is back to where it was.
I think the big boys are using the stories to push the market one way or the other so they can unwind their crap in little pieces. Meanwhile all us Joe's are going broke in houses, IRA's, checking accounts, and in life.
Hey, I think I agree with you. The same guy who told me to Buy Gold back in 1999, said a lot of stuff that you just said about the Elite
Global Oligarchy.
Republicrats bad, Democans good? This is all folly - SOMA holiday for the masses. Its hard to believe that educated(?) folks around here still fall into this simpleton's trap.
The Federal Reserve is actually in charge of the country and has been for many, many years. They control the FBI, Homeland Security and most other "government" agencies. Their short term goal is to completely break the middle class and combine the US with Canada and Mexico in a North American Union with a new currency (Amero.)This is part of a larger one-world government movement.
As Joe Six Pack wisely noted in his post above, its now mission accomplished. Mostly they do it by slow inflation, but occasionally they switch tactics and cause crushing deflations where they can consolidate even more control and power. The deflationary collapse is the great bounty of the pigmen elite and they have now lined up all of the dominoes in such a way that the citizens of the US will have no choice but to go along with their satanic plan - or face starvation and/or extermination.
Anybody notice the large Homeland Security "detention" centers being built all across the country? I've got three of them within a 40 mile radius of me.
Notice the .gov in the link below, or how they go out of their way to deny the existence of the Amero? But I'm sure the government is 100% trustworthy...
Speaking of which, here's a fun read on how the trade center could only have been imploded by professionals with months of advance planning and access to the base columns. This is written by hundreds of engineers and architects, but I'm sure they're just a bunch of wacko nuts too, right?
Pepto, it's a depressing thing knowing the truth. Are you sure you want the red pill? Sometimes ignorance really is bliss. I say that with all sincerity, knowing what I know today is a great burden, and CR has been a big part of my education.
If you REALLY want to know, I suggest beginning with a Google search on the history of the Federal Reserve and specifically a history of the Rothschilds and Rockefellers. This will get you started off. Ironically, none of the facts are even disputed, and much of what you'll find is on actual .gov pages, not wack-job cook websites. Most of the real cooky pages are really just designed as false-flag propaganda operations by the pigmen to discredit any legitimate dialog and to marginalize (like Malaclypse was just trying to do by mocking my earlier statements.)
FWIW In my view all politicans are the same. Just like Chocolate and Vanilla. Different flavors but still ice cream and bought at the same store. I wrote in Ralph both times.
BG, just more of the same. This is another face of the CFR. At this point we've got a pretty good idea WHO the pigmen parasites are and what their agenda is.
All Fall Down is correct. All major party politicians have been pre-approved by the CFR (ruling globalist elite.) Anybody radically different (Nader, Paul, etc.) will be marginalized as a cooky ideologue. If they gain too much prominence, they will be eliminated.
The CFR and various front groups will often fund fringe elements on BOTH sides of an issue (pro life AND pro abortion, for example) to cause class-divisions and other trouble.
Damn! Sorry to get so political CR. Got carried away there...
Average Joe said: "The older standards were discarded when data points indicating smaller and smaller default rates with less and less losses on each default meant that risk premiums could be lowered and profits could be made on volume.
It was a misinterpretation of existing data that lead to the wrong conclusions.
Exactly what is happening by those who look to current employment, inflation rates, etc to extrapolate."
Tell me about it.
I was just browsing through some old Excel files and found this gem:
Between 1960 and 2005, the median unemployment rate was 5.7%, in a range of 10.8%(!) to 3.4%.
As of the most-recent reading, unemployment was 4.8%.
So, using long-term historical data, unemployment is substantially below its long-run median level.
Or how about this pearl: Over the same time-period, the median SP500 PE valuation was 16.01, in a range of 32.88 to 6.74.
As of today's close, it's at 15.49, below its long-run median.
They redefined the unemployment rate midway thru your data so you are comparing apples to oranges.
They also rejiggered the CPI calculations. If we calculated inflation the way it had been done from the Great Depression thru the Carter Administration, CPI-U would be closer to 11.80% instead of the reported 4.28%.
Since real GDP is measured by calculating nominal GDP and then subtracting inflation, understating inflation causes a systemic and pervasive upward bias in reported real GDP growth. By biasing reported real GDP growth, it means you do not know when you've tipped into what historically would call a recession.
"I would have to argue that we've got to be fast-approaching the precise opposite of "irrational exuberance," with so many people insisting there's a recession on in the absence of clear, uncontrovertible evidence." - Sebastian
Seb,
Greenspan coined that term in what...1997. Look at how much more irrational and exhuberant the market got between then an spring 2000.
We are nowhere near the depths that we will plumb. The fact that the markets rally on toothless FED bailouts means they still have hope. At bottoms...there is no hope left...everyone has given up.
Sebastien has essentially two major points backing his theory that the economy is okey-dokey.
The first is that real GDP is still OK. This point is, umm, weak. The recession would have started in December 2007, based on employment/IP data. However, we only have fourth quarter GDP. For those of you don't follow economic data closely (or properly, like some people I could mention), Q4 is essentially the average of October-December 2007. Thus, the average may not be impacted enough by one month to make the average negative. Then again, we don't have the final revision - who knows what the reading will say for 2007q4 with the data set available in 2015? Moreover, we are currently still in Q1, so we should not expect 2008Q1 GDP yet (unless we were in China). Q1 results will available long after anyone in the markets will care about it.
The second point is the amazing labor report. The bond market rallied like stink on that report, which flies in the face of Sebastien's interpretation.
Sebastien's theory is that the unemployment rate ticking down (by a statistically insignificant 0.1%) means there are no problems. However, jobs are being lost, both on the NFP (employer) measure, as well as the household survey (about 200 thousand lost on the Household survey, which is where the unemployment rate comes from).
If 200k jobs were lost - how could the unemployment rate drop? Very simply, people dropped out of the labor force faster than jobs were destroyed. Remember, the unemployment rate is the percentage of people "looking for work" divided by (people in work) + (people looking for work). [The exact definition of looking for work depends on which unemployment measure is used.] So, for example, if people drop out of the group "looking for work" the unemployment rate would drop, even if the number of employed is unchanged.
Ultimately, the number of people employed, which is what drives spending growth - not the re-classification of people who aren't.
It is a question more of your idiocy than my ego. If I had a big ego I wouldn't freely admit to my mistake, would I? Just because my observations on American system and forecasts don't agree with most here doesn't imply that I have a big ego.
I always think that I am fallible and I correct my mistakes as soon as I discover them.
In the case of voting for W, I became a victim of the great American con game voting for lesser to the two evils and I was wrong on who was going to be worse.
"Anybody notice the large Homeland Security "detention" centers being built all across the country? I've got three of them within a 40 mile radius of me."
Really? Where is that? Not that I doubt it - it makes sense. If Gitmo is closed down, the terrorists will need to be put somewhere.
I just hadn't heard this before. Then again, I don't have much connection to DHS.
still waiting for a comment too, apparently. must be something to keep 283 so occupied.
O RLY R U SERIOUS?
Who would have known?
http://thumbsnap.com/v/sScCzabA.gif
I guess worry about depression when they give severe recession an 80% number and depression a 10% chance...
circling the drain of consenus...
but standard and poor thinks we are out of the woods, and the market loves it! Yee haw!
I guess they looked at their balance sheet ex-Level 3 and said," Oh-oh, some of us are going to lose our jobs. We must be in a recession."
When they start laying off their economists then they'll call the depression.
Don't these guys have Wright Model B?
Can some one please help them! They're obviously missing the only thing that matters.....
And while Rome burns, Sebastian continues to fiddle.....
I am hearing that Bear Stearns shut down their EMC subsidiary today (tip coming from inside Bear). Can anyone confirm that?
Well, Sebastian has been very clear and unambiguous that he believes there will be no recession. Takes guts to stick to that in this environment. If he's right, he'll gain enormous credibility in my view. If he's wrong, it will interesting to see how he adjusts his assumptions.
"Don't these guys have Wright Model B?"
bahahhahahahaha
Sebastion has to be a member of the Bush Admin.
Hope Now or No Hope?
Mortgage relief plan falling short
Mortgage relief plan falling short - Mortgage Mess- msnbc.com
I have been deeply dissapointed in the administration, Bush in particular, even though I consider myself a fiscal conservative and voted for him twice.
Ironically Bush may be a contrarian play as he is likely the only obsticle to a Democrate lead federal bailout from this problem, a bailout that virtually assures a propping of housing prices, a socialization of losses, a savior to the banks/lenders most at fault, and an extension of the problem for may years
The stock market hasn't done a very good job of anticipating this recession. There was a big run up in late 2006 and through much of 2007 as the economic fundamentals were deteriorating...
The best-forecast recession in history, when everyone and their dog catches the exact beginning of the recession except me.
I would have to argue that we've got to be fast-approaching the precise opposite of "irrational exuberance," with so many people insisting there's a recession on in the absence of clear, uncontrovertible evidence.
The upside for CR if there's no recession: He'll have bragging rights that the only Internet poster who got it right was one of his loyal community-members.
Sebastian
Don't know whether it's been put up on the web yet, but UCLA was on the local radio news Tuesday morning continuing the line: it will feel like a recession, but employment won't fall enough for it to be technically a recession.
If he's wrong, he'll slink away in humiliation, like most trolls.
What the heck is wrong with you people? It's obviously just a rough patch, not a recession.
Really, whom are you going to trust? Wells (spit!) Far-go or the President of the United States?
Sorry, CR I'm a little slow.
I get it now: you're waiting for UCLA to declare a recession.
At this point, I'm expecting that when NBER declares a recession in ten months from now, the UCLA guys will say that they lowered their standards.
crispy&cole said: "Sebastion has to be a member of the Bush Admin."
What I find so maddening and hypocritical about that statement is that Bush Administration logic is the kind that too many of the bears here use.
Never mind the evidence, let's invade Iraq. Never mind the evidence, there's a recession.
S.
S&P claims we near the bottom.
Rich,
I do not think it's fair to label Sebastian a troll. I think he's been a valued member of this community for awhile (the whole fake sebastian thing aside). I also think it's important for a community to have dissenters, to keep the masses from devolving into groupthink. I personally believe we are in a recession, but I defend Sebastian's right to disagree with me.
TH said: "...If he's wrong, it will interesting to see how he adjusts his assumptions."
An Elliot Spitzer moment.
I hope to God it doesn't come to that, LOL!
S.
OT: here's a nice alt-a graph to look at.
http://cache.dbrs.com/pdf/21859108324464.pdf?transactionID=563621
Seb, so the governments data was bad on Iraq, but it is good on the economy.
You are losing me here?
Sebastian,
while I think we will have a technical recession, I don't think that if we somehow through a miracle of stats avoid the technical definition, i.e. 01% growth for say 6 quarters would be avoiding a technical recession, no one who was listening to you would have any inkling of the current problems we have now.
If someone sat down on a couch with you a year ago then they never would have understood the current stock market, the credit crunch, the collapse in housing sales and prices...none of it.
Had they sat down with CR, absolutely none of this would have been a surprise.
You may continue to hang your hat on a meaningless statistic, meanwhile no one here can say that we didn't see it coming.
"Never mind the evidence, there's a recession."
Sebastian there comes a point that even if an economy is doing very well if everybody goes septic on it then investment plummets and you get what that negative psychology creates.
Perhaps the view of the data from Rayleigh is still good but this is not how that data is being read around the world. Thats what counts now.
It is nothing to do with the data now.
It is the psychology.
what up with BSC. the stock is way down. Trouble ahead?
Average Joe,
I have lost some respected for you knowing that you voted for Bush not once but twice.
Anybody who hears him speak without a prepared speech should be able to tell that this guy is an idiot and the years he spent doing alcohol and drugs has destroyed his brain. Not that he was too bright in the first place.
Can you explain why you vote for him the 2nd time?
Sebastian writes:
le said: "Sebastion has to be a member of the Bush Admin."
What I find so maddening and hypocritical ... Never mind the evidence, there's a recession.
Did you read the title? "Wells Fargo: U.S. Now in Recession "beyond a reasonable doubt""
The ridicule who see is what happens when you state that recession 2008 is not possible.
Traders have been reluctant to engage in long-term transactions such as credit- default swaps with Bear Stearns as the counterparty, the Wall Street Journal reported.
"Sir, Mr. Margin is still holding on 1, and now the Bear is on line 2."
"Put Margin through, but I'm not taking calls from the bear!"
Did everyone already see the prediction by Wholesale Access:
Wholesale Access has estimated that all these changes mean 30% to 40% of borrowers who could have qualified for a conventional mortgage a year ago can no longer do so.
The next shoe to drop in housing - Mar. 13, 2008
Anon 123,
I don't want to turn this into a poltiical posting session unrelated to real estate and the economy. (politics is a valid discussion when it relates to policy affecting economic issues, at least for this blog).
I voted for Bush because I believed that republicans would be better at keeping taxes low, reducing govt, and I believed that a clean victory in Iraq would prevent problems with Iran and North Korea.
Needless to say I feel hoodwinked.
Now back to our regularly scheduled program.
Rumor: I've heard from an excellent source that Bear Stearns is shutting down EMC (or at least making major cuts). I'm looking for any news.
Best to all.
WSJ - Attention Regional Banks With Large Exposure To RE Sector, Capital Invusion Is In Order
Attention, Regional Banks - WSJ.com
FDIC scold Bremerton Bank
FDIC scolds Bremerton bank - Puget Sound Business Journal (Seattle):
Jennings Bank issued FDIC order
Jennings Bank issued FDIC order; bank looks forward - Bluff Country News - Southeastern Minnesota
Fremont General Corp Announces Regulatory Approval to Appoint New Directors of Fremont Investment & Loan
http://www.earthtimes.org/articles/show/fremont-general-corporation-announces-regulatory-approval-to-appoint-new-directors,312851.shtml
WSJ - National City Looks For Buyer
It's a Buyers Market for Banks - WSJ.com
WSJ - Shinsei Bank to Sell Headquarters As Subprime Losses Increase
Shinsei Sees More Losses, So It Sells Headquarters - WSJ.com
Now that the majority of business economists are forecasting a recession (which I agree with), some even musing about a severe recession (which I don't agree with), all we need now is for NAR to cave and issue a bearish housing forecast then maybe the light will start to appear at the end of the tunnel (and not the train).
Does anyone have a link to the S&P report that has the market so giddy? As for the deepness of the recession, it is going to depend on how you measure it. Unemployment will be relatively tame because of the underlying demographics. Year over year growth in employment however will turn quite negative. Real PCE will fall very sharply. Industrial production might hold up relatively well due to exports being boosted by the dollar going the way of the old peso. Real incomes will fall fairly sharply. Personal bankrupties will soar, even with the very harsh 2005 bankruptcy law, most likely setting new records. Look for a bit of a bounce in the 3Q from the stimulus checks, but that will be short lived. A W shaped recession brought to you by W. This of course is dependent on the Fed being able to paper over the failure of any major player and preventing the nightmare scenario of cascading cross defaults. If that happens, then Conjure Bag might be optimistic.
EMC will likely go down.
Actually nearly everyone will go down leaving on Fannie and Freddie to continue to loan money for a loss.
In this environment (falling house prices) every loan at these rates is entirely underpriced for the risk.
This is essentially a situation where these two companies are willing to be the sole provider of mortgages for a loss, the loss-leaders, who will drive everyone else out of business who is unwilling to also take losses.
Only when Freddie and Fannie fail will there be an opportunity for companies to adequately price risk and lend money for a profit to homebuyers.
This of course would mean a large spike in interest rates that would temporarily exacerbate the price drops and thus the value of assets backing current loans.
The solution for the future is market is the deathnell for the current one.
Liquidity Worries Continue to Maul Bear Stearns
Liquidity Worries Continue to Maul Bear Stearns at SmartMoney.com
Gotta love that headline.
Cheers,
Does anyone have an understanding as to the methodology S&P used to make their conclusion that we are pretty much through with subprime write-downs?
Does this study just ignore Alt-A, or HELOC paper? How do they estimate what the losses ought to be? Do they use assumptions as to what the worst-case default rates will be?
S&P Says End in Sight for Writedowns on Subprime Debt (Update6) - Bloomberg.com
If Sebastian is "really" Hank Paulson..is CR "really" Roubini
"In this environment (falling house prices) every loan at these rates is entirely underpriced for the risk."
When is the marketplace going to get it? The government can't subsidize new mortgage origination and prop up the existing paper.
Is the EMC in question EMC Insurance Group? There is an 8-k today announcing 2008 executive compensation. That may not be inconsistent with going out of business - some forms just have to be filed, ya know - but that is all the news I can find.
Worried said: "It is nothing to do with the data now."
I don't think I'm making myself clear.
It's always about the data.
If you look at Q1 2007 GDP, you'll see that it was pretty weak, only about 1.5% growth from Q1 2006.
So Q1 2008 is going to have an "advantage", it will benefit from being compared with a weak year-ago quarter.
And don't forget that you can't have a recession with full employment or net job-losses so small that they're well within the margin of error.
Sebastia
Taos writes:
If Sebastian is "really" Hank Paulson..is CR "really" Roubini
CR is much less pessimistic than Roubini.
EMC is Bear's mortgage unit.
Sebastion,
I agree with Soloman you have the right to disagree with everyone here. However if you disagree why do you come here? Why not go to a bull site and live in harmony with your own kind. I personally agree with some of what you are saying but very little. Government numbers are BS and that isn't for Bear Sterns.
--
"Still waiting for ECRI and UCLA ..."
We are dealing with rogue economists here.
I have followed Guru Lakshman Achuthan of ECRI for 5 or so years and there is no doubt that he is lying because all the things that he said mattered in the past, in forecasting recession, have already CONFIRMED the recession.
Economists who lie at critical junctures make good money!
My notes on Ratcliff
July 27, 2006
One Mr. Ratcliff, a UCLA economist, appeared on the boob-tube to talk about California housing. He said, The California home prices have never declined except when the economy was in a severe recession.
OK.
Then he continued, Since we are not forecasting a recession, the prices should level off and remain flat.
Jas
Average Joe,
If you turn off Fox News and Limbaugh you'll be much better informed. ;^)
Republicans have been hoodwinking you for roughly 20 years now.
Who said 0% down is dead?
All the real estate agents and builders are using 3% FHA loans with a gift through the Nehemiah program.
Get Downpayment Home Page
continuously rising house prices is an infinately safer environment than continuously falling house prices.
When you move from one to the other you should have an immediate repricing to account for the environment change.
It's like selling life insurance to a bunch of librarians. You and other companies price the insurance based upon historical losses. Then suppose that all the librarians were shipped to Bagdad to serve in the reserve army. Unless you immediately reprice all their life insurance you going to be unable to make money. The losses will quickly drain your cash flow from premiums.
Now suppose that one of the insurance companies will stick with the current premiums no matter the cost (fannie and freddie). They will continue to take losses and anyone competing will have to instantly give up and go out of business. So as an employee to you simply quit or do you continue to generate income by selling policies even though the losses will eventually drive you out of business. You die now or die later.
As you can see, Fannie and Freddie are picking up the slack from all those unable to get a cheap loan in the private sector.
It would be like the insurance company that was willing to take a loss on librarians turned rambo would be selling more and more insurance to all those who were dropped by the insurer who dared to price for profit.
Government is expedient, like pissing in your boots to keep your feet warm.
Right now that warm urine is cooling off and will soon exacerbate the problem and turn the cold boots into buckets of ice.
--
"Republicans have been hoodwinking you for roughly 20 years now."
As a former Republican who stupidly voted for W and also used to listen to Limbaugh I can attest to the truthfulness of the above statement.
Jas
sequoia152 said: "I agree with Soloman you have the right to disagree with everyone here. However if you disagree why do you come here?..."
This is where I can do the most good. In the past, I've been "victimized" by stock market reporters, gurus, pundits, sell-side "market strategists", etc. and their poorly-researched, biased, or even fraudulent writings and presentations.
I'd like to demonstrate that it doesn't have to be that way, that people can make good decisions on their own without having to rely on anyone else, even if conditions seem confusing on the surface.
S.
EMC is Bear's mortgage unit.
Oh good, I was afraid you were talking about EMC^2 (the Enterprise Storage Company).
S&P says the subprime mess is over:
S&P Says End in Sight for Writedowns on Subprime Debt (Update6) - Bloomberg.com
I guess that settles it. Nothing more to see, move along.
Sebastian,
I may not agree with you but I admire you for sticking to your guns in the face of mostly good-natured ribbing.
Incidentally, a lot of the arguments seem to boil down to the technical definition of a recession. It would seem to me that negative changes in real per capita GDP would be the "true" measure, but I do not think that jibes with the official definitions.
even though I consider myself a fiscal conservative and voted for him twice.
The first time avgjoe I can understand. The second is completely beyond me, frankly. And anyone who did, i feel, has no business complaining about anything that happens. Although I do applaud that you people that put this administration in a second time have destroyed the modern conservative movement for generations to come. That's the best legacy this pathetic government will leave behind.
Sniglet said: "Does anyone have an understanding as to the methodology S&P used to make their conclusion that we are pretty much through with subprime write-downs?"
The companies make their estimates and pass them on to Standard & Poor's. So S&P is essentially saying, "the companies we follow are reporting to us that they're pretty much done with the write-downs."
S.
Jas Jain voted for Bush?
Average Joe voted for Bush...twice?
This comment thread has more shockers than a soap opera on a Friday.
"even if conditions seem confusing on the surface."
Sebastian, I cant work you out. Are you the guy who tells the other guy to rearrange the chairs on the Titanic or are you the guy who is rearranging the chairs?
I can no longer even doubt the ship is going down and yet there you are bright and breezy beavering away!
It is an interesting and amusing sight.
And quite impressive too!
Well done!
I have been logging the S&P futures purchases for one year, now, when I read that they were the preferred instrument for hedgies/PPT for 'saving' the market from a crash.
Yesterday's volume of futures purchases was in the top 3%.
Today will be the all-time high.
I hope those guys are running out of money, 'cause they sure are interrupting the natural, disorderly, foreordained meltdown.
They are losing money on each and every futures purchase as they are, in effect, chasing the market down.
Prediction (based upon my above analogy).
Home prices will continue to drop toward 3x median income based upon current loan rates....this will take a while
Then Fannie and Freddie explode based upon years of underpriced risk.....
Loan interest rates shoot up due to the search for the true price of risk, lack of liquidity, fear, and general market turmoil.....
House prices will take a second leg down due to massive liquidation of assets and a complete absense of those able to afford huge down payments and high mortgage rates....
Prices for all cash buyers will really drop since no one wants or needs another loan....
THEN BUY! (of course you can only buy if you have lots of cash....so both of you will get a really nice house for cheap)
Even if the real estate industry (residential and commercial) were normal, $110 per barrel oil would be enough to tip the economy into recession.
There is nothing more destruction to the U.S. economy than high oil prices.
Another huge headwind is the spiraling cutbacks in government spending, which will take time to play out and won't be reversed for years.
There are huge bank hits to come from bad construction loans, especially condo construction in bubble markets. Corus Bankshares alone will stick the FDIC with more than a billion dollar tab.
I think all over the U.S. condo construction crews are being laid off. It just doesn't make sense to finish them. They are no lenders and no buyers. Every high-rise condo unit sale takes a miracle.
The confessional is open...
I seriously considered voting for Bush in 2000...
jg-
whoever is doing that is not using there own money. Just like the I-banks refusing to backstop over $75 billion in rated securities (that is not there money) with $3 billion of it's own money......
this....will end rather poorly...
Ciao
MS
It was 2002 when it hit me.
That madmen had taken over the country...
Sebastian, "the companies we follow are reporting to us that they're pretty much done with the write-downs."
Eek! Isn't that pretty much tautological?!? After all, if a company said, "These are the write-downs, and we think there will be more," the company would be essentially obliged to include those projected write-downs. S&P certainly ought to be doing its own analysis.
rich,
Luxury condo units around here are being converted to apartments.
Cheers,
Are you the guy who tells the other guy to rearrange the chairs on the Titanic or are you the guy who is rearranging the chairs?
That's a great picture! But I do think that Seb has a couple of points. And while the bulls rationalized their own irrational exuberance to excess, perhaps the bears here are doing the same thing. Some here don't want to hear rational arguments based on datapoints. They want to argue away the datapoints as being not right, or find some reason why they are right.
So while, on the way up, I was inclined to believe you should have been more cautious than everyone was saying, on the way down I'm inclined to believe it's better. So I think we're near or in a recession, but the numbers aren't bearing out the full-fledged call.
It will be interesting to see what happens with vacation season, driving, and spending this summer. That's going to tell the story.
OK, I confess. I almost thought about registering to vote, so I could vote for Ron Paul in the primaries.
Fortunately there was a cold 'tini nearby and the silly notion was history.
Cheers,
That madmen had taken over the country...
The endgame of which is playing out now. I don't know about anyone else here, but I'll say it again. I live in the first world and don't mind paying for first world services...even by taxes. I object when I don't get them. Tax me to pay for SS? Fine. We're a rich country and SHOULD take care of our own. Tax me to bail out stupid people? Not so much. Tax me for a bridge to no where? Forget about it. Tax me for education? I'll dig deep.
Simple talk for simple folks...lower taxes. And you wonder why people bought the "house prices will go up forever" line from realtors. Just look in the white house for the answer.
ipodius make good sense!
News from AP
LOS ANGELES -" Nearly 60 percent more U.S. homes faced foreclosure in February than in the same month last year, with Nevada, California and Florida showing the highest foreclosure rates, a research firm said Wednesday."
Is it the 4th inning yet?
Eric said: "Eek! Isn't that pretty much tautological?!? After all, if a company said, "These are the write-downs, and we think there will be more," the company would be essentially obliged to include those projected write-downs. S&P certainly ought to be doing its own analysis."
Tautological it may be, but that's the truth of it. S&P is more of an aggregator of the earnings and dividend data than an honest investigator.
Still, I believe their statement. This has been going on for at least a couple of quarters now, there have been all kinds of closures, bankruptcies, "re-structurings", and all that mess. There may not have been a good resolution, but it sounds like the badly-damaged ship has been made almost sea-worthy again.
JMO.
S.
Oh, heck. Sebastian is not a troll. I think he's wrong about the current economy, but that's my opinion. Trollage should not be judged by differences of opinion. If it were, then every active participant on this blog would be a troll sooner or later. A lot gets discussed on this blog, and a lot of different opinions get aired.
Stuff I like about Sebastian:
-He does not refer to astrology to explain economics.
-He generally is willing to argue his points, and in a pretty courteous way.
-He is not a wuss.
-He seems to be a fundamentally healthy and optimistic character.
-He tends to stay on topic.
-He does not indulge in conspiracy theories or bigotry.
-He does not indulge in long political rants. There are tons of good political blogs around, but few really good economics blogs. IMO, using CR for politically focused discussions is kind of like using a Stradivarius as a shovel.
Now here's what I would call a troll.
Not only does this lady refuse to concede a current recession (like Sebastian), she also is doing away with the 2001 recession, and she has the NBER's method of defining recessions completely backwards! And guess who she is? A former chief economist at the US Dept of Labor. Gurgle. This was clearly not one of Bush's best appointments.
A troll is a person who is an active enemy of truth and reasoned discourse, not a person who disagrees with most of the people posting at a site. I do have pretty strong disagreements with Sebastian personally. I think he is a bad economist and a decent stock jockey, especially on upswings. Well, bulls make money and bears make money, so Sebastian's day in the sun will come around again, and when it does, we'll probably be glad he's here.
I enjoy reading Sebastian's stuff, and it has caused me to look twice at some of my own investments. That's not necessarily a bad thing.
Bad things?
Average Joe: "... Bush in particular, even though I consider myself a fiscal conservative and voted for him twice."
This follows my own thesis about propaganda... the biggest victims of corporate propaganda, are 'real conservatives', not 'liberals'.
sebastian you vacated the debate on the previous thread right after you demanded i show you numbers.
so here are a few macro numbers for you to consider.
Sebastian wrote:
You didn't quantify a single one of these factors (current account deficit and federal debt held by foreign govs) into anything of practical use. Every point is nebulous and without a concrete, test-able data-value.
I've gotten multiple decades of economic data and quantified their impact on the U.S. economy and stock market behavior. When you do the same, I'll be glad to compare notes.
Sebastian | 03.13.08 - 1:24 pm | #
OK Seb you may have "multi decade of economic data" but you don' seem to be able to understand and interpret that data into policy decisions.
10 trillion dollars debt
50 plus billion monthly trade deficit
dollar crashing
oil over 110 per barrel when it was less than 1/4th that 7 years ago
credit default swaps more than half of the entire derivatives market,growing asymptotically since 2000 and no chance to figure out counter-party risk
endless war that cost 1/2 billion a day up front with additional medical costs and equipment replacement costs back loaded,
70% of economy is service/consumerism, our automotive economy and transportation infrastructure is badly damaged (Toyota just overtook G,M. in sales) (bridges falling down)
half trillion military budget (including off book black ops funding) that exceed spending of all other countries in the world combined.
all other countries in the world (INCLUDING OUR ALLIES!!!)
Seb.. someone set us up the (debt) bomb...launch all zigs...all your bases are belong to us
ps no amount of cowbell (on the 19th) (or tinkerbell) is gonna save the situation.
mock turtle | 03.13.08 - 1:50 pm | #
(OT) My confession: I registered to vote for the first time ever so I could vote against Bush, making me feel extremely self-righteous.
S.
"They want to argue away the datapoints as being not right, or find some reason why they are right."
NEWSFLASH: sticking to historical data points in the face of common sense is what caused this mess!
How many people in the loan business, with access to the actual data, saw this coming!????
Geeeeeeeeez, I'm sure when Merryl bought First Franklin it was because they couldn't "ignore the data...it speaks for itself". Or when Macklowe bought New York, or when....you get the point.
ipodius | 03.13.08 - 4:07 pm |
I look at our freight volumes every couple of weeks. Every truck pulling from the dock is pretty much full. When we fall off 20% like during the dot com implosion I'll get a little worried.
Heck,I still have the ability to spend 500.00 on a single part or 1500.00 combined on a repair before I have to even email a manager. This is the same as 5 years ago...
Chris
P.S.- I'm very bearish on housing...Sitting on 5 years cash,just waiting for the right situation.
Eric and Sebastian - well, as the subprime writedowns end in theory, the next set of writedowns begin. There's a world of pain in LBO, CRE, Alt-Aish, bad car loans, CC, etc.
MOM said: "I think he is a bad economist and a decent stock jockey, especially on upswings."
The weird thing is that I think of myself the other way around, with a clear handle on the economy and a shaky handle on stock swings.
Just goes to show how deceptive a medium Internet posts can be, I guess.
S.
Good work on the voting, Seb!
Couple of analytic points that I hope fit into the discussion. One is that year-ago GDP comparisons have nothing to do with recession determination. The rule-of-thumb about two quarters of declining output refers to quarter-over-quarter declines. It is entirely possible to have a recession without every showing a y/y decline in output.
The other is that some of the conversation seems to be at cross purposes. Sebastian, if memory serves, tends to cite historic output and employment data as a starting point, to claim that no recession is underway. Others, including our host, is to look at leading indicators to assess the odds of a future recession. That, I think, was Average Joe's point in comparing a conversation with Sebastian to one with our host.
So if I have my schematic conversation right, it comes down to "A) there is going to be a recession ... B) there is no recession now...A) but there is always a recession after X happens...B) but GDP grew last quarter, so there is no recession...A) but there is always a recession after Y happens...B) but GDP grew last quarter, so why should there be a recession this quarter?
There is nothing new in ignoring what the other guy is saying, but it runs out of fun pretty quickly.
" in the absence of clear, uncontrovertible evidence "
" They want to argue away the datapoints as being not right "
This is the point, Sebastian and ipodius:
The data was confuzzled over the past 20+ years to be whatever government politicians wanted it to say. Rather than reporting consistent quality data and let good/bad fall wherever it would, the US government has enacted what it thought was a put on equity prices.. however, this will actually end up bouncing back on them.
It wouldn't be the first time khr@p was priced as quality, though. Happens all the time throughout the history of individual businesses.
Free-market idealists will get a lesson in the value of not spinning yarns about data.
Ipodius,
Have you forgotten that the second time he ran against John Kerry? Reason enough right there.
detroit dan...as much as you avoided the irrationality on the way up, avoid it also on the way down. That's my rule anyhow.
ipodius makes no sense because she/he like so many other sheep blame Bush for what is going on. There is no quantifiable difference between D or R. Bush is a figurehead only, part of the elite globalist oligarchy (same people that brought you the Federal Reserve) and so is Clinton. So are McCain and Obama. There are supposedly free election to keep the sheep distracted and to keep their eyes off the ball.
All of the leading candidates have been pre-approved by the pigmen to not challenge the system and to further the elite globalist protocols. Any person who represents a differing viewpoint will be allowed to exist only if they can be marginalized or portrayed as a crackpot ideologue (Ron Paul.) Otherwise, they will literally be assassinated, or figuratively as in the case of Spitzer.
The elite global oligarchy viral infestation creates wars to create debt that cannot possibly be repaid by the "host" county. Every central bank except 5 were founded by the Rothschilds. Any guess as to who the 5 are? Iran, North Korea, Cuba, Sudan, and Venezuela. There were 6, but Iraq was invaded to eliminate that little problem. Next up, Iran...
Average Joe said: "NEWSFLASH: sticking to historical data points in the face of common sense is what caused this mess!"
I think Tanta would back me up on this, but ignoring historical benchmarks is what caused this problem. Like applying looser mortgage lending standards when the older, tighter standards worked well over changing economic environments.
S.
Have you forgotten that the second time he ran against John Kerry? Reason enough right there.
You know, I really can't say much on that one
But I did have to go for Kerry onnacounta.
I like your philosophy, ipodius.
Darth, on the other hand, seems a bit extreme...
K Harris,
Well said....
Sebastian and CR (and others) are simply talking past each other.
For the record, I disagree with Sebastian but I am glad he is here.
I liked Kerry...
most insightful comment of the day
I have been logging the S&P futures purchases for one year, now, when I read that they were the preferred instrument for hedgies/PPT for 'saving' the market from a crash.
Yesterday's volume of futures purchases was in the top 3%.
Today will be the all-time high.
I hope those guys are running out of money, 'cause they sure are interrupting the natural, disorderly, foreordained meltdown.
They are losing money on each and every futures purchase as they are, in effect, chasing the market down.
(and yes I read them all...so far)
on a side note, voting for bush...just sad really
Wells fargo : "earth revolves around sun." Story at 11.
My contact at Bear says that their CDS counterparties are getting nervous and that one of the ways they're hedging their risk is to short the stock. Says he doesn't think the rumours (and there are lots of 'em) are true and that shutting EMC wouldn't be that big a deal, as they're not making any loans anyway or generating any profit.
--
What if someone named Abdullah were to post the same that Sebastian does?
Just curious,
Jas
There is no quantifiable difference between D or R. Bush is a figurehead only, part of the elite globalist oligarchy...
God that sounds so much like what Marxist economics professors spouted in the 70's with just substitution for those railed against....
Seb once again- real data- YOY drops in revenue collections.
Large drops:
Joint Legislative Budget Committee - Monthly Fiscal Highlights
"Total January General Fund revenue
collections were $849.3 million, or (16.1)%
below January of last year. This amount was
$(226.2) million below the forecast based on
the June enacted state budget
For the first 7 months of FY 2008, General Fund
collections are down (3.5)% when compared
to last year, and are $(619.2) million less than
the enacted forecast. When factoring in
Urban Revenue Sharing, year-to-date
collections are (5.1)% below last year. (See
page 13 for detail information).
The January decrease represents the largest
percentage year over year decline since April
2002. The dramatic drop in January revenues
was across the board in all 3 main revenue
categories:.."
GET IT YET?
The feds have seen the same drops.
How many times do I have to say it:
The recession is here. Deal with it.
Someday this war's gonna end...
Sebastian wrote:
JMO.
"...Still, I believe their statement. This has been going on for at least a couple of quarters now, there have been all kinds of closures, bankruptcies, "re-structurings", and all that mess. There may not have been a good resolution, but it sounds like the badly-damaged ship has been made almost sea-worthy again.
S.
Sebastian | 03.13.08 - 4:13 pm | #
Hey Seb, i love ya hommie, but stop drinking the koolaid...
do you look at the graphs at bloomberg, marketwatch and that CR posts here????
the biggest waves of mortgage resets have YET to happen AND there is a ton of collateral damage in the areas of consumer credit.
finally it appears that Broker-Dealers have been writing FTD /IOUs rather than clearing equities sales and purchases...ie PONZI scheme on wall street
see Yearning to learn for the link...awesome...sad...for our kids
DT: "The elite global oligarchy viral infestation creates wars to create debt that cannot possibly be repaid by the "host" county. Every central bank except 5 were founded by the Rothschilds."
Let us not ignore the incontrovertible role played by the Bavarian Illuminati, led by the monstrous Adam Weishaupt.
Who controls the British crown?
Who keeps the metric system down?
We do! We do!
Who leaves Atlantis off the maps?
Who keeps the Martians under wraps?
We do! We do!
Who holds back the electric car?
Who makes Steve Gutenberg a star?
We do! We do!
Who robs cave fish of their sight?
Who rigs every Oscar night?
We do! We do!
Okay, I'm in.
I voted for Bush both times. The second time was because I hate John Kerry - passionately - and Laura is infinitely better looking than Mrs. Kerry.
That said, abolish the Fed.
Don't know what to replace it with yet, but I'm going to Lowes tonight and we'll figure something out.
The older standards were discarded when data points indicating smaller and smaller default rates with less and less losses on each default meant that risk premiums could be lowered and profits could be made on volume.
It was a misinterpretation of existing data that lead to the wrong conclusions.
Exactly what is happening by those who look to current employment, inflation rates, etc to extrapolate.
Malaclypse I just spit out my tea on the "who robs cavefish of their sight".
THAT was the best post of the day!
Who was the political guy who said a while ago that deficits do not matter because we owe it to ourselves?
The reason I am asking is because I want to ask him if I should cover my short position in the Euro or keep holding.
The second time was because I hate John Kerry - passionately - and Laura is infinitely better looking than Mrs. Kerry.
Now there's the reasoning that makes me have the philosophy that I do. lol
I wouldn't be in the least bit surprised to hear the Treasury is ready to take any quantity from a basket of NYSE-listed stocks as collateral for its TAF/TPF or toilet paper facility or whatever its called.
That would be the next logical step, and it would complete the circle.
Malaclypse -- That was funny!!
Re-post
For Sebastion who said:
"I think Tanta would back me up on this, but ignoring historical benchmarks is what caused this problem. Like applying looser mortgage lending standards when the older, tighter standards worked well over changing economic environments."
The older standards were discarded when data points indicating smaller and smaller default rates with less and less losses on each default meant that risk premiums could be lowered and profits could be made on volume.
It was a misinterpretation of existing data that lead to the wrong conclusions.
Exactly what is happening by those who look to current employment, inflation rates, etc to extrapolate.
I'm still not convinced either. This still looks more like a mid-cycle downturn to me.
Actually, I'm rather optimistic again
The smart money has bought into the double bottom much stronger than into the Jan. 22nd lows. I think they bet on an instant recovery.
O-Joe
I didnt vote for Bush but I dont see why people are bashing him.
bong water moment here.
CR
Ok I guess thru this bongwater haze what I can say is that CR should be looking at the percentage of debt relative to GDP.. not just the 10 Trillion number because that amount doesnt mean AAA. Although even the debt / GD"P" ratio doesnt mean much because we dont "produce" much in terms of hard goods. So if your GDP includes financial engineering "products" or products sold here but made elsewhere does that even matter? Its ephemeral. mp and Conjure Bag .. another post dinner Cuban comment from you please.
If Bush started with a 5 Trillion deficit and is ending with 10 - but its a DOLLAR deficit not glod.. then isnt he the smarter guy??? I mean, the 10 Trillion is now worth what? 2-3 trillion in 2000-2001 dollar terms? But then again..our entire GDP is worth less in glod terms isnt it.
Sebastian is no troll, and I appreciate his viewpoint.
That said, I am down with mp & Conjure- this will not end well.
(I HOPE that they are a bit too bearish...but I SUSPECT that they are seeing a bit further out than most.)
These are interesting times. Nice to have a group to watch with.
Oh, and Malaclypse...SHHHH!
"Malaclypse -- That was funny!!"
Not original though. From Simpson's episode "Homer the Great"
It was a misinterpretation of existing data that lead to the wrong conclusions.
averagejoe, you're thinking too much. I can tell you that, at the executive level, anything that was bad was scrubbed from the data before those decisions were made. If the execs said they wanted it, by god we'll just produce the data to make them happy! So you are incorrect. The data was bent to fit the directive. No one saw the data you refer to who was in a position to change direction. I don't work that way, but I can tell you that's the culture in these companies.
I would personally like to thank Bernanke, S&P, and our very own O-Joe and Sebastian for generating all of these nice buying opportunities (put options) this week.
"averagejoe, you're thinking too much"
"The data was bent to fit the directive."
I am only thinking of how to convince Sebastian to ignore current data because he and others are "bending it" like you said.
Trust me, those idiots who "didn't think to much" and said...gee I wonder how that guy can afford that house? Oh, well he must be able to since they gave him the loan?"
When I stopped trying to figure it out and just accepted what my lying eyes were telling me....is when it all made sense.
"she has the NBER's method of defining recessions completely backwards! And guess who she is? A former chief economist at the US Dept of Labor. Gurgle. This was clearly not one of Bush's best appointments." MOM
I fully agree with you about Seb not being a troll, and it is good to have someone here to keep us all on our toes and not become one big bastion of group think. As to the part I cut and pasted: MOM can you think of ANY good appointments he has made. David Patreus perhaps, and maybe Big Ben, although the jury is still out on him, given the increadibly tough hand he was given to play (sort of being handed a 6 hearts bid, and holding only 11 points and a singleton Jack in Hearts)but after that the list gets pretty thin. Ashcroft, Rummy, Gonzo, Alito, Roberts, just about any former industry lobbiest regulating their former industry, O'Neil, Snow, Paulson, Rice. See any impressive names on that list?
We shall find out eventually whether the US in a recession or not. I think it probably is but there is a chance that sebastian is right, at least as far as the definition accepted by economists is concerned. (This require TWO consecutive quarters of negative changes to real GDP.) given the strength of US exports it is possible that output may be strong enough to avoid such a fall in 2008-09 - certainly this accounted for the surprising (to me) avoidance of recession last year.
The NBER has its own definition, which seems looser (a prolonged period of sub-par growth, I think) and I doubt if this can be avoided.
Forecasts i've seen recently are now pretty close to stagflation - two years of growth of 1-1.5% and inflation creeping up.
Not a good environment for consumers or banks.
Canary in the UK
gee I wonder how that guy can afford that house?
that's my point avgjoe. no one said that because you get the behavior you incentivize. the boss said "we need to make these numbers". there was no thought past that. no one wondered about how people were going to pay because their pay wasn't linked to that. No one's was.
that was the point of my "bush is for tax cuts" barb. no thought past what that actually means.
Anyone see Corzine on CNBC today (I have the flu so i was in bed all day and subjected myself to a full day session...never again).
Says we are in a recession and noted that shipping the NJ/NY port was down 15%. Not sure if that is a normal fluctuation, but sounded like a big deal to me.
when asked if he thought paulson and ben were doing a good job he said, "I think they are working very hard". Great vote of confidence in his old partner, eh?
Noble: "Ok I guess thru this bongwater haze what I can say is that CR should be looking at the percentage of debt relative to GDP."
One graph, at your service: U.S. National Debt Graph: Since Great Depression
One might note that the ratio has decreased for every Democratic president post-WW2 (although not much for Carter), while, among the "fiscally conservative party" Ike made progress, Nixon/Ford left us pretty unchanged, and all the rest spent like, well, like they expected Jesus to return tomorrow to pay off the bills.
MaxedOutMama,
You mentioned the world of pain coming after sub-prime, to wit, alt-A, CC, auto, etc.
On auto, allow me to opine that it'll never get nearly as bad as what you see in mortgages. I can testify that lenders were making a lot of uneconomical loans the last few years, mostly as a result of not taking into account that the economy was bound to turn and a natural tendency to let LTVs get out of hand. That said, the underlying collateral never saw the sort of bubblicious inflation you got in housing.
--
"Jas Jain voted for Bush?"
I recognized my mistake in early 2001 and left the party in 2002. I have never voted since.
Jas
BG,
I think MoM may be closer to the mark when you consider the negative value roll overs that occurred - folks who owed more than trade in value refinancing the balance owed repeatedly...some of the same same we have seen with 'record low defaults' because everyone could roll a note over in the fog a mirror lending world.
All I know is that it's a major pain in the A$$ trying to make any sense out of this market. What are the Joe's supposed to do? Move our IRA's to bonds, take a hit, move them back to stocks, another hit. Go to cash or money markets and lose our shirts to a falling dollar. Every day we get some SOB throwing out a rumor and the markets go nuts. Then by the end of the day, everything is back to where it was.
I think the big boys are using the stories to push the market one way or the other so they can unwind their crap in little pieces. Meanwhile all us Joe's are going broke in houses, IRA's, checking accounts, and in life.
J6P,
You said the secret word! However, due to the shortage of Groucho Ducks you will be given a pony instead!
Darth Toll,
Hey, I think I agree with you. The same guy who told me to Buy Gold back in 1999, said a lot of stuff that you just said about the Elite
Global Oligarchy.
Where can I read more about it?
Republicrats bad, Democans good? This is all folly - SOMA holiday for the masses. Its hard to believe that educated(?) folks around here still fall into this simpleton's trap.
The Federal Reserve is actually in charge of the country and has been for many, many years. They control the FBI, Homeland Security and most other "government" agencies. Their short term goal is to completely break the middle class and combine the US with Canada and Mexico in a North American Union with a new currency (Amero.)This is part of a larger one-world government movement.
As Joe Six Pack wisely noted in his post above, its now mission accomplished. Mostly they do it by slow inflation, but occasionally they switch tactics and cause crushing deflations where they can consolidate even more control and power. The deflationary collapse is the great bounty of the pigmen elite and they have now lined up all of the dominoes in such a way that the citizens of the US will have no choice but to go along with their satanic plan - or face starvation and/or extermination.
Anybody notice the large Homeland Security "detention" centers being built all across the country? I've got three of them within a 40 mile radius of me.
Notice the .gov in the link below, or how they go out of their way to deny the existence of the Amero? But I'm sure the government is 100% trustworthy...
SPP Home
Speaking of which, here's a fun read on how the trade center could only have been imploded by professionals with months of advance planning and access to the base columns. This is written by hundreds of engineers and architects, but I'm sure they're just a bunch of wacko nuts too, right?
AE911Truth
Pepto, it's a depressing thing knowing the truth. Are you sure you want the red pill? Sometimes ignorance really is bliss. I say that with all sincerity, knowing what I know today is a great burden, and CR has been a big part of my education.
If you REALLY want to know, I suggest beginning with a Google search on the history of the Federal Reserve and specifically a history of the Rothschilds and Rockefellers. This will get you started off. Ironically, none of the facts are even disputed, and much of what you'll find is on actual .gov pages, not wack-job cook websites. Most of the real cooky pages are really just designed as false-flag propaganda operations by the pigmen to discredit any legitimate dialog and to marginalize (like Malaclypse was just trying to do by mocking my earlier statements.)
AllenM said: "Seb once again- real data- YOY drops in revenue collections."
AllenM, once again, why isn't that "bad" news driving down GDP dramatically and driving up unemployment dramatically?
I'm just a guy, of course, but if a woman is really pregnant at some point she has to show, right?
S.
Darth,
So, how do the Tri-lats fit into this?
FWIW In my view all politicans are the same. Just like Chocolate and Vanilla. Different flavors but still ice cream and bought at the same store. I wrote in Ralph both times.
BG, just more of the same. This is another face of the CFR. At this point we've got a pretty good idea WHO the pigmen parasites are and what their agenda is.
All Fall Down is correct. All major party politicians have been pre-approved by the CFR (ruling globalist elite.) Anybody radically different (Nader, Paul, etc.) will be marginalized as a cooky ideologue. If they gain too much prominence, they will be eliminated.
The CFR and various front groups will often fund fringe elements on BOTH sides of an issue (pro life AND pro abortion, for example) to cause class-divisions and other trouble.
Damn! Sorry to get so political CR. Got carried away there...
Average Joe said: "The older standards were discarded when data points indicating smaller and smaller default rates with less and less losses on each default meant that risk premiums could be lowered and profits could be made on volume.
It was a misinterpretation of existing data that lead to the wrong conclusions.
Exactly what is happening by those who look to current employment, inflation rates, etc to extrapolate."
Tell me about it.
I was just browsing through some old Excel files and found this gem:
Between 1960 and 2005, the median unemployment rate was 5.7%, in a range of 10.8%(!) to 3.4%.
As of the most-recent reading, unemployment was 4.8%.
So, using long-term historical data, unemployment is substantially below its long-run median level.
Or how about this pearl: Over the same time-period, the median SP500 PE valuation was 16.01, in a range of 32.88 to 6.74.
As of today's close, it's at 15.49, below its long-run median.
Sebastia
Jas said:
I recognized my mistake in early 2001 and left the party in 2002.
This doesn't square with your oversized ego.
I think you ought to reflect on the fallibility of your own thought that this implies.
DT: "At this point we've got a pretty good idea WHO the pigmen parasites are and what their agenda is."
In all seriousness then, and no mocking intended, just who, exactly, are these "parasites"?
Sebastian:
They redefined the unemployment rate midway thru your data so you are comparing apples to oranges.
They also rejiggered the CPI calculations. If we calculated inflation the way it had been done from the Great Depression thru the Carter Administration, CPI-U would be closer to 11.80% instead of the reported 4.28%.
Since real GDP is measured by calculating nominal GDP and then subtracting inflation, understating inflation causes a systemic and pervasive upward bias in reported real GDP growth. By biasing reported real GDP growth, it means you do not know when you've tipped into what historically would call a recession.
"I would have to argue that we've got to be fast-approaching the precise opposite of "irrational exuberance," with so many people insisting there's a recession on in the absence of clear, uncontrovertible evidence." - Sebastian
Seb,
Greenspan coined that term in what...1997. Look at how much more irrational and exhuberant the market got between then an spring 2000.
We are nowhere near the depths that we will plumb. The fact that the markets rally on toothless FED bailouts means they still have hope. At bottoms...there is no hope left...everyone has given up.
We are nowhere even close.
Sebastien has essentially two major points backing his theory that the economy is okey-dokey.
The first is that real GDP is still OK. This point is, umm, weak. The recession would have started in December 2007, based on employment/IP data. However, we only have fourth quarter GDP. For those of you don't follow economic data closely (or properly, like some people I could mention), Q4 is essentially the average of October-December 2007. Thus, the average may not be impacted enough by one month to make the average negative. Then again, we don't have the final revision - who knows what the reading will say for 2007q4 with the data set available in 2015? Moreover, we are currently still in Q1, so we should not expect 2008Q1 GDP yet (unless we were in China). Q1 results will available long after anyone in the markets will care about it.
The second point is the amazing labor report. The bond market rallied like stink on that report, which flies in the face of Sebastien's interpretation.
Sebastien's theory is that the unemployment rate ticking down (by a statistically insignificant 0.1%) means there are no problems. However, jobs are being lost, both on the NFP (employer) measure, as well as the household survey (about 200 thousand lost on the Household survey, which is where the unemployment rate comes from).
If 200k jobs were lost - how could the unemployment rate drop? Very simply, people dropped out of the labor force faster than jobs were destroyed. Remember, the unemployment rate is the percentage of people "looking for work" divided by (people in work) + (people looking for work). [The exact definition of looking for work depends on which unemployment measure is used.] So, for example, if people drop out of the group "looking for work" the unemployment rate would drop, even if the number of employed is unchanged.
Ultimately, the number of people employed, which is what drives spending growth - not the re-classification of people who aren't.
--
"This doesn't square with your oversized ego."
Curious,
It is a question more of your idiocy than my ego. If I had a big ego I wouldn't freely admit to my mistake, would I? Just because my observations on American system and forecasts don't agree with most here doesn't imply that I have a big ego.
I always think that I am fallible and I correct my mistakes as soon as I discover them.
In the case of voting for W, I became a victim of the great American con game voting for lesser to the two evils and I was wrong on who was going to be worse.
Jas
I voted for Bush in 2004. I'm from MA and Kerry was my senator. I figured that in a contest between 2 complete incompetents, go with the one you know.
That's funny Nuke, I came to the exact opposite conclusion. Kerry looked bad, but I couldn't imagine him being worse than Bush.
"Anybody notice the large Homeland Security "detention" centers being built all across the country? I've got three of them within a 40 mile radius of me."
Really? Where is that? Not that I doubt it - it makes sense. If Gitmo is closed down, the terrorists will need to be put somewhere.
I just hadn't heard this before. Then again, I don't have much connection to DHS.