Billy Shears,
- he calls for goverment intervention, otherwise prolong 2 yrs recession.
- to goverment: buy loans at discounted price from bankers, reduce the face value then sell to people, tax money to drain
- Repulicans don't realize severity of probelm, market can not correct itself
- he isn't as alone as last year, kidding ...
Videos are always a lousy way to convey news. I guess they exist because few people can read. The You Tube here plays over itself and the whole thing is chaotic. Worthless. If you want us to know what Roubini has to say, give us a text we can READ. At least I am capable of READING.
One thing that comes across immediately is the intelligence of the interviewer -- so different from the bimbos we have on the cable networks here.
Roubini himself is in top form, as usual.
I wish I could say Roubini was a nut.While I do think his proposals are the most sensible I have encountered,they have less chance than a snowball in Hell of being adopted.I don't like the proposals,but I believe they would have a good chance of working IF they could be implemented.
I just saw the McCulley post, so I wrote a poem about it:
What Im laying out is simply a bedrock principle: if you have access to the Feds discount window, the Fed should and will, I strongly believe have the power to supervise and regulate your business core capital requirements, risk management, liquidity management, et al.
It looks like we've gotten to the point where state control over private business (the "f word") is superior to responsible monetary policy.
And the institution that ignored all the past financial disasters created by inflationary monetary policy and went on to create the biggest disaster of all needs to run things.
No organization is more culpable in this mess than the Federal Reserve. No other organization has used money more destructively than the Federal Reserve.
They could have put a stop to all this in 1996 if they had simply managed the money supply in a responsible way and heeded the growing warning signs of a bubble economy.
Instead they repeatedly poured more gas on the fire.
The history books will look back at todays Federal Reserve as a towering monument to managerial and supervisory failure.
Yet the reward for being catastrophically negligent and incompetent is that you get to control "private" businesses and the money supply.
The fundamental problem here is not lack of regulation. The problem is that people who deal with paper promises for a living have begun interfering with the real economy and in the end can't help restructuring it in a way to benefit people who deal with paper promises for a living. This predictably ends in disaster, as it has time and time again throughout history.
It's no coincidence that paper dealers are pushing for more control over business by paper dealers.
Perhaps an iron grip by the Federal Reserve will somehow prevent a repudiation of wealth illusions that keep the giant financial parasite feeding off the real economy alive even while the host is starving. A financial dictatorship disguised as a government watchdog goes down much easier than a Wall Street bailout, and so long as that government guarantees inflation, the paper swappers can keep feeding off the efforts of genuine enterprise.
Remember, the people claiming they need to protect us from financial abuses did nothing when it really mattered.
But now that the damage is done theyre saying they really mean it this time, only they need to control private investment banks to do it. Just like they needed more control over the money supply to keep the economy stable before that.
Take a look around you to see how thats worked out so far.
The investment banks dont need to be regulated; they need to be liquidated.
The regulators dont need to be somewhere they can do even more damage; they need to be in the unemployment line.
The only solution to this problem is to get rid of the businesses and regulators that make things worse, and replace them with ones that dont.
mp: Roubini mentioned the possibility of a collapse in commodity prices so, yes, you could say he's a "deflationist."
This is an excerpt from an email that RGE Monitor sent out this morning:
Yet, the effect of high oil prices on consumers is a wildcard; will demand slow enough to cool prices? So far demand from China and other fast growing emerging markets has offset OECD demand drops, to the extent that Chinese crude oil imports reached an all-time in Q1.
He's not as sure of this deflation scenario as he used to be, I think.
Inflation is defined as an increase in the supply of money and credit.
Oil, food, and commodities are not inflation, they are being driven by supply and demand. Just because prices go up due to scarcity(or speculation of scarcity) does not make that "inflation".
While fractional reserve lending and looser credit (lower interest rates) could be inflational, so far they have not, because banks are not lending more, i.e creating more credit, they have reduced. The fed has performed only sterilized operations as well, AND the creation of money has actually been declining too in a year over year basis.
In short, there is nothing inflational going on.....yet. The consumer is being squeezed by high commodity and food prices, but this isnt real inflation, its just supply and demand, exacerbated by a horrible ethanol boondogle.
Some of us are still at work.
You know, booming economy and all...
Nemo | Homepage | 04.18.08 - 8:34 pm | #
Actually,no new trucks = fix the old = more work for me !!! Up until 6 months ago we would retire and replace the major repair jobs. Not now. 60+ hours a week is gonna get old real fast...
The only solution to this problem is to get rid of the businesses and regulators that make things worse, and replace them with ones that dont.
ac, in a perfect world, that would be the way to go. I just don't want to live through the chaos that will intervene (likely for a very long time). There's already plenty of gangs around and so far the police keep them in check.
I was in Costco today, and person in front of me at the cash register was complaining about food prices and the cash rigerter person started complaining as well.
Then I said to myself "No, I am not the only one who see high food prices, there are others as well"
Today I drove around Tucson and it was FILLED with cars. I would think high gas prices would reduce the number of cars out and about. Seem to do the opposite.
I think Roubini has become too optimistic, because he is now preaching govt. intervention to keep a recession from turning into a depression. His basic equation is that the govt. will do the right things in the right time frame and makes things better.
So far, the govt. has not shown much ability to do that. Even if they could, there's no assurance that intervention would make matters better long-term.
Roubini has made too much money being a bear to be as pessimisticly objective as he might. If he is too bearish, even the Canadians won't pay him, and then he won't get to take international junkets for free.
No one, including the estimable CR, is going to stick their necks out on this one. There are certain thoughts that one keeps to one's self, assuming you don't want to be derided by every pump monkey on Wall St.
ac, in a perfect world, that would be the way to go. I just don't want to live through the chaos that will intervene (likely for a very long time). There's already plenty of gangs around and so far the police keep them in check.
Life is fundamentally the confrontation of chaos. You can't avoid it; you can only postpone it or foist it onto somebody else.
We have the choice of facing economic misery, or the misery that comes from the accumulation of wealth in the hands of petty tyrants.
Do you want people like Jim Kramer and Larry Kudlow running things?
A bubble is simply a form of legalized mass robbery. It redistributes wealth from those who have a conscience to those who don't. It's a coup of sociopaths.
If that's not undone we're going to be beholden to these types.
You need to ask yourself seriously if a transient comfort is worth that price.
You know, I honestly think CR knows what he's saying. I wish I had the temperament to argue that people need to be cautious, but we're not all going to die.
CR is a great blogger but he's not a great forecaster. He's been consistently too bullish on the economy, maybe in part because he is trying to be a balanced moderator.
Part of the problem the U.S. now has is Main St. vs. Wall St/Big Biz. All the trends are working against Main Street businesses and in favor of Wall St./Big Biz.
The Fed isn't going to bail out the Yohokus Savings Bank when it fails because it made too many loans to small biz up and down Main St. in Yohokus.
All of the trends the Fed is engineering are lethal to Main St. businesses and small/regional banks. CR has done his best work forecasting and illuminating the coming crisis in regional banks, not only because of CRE and construction loans but also because of sour small biz lending. But CR can't see that this trend will take years to play out and it will just be a slow death spiral for the U.S. economy. I don't know why he has this blind spot. He does sorta run a small biz.
Small biz and local lending is the lifeblood of the American economy, and the veins and arteries are clogged worse than they've been in decades. Many of the regulars here are better forecasters than CR, because they can see and feel the pain on Main St.
CR is a great blogger but he's not a great forecaster. He's been consistently too bullish on the economy, maybe in part because he is trying to be a balanced moderator.
I think most human aspirations are far too optimistic.
But I think without this unrealistic perspective we wouldn't be able to create the things we do.
Most inventors fail. If they honestly assessed their chances we might still be living in trees.
Then I said to myself "No, I am not the only one who see high food prices, there are others as well"
wawawa | Homepage | 04.18.08 - 9:38 pm | #
Everyone I know is talking about food prices! Just walking around the store (discount store in a working class neighborhood) you see the tension on people's faces that wasn't there so much a few months ago. I've also seen more people eating their way through the store, and leaving peels/cores/wrappers around. They seem defiant, handing fruit to each of their children and just daring anyone to say anything to them.
I've never even heard of this guy prior to his making the headlines with his bearish viewpoints this past year or so. Can someone tell me a bit more about him, prior to this sudden thrusting into the news-making limelight? Thanks.
rich writes:
I think Roubini has become too optimistic, because he is now preaching govt. intervention to keep a recession from turning into a depression. His basic equation is that the govt. will do the right things in the right time frame and makes things better.
I agree. Maybe hes looking for a job in 2009 at the White House.
Oil Rises to Record on Signs Stronger Economy May Boost Demand
Excerpt;
The real gloomy scenario has been sort of ameliorated with some of these very positive earnings and the indication that the worst is behind us,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York.There will be an uptick in energy demand with the renewed economic outlook for the second half of the year in particular.''
rich writes:
I think Roubini has become too optimistic, because he is now preaching govt. intervention to keep a recession from turning into a depression. His basic equation is that the govt. will do the right things in the right time frame and makes things better.
Every economist aspires to rule the world by controlling the money supply of the most economically successful nation(s).
That's why the become economists.
So they come up with this mythology that they can make the world a better place by changing a certain number here or there.
People in other professions do exactly the same thing.
It's just that the economists have created a more convincing and relevant fairy tale, and they've gotten into a situation of control that makes this myth very dangerous.
BTW, I also think some government intervention is necessary... not to keep a recession from turning into a depression, but too keep a depression from turning into an economic collapse.
IMO we need to preserve the good things we've created and expel the rest. At some point when the US economy an instrument for general prosperity, then it's worth bailing out and saving etc.
But we've got a long way to go, I think.
Purge the rottenness, then help the people that genuinely want to contribute so they can contribute more.
Again, nothing wrong with the US economy that a 50% haircut in nominal GDP can't fix.
Oil Rises to Record on Signs Stronger Economy May Boost Demand
Excerpt;
``There will be an uptick in energy demand with the renewed economic outlook for the second half of the year in particular.''
I think they're smoking crack laced with acid while they're mainlining draino...
BTW, pull up an S&P chart of May 2001. You'll see that it went up 18% in one month! You think there was talk of a second half rebound back then? You bet there was, but it didn't occur for another two years. Talk of a PC upgrade cycle, year-end budget flush, etc., kept the pump monkeys working. And that wasn't a consumer led recession with gas and food and mortgage payments going through the roof.
Anyone (everyone) familiar with Starve the Beast economics? George Bush's handlers are evil genuses. To them I say: you better watch what you wish for...
In Section number 2 I had to play it back a few times to make sure he said that 6.6 Trillion (!) of equity would be wiped out. Couple that with what he said about the % contribution that mortgates have in the overall economy and we are going to be in a world of hurt. He is spot on but it doesn't jive with his opinion that there should continue to be a government bailoutin both private and public sector. Our government has already spent all it's money.
The fundamental problem here is not lack of regulation. The problem is that people who deal with paper promises for a living have begun interfering with the real economy and in the end can't help restructuring it in a way to benefit people who deal with paper promises for a living.
rich - very well said. Question though, how long can Wall Street keep climbing with Main Street suffering?
I don't think Wall Street is climbing. I think we've entered the mother of all bear markets.
But if you think about it, the mother of all bear markets is going to be very long and in the end very deep. In the interim, there will be lots of twists and turns.
Wall Street as a dynamic force in the American economy is shot for at least a generation. It has almost no ammo left. The average Joe on the Street gave up on Wall Street awhile ago, and lately it's just been run by shysters and gamblers using borrowed money.
Wall Street is about to run into its worst nightmare, which is a combination of recession, higher taxes on biz, much tighter regulation, and an unwinding of vast amounts of speculation and leverage.
In the end, Main Street will be fine but Wall Street will be shot. You can restore capital,earnings and economic momentum. But it takes a lot longer to restore credibility and confidence of investors.
Wall Street stopped really caring about individual investors some years ago, except to fleece their money to prop up schemes like auction rate debt. They figured individuals weren't influential or powerful anyway.
They're about to find out just how influential millions of angry individual investors can be in clamoring for regulations, laws, lawsuits and investigations against Wall Street crooks.
You won't believe how many lawyers Wall Street's gonna need.
Blogging from a big convention... you know, here in the Pacific Northwest, according to an NPR story... we have dropped our gasoline consumption by 10 - 11 percent.
We of course, have all those socialistic experiments in mass transit, bike coops, and the like. Could be the reason. Demand could be more inelastic than in Tucson, where public transit stops running at six, and requires mass quantities of diesel.
I would LOVE to see a Roubini vs. Rodgers debate... I got a ton of money (for me) in Treasuries, keep resisting putting money in China, Hong Kong, etc... but it's getting late, and I'm wondering.
Something's wrong with Roubini's blog today - no one has been able to post a comment since around 4 this afternoon. Thought I'd see more of his regulars at this site because of that.
I've spent much of the last 3 days trying to rescue some of my mother's money from her (also elderly) financial adviser's good intentions and conservative caution. My mom has Alzheimer's, but this adviser is an old friend who has handled her money for the last 20 years. About a year ago I pleaded with her to pull the money out of stocks and put it somewhere safe. I was thinking treasuries and CDs. Found out 3 days ago that safe, to her, meant municipal bond funds and utilities. High yield muni bond funds, specifically.
Have you ever tried to convince a 70 year old (too young to remember the Depression) that muni bonds aren't safe? She kept saying that this recession (if it is one) is not bad at all, nowhere near as bad as 2001! I finally talked her into putting half into CDs and treasuries (which I had thought were safely locked in a year ago, when yields were higher). The other half remains in muni bonds and utilities, sacrificed to the God of Diversification.
I guess investors aren't listening to Rubini's story... Basically, the markets listed above have growth stock valuations in the face of everything Nouriel describes.
Unbelievable.
Again, I recommend reading this month's ContraryInvestor.com for some part of the explanation for this madness. (Hint: Deleveraging).
mb writes: Inflation is defined as an increase in the supply of money and credit.
Well, close. It is necessary to include the rate of expansion of the economy. To maintain the more-or-less illusion of constant purchasing power (it isn't really because of changes in technology), the money supply is supposed to track the economy.
Which is why the money supply SHOULD be contracting right now, but the question isn't whether it is contracting, but whether it is contracting at the same rate as the economy.
To make it obnoxiously complex, we now have to take into account the collapse of all that joyful Keynesian endogenous money as the mortgage defaults work their way through the (just slightly dysfunctional) system.
Every economist aspires to rule the world by controlling the money supply of the most economically successful nation(s).
That's why the become economists.
ac
With all due respect, that's more than a bit hyperbolic. I, myself, have studied economics, but as a means of understanding the world, not ruling it.
I have no aspirations for Total World Domination. I'm not even a Republican. And I think there are a lot more economists like me than like George Bush.
mp writes: No one, including the estimable CR, is going to stick their necks out on this one. There are certain thoughts that one keeps to one's self, assuming you don't want to be derided by every pump monkey on Wall St.
Well, there are a couple of bike coops (ok, co-ops) here in Portland.
They are basically small non profits with retail storefronts. They're typically run by twentysomethings, although late fortysomethings like me are quite welcome... they're bike shops run by people more interested in bicycles, than making profits on selling new bikes. They are the highest quality and best places to do your bike business. Bought all my family's bikes at the co-ops.
The co-ops do a lot of repair work, sell new and used parts. Portland is I think still the number one bicycling city in the US. Pales compared to the world in general... but very common to see scores of bikes being ridden.... TO WORK and back!!
For a major American city, it's quite impressive. There are even minor bicycle traffic jams during rush hour. It's a culture thing.
But not all is perfect in Oregon, transit-wise. Our gasoline use is down 10 percent. But.. I live and work in a small farmtown between Salem and Portland.. we still have a little downtown, but the last bike shop closed two years ago. Killed by Walmart.
Nice interviews, and yes he does sound like Nick Rivera.
I'm confused, though: why didn't the interviewer ask Roubini why he wasn't wearing a flag lapel pin? How can we trust him if he's not wearing one? Doesn't that mean he secretly hates America?
I'm confused, though: why didn't the interviewer ask Roubini why he wasn't wearing a flag lapel pin? How can we trust him if he's not wearing one? Doesn't that mean he secretly hates America?
Don
Yes.
This has been another edition of simple answers to simple questions.
I assume this terminology is used in every town across the country, but I just have to laugh anyhow. Three houses in my immediate neighborhood have been on the market for many months, and all the "for sale" signs disappeared for a while during the winter. Now they've reappeared with small signs on top saying "New Price." I guess it was just too damn hard to say "Reduced Price." Perhaps they think the latter lends an air of downscale desperation while the former somehow maintains a sense of dignity and upscale respect. Seems like being a relitter is essentially an elaborate exercise in slathering lipstick on a very ugly pig.
Who needs an economy with all its problematic sectors when we have the stock market to make us all rich. Seems like the neoconomists were right all along. If we can hit a 100% unemployment rate the DOW will surely be at least 100,000. of course the dollar won't be worth all the pretty ink they use to print the bills.
A nice, serious interview, the likes of which U.S. TV spends billions in order to avoid.
It's fun hearing Roubini allude to social costs. Well, 'fun' isn't the word, exactly. But the social costs are all but absent from American discussion, even as they begin to pile up.
So, let's say it's intriguing that for any consideration of the pain being wrought by our deranged Reaganist system, we need to turn to a foreign-born economist speaking in English as a second language on a Canadian TV channel.
One simple question I ask myself in regards to the growth of the economy is, "Who has any money?"
If credit is not accessible, that means people have to make purchases with disposable income. With inflation on necessities and wages stagnant, this is obviously getting strained. This will eventually affect behavior and retrenchment will occur. Rising unemployment will also act as a catalyst for this if it were to continue rising. My advice is focus on what is happening to money, the kind you fold and put in your wallet.
I don't know- I think the FED will reflate the economy in the second half- in time for the election- the stock market seems intent on rising like in 1998-however I doubt there will be any kind of strong growth really-it will purely be chimerical- the real growth will pick up in 2009- igniting inflation, and prompting the FED to swiftly raise interest rates. This will really crash the economy in 2010.
Anyone who elected President is probably going to be dead meat. This slowdown was merely a prelude- it has been stopped for the moment by Bernanke's reckless behavior- but as well all know the postman always rings twice. The real recession will be a doosy.
I have been trying to figure why we have a Fed at all. If we are going to be stuck we the repercussions of fiat money why not just have the Treasury issue it instead of borrowing it from the Fed. I guess the borrowing was suppose to be the brake on the issuing of money. If business did not have a legititmate demand for it they would not borrow. Having to pay the interest back meant business would be very careful to make sure that their borrowing was legitimate. A natural growing economy (goods & services) would keep the necessary expansion of money to repay the interest generated in check (instead of having inflation.) However the expansion of the amount of money in the system has to be expotential to cover the unpaid interest. In my limited capacity to understand it all it seems to require continued asset bubbbles to soakup the excess money. Many are calling for increased regulation again as the sytem has failed to protect it citizenry. Which may be a good thing but if we do not deal with our monetary system that needs continued expotential growth to prevent deflation can it be succesful?
"we need to turn to a foreign-born economist speaking in English as a second language on a Canadian TV channel"
That struck me too. The US bubblevision media is hardly interested in facing facts when they happen to paint a bearish picture. You will get a bear on a panel, normally outnumbered 3:1, always marginalized by the "sane" panelists, and never gets the final word.
So, talking yesterday with a lovely woman I work with and she announces now that housing prices have dropped, and there's some good bargains out there, she's looking to buy. A condo. In downtown Los Angeles. The most ridiculously over priced and over built neighborhood in all of LA.
What is wrong with people? And why do they have to find me to tell me about their schemes?
Spitzer said: "The real genius is CR, who still expects no recession or mild recession in the general economy."
ac said: "You know, I honestly think CR knows what he's saying.
I wish I had the temperament to argue that people need to be cautious, but we're not all going to die."
mp said: "No one, including the estimable CR, is going to stick their necks out on this one. There are certain thoughts that one keeps to one's self, assuming you don't want to be derided by every pump monkey on Wall St."
You guys are such kidders.
No recession, certainly no depression, never waivered in my conviction, always been unafraid to stick my neck out.
"we need to turn to a foreign-born economist speaking in English as a second language on a Canadian TV channel"
If you REALLY want to know what is going on in the U.S. then the U.S. media is the last place you should turn. There are entirely too many elite gatekeepers who control the flow of information.
I live in Mexico and for years have gotten much better information and analysis on the dismal condition of the U.S. economy in the Mexican press than what is offered in the U.S. press.
Of course if you want to find out what's going on in Mexico, that's a different matter.
You can take the Italian out of fascist Italy, but you can't take the fascism out of the Italian immigrant.
Seriously, anybody who buys a new car on time without a down payment is "under water" from the moment of purchase until the car loan is almost paid off. So why does being under water on a home loan call for government intervention?
And if foreclosures cause neighborhoods to become run down, thereby lowering other house prices, why is that a federal problem? State or local governments can and should take care of such problems without federal financial help. Sheesh! Doesn't anybody remember the 10th Amendment and what it means?
1st, no big deal only 22 online
Me, and 21 other losers on a Friday night
Some of us are still at work.
You know, booming economy and all...
So did Roubini have any new thoughts or predictions? I'll listen to it later but just curious if anyone has watched it.
CR, Thanks for the link.
Billy Shears,
- he calls for goverment intervention, otherwise prolong 2 yrs recession.
- to goverment: buy loans at discounted price from bankers, reduce the face value then sell to people, tax money to drain
- Repulicans don't realize severity of probelm, market can not correct itself
- he isn't as alone as last year, kidding ...
You will be stranded in a deserted small tropical island with an economist. You have a choice between Prof. Roubini and Prof. Shiller.
Which economist would you choose?
Mr Juncker warned that matters could get out of hand unless America took steps to halt the slide in the dollar.
Steps? Like what steps? You mean like a big rise in interest rates? I'm sure Ben will go for that. Bush too. LOL.
For some loser Friday night fun, load up on you favorite intoxicant and hit "play" on all three videos at once...
Videos are always a lousy way to convey news. I guess they exist because few people can read. The You Tube here plays over itself and the whole thing is chaotic. Worthless. If you want us to know what Roubini has to say, give us a text we can READ. At least I am capable of READING.
On Roubini's interview:
One thing that comes across immediately is the intelligence of the interviewer -- so different from the bimbos we have on the cable networks here.
Roubini himself is in top form, as usual.
Is he still a deflationist, I can't tell anymore.
I wish I could say Roubini was a nut.While I do think his proposals are the most sensible I have encountered,they have less chance than a snowball in Hell of being adopted.I don't like the proposals,but I believe they would have a good chance of working IF they could be implemented.
Roubini mentioned the possibility of a collapse in commodity prices so, yes, you could say he's a "deflationist."
Tom- "...I believe they would have a good chance of working IF they could be implemented."
It isn't going to happen, at least not in time. The US economy is in for one hell of a recession.
I just saw the McCulley post, so I wrote a poem about it:
What Im laying out is simply a bedrock principle: if you have access to the Feds discount window, the Fed should and will, I strongly believe have the power to supervise and regulate your business core capital requirements, risk management, liquidity management, et al.
It looks like we've gotten to the point where state control over private business (the "f word") is superior to responsible monetary policy.
And the institution that ignored all the past financial disasters created by inflationary monetary policy and went on to create the biggest disaster of all needs to run things.
No organization is more culpable in this mess than the Federal Reserve. No other organization has used money more destructively than the Federal Reserve.
They could have put a stop to all this in 1996 if they had simply managed the money supply in a responsible way and heeded the growing warning signs of a bubble economy.
Instead they repeatedly poured more gas on the fire.
The history books will look back at todays Federal Reserve as a towering monument to managerial and supervisory failure.
Yet the reward for being catastrophically negligent and incompetent is that you get to control "private" businesses and the money supply.
The fundamental problem here is not lack of regulation. The problem is that people who deal with paper promises for a living have begun interfering with the real economy and in the end can't help restructuring it in a way to benefit people who deal with paper promises for a living. This predictably ends in disaster, as it has time and time again throughout history.
It's no coincidence that paper dealers are pushing for more control over business by paper dealers.
Perhaps an iron grip by the Federal Reserve will somehow prevent a repudiation of wealth illusions that keep the giant financial parasite feeding off the real economy alive even while the host is starving. A financial dictatorship disguised as a government watchdog goes down much easier than a Wall Street bailout, and so long as that government guarantees inflation, the paper swappers can keep feeding off the efforts of genuine enterprise.
Remember, the people claiming they need to protect us from financial abuses did nothing when it really mattered.
But now that the damage is done theyre saying they really mean it this time, only they need to control private investment banks to do it. Just like they needed more control over the money supply to keep the economy stable before that.
Take a look around you to see how thats worked out so far.
The investment banks dont need to be regulated; they need to be liquidated.
The regulators dont need to be somewhere they can do even more damage; they need to be in the unemployment line.
The only solution to this problem is to get rid of the businesses and regulators that make things worse, and replace them with ones that dont.
mp: Roubini mentioned the possibility of a collapse in commodity prices so, yes, you could say he's a "deflationist."
This is an excerpt from an email that RGE Monitor sent out this morning:
Yet, the effect of high oil prices on consumers is a wildcard; will demand slow enough to cool prices? So far demand from China and other fast growing emerging markets has offset OECD demand drops, to the extent that Chinese crude oil imports reached an all-time in Q1.
He's not as sure of this deflation scenario as he used to be, I think.
Deflation in housing, financial yields, etc
Inflation in food, oil, etc
an inflationary deflationist
BTW, can somebody tell me what PIMCO actually does to contribute to the economy?
I mean do we really need a company that resells debt after scalping 1.5% off the top in an economy where growth averages 3% a year?
Man, if I could get that kind of racket going I'd be on CNBC begging for inflation all day.
bzb, I agree with you. He's not pushing as hard as he used to, perhaps because he's learned that he's at risk of earning the "Dr Doom" moniker.
Let's not forget that China is the wild card in all of this. Right now, it would not be good news to hear that the China bubble is popping.
This guy, Roubini, is not very intelligent. He is saying what everyone knows.
The real genius is CR, who still expects no recession or mild recession in the general economy.
Inflation is defined as an increase in the supply of money and credit.
Oil, food, and commodities are not inflation, they are being driven by supply and demand. Just because prices go up due to scarcity(or speculation of scarcity) does not make that "inflation".
While fractional reserve lending and looser credit (lower interest rates) could be inflational, so far they have not, because banks are not lending more, i.e creating more credit, they have reduced. The fed has performed only sterilized operations as well, AND the creation of money has actually been declining too in a year over year basis.
In short, there is nothing inflational going on.....yet. The consumer is being squeezed by high commodity and food prices, but this isnt real inflation, its just supply and demand, exacerbated by a horrible ethanol boondogle.
Deflation in housing, financial yields, etc
Inflation in food, oil, etc
an inflationary deflationist
Absolutely worst case scenario for the average person.
Who's on the winning end of this deal?
Some of us are still at work.
You know, booming economy and all...
Nemo | Homepage | 04.18.08 - 8:34 pm | #
Actually,no new trucks = fix the old = more work for me !!! Up until 6 months ago we would retire and replace the major repair jobs. Not now. 60+ hours a week is gonna get old real fast...
Chris
PIMCO is a diversified Registered Investment Adviser that specializes in fixed income instrument.
Like all other RIAs, they contribute to the economy by employing people and by adding secondary market liquidity to publicly registered investments.
The only solution to this problem is to get rid of the businesses and regulators that make things worse, and replace them with ones that dont.
ac, in a perfect world, that would be the way to go. I just don't want to live through the chaos that will intervene (likely for a very long time). There's already plenty of gangs around and so far the police keep them in check.
"Who's on the winning end of this deal?"
The nationally-chartered banks, just like the thirties, but maybe not as pronounced.
I was in Costco today, and person in front of me at the cash register was complaining about food prices and the cash rigerter person started complaining as well.
Then I said to myself "No, I am not the only one who see high food prices, there are others as well"
Chris | 04.18.08 - 8:58 pm
Single click to start the video. It's the double clicking that causes the overlay.
The real genius is CR, who still expects no recession or mild recession in the general economy.
You know, I honestly think CR knows what he's saying.
I wish I had the temperament to argue that people need to be cautious, but we're not all going to die.
I actually have a great deal of respect for his position even if I think we're heading into the next Great Depression.
Today I drove around Tucson and it was FILLED with cars. I would think high gas prices would reduce the number of cars out and about. Seem to do the opposite.
I think Roubini has become too optimistic, because he is now preaching govt. intervention to keep a recession from turning into a depression. His basic equation is that the govt. will do the right things in the right time frame and makes things better.
So far, the govt. has not shown much ability to do that. Even if they could, there's no assurance that intervention would make matters better long-term.
Roubini has made too much money being a bear to be as pessimisticly objective as he might. If he is too bearish, even the Canadians won't pay him, and then he won't get to take international junkets for free.
No one, including the estimable CR, is going to stick their necks out on this one. There are certain thoughts that one keeps to one's self, assuming you don't want to be derided by every pump monkey on Wall St.
ac, in a perfect world, that would be the way to go. I just don't want to live through the chaos that will intervene (likely for a very long time). There's already plenty of gangs around and so far the police keep them in check.
Life is fundamentally the confrontation of chaos. You can't avoid it; you can only postpone it or foist it onto somebody else.
We have the choice of facing economic misery, or the misery that comes from the accumulation of wealth in the hands of petty tyrants.
Do you want people like Jim Kramer and Larry Kudlow running things?
A bubble is simply a form of legalized mass robbery. It redistributes wealth from those who have a conscience to those who don't. It's a coup of sociopaths.
If that's not undone we're going to be beholden to these types.
You need to ask yourself seriously if a transient comfort is worth that price.
CR is a great blogger but he's not a great forecaster. He's been consistently too bullish on the economy, maybe in part because he is trying to be a balanced moderator.
Part of the problem the U.S. now has is Main St. vs. Wall St/Big Biz. All the trends are working against Main Street businesses and in favor of Wall St./Big Biz.
The Fed isn't going to bail out the Yohokus Savings Bank when it fails because it made too many loans to small biz up and down Main St. in Yohokus.
All of the trends the Fed is engineering are lethal to Main St. businesses and small/regional banks. CR has done his best work forecasting and illuminating the coming crisis in regional banks, not only because of CRE and construction loans but also because of sour small biz lending. But CR can't see that this trend will take years to play out and it will just be a slow death spiral for the U.S. economy. I don't know why he has this blind spot. He does sorta run a small biz.
Small biz and local lending is the lifeblood of the American economy, and the veins and arteries are clogged worse than they've been in decades. Many of the regulars here are better forecasters than CR, because they can see and feel the pain on Main St.
You will be stranded in a deserted small tropical island with an economist. You have a choice between Prof. Roubini and Prof. Shiller.
Who has more meat on their bones?
Ummm, economist!!!
CR is a great blogger but he's not a great forecaster. He's been consistently too bullish on the economy, maybe in part because he is trying to be a balanced moderator.
I think most human aspirations are far too optimistic.
But I think without this unrealistic perspective we wouldn't be able to create the things we do.
Most inventors fail. If they honestly assessed their chances we might still be living in trees.
Then I said to myself "No, I am not the only one who see high food prices, there are others as well"
wawawa | Homepage | 04.18.08 - 9:38 pm | #
Everyone I know is talking about food prices! Just walking around the store (discount store in a working class neighborhood) you see the tension on people's faces that wasn't there so much a few months ago. I've also seen more people eating their way through the store, and leaving peels/cores/wrappers around. They seem defiant, handing fruit to each of their children and just daring anyone to say anything to them.
It's changing out there.
Roubini said that commodity prices would fall 20-30% in a recession.
We need a Roubini v. Jimmy Rogers debate.
Roubini should stick to economics and spare us the bad political policy recommendations.
I've never even heard of this guy prior to his making the headlines with his bearish viewpoints this past year or so. Can someone tell me a bit more about him, prior to this sudden thrusting into the news-making limelight? Thanks.
rich writes:
I think Roubini has become too optimistic, because he is now preaching govt. intervention to keep a recession from turning into a depression. His basic equation is that the govt. will do the right things in the right time frame and makes things better.
I agree. Maybe hes looking for a job in 2009 at the White House.
Jim Rodgers is probably all tied up with his china position going south in a hurry. no time for him.
mp,
It's great to see wisdom. It even greater to recognize it when you see it.
No one in their rational mind will attempt to predict what might be coming for the world.
We just know pattens from the past. Our models are being destroyed by arbitrage. How can any certainty be attained? Any predictability?
This is why trust is at its lowest.
This is why it will take longer that most can even imagine.
How can trust be bought?
rich - very well said. Question though, how long can Wall Street keep climbing with Main Street suffering?
OT
This guy has to be smoking Crack!
Oil Rises to Record on Signs Stronger Economy May Boost Demand
Excerpt;
The real gloomy scenario has been sort of ameliorated with some of these very positive earnings and the indication that the worst is behind us,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York.There will be an uptick in energy demand with the renewed economic outlook for the second half of the year in particular.''
Oil Rises to Record on Signs Stronger Economy May Boost Demand - Bloomberg.com
rich writes:
I think Roubini has become too optimistic, because he is now preaching govt. intervention to keep a recession from turning into a depression. His basic equation is that the govt. will do the right things in the right time frame and makes things better.
Every economist aspires to rule the world by controlling the money supply of the most economically successful nation(s).
That's why the become economists.
So they come up with this mythology that they can make the world a better place by changing a certain number here or there.
People in other professions do exactly the same thing.
It's just that the economists have created a more convincing and relevant fairy tale, and they've gotten into a situation of control that makes this myth very dangerous.
BTW, I also think some government intervention is necessary... not to keep a recession from turning into a depression, but too keep a depression from turning into an economic collapse.
IMO we need to preserve the good things we've created and expel the rest. At some point when the US economy an instrument for general prosperity, then it's worth bailing out and saving etc.
But we've got a long way to go, I think.
Purge the rottenness, then help the people that genuinely want to contribute so they can contribute more.
Again, nothing wrong with the US economy that a 50% haircut in nominal GDP can't fix.
Hoover 2008
Just uploaded an mp3 version, for those who listen on the go:
http://drop.io/sacrealstats001
OT: Does Roubini sound like Dr. Nick Riviera to anyone but me? I laugh every time I hear the guy.
thanks max! I am working on in Aperture and appreciate the mp3
rich - very well said. Question though, how long can Wall Street keep climbing with Main Street suffering?
That's up to Main Street.
As long as people think there's someone in Washington looking out for them the looting will continue unimpeded.
Charities forced to do more with less
Charities lashed by surging demands and shrinking supplies
Food bank leaders says shortage is worst they've ever seen
Many people coming to charities are not homeless but working poor
Charities forced to do more with less - CNN.com
Topher writes:
This guy has to be smoking Crack!
Oil Rises to Record on Signs Stronger Economy May Boost Demand
Excerpt;
``There will be an uptick in energy demand with the renewed economic outlook for the second half of the year in particular.''
I think they're smoking crack laced with acid while they're mainlining draino...
BTW, pull up an S&P chart of May 2001. You'll see that it went up 18% in one month! You think there was talk of a second half rebound back then? You bet there was, but it didn't occur for another two years. Talk of a PC upgrade cycle, year-end budget flush, etc., kept the pump monkeys working. And that wasn't a consumer led recession with gas and food and mortgage payments going through the roof.
Re: hit "play" on all three videos at once...
The best idea of the day, and can't believe I found it here!
mp,
I am glad to see you posting regularly again. I very much enjoy reading your thoughts.
Cheers,
prat
ac,
Great poem. Thanks.
Anyone (everyone) familiar with Starve the Beast economics? George Bush's handlers are evil genuses. To them I say: you better watch what you wish for...
"You will be stranded in a deserted small tropical island with an economist. You have a choice between Prof. Roubini and Prof. Shiller. "
Strangely, my answer is Salma Hayak.
" I've also seen more people eating their way through the store, and leaving peels/cores/wrappers around. "
Interesting. I've seen that lately, just didn't think much about it.
"It's a coup of sociopaths."
ac | 04.18.08 - 9:52 pm
I think you have coined a phrase. Similar to a pack of weasels or a murder of crows.
In Section number 2 I had to play it back a few times to make sure he said that 6.6 Trillion (!) of equity would be wiped out. Couple that with what he said about the % contribution that mortgates have in the overall economy and we are going to be in a world of hurt. He is spot on but it doesn't jive with his opinion that there should continue to be a government bailoutin both private and public sector. Our government has already spent all it's money.
The fundamental problem here is not lack of regulation. The problem is that people who deal with paper promises for a living have begun interfering with the real economy and in the end can't help restructuring it in a way to benefit people who deal with paper promises for a living.
Thanks, ac. That elegant statement made my day!
Spitzer wrote:
This guy, Roubini, is not very intelligent. He is saying what everyone knows. snip
Spitzer | 04.18.08 - 9:32 pm | #
yeah spitzer
problem with your observation is...
Roubini was saying it years before everybody else was.
Nouriel Roubini's blog pointed me at CR...
roubini is the man.
thanks CR for the vid.
IrvineResident
your summary was on point...well done
JoeB writes:
I don't think Wall Street is climbing. I think we've entered the mother of all bear markets.
But if you think about it, the mother of all bear markets is going to be very long and in the end very deep. In the interim, there will be lots of twists and turns.
Wall Street as a dynamic force in the American economy is shot for at least a generation. It has almost no ammo left. The average Joe on the Street gave up on Wall Street awhile ago, and lately it's just been run by shysters and gamblers using borrowed money.
Wall Street is about to run into its worst nightmare, which is a combination of recession, higher taxes on biz, much tighter regulation, and an unwinding of vast amounts of speculation and leverage.
In the end, Main Street will be fine but Wall Street will be shot. You can restore capital,earnings and economic momentum. But it takes a lot longer to restore credibility and confidence of investors.
Wall Street stopped really caring about individual investors some years ago, except to fleece their money to prop up schemes like auction rate debt. They figured individuals weren't influential or powerful anyway.
They're about to find out just how influential millions of angry individual investors can be in clamoring for regulations, laws, lawsuits and investigations against Wall Street crooks.
You won't believe how many lawyers Wall Street's gonna need.
I love the side camera angles. Dystopia in profile.
Cinematic almost.
So cool, only a Canadian could think of it.
Blogging from a big convention... you know, here in the Pacific Northwest, according to an NPR story... we have dropped our gasoline consumption by 10 - 11 percent.
We of course, have all those socialistic experiments in mass transit, bike coops, and the like. Could be the reason. Demand could be more inelastic than in Tucson, where public transit stops running at six, and requires mass quantities of diesel.
I would LOVE to see a Roubini vs. Rodgers debate... I got a ton of money (for me) in Treasuries, keep resisting putting money in China, Hong Kong, etc... but it's getting late, and I'm wondering.
Something's wrong with Roubini's blog today - no one has been able to post a comment since around 4 this afternoon. Thought I'd see more of his regulars at this site because of that.
I've spent much of the last 3 days trying to rescue some of my mother's money from her (also elderly) financial adviser's good intentions and conservative caution. My mom has Alzheimer's, but this adviser is an old friend who has handled her money for the last 20 years. About a year ago I pleaded with her to pull the money out of stocks and put it somewhere safe. I was thinking treasuries and CDs. Found out 3 days ago that safe, to her, meant municipal bond funds and utilities. High yield muni bond funds, specifically.
Have you ever tried to convince a 70 year old (too young to remember the Depression) that muni bonds aren't safe? She kept saying that this recession (if it is one) is not bad at all, nowhere near as bad as 2001! I finally talked her into putting half into CDs and treasuries (which I had thought were safely locked in a year ago, when yields were higher). The other half remains in muni bonds and utilities, sacrificed to the God of Diversification.
I give up.
Yossarian -
Is a bike coop like a chicken coop?
Seriously, how does a bike co-op work?
Have you ever tried to convince a 70 year old (too young to remember the Depression) that muni bonds aren't safe?
I'll give you my life's work.
I promise.
Here's a piece of paper to prove it.
In case nobody noticed, the major indices are now sporting these healthy PE ratios:
Dow = 58
Russell2K = 54
Nasdaq = 29
S&P500 = 22
Source is the WSJ(
:
P/Es & Yields on Major Indexes - Markets Data Center - WSJ.com
I guess investors aren't listening to Rubini's story... Basically, the markets listed above have growth stock valuations in the face of everything Nouriel describes.
Unbelievable.
Again, I recommend reading this month's ContraryInvestor.com for some part of the explanation for this madness. (Hint: Deleveraging).
mb writes:
Inflation is defined as an increase in the supply of money and credit.
Well, close. It is necessary to include the rate of expansion of the economy. To maintain the more-or-less illusion of constant purchasing power (it isn't really because of changes in technology), the money supply is supposed to track the economy.
Which is why the money supply SHOULD be contracting right now, but the question isn't whether it is contracting, but whether it is contracting at the same rate as the economy.
To make it obnoxiously complex, we now have to take into account the collapse of all that joyful Keynesian endogenous money as the mortgage defaults work their way through the (just slightly dysfunctional) system.
Every economist aspires to rule the world by controlling the money supply of the most economically successful nation(s).
That's why the become economists.
ac
With all due respect, that's more than a bit hyperbolic. I, myself, have studied economics, but as a means of understanding the world, not ruling it.
I have no aspirations for Total World Domination. I'm not even a Republican. And I think there are a lot more economists like me than like George Bush.
mp writes: No one, including the estimable CR, is going to stick their necks out on this one. There are certain thoughts that one keeps to one's self, assuming you don't want to be derided by every pump monkey on Wall St.
(Very OT) Did somebody say trunk monkey?
(Hey, it's officially the weekend, and we needed some Midwestern humor after a full dose of Roubini...)
Suecris:
Well, there are a couple of bike coops (ok, co-ops) here in Portland.
They are basically small non profits with retail storefronts. They're typically run by twentysomethings, although late fortysomethings like me are quite welcome... they're bike shops run by people more interested in bicycles, than making profits on selling new bikes. They are the highest quality and best places to do your bike business. Bought all my family's bikes at the co-ops.
The co-ops do a lot of repair work, sell new and used parts. Portland is I think still the number one bicycling city in the US. Pales compared to the world in general... but very common to see scores of bikes being ridden.... TO WORK and back!!
For a major American city, it's quite impressive. There are even minor bicycle traffic jams during rush hour. It's a culture thing.
But not all is perfect in Oregon, transit-wise. Our gasoline use is down 10 percent. But.. I live and work in a small farmtown between Salem and Portland.. we still have a little downtown, but the last bike shop closed two years ago. Killed by Walmart.
Nice interviews, and yes he does sound like Nick Rivera.
I'm confused, though: why didn't the interviewer ask Roubini why he wasn't wearing a flag lapel pin? How can we trust him if he's not wearing one? Doesn't that mean he secretly hates America?
I'm confused, though: why didn't the interviewer ask Roubini why he wasn't wearing a flag lapel pin? How can we trust him if he's not wearing one? Doesn't that mean he secretly hates America?
Don
Yes.
This has been another edition of simple answers to simple questions.
I assume this terminology is used in every town across the country, but I just have to laugh anyhow. Three houses in my immediate neighborhood have been on the market for many months, and all the "for sale" signs disappeared for a while during the winter. Now they've reappeared with small signs on top saying "New Price." I guess it was just too damn hard to say "Reduced Price." Perhaps they think the latter lends an air of downscale desperation while the former somehow maintains a sense of dignity and upscale respect. Seems like being a relitter is essentially an elaborate exercise in slathering lipstick on a very ugly pig.
"The history books will look back at todays Federal Reserve as a towering monument to managerial and supervisory failure."
Unless, of course, Ben, Al and their merry band of money printers are the ones who write the books.
Who needs an economy with all its problematic sectors when we have the stock market to make us all rich. Seems like the neoconomists were right all along. If we can hit a 100% unemployment rate the DOW will surely be at least 100,000. of course the dollar won't be worth all the pretty ink they use to print the bills.
It looks like we've gotten to the point where state control over private business (the "f word") is superior to responsible monetary policy.
No, you've got it backwards. The "f" word is private business controlling the state.
Deflation in housing, financial yields, etc
Not sure if you meant to say it, but a drop in financial yields is asset inflation.
If the price of housing (or other assets) goes down - asset deflation - its yield goes up.
Now just what were you trying to say?
A nice, serious interview, the likes of which U.S. TV spends billions in order to avoid.
It's fun hearing Roubini allude to social costs. Well, 'fun' isn't the word, exactly. But the social costs are all but absent from American discussion, even as they begin to pile up.
So, let's say it's intriguing that for any consideration of the pain being wrought by our deranged Reaganist system, we need to turn to a foreign-born economist speaking in English as a second language on a Canadian TV channel.
How's that for ensuring Bubba stays stoopid?
Dear Forum,
One simple question I ask myself in regards to the growth of the economy is, "Who has any money?"
If credit is not accessible, that means people have to make purchases with disposable income. With inflation on necessities and wages stagnant, this is obviously getting strained. This will eventually affect behavior and retrenchment will occur. Rising unemployment will also act as a catalyst for this if it were to continue rising. My advice is focus on what is happening to money, the kind you fold and put in your wallet.
wow. just finished watching the vids.
the most interesting part for me was when Nouriel did the Smack Down to Canada.
The announcer basically asked "will Canada do ok though?" and Nouriel said "No way" and then listed 4 reasons why Canada will get slaughtered as well.
then the announcer gave a bunch of reasons why Canada will do fine... I thought Nouriel would contradict him, but he didn't.
I don't know- I think the FED will reflate the economy in the second half- in time for the election- the stock market seems intent on rising like in 1998-however I doubt there will be any kind of strong growth really-it will purely be chimerical- the real growth will pick up in 2009- igniting inflation, and prompting the FED to swiftly raise interest rates. This will really crash the economy in 2010.
Anyone who elected President is probably going to be dead meat. This slowdown was merely a prelude- it has been stopped for the moment by Bernanke's reckless behavior- but as well all know the postman always rings twice. The real recession will be a doosy.
Yogurt - "No, you've got it backwards. The "f" word is private business controlling the state."
You should consider moving to a different country. Like North Korea or Cuba. This country was founded by capitialists to control their own government.
I have been trying to figure why we have a Fed at all. If we are going to be stuck we the repercussions of fiat money why not just have the Treasury issue it instead of borrowing it from the Fed. I guess the borrowing was suppose to be the brake on the issuing of money. If business did not have a legititmate demand for it they would not borrow. Having to pay the interest back meant business would be very careful to make sure that their borrowing was legitimate. A natural growing economy (goods & services) would keep the necessary expansion of money to repay the interest generated in check (instead of having inflation.) However the expansion of the amount of money in the system has to be expotential to cover the unpaid interest. In my limited capacity to understand it all it seems to require continued asset bubbbles to soakup the excess money. Many are calling for increased regulation again as the sytem has failed to protect it citizenry. Which may be a good thing but if we do not deal with our monetary system that needs continued expotential growth to prevent deflation can it be succesful?
"we need to turn to a foreign-born economist speaking in English as a second language on a Canadian TV channel"
That struck me too. The US bubblevision media is hardly interested in facing facts when they happen to paint a bearish picture. You will get a bear on a panel, normally outnumbered 3:1, always marginalized by the "sane" panelists, and never gets the final word.
That's what Faith based media get you.
Why me?
So, talking yesterday with a lovely woman I work with and she announces now that housing prices have dropped, and there's some good bargains out there, she's looking to buy. A condo. In downtown Los Angeles. The most ridiculously over priced and over built neighborhood in all of LA.
What is wrong with people? And why do they have to find me to tell me about their schemes?
Spitzer said: "The real genius is CR, who still expects no recession or mild recession in the general economy."
ac said: "You know, I honestly think CR knows what he's saying.
I wish I had the temperament to argue that people need to be cautious, but we're not all going to die."
mp said: "No one, including the estimable CR, is going to stick their necks out on this one. There are certain thoughts that one keeps to one's self, assuming you don't want to be derided by every pump monkey on Wall St."
You guys are such kidders.
No recession, certainly no depression, never waivered in my conviction, always been unafraid to stick my neck out.
Sebastia
There is no comparison between this interviewer and the ones from CNBC, or even FOX business.
"we need to turn to a foreign-born economist speaking in English as a second language on a Canadian TV channel"
If you REALLY want to know what is going on in the U.S. then the U.S. media is the last place you should turn. There are entirely too many elite gatekeepers who control the flow of information.
I live in Mexico and for years have gotten much better information and analysis on the dismal condition of the U.S. economy in the Mexican press than what is offered in the U.S. press.
Of course if you want to find out what's going on in Mexico, that's a different matter.
Kudos ac and many others.
You can take the Italian out of fascist Italy, but you can't take the fascism out of the Italian immigrant.
Seriously, anybody who buys a new car on time without a down payment is "under water" from the moment of purchase until the car loan is almost paid off. So why does being under water on a home loan call for government intervention?
And if foreclosures cause neighborhoods to become run down, thereby lowering other house prices, why is that a federal problem? State or local governments can and should take care of such problems without federal financial help. Sheesh! Doesn't anybody remember the 10th Amendment and what it means?