Messrs. Fisher and Plosser dissented because, in light of heightened inflation risks, they favored easing policy less aggressively. Incoming data suggested a weaker near-term outlook for economic growth, but the Committee's earlier policy moves had already reduced the target federal funds rate by 225 basis points to address risks to growth, and the full effect of those rate cuts had yet to be felt. While financial markets remained under stress, the Federal Reserve had already taken separate, significant actions to address liquidity issues in markets. In fact, Mr. Fisher felt that focusing on measures targeted at relieving liquidity strains would improve economic prospects more quickly and lastingly than would further reductions in the federal funds rate at this point; he believed that alleviating these strains would increase the efficacy of the earlier rate cuts. Both Messrs. Fisher and Plosser were concerned that inflation expectations could potentially become unhinged should the Committee continue to lower the funds rate in the current environment. They pointed to measures of inflation and indicators of inflation expectations that had risen, and Mr. Fisher stressed the international influences on U.S. inflation rates. Mr. Plosser noted that the Committee could not afford to wait until there was clear evidence that inflation expectations were no longer anchored, as by then it would be too late to prevent a further increase in inflation pressures.
energy,
I think all these models are useful only as historical assessment tools. They are fun to muse with in predicting the future, but are not workable tools due to their unreliability.
If they did work predicably and could outsmart an free and open market, a person of modest means could use leverage to make themself extraordinary wealth, probably quickly.
I've said it before. I believe a random survey of various retailers, especially cash intensive (i.e.: dry cleaners, gas stations, convenience stores), would yield better predictions.
[When asked whether he predicts a dollar crisis,'' Volcker said,you don't have to predict it, you're in it.']
Priceless. If we could only have a Fed Chair with some testosterone we might actually emerge from the hole we keep making deeper by artificially stimulating asset prices at every turn. There is no vaccine that prevents asset price declines. They are a normal element of an economic cycle. We happen to have a supercycle to unwind, but so what?
I looked at a Deutsche Bank REO yesterday. The foreclosed owner bought it for $89k. Last year's tax assessment was $90.3k.
Deutsche Bank appears to have bought it at auction for $75k. The bank is asking $75k.
It had been stripped. Range gone, lighting fixtures removed, hardware taken from cabinet doors. Mold on wall. All this in addition to the usual broken windows, trashed floor and wall coverings, dead lawn, etc.
No way it sells for more than $50k. If this is at all typical of the discount that mortage holders are going to have to take, they're in trouble.
"Since TIPs have gotten too expensive, I'm thinking of buying 100,000 Forever stamps from the Postal Service... Any other ideas?
Bob_in_MA | 04.08.08 - 2:31 pm | #
mock turtle responds:
ive said it before...presently im into manure ! that's right
hey during the depression and world war II my grandparents had a "victory garden"
it's time for people to OWN a patch of land where they can grow a large garden.
im not saying its gonna get that bad but it might and besides the exercise if you are middle age or older will do ya good.
(this compliments the bonds, coins, CDs and improves sleep at night)
PPI rose at 6.3% rate in 2007. CPI rose at a 4.1% rate in 2007.
Why are we cutting the fed funds rate? In the early 70s, Nixon introduced price controls in the face of a 4% CPI. Mind you, the CPI in the 70s was not as sterilized as it is today.
Is it any wonder the American middle class is shrinking?
From March 10-"Most participants concluded that offering this facility was an appropriate step that could help alleviate pressures in the financing markets for Treasury and some mortgage-backed securities. By improving conditions in funding markets, the measure was expected to help restore the functioning of financial markets more generally and thereby promote the effective conduct of monetary policy as well as macroeconomic stability. During the discussion, participants expressed concerns that establishment of the facility could be viewed as setting a precedent and thus raise expectations of other actions in the future, and they also noted some uncertainty about how effective the facility would be in practice."
Who dissented? The minutes are definitely unclear here.
Now they are starting to worry about moral hazard and a Bernanke Put.
If I was a non US based investor in financials, I would be selling everything right now. This is prima facie evidence that the credit crisis is far from contained, and more and more bad news is just below the horizon.
Since TIPs have gotten too expensive, I'm thinking of buying 100,000 Forever stamps from the Postal Service... Any other ideas?
Darn. I've been waiting to pull the trigger on the Forever Stamp maneuver, and I may have waited too long. I better get down to the post office right now before lines develop and they run out of stamps.
The only thing that's been stopping me is that the original Ponzi scheme (developed by the great Charles Ponzi himself) involved postage.
Students of postal history may be interested in what your mail could look like in a period of hyperflation. Just go to e-bay to the stamp-collecting section and search "inflation cover" for some interesting examples.
Where are "Black Helicopter" paranoids who claimed Clinton was going to take over with the UN when you need 'em? Those guys need to keep their furtive military-issue field glasses aimed skyward looking out for squadrons of choppers with that green confetti cascading out.
Got popcorn? This would seem to heading to a round of capital flight - almost inevitably given the Fed actions to date - with the potential for a non-linear dislocation (cue "whocoodanode?")...
lama,
You are spot on as usual, models work until they don't - or rather, reality presents circumstances that violate the modeling assumptions - just having a bit of fun with one of our resident sunshine boyz.
Good quality firearms and fishing tackle tend to increase in value in an inflationary environment. And if we get a depression, they're good for putting meat on the table...
The US economy would be better off, I believe, if these bureaucrats went out and got real, productive jobs for a change. The Chairman apparently hasn't worked or functioned outside of Academia or The Government since his college days.
Mr. Foster: [Mr. Foster is reading out the class grades] Miss Rogers, A, Mr. Haskell, B+, Mr. Cleaver, A-, Mr. Rutherford, F.
Clarence 'Lumpy' Rutherford: An ?F?, Mr. Foster?
Mr. Foster: Yes, Mr. Rutherford. It's the lowest grade they allow me to give.
Eddie Haskell: [Beaver thinks he isn't going to graduate from 8th grade] Hey, that's tough, kid. Let me think. Maybe I can help you figure a way out of this.
Wally Cleaver: Listen, Beav. At this point, I don't think you want to be taking advice from Eddie.
Eddie Haskell: Are you kidding? I've been in an out of every kind of trouble there is in school.
All these convoluted schemes to maintain asset values (stocks, houses, etc.) are counter-productive. Stagnant incomes, negative real interest rates & increasing inflation are decimating the lower four income quintiles.
The income situation is actually really scary when government jobs and the top 5% are excluded.
I bought a load of 'forever stamps' last year. They are already up over 5% (postal increase from .39 to .41). Far from my worst return over the period.
Geithner is clearly a puppet for wall street. Bernanke is a true believer with great academic credentials, but no real world experience.
Bernanke lacks common sense and good judgement. Bernanke just doesn't understand basic human behaviour. He appears to have hindsight, unfortunately, he also needs foresight.
Wonder why the banks and builders are getting crushed today?
[WASHINGTON -(Dow Jones)- The White House said it can't back the proposal being considered by the Senate to address the housing crisis.
"The bill would likely do more harm than good by bailing out lending and speculators and passing on costs to other Americans who play by the rules and honor their mortgage debt obligations," White House spokeswoman Dana Perino said Tuesday.]
"The bill would likely do more harm than good by bailing out lending and speculators and passing on costs to other Americans who play by the rules and honor their mortgage debt obligations," White House spokeswoman Dana Perino said Tuesday.]
Wait. Just. One. Second.
Did the White House just say something that I agree with?!
energyecon said: "C'mon Seb - turn around those hysterical Fed governors - whup them upside the head with the ol' Wright Model B!"
Bunch of Nancy-boys. They'll get head-faked on this "recession", then won't know what hit them when the real one comes along..."hey, it was worse than this before and there wasn't a recession.":)))
trail writes:
Good quality firearms and fishing tackle tend to increase in value in an inflationary environment. And if we get a depression, they're good for putting meat on the table...
trail | 04.08.08 - 3:04 pm
One of the few things I know about my father (he passed away when I was 2): He refused to eat fish, because as a boy, during the GD, he ate nothing but catfish from the local river (in KY).
Good luck with that, today. The Potomac River, arguably the greatest natural fishery on the East coast of the US, now has male fish growing ovaries and producing eggs due to some kind of funky industrial pollution, the source of which no one can pinpoint (it seems to be somewhere in WV).
If you're a male, and you plan to eat these fish, you should probably stock up on lady's undergarments and other "supplies" while the gettin' is good.
NEW YORK, April 8 (Reuters) - Spanish language broadcaster Univision Communications on Tuesday drew down $700 million of a $750 million revolving credit line to access liquidity as banks begin to tighten lending standards, sources told Reuters Loan Pricing Corp
Wait. Just. One. Second.
Did the White House just say something that I agree with?!
OMG I think I just entered some sort of weird parallel universe where the current political regime made sense in a public statement....please let me know when they get back to the usual make-believe universe we're been living in for almost 8 years...
trail said: "Good quality firearms and fishing tackle tend to increase in value in an inflationary environment. And if we get a depression, they're good for putting meat on the table..."
Not sure how that would work in an urban environment. I don't think I'd be down with cannibalism and the lakes around here aren't well-stocked.
There will be a prolonged downturn......BMW and Mercedes sales will drop about 5% over the next 6 months until the economy can find some tracking.
Also, restaurants will only be about 97% full and families ordering appetizers will probably cut back by 1%.
It's gonna be rough until the end of the year when the economy will magically get back to 4-6% GDP growth and hedge fund managers can rightfully claim their tens of billions of dollars worth of bonuses........then it will once again be good times for all!!!!
Swap Authorizations.
The Federal Open Market Committee directs the Federal Reserve Bank of New York to increase the amount available from the System Open Market Account under the existing reciprocal currency arrangement ("swap" arrangement) with the European Central Bank to an amount not to exceed $30 billion. Within that aggregate limit, draws of up to $15 billion are hereby authorized. The current swap arrangement shall be extended until September 30, 2008, unless further extended by the Federal Open Market Committee.
The Federal Open Market Committee directs the Federal Reserve Bank of New York to increase the amount available from the System Open Market Account under the existing reciprocal currency arrangement ("swap" arrangement) with the Swiss National Bank to an amount not to exceed $6 billion. Draws are authorized up to the full amount of the swap. The current swap arrangement shall be extended until September 30, 2008, unless further extended by the Federal Open Market Committee
The forecast for core PCE price inflation over the first half of 2008 was raised in response to elevated readings in recent months. In addition, the forecast for headline PCE price inflation incorporated a much higher rate of increase for energy prices for the first half of the year; as a result, headline PCE price inflation was expected to substantially exceed core PCE price inflation in 2008. By 2009, the forecasts for both the headline and core PCE price indexes showed inflation receding from its 2008 level, in line with the previous forecasts.
yes, investment bankers are oily, RE agents a bit gamey now, and service sector employees have no meat on them because of low pay/bad nurtition (especially the WalMart ones). Former hedgies might still be plump though...
Sebastian, "Not sure how that would work in an urban environment"
I know! You could grind up your NEW shares into dust, mix with water and yeast, and watch in amusement as your NEW shares go UP!. Then feed your famiy, to boot!
some favorite quotes from the march 18, 08 fomc meeting...
"In their discussion of the economic situation and outlook, FOMC participants noted that prospects for both economic activity and near-term inflation had deteriorated in view of increasingly fragile financial markets and tighter credit conditions, rising prices for oil and other commodities, and the deepening contraction in the housing sector .(snip)
Stresses in financial markets had intensified noticeably since the January meeting. Several meeting participants noted that price discovery for mortgage-related financial assets had become increasingly difficult in an environment of declining house prices and considerable uncertainty as to the ultimate extent of such declines. (snip)
Several participants noted that the problems of declining asset values, credit losses, and strained financial market conditions could be quite persistent, restraining credit availability and thus economic activity for a time and having the potential subsequently to delay and damp economic recovery.
Participants noted that the contraction in the housing sector had deepened and that considerable uncertainty surrounded the outlook for housing. (snip )Elevated rates of foreclosures and large inventories of unsold property were likely to depress home prices for some time.
(snip)
With the exception of the February report on consumer prices, readings on inflation had generally been elevated. Agricultural prices were rising at a substantial clip, partly in response to strong global demand, lean supplies, and a lower foreign exchange value of the dollar. Other commodity prices also were climbing rapidly, and crude oil prices were near record levels. Several participants stated that business contacts had emphasized that their input costs were rising and that they were seeking to pass on higher costs to their customers." (snip)
Are you suggesting that if the principal counterparties to a failed financial institution were ultrashorts, there wouldn't be federal intervention to save them?
From our friend Wik: "Evidence that an adverse feedback loop was under way, in which a restriction in credit availability prompts a deterioration in the economic outlook that, in turn, spurs additional tightening in credit conditions, was discussed. Several participants noted that the problems of declining asset values, credit losses, and strained financial market conditions could be quite persistent, restraining credit availability and thus economic activity for a time and having the potential subsequently to delay and damp economic recovery.
Re: In the end, built-in inflation involves a vicious circle of both subjective and objective elements, so that inflation encourages inflation to persist. It means that the standard methods of fighting inflation using either monetary policy or fiscal policy to induce a recession are extremely expensive, i.e., meaning large rises in unemployment and large falls in real gross domestic product. This suggests that alternative methods such as wage and price controls (incomes policies) may be needed as complementary to recessions in the fight against inflation.
Re: Keynesians argue that in a modern industrial economy, many prices are sticky downward or downward inflexible, so that instead of prices falling in this story, a supply shock would cause a recession, i.e., rising unemployment and falling gross domestic product. It is the costs of such a recession that likely causes governments and central banks to allow a supply shock to result in inflation. They also note that though there was no deflation in the 1980s, there was a definite fall in the inflation rate during this period. Actual deflation was prevented because supply shocks are not the only cause of inflation; in terms of the modern triangle model of inflation, supply-driven deflation was counteracted by demand pull inflation and built-in inflation resulting from adaptive expectations and the price/wage spiral."
We've been in a downturn since 2000. You really can't count the last 7 years of war, deficit spending and mortgage shenanigans as prosperity.
Oh snap.. Well played.
All this time I thought we were creating value when it was all just an illusion. Now I know what Americans felt like during the Panic of 1837 and the years following.
I remember reading many years ago that during the post World War I '20s, a German investor bought a rail car full of tooth brushes, which he sold periodically to feed his family for the duration of the hyper inflation experienced in Germany during that period. Of course, the hyper inflation was induced intentionally by the German Government to escape War Reparation Debts. The US government would never intentionally induce hyper inflation. Right? Please say I'm right.
I agree, Interesting Times. I think there is growing realization on the Fed that interest rate cuts do zilch for liquidity and solvency problems and zilch for inter-bank paranoia problems. They are for long-term effects on a declining economy. They have been applied appropriately and now it is time to wait and see.
It isn't that these guys are dumb or imperceptive as much as it is that they are in a highly charged political and economic environment. It is hard to keep your perspective when everybody with money or power is screaming at you.
Yeah, wow on the video. But to be strictly accurate, those people aren't vandals. They didn't destroy property for fun, but rather to get their $50 worth of copper.
On Bush opposing the bailout: my husband would say that even a blind squirrel finds a nut sometimes.
Are you suggesting that if the principal counterparties to a failed financial institution were ultrashorts, there wouldn't be federal intervention to save them?
Yalt- well those guys are European right? Maybe the ECB will get bail-out fever and make my question moot. Funny thing is, I bet there wouldn't even be outrage if the Fed started bailing out foreign banks too.
I realize some of you live in those toxic, polluted cities and you're right, there's not much hope for you - but here in the piney woods, the water still runs clean and the squirrels haven't taken on the rat-like characteristics of the ones in the cities. Plus we make some mighty fine firewater from the mountain brooks.
Anybody want to join me in building a back yard shot tower?
RThomas said: "...Of course, the hyper inflation was induced intentionally by the German Government to escape War Reparation Debts..."
Which was the only course left to Germany, since the victors of WWI either confiscated or severely hampered German industrial capacity. It was faced with re-paying a crushing debt that the debtors wouldn't allow it to work off.
The U.S. isn't in that situation, as we clearly have plenty of money-making opportunities open to us.
So, please, no more faulty comparisons of future U.S. inflation prospects and Weimar Germany.
Of course, our hyper inflation will be induced unintentionally by the US Government as a result of a debt-based, fiat money economic policy. Unlike Weimar Germany in its cause, but identical in its effect. Unless it's deflationary and brought about by the same short-sighted policies.
trail writes:
I realize some of you live in those toxic, polluted cities and you're right, there's not much hope for you - but here in the piney woods, the water still runs clean and the squirrels haven't taken on the rat-like characteristics of the ones in the cities. Plus we make some mighty fine firewater from the mountain brooks.
Anybody want to join me in building a back yard shot tower?
Don't ferget that them squirrels is mighty fine eatin', too!
I have collected almost 3k in wheel weights. Its still in a buddys pole building in Ohio. I sure am not looking forward to moving it here this year!
When I do the initial smelt to smaller hockey puck sizes I do wear a respirator. Not so much on the final casting(mainly .45acp).It probably explains alot.
Yeah, in a couple of years, you'll have a million or so hungry people taking you up on the offer, whether you like it or not.
Marcus Aurelius | 04.08.08 - 4:30 pm | #
I've always told my co-workers - when flying together - that if we go down in a remote area and I survive and they don't (as in the "Alive" scenario), that I'll have no problem eating their remains. I won't even wait to get hungry. I'll do it if I think I might miss lunch. Especially my fat friend, Dave (ribs!). I'll have to remember to pack the Tabasco, in the future.
While the White House might be correct for once in opposing something stupid, we still don't see any actual productive proposals emanating from therein.
OMG! And my sister owns one of the most expensive houses in Dayton.
Rob Dawg | Homepage | 04.08.08 - 3:22 pm | #
Not hard to do. I have a 3/4 bedroom 2.5 bath classic 4 square craftsman house on a standard city lot that I bought in 04 for $68K. Serves as a cheap base when I see the kids. House next door is a REO (not as nice) on the market for $20K now. A few houses in the Oregon district might be in the $250K range. However anyone with any month in Dayton lives in Oakwood, Centerville, Beavercreek, Springboro or West Kettering.
Thats what I have never understood. When it get that bad survival comes first. I'll worry later about how everyone survived.
You ever get to the Gulf coast you should make the pilgrimage to Avery Island...
energyecon | 04.08.08 - 5:03 pm | #
Yep,once my brother gets a little more time in and is on his two week off cycle I am gonna head that way for a short vacation. Mom and Dad said it was a blast...
"Since TIPs have gotten too expensive, I'm thinking of buying 100,000 Forever stamps from the Postal Service... Any other ideas?"
I just invested in a Winchester 94 .30-30 and 200 rounds. I figured I might need something faster (lever action) than the bolt action Weatherby .257 that has resided next to the nightstand for years.
All, check out the video of the day at the bottom of the posts. The vandals took everything from the REO including the kitchen sink!
Best to all
C'mon Seb - turn around those hysterical Fed governors - whup them upside the head with the ol' Wright Model B!
What a bunch of lagging indicators...
"In the kingdom of the blind, the one-eyed man (with a beard?) is king" - Desiderius Erasmus.
At Bloomberg: Volcker Says Fed's Bear Loan Stretches Legal Power
When asked whether he predicts a dollar crisis,'' Volcker said,you don't have to predict it, you're in it.''
Since TIPs have gotten too expensive, I'm thinking of buying 100,000 Forever stamps from the Postal Service... Any other ideas?
Ben & the rest of the governors, welcome to the US Economy! Glad you could join us.
They need to get with the nomenclature:
Its a severe and prolonged soft landing.
Messrs. Fisher and Plosser dissented because, in light of heightened inflation risks, they favored easing policy less aggressively. Incoming data suggested a weaker near-term outlook for economic growth, but the Committee's earlier policy moves had already reduced the target federal funds rate by 225 basis points to address risks to growth, and the full effect of those rate cuts had yet to be felt. While financial markets remained under stress, the Federal Reserve had already taken separate, significant actions to address liquidity issues in markets. In fact, Mr. Fisher felt that focusing on measures targeted at relieving liquidity strains would improve economic prospects more quickly and lastingly than would further reductions in the federal funds rate at this point; he believed that alleviating these strains would increase the efficacy of the earlier rate cuts. Both Messrs. Fisher and Plosser were concerned that inflation expectations could potentially become unhinged should the Committee continue to lower the funds rate in the current environment. They pointed to measures of inflation and indicators of inflation expectations that had risen, and Mr. Fisher stressed the international influences on U.S. inflation rates. Mr. Plosser noted that the Committee could not afford to wait until there was clear evidence that inflation expectations were no longer anchored, as by then it would be too late to prevent a further increase in inflation pressures.
The smartest guys in the room right there.
Sorry, Volcker at Bloomberg
energy,
I think all these models are useful only as historical assessment tools. They are fun to muse with in predicting the future, but are not workable tools due to their unreliability.
If they did work predicably and could outsmart an free and open market, a person of modest means could use leverage to make themself extraordinary wealth, probably quickly.
I've said it before. I believe a random survey of various retailers, especially cash intensive (i.e.: dry cleaners, gas stations, convenience stores), would yield better predictions.
[When asked whether he predicts a dollar crisis,'' Volcker said,you don't have to predict it, you're in it.']
Priceless. If we could only have a Fed Chair with some testosterone we might actually emerge from the hole we keep making deeper by artificially stimulating asset prices at every turn. There is no vaccine that prevents asset price declines. They are a normal element of an economic cycle. We happen to have a supercycle to unwind, but so what?
I looked at a Deutsche Bank REO yesterday. The foreclosed owner bought it for $89k. Last year's tax assessment was $90.3k.
Deutsche Bank appears to have bought it at auction for $75k. The bank is asking $75k.
It had been stripped. Range gone, lighting fixtures removed, hardware taken from cabinet doors. Mold on wall. All this in addition to the usual broken windows, trashed floor and wall coverings, dead lawn, etc.
No way it sells for more than $50k. If this is at all typical of the discount that mortage holders are going to have to take, they're in trouble.
Bob_In_Maine wrote
"Since TIPs have gotten too expensive, I'm thinking of buying 100,000 Forever stamps from the Postal Service... Any other ideas?
Bob_in_MA | 04.08.08 - 2:31 pm | #
mock turtle responds:
ive said it before...presently im into manure ! that's right
hey during the depression and world war II my grandparents had a "victory garden"
it's time for people to OWN a patch of land where they can grow a large garden.
im not saying its gonna get that bad but it might and besides the exercise if you are middle age or older will do ya good.
(this compliments the bonds, coins, CDs and improves sleep at night)
Prolonged?
We've been in a downturn since 2000. You really can't count the last 7 years of war, deficit spending and mortgage shenanigans as prosperity.
The FRB staff economists are predicting above average growth in GDP in 2009?
Look at the debt overhang, guys! Look at the increasing risk premium, guys! Look at consumer expectations, guys!
Clearly, there are differences of opinion about the data.
PPI rose at 6.3% rate in 2007. CPI rose at a 4.1% rate in 2007.
Why are we cutting the fed funds rate? In the early 70s, Nixon introduced price controls in the face of a 4% CPI. Mind you, the CPI in the 70s was not as sterilized as it is today.
Is it any wonder the American middle class is shrinking?
From March 10-"Most participants concluded that offering this facility was an appropriate step that could help alleviate pressures in the financing markets for Treasury and some mortgage-backed securities. By improving conditions in funding markets, the measure was expected to help restore the functioning of financial markets more generally and thereby promote the effective conduct of monetary policy as well as macroeconomic stability. During the discussion, participants expressed concerns that establishment of the facility could be viewed as setting a precedent and thus raise expectations of other actions in the future, and they also noted some uncertainty about how effective the facility would be in practice."
Who dissented? The minutes are definitely unclear here.
Now they are starting to worry about moral hazard and a Bernanke Put.
If I was a non US based investor in financials, I would be selling everything right now. This is prima facie evidence that the credit crisis is far from contained, and more and more bad news is just below the horizon.
I can hardly wait.
Someday this war's gonna end...
Since TIPs have gotten too expensive, I'm thinking of buying 100,000 Forever stamps from the Postal Service... Any other ideas?
Darn. I've been waiting to pull the trigger on the Forever Stamp maneuver, and I may have waited too long. I better get down to the post office right now before lines develop and they run out of stamps.
The only thing that's been stopping me is that the original Ponzi scheme (developed by the great Charles Ponzi himself) involved postage.
Students of postal history may be interested in what your mail could look like in a period of hyperflation. Just go to e-bay to the stamp-collecting section and search "inflation cover" for some interesting examples.
Where are "Black Helicopter" paranoids who claimed Clinton was going to take over with the UN when you need 'em? Those guys need to keep their furtive military-issue field glasses aimed skyward looking out for squadrons of choppers with that green confetti cascading out.
AllenM,
Got popcorn? This would seem to heading to a round of capital flight - almost inevitably given the Fed actions to date - with the potential for a non-linear dislocation (cue "whocoodanode?")...
lama,
You are spot on as usual, models work until they don't - or rather, reality presents circumstances that violate the modeling assumptions - just having a bit of fun with one of our resident sunshine boyz.
Good quality firearms and fishing tackle tend to increase in value in an inflationary environment. And if we get a depression, they're good for putting meat on the table...
The US economy would be better off, I believe, if these bureaucrats went out and got real, productive jobs for a change. The Chairman apparently hasn't worked or functioned outside of Academia or The Government since his college days.
Mr. Foster: [Mr. Foster is reading out the class grades] Miss Rogers, A, Mr. Haskell, B+, Mr. Cleaver, A-, Mr. Rutherford, F.
Clarence 'Lumpy' Rutherford: An ?F?, Mr. Foster?
Mr. Foster: Yes, Mr. Rutherford. It's the lowest grade they allow me to give.
Eddie Haskell: [Beaver thinks he isn't going to graduate from 8th grade] Hey, that's tough, kid. Let me think. Maybe I can help you figure a way out of this.
Wally Cleaver: Listen, Beav. At this point, I don't think you want to be taking advice from Eddie.
Eddie Haskell: Are you kidding? I've been in an out of every kind of trouble there is in school.
All these convoluted schemes to maintain asset values (stocks, houses, etc.) are counter-productive. Stagnant incomes, negative real interest rates & increasing inflation are decimating the lower four income quintiles.
The income situation is actually really scary when government jobs and the top 5% are excluded.
I bought a load of 'forever stamps' last year. They are already up over 5% (postal increase from .39 to .41). Far from my worst return over the period.
Geithner is clearly a puppet for wall street. Bernanke is a true believer with great academic credentials, but no real world experience.
Bernanke lacks common sense and good judgement. Bernanke just doesn't understand basic human behaviour. He appears to have hindsight, unfortunately, he also needs foresight.
Wonder why the banks and builders are getting crushed today?
[WASHINGTON -(Dow Jones)- The White House said it can't back the proposal being considered by the Senate to address the housing crisis.
"The bill would likely do more harm than good by bailing out lending and speculators and passing on costs to other Americans who play by the rules and honor their mortgage debt obligations," White House spokeswoman Dana Perino said Tuesday.]
http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20080408%5cACQDJON200804081352DOWJONESDJONLINE000684.htm&&mypage=newsheadlines&title=UPDATE:White%20House%20Says%20It%20Can't%20Support%20Senate%20Housing%20Bill
The hoarding is underway - stamps, rice in Asia, Bread &,grains in the Middle East, Oil in China, cash at U.S. banks.
Question to Tanta, please.
I think you mentioned a while ago that 30-year fixed only appeared when FNM got in business?
Since the late 1930, home owners generally took out 30-year fixed rate mortgages
Rosner on the Prospects for the Credit Markets (Not for the Fainthearted) « naked capitalism
Calculated Risk writes:
All, check out the video of the day at the bottom of the posts.
OMG! And my sister owns one of the most expensive houses in Dayton.
Where are "Black Helicopter" paranoids who claimed Clinton was going to take over with the UN when you need 'em?
LOL
CLINTON CRIME SYNDICATE EXILE TO ELEPHANT ISLAND: A MODEST PROPOSAL
OT from the CRL:
Steered Wrong: Brokers, Borrowers, and Subprime Loans
http://www.responsiblelending.org/pdfs/steered-wrong-brokers-borrowers-and-subprime-loans.pdf
"The bill would likely do more harm than good by bailing out lending and speculators and passing on costs to other Americans who play by the rules and honor their mortgage debt obligations," White House spokeswoman Dana Perino said Tuesday.]
Wait. Just. One. Second.
Did the White House just say something that I agree with?!
Rosner on the Prospects for the Credit Markets (Not for the Fainthearted)
Rosner on the Prospects for the Credit Markets (Not for the Fainthearted) « naked capitalism
barely, that news is almost too good to be true.
If Republicans keep up this 'backbone' stuff, they may actually have a chance this fall.
Back from my 4 martini cash out refi lunch. In an attempt to not stray off topic i will stick to the TIPs comments.
Anyone have any thoughts on <a href="http://biz.yahoo.com/bw/080319/20080319005763.html?.v=1
">this new Inflation Protected ETF?
"barely, that news is almost too good to be true"
I agree, but Tanta might feel otherwise.
Watched the vid - wow.
A question: Can banks park copper at the Fed window? It is after all a physical asset with a market value.
Don't be alarmed, it's the monkeys at the typewriters getting lucky.
energyecon said: "C'mon Seb - turn around those hysterical Fed governors - whup them upside the head with the ol' Wright Model B!"
Bunch of Nancy-boys.
They'll get head-faked on this "recession", then won't know what hit them when the real one comes along..."hey, it was worse than this before and there wasn't a recession.":)))
S.
trail writes:
Good quality firearms and fishing tackle tend to increase in value in an inflationary environment. And if we get a depression, they're good for putting meat on the table...
trail | 04.08.08 - 3:04 pm
One of the few things I know about my father (he passed away when I was 2): He refused to eat fish, because as a boy, during the GD, he ate nothing but catfish from the local river (in KY).
Good luck with that, today. The Potomac River, arguably the greatest natural fishery on the East coast of the US, now has male fish growing ovaries and producing eggs due to some kind of funky industrial pollution, the source of which no one can pinpoint (it seems to be somewhere in WV).
If you're a male, and you plan to eat these fish, you should probably stock up on lady's undergarments and other "supplies" while the gettin' is good.
O/T
Mo Cash Please:
NEW YORK, April 8 (Reuters) - Spanish language broadcaster Univision Communications on Tuesday drew down $700 million of a $750 million revolving credit line to access liquidity as banks begin to tighten lending standards, sources told Reuters Loan Pricing Corp
Some members ... thought it likely
Gee what reckless extremism. Better not to go out so far on limbs like this. LOL
YouTube
- The Coming Collapse of the Middle Class
After all the dilution, management bonuses, stock otion grants, earnings manipulation, fraud, etc., there really isn't much left for the investor.
All made more possible thanks to fed sponsored negative real interest rates.
The market is trying to rally. On what news and with whose money, I haven't a clue.
Wait. Just. One. Second.
Did the White House just say something that I agree with?!
OMG I think I just entered some sort of weird parallel universe where the current political regime made sense in a public statement....please let me know when they get back to the usual make-believe universe we're been living in for almost 8 years...
Who thinks the fed has any more power?
Say the Dow dropped 500, would another rate cut have any impact?
trail said: "Good quality firearms and fishing tackle tend to increase in value in an inflationary environment. And if we get a depression, they're good for putting meat on the table..."
Not sure how that would work in an urban environment. I don't think I'd be down with cannibalism and the lakes around here aren't well-stocked.
S.
There will be a prolonged downturn......BMW and Mercedes sales will drop about 5% over the next 6 months until the economy can find some tracking.
Also, restaurants will only be about 97% full and families ordering appetizers will probably cut back by 1%.
It's gonna be rough until the end of the year when the economy will magically get back to 4-6% GDP growth and hedge fund managers can rightfully claim their tens of billions of dollars worth of bonuses........then it will once again be good times for all!!!!
OT.
Rich or anyone else in Ultrashorts:
Are any of you guys concerned about counterparty risk? Someone posted the other day that the main counterparties are UBS and Credit Suisse.
If those guys went under, how would our shares be impacted?
Swap Authorizations.
The Federal Open Market Committee directs the Federal Reserve Bank of New York to increase the amount available from the System Open Market Account under the existing reciprocal currency arrangement ("swap" arrangement) with the European Central Bank to an amount not to exceed $30 billion. Within that aggregate limit, draws of up to $15 billion are hereby authorized. The current swap arrangement shall be extended until September 30, 2008, unless further extended by the Federal Open Market Committee.
The Federal Open Market Committee directs the Federal Reserve Bank of New York to increase the amount available from the System Open Market Account under the existing reciprocal currency arrangement ("swap" arrangement) with the Swiss National Bank to an amount not to exceed $6 billion. Draws are authorized up to the full amount of the swap. The current swap arrangement shall be extended until September 30, 2008, unless further extended by the Federal Open Market Committee
The forecast for core PCE price inflation over the first half of 2008 was raised in response to elevated readings in recent months. In addition, the forecast for headline PCE price inflation incorporated a much higher rate of increase for energy prices for the first half of the year; as a result, headline PCE price inflation was expected to substantially exceed core PCE price inflation in 2008. By 2009, the forecasts for both the headline and core PCE price indexes showed inflation receding from its 2008 level, in line with the previous forecasts.
I don't think I'd be down with cannibalism
yes, investment bankers are oily, RE agents a bit gamey now, and service sector employees have no meat on them because of low pay/bad nurtition (especially the WalMart ones). Former hedgies might still be plump though...
Sebastian, "Not sure how that would work in an urban environment"
I know! You could grind up your NEW shares into dust, mix with water and yeast, and watch in amusement as your NEW shares go UP!. Then feed your famiy, to boot!
some favorite quotes from the march 18, 08 fomc meeting...
"In their discussion of the economic situation and outlook, FOMC participants noted that prospects for both economic activity and near-term inflation had deteriorated in view of increasingly fragile financial markets and tighter credit conditions, rising prices for oil and other commodities, and the deepening contraction in the housing sector .(snip)
Stresses in financial markets had intensified noticeably since the January meeting. Several meeting participants noted that price discovery for mortgage-related financial assets had become increasingly difficult in an environment of declining house prices and considerable uncertainty as to the ultimate extent of such declines. (snip)
Several participants noted that the problems of declining asset values, credit losses, and strained financial market conditions could be quite persistent, restraining credit availability and thus economic activity for a time and having the potential subsequently to delay and damp economic recovery.
Participants noted that the contraction in the housing sector had deepened and that considerable uncertainty surrounded the outlook for housing. (snip )Elevated rates of foreclosures and large inventories of unsold property were likely to depress home prices for some time.
(snip)
With the exception of the February report on consumer prices, readings on inflation had generally been elevated. Agricultural prices were rising at a substantial clip, partly in response to strong global demand, lean supplies, and a lower foreign exchange value of the dollar. Other commodity prices also were climbing rapidly, and crude oil prices were near record levels. Several participants stated that business contacts had emphasized that their input costs were rising and that they were seeking to pass on higher costs to their customers." (snip)
Kevin:
Are you suggesting that if the principal counterparties to a failed financial institution were ultrashorts, there wouldn't be federal intervention to save them?
barely writes:
I know! You could grind up your NEW shares into dust, mix with water and yeast, and watch in amusement as your NEW shares go UP!
They're already going UP; up 9% today alone....
(From .011 to .012.)
mock, you missed one under your discovery post:
From our friend Wik: "Evidence that an adverse feedback loop was under way, in which a restriction in credit availability prompts a deterioration in the economic outlook that, in turn, spurs additional tightening in credit conditions, was discussed. Several participants noted that the problems of declining asset values, credit losses, and strained financial market conditions could be quite persistent, restraining credit availability and thus economic activity for a time and having the potential subsequently to delay and damp economic recovery.
Re: In the end, built-in inflation involves a vicious circle of both subjective and objective elements, so that inflation encourages inflation to persist. It means that the standard methods of fighting inflation using either monetary policy or fiscal policy to induce a recession are extremely expensive, i.e., meaning large rises in unemployment and large falls in real gross domestic product. This suggests that alternative methods such as wage and price controls (incomes policies) may be needed as complementary to recessions in the fight against inflation.
Re: Keynesians argue that in a modern industrial economy, many prices are sticky downward or downward inflexible, so that instead of prices falling in this story, a supply shock would cause a recession, i.e., rising unemployment and falling gross domestic product. It is the costs of such a recession that likely causes governments and central banks to allow a supply shock to result in inflation. They also note that though there was no deflation in the 1980s, there was a definite fall in the inflation rate during this period. Actual deflation was prevented because supply shocks are not the only cause of inflation; in terms of the modern triangle model of inflation, supply-driven deflation was counteracted by demand pull inflation and built-in inflation resulting from adaptive expectations and the price/wage spiral."
We've been in a downturn since 2000. You really can't count the last 7 years of war, deficit spending and mortgage shenanigans as prosperity.
Oh snap.. Well played.
All this time I thought we were creating value when it was all just an illusion. Now I know what Americans felt like during the Panic of 1837 and the years following.
I remember reading many years ago that during the post World War I '20s, a German investor bought a rail car full of tooth brushes, which he sold periodically to feed his family for the duration of the hyper inflation experienced in Germany during that period. Of course, the hyper inflation was induced intentionally by the German Government to escape War Reparation Debts. The US government would never intentionally induce hyper inflation. Right? Please say I'm right.
"The smartest guys in the room right there."
I agree, Interesting Times. I think there is growing realization on the Fed that interest rate cuts do zilch for liquidity and solvency problems and zilch for inter-bank paranoia problems. They are for long-term effects on a declining economy. They have been applied appropriately and now it is time to wait and see.
It isn't that these guys are dumb or imperceptive as much as it is that they are in a highly charged political and economic environment. It is hard to keep your perspective when everybody with money or power is screaming at you.
Yeah, wow on the video. But to be strictly accurate, those people aren't vandals. They didn't destroy property for fun, but rather to get their $50 worth of copper.
On Bush opposing the bailout: my husband would say that even a blind squirrel finds a nut sometimes.
RThomas,
Have you seen these fine toothbrushes that I'm selling here?
Yalt writes:
Kevin:
Are you suggesting that if the principal counterparties to a failed financial institution were ultrashorts, there wouldn't be federal intervention to save them?
Yalt- well those guys are European right? Maybe the ECB will get bail-out fever and make my question moot. Funny thing is, I bet there wouldn't even be outrage if the Fed started bailing out foreign banks too.
JS @ 3:30
Yeah. And April Fools Day is long past. Will wonders never cease?
I realize some of you live in those toxic, polluted cities and you're right, there's not much hope for you - but here in the piney woods, the water still runs clean and the squirrels haven't taken on the rat-like characteristics of the ones in the cities. Plus we make some mighty fine firewater from the mountain brooks.
Anybody want to join me in building a back yard shot tower?
RThomas said: "...Of course, the hyper inflation was induced intentionally by the German Government to escape War Reparation Debts..."
Which was the only course left to Germany, since the victors of WWI either confiscated or severely hampered German industrial capacity. It was faced with re-paying a crushing debt that the debtors wouldn't allow it to work off.
The U.S. isn't in that situation, as we clearly have plenty of money-making opportunities open to us.
So, please, no more faulty comparisons of future U.S. inflation prospects and Weimar Germany.
Sebastia
Anybody want to join me in building a back yard shot tower?
trail | 04.08.08 - 4:12 pm | #
I have plenty of lead...Got most before the big runup. I can reload pistol and rifle,nothing for shotgun yet...Never tried making my own shot.
Chris
Cobra - Me either - but it looks like a lot of fun - and think of the braggin' rights!
trail | 04.08.08 - 4:12 pm
Yeah, in a couple of years, you'll have a million or so hungry people taking you up on the offer, whether you like it or not.
One comment, lead fumes.
Mad as a hatter, and baked as a lead miner.
Somedays you guys should check out the association of backyard metal casters. Just don't say I sent ya.
Someday this war's gonna end...
Sebastian:
I fixed it:
Of course, our hyper inflation will be induced unintentionally by the US Government as a result of a debt-based, fiat money economic policy. Unlike Weimar Germany in its cause, but identical in its effect. Unless it's deflationary and brought about by the same short-sighted policies.
trail writes:
I realize some of you live in those toxic, polluted cities and you're right, there's not much hope for you - but here in the piney woods, the water still runs clean and the squirrels haven't taken on the rat-like characteristics of the ones in the cities. Plus we make some mighty fine firewater from the mountain brooks.
Anybody want to join me in building a back yard shot tower?
Don't ferget that them squirrels is mighty fine eatin', too!
Someday this war's gonna end...
AllenM | 04.08.08 - 4:35 pm | #
I have collected almost 3k in wheel weights. Its still in a buddys pole building in Ohio. I sure am not looking forward to moving it here this year!
When I do the initial smelt to smaller hockey puck sizes I do wear a respirator. Not so much on the final casting(mainly .45acp).It probably explains alot.
Chris
Um, CR, you might want to talk about the wanton damage in the ABX indices, yet again.
I note that a lot of the BBB stuff is trading at a 90%+ loss to the issue prices. How about that 45% loss in AAA paper?
Simply amazing folks.
Products and Services Overview
Um, where is the containment?
Someday this war's gonna end...
AllenM | 04.08.08 - 4:41 pm | #
Nothing like AAA at
50
53
66
84
Chris
--
Q: What terms are between mild and "severe and prolonged" when it comes to recessions.
Since CR claims to lie between these two he must have the answer.
Jas
Yeah, in a couple of years, you'll have a million or so hungry people taking you up on the offer, whether you like it or not.
Marcus Aurelius | 04.08.08 - 4:30 pm | #
Tabasco brand hotsauce. Makes anything edible.
Chris
Chris,
You ever get to the Gulf coast you should make the pilgrimage to Avery Island...
Cobradriver | 04.08.08 - 5:00 pm
Chris:
I've always told my co-workers - when flying together - that if we go down in a remote area and I survive and they don't (as in the "Alive" scenario), that I'll have no problem eating their remains. I won't even wait to get hungry. I'll do it if I think I might miss lunch. Especially my fat friend, Dave (ribs!). I'll have to remember to pack the Tabasco, in the future.
I'm thinking of buying 100,000 Forever stamps from the Postal Service
The USPS was said to have stockpiled 5-billion Forever Stamps in preparation for the investor rush.
Spatula, meet economy....
While the White House might be correct for once in opposing something stupid, we still don't see any actual productive proposals emanating from therein.
OMG! And my sister owns one of the most expensive houses in Dayton.
Rob Dawg | Homepage | 04.08.08 - 3:22 pm | #
Not hard to do. I have a 3/4 bedroom 2.5 bath classic 4 square craftsman house on a standard city lot that I bought in 04 for $68K. Serves as a cheap base when I see the kids. House next door is a REO (not as nice) on the market for $20K now. A few houses in the Oregon district might be in the $250K range. However anyone with any month in Dayton lives in Oakwood, Centerville, Beavercreek, Springboro or West Kettering.
Marcus Aurelius | 04.08.08 - 5:06 pm |
Thats what I have never understood. When it get that bad survival comes first. I'll worry later about how everyone survived.
You ever get to the Gulf coast you should make the pilgrimage to Avery Island...
energyecon | 04.08.08 - 5:03 pm | #
Yep,once my brother gets a little more time in and is on his two week off cycle I am gonna head that way for a short vacation. Mom and Dad said it was a blast...
Chris
So they are concerned now? What were they before?
In the real world, Marlo Stanfield walks.
GWB: "I am for a strong dollar."
America: "The dollar is not strong. If you shopped for yourself you would know we are in a crisis."
GWB: "I am for a strong dollar."
America: "Just because you say it doesn't mean its true."
GWB: "I am for a strong dollar."
America: "..."
Bob_In_Maine wrote
"Since TIPs have gotten too expensive, I'm thinking of buying 100,000 Forever stamps from the Postal Service... Any other ideas?"
I just invested in a Winchester 94 .30-30 and 200 rounds. I figured I might need something faster (lever action) than the bolt action Weatherby .257 that has resided next to the nightstand for years.
In the real world, Marlo Stanfield walks.
True dat. And Vondas and the Greek have a new distribution syndicate. Only the Cheeze is dead.