In the end it all comes down to the dollar. Roubini has been writing about the coming breakdown of Bretton Woods II for some time now -- USD losing its place as the world's reserve currency.
As long as the Chinese, Indians, Petro-nations, etc. continue to lend us money, our Congress, Fed, Companies, Banks, etc. can continue to paper over the problem.
On the face of it, it doesn't make sense. American treausuries don't compensate investors for inflation risk, let alone currency risk.
As we all know, the model followed by dollar hoarders is to export goods in exchange for USD paper. This is all they know to do. They may keep this up for longer than we can imagine.
As long as the Chinese, Indians, Petro-nations, etc. continue to lend us money, our Congress, Fed, Companies, Banks, etc. can continue to paper over the problem.
Yeah, that'll work right up until the moment it doesn't.
Roubini's predictions may not be rifle accurate, but they have been at least shotgun accurate. Either way you slice it, it's not good and it's not over by a mile.
I don't take Roubini with salt at all. He's been more accurate than any other major economist in the world. His twelve steps to a financial crisis are, if anything, playing out WORSE than he originally laid out.
He was a little early on his call, I agree. He underestimated stupidity. That was just about the only thing he's got wrong.
As I noted in a prior thread - Japan mfg output is down 2% in the last Q. Most found the speed/abrupt adjustment surprising.
Time to look at trasports and shipping. I suspect a huge adjustment in this area. CA truck transport (commercial miles driven w/ paid loads) down 18% for June, on a y/o/y basis. JIT deliveries means JIT adjustments.
"I take Roubini with a huge grain of salt. He's been crying recession since late 2006.
I think he has overestimated the time span over which the events of late will play out."
I suspect that Roubini, and those like him, underestimated the degree to which the economy could could be hotwired to produce good numbers, long after the fundamentals themselves went south.
Following up on my previous post, expect for the brief period when the Euro ran up to $1.60 and Brazilian supermodels demanded euro-only contracts, the world stores and measures wealth with USD.
Unlike Argentina, where a currency crisis led very quickly to a very nasty recession, it is hard to imagine a scenario where Foreign Central Banks begin to dump USD en masse.
Simply put, where would they go to park their amassed wealth?
Calling "recession" is similar to cost of living statistics. No matter what the experts say, some people are hurting and others prospering and right now, the former is increasing while the latter decreases. Put another way, the top 1% are as happy as pigs in shit, most of the rest of us are less satisfied with the shit.
He was a little early on his call, I agree. He underestimated stupidity. That was just about the only thing he's got wrong.
He underestimated panicky short-sighted fixes that ramped up the federal deficit, devalued the dollar, and fueled commodities inflation.
Tell the truckers, airline employees, hotel owners, car dealers, resort workers, etc. that Roubini was wrong. They're all in a deep recession right now...and for years to come.
Had a conversation w/a top 1 percenter a few weeks ago. She was complaining about the price of gas. $100, and it didn't even fill the tank (Escalade, one of many various luxury vehicles). They might not be feeling pain, but they are becoming aware that things ain't what they used to be.
But I would like some thoughts on the following, if its worth discussing - it sure baffles me...Why trun to debit cards?
"Total spending on credit and debit cards rose 19 percent to $652 billion, the company said. The number of Visa cards in use globally rose 14 percent to 1.6 billion."
MH: I assume that by doom you mean that the dollar will continue to sink against foreign currencies, while price inflation eats away at what wages will buy. The idea that a worse economy will be self-curing is IMF anti-labor ideology and Chicago School propaganda. This is indeed what Nobel Economic Prizes are given for, I grant you. But its Junk Economics. A falling dollar threatens to become self-reinforcing. For starters, dollar-denominated stocks, bonds and real estate are worth less and less in terms of euros, sterling or other harder and foreign currencies. This doesnt provide much incentive for foreigners to invest here. And if we go into a recession (not to speak of depression), there will be even fewer profitable opportunities to invest.
Meanwhile, U.S. import dependency will continue to rise as the economy de-industrializes that is, as it is further financialized. U.S. overseas military spending will throw yet more dollars onto the worlds foreign exchange markets. So a weak economy here does NOT mean that the dollar will strengthen; it means we have a bad investment climate! Austerity will make us more dependent on foreign countries. For a foretaste, just look at what has happened when the IMF has imposed austerity plans on Third World debtors. And remember, last time when Robert Rubin was given a free hand, in reforming Russia under Clinton, the result was industrial collapse and bankruptcy.
MH: I assume that by doom you mean that the dollar will continue to sink against foreign currencies, while price inflation eats away at what wages will buy. The idea that a worse economy will be self-curing is IMF anti-labor ideology and Chicago School propaganda. This is indeed what Nobel Economic Prizes are given for, I grant you. But its Junk Economics. A falling dollar threatens to become self-reinforcing. For starters, dollar-denominated stocks, bonds and real estate are worth less and less in terms of euros, sterling or other harder and foreign currencies. This doesnt provide much incentive for foreigners to invest here. And if we go into a recession (not to speak of depression), there will be even fewer profitable opportunities to invest.
Meanwhile, U.S. import dependency will continue to rise as the economy de-industrializes that is, as it is further financialized. U.S. overseas military spending will throw yet more dollars onto the worlds foreign exchange markets. So a weak economy here does NOT mean that the dollar will strengthen; it means we have a bad investment climate! Austerity will make us more dependent on foreign countries. For a foretaste, just look at what has happened when the IMF has imposed austerity plans on Third World debtors. And remember, last time when Robert Rubin was given a free hand, in reforming Russia under Clinton, the result was industrial collapse and bankruptcy.
MH: I assume that by doom you mean that the dollar will continue to sink against foreign currencies, while price inflation eats away at what wages will buy. The idea that a worse economy will be self-curing is IMF anti-labor ideology and Chicago School propaganda. This is indeed what Nobel Economic Prizes are given for, I grant you. But its Junk Economics. A falling dollar threatens to become self-reinforcing. For starters, dollar-denominated stocks, bonds and real estate are worth less and less in terms of euros, sterling or other harder and foreign currencies. This doesnt provide much incentive for foreigners to invest here. And if we go into a recession (not to speak of depression), there will be even fewer profitable opportunities to invest.
Meanwhile, U.S. import dependency will continue to rise as the economy de-industrializes that is, as it is further financialized. U.S. overseas military spending will throw yet more dollars onto the worlds foreign exchange markets. So a weak economy here does NOT mean that the dollar will strengthen; it means we have a bad investment climate! Austerity will make us more dependent on foreign countries. For a foretaste, just look at what has happened when the IMF has imposed austerity plans on Third World debtors. And remember, last time when Robert Rubin was given a free hand, in reforming Russia under Clinton, the result was industrial collapse and bankruptcy.
If the rest of the world slows down significantly sooner rather than later, then they'll start to drop their rates and probably quite fast. The dollar will strengthen somewhat and this, along with reduced demand from the global slowdown, will further reduce commodity and energy prices.
If that happens, our exports are obviously going to suffer twice: once from the slowdown and second from the stronger dollar. But domestically the economy might start to pick up in other ways as the massive drag of energy costs will be reduced, which will eventually feed into food price reductions. Consumers will have more money to spend, and the more the banks have taken it in the ass through foreclosures, the more unburdened consumers there will be. I think we forget that - every consumer that forecloses is a consumer that probably has more money available now they're back in a rental.
I think the Fed hopes that these things occur roughly at the right time. IOW, exports take us through the short term, and then the global situation looks bad enough that our currency strengthens (in a relative sense), energy/food gets cheaper, and we ride through the second phase limping but not dead.
They have amassed their treasury holders in order to keep the U.S. consumer...consuming. Once it becomes clear that they are pushing on a string these rational investors will move their capital elsewhere. I know it is hard for an ameri-centric mind to grasp this but the seasons do change. The US has only even been the US for a mere eye-blink in history. At least consider the possibility that times...they are a changing.
The world is awash in currency right now everywhere you look. It is unlikely that any one central bank is going to find religion and start to strengthen their currency aggressively in the face of domestic upheaval.
As a result, we'll all fall down the rabbit hole together. What we find on the other side continues to be a mystery.
I don't see much slowing of grain exports, and a declining dollar could lead to re-industrialization here.
It'll be a slow process, (years or decades not quarters) but the dollar decline is one of the few signs of hope I see. It could wean us off petroleum and favor local production.
Actually, the Chinese govt just announced that they would focus on maintaining growth rather than reducing inflation. That means they'll keep buying US debt to allow them to maintain the renminbi peg where it's at now.
Re: dollar as reserve currency...where would FCB's put their money other than the US? Euro...I don't think so...EU has worse deficits, bigger inflation problem, and is recessionary, along with demographic time bomb. Yen...nope...everyone's been shorting the yen and yields on JGB's are zilch. Plus Japan's national debt is sky high.
So the Chinese will all get credit cards and start living like the Boomers used to when times were fat. Companies will just cruise to them...wow, look how many! Boom times are here again!
The US will be left to die a bankrupt desert of stunned patriots.
We won't be needed much longer. Then we're on our own. Prepare to do a lot of unintended camping.
Either house prices continue to plunge or, the dollar is devalued by inflation. Inflation sucks--but could cure the present predicament. Deflation just sucks.
Mr. Beach - That's the old ceteris paribus way of thinking. The new way of thinking may very well be: "That place is a mess. Why the hell would I want to invest there?"
It's more than just recessions that make now such a dangerous time. It's also the enormous leverage in all parts of the system - real estate, commodities, stocks, bonds.
The fed & treasury (based on their knee jerk/ historic actions) clearly believe that we are on the verge of a financial catastrophy. Who am I to disagree.
Seriously. All thoses morons on TV are paid to sell financial products. How and why would you believe a word they say.
Mr Beach: Simply put, where would they go to park their amassed wealth?
If other leading economies start down the hill into recession, won't they want to call back to home their cash parked in US investments/treasuries/etc.?
They will need to pump up their own economies to prevent widespread unemployment, financial failures, and the resulting political unrest.
Easy. People need $100+ to fill up their tanks and they don't like carrying that kind of cash around. Oh, and their credit cards are already maxed out and/or cut off. You don't need credit to have a debit card, just a bank account.
Barley, I think tj's got it exactly right. Once the credit card is maxed, you turn to the debit card for the same convenience factors you had before. If my cc was maxed I'd be paying for groceries and gas with a debit card.
12th Percentile, are you instigating again? This whole thing s a Nothingburger, eh? We prop up private corporations and bump the national debt ceiling by $800B to save the financial system...and you ask what's the big deal?
I can only assume you're trying to push people's buttons here, right?
Is there a new Fed facility? Called PFKATPDCF? I love alphabet soup?
The new Permanent Formerly Know As Temporary Primary Dealer Credit Facility will churn out futurative presumption upon the earning power of the USA taxpayer. Like the hedonic adjustments of inflation calculations, you (YES YOU, READER) must become accustomed to fat-free milk as a protein source when previously you had King Crab and Tenderloin. Your dollar shall be diluted. Your ability to freely trade and manage your assets will be hampered. Your liberties shall be imposed upon. Your absolute faiths will be shaken tremendously. Every human possesses their own concept of (heaven, paradise, Shangri-La)--we began an approach to it with the foundation of a new order with new specially protective laws in a New World. The canker and Leprosy of an Old World came to be hosted quietly amoung a small banking elite. The teeth of the dragon sown have spawned a legion of haunting demons which will deprive you of property and life. Andrew Jackson, Woodrow Wilson, Jefferson recognized the inherent danger. N.Rothschild is laughing in his grave. Objective achieved. Yeomen yoked. Henchmen of a cruelty cartel has enslaved the unvigilant majority. How many Pinocchios are enjoying Donkey Island? Greater Fools? None greater than those who presume themselves wiser than their predecessors. We are in Stromboli's grasp...er, International Banking. Dance upon your strings boys, commit your bodies to the cannon. Your bodies are but fodder to your astute and conniving enemies. Your unearned-as-yet possessions are as an albatross upon your neck. Too long ignored is Jimminey Cricket, that still small voice which counsels you to prudent undertaking, which provokes you toward virtue. No! You must have NOW! You must live IMMEDIATE! You do not understand the investment of eternity. Nor do you understand your state and status under heaven. Instead you eat a bread of ignominy and ridicule. Happy must be your estate! Happy your inheritance! Remember as fools mock, they mourn their mocking much longer. Your teeth shall crumble like chalk as you try to digest the ruthless bread of your doings. In consuming, you are consumed. Pulled within a leviathan of your own making. Draw yourselves down, adorn with sackcloth and ashes. You are forlorn, unallied, unknown and despised amoung men. Job's tear have ascendency over you. To be called gentile! How horrible, and yet to deserve it for ignorance and avoidance of the light. YouTube
- Les voyages de Pinocchio
JimPortlandOR;
China has shown that it wants to focus on export markets...just look at Brad Setser's site; he explains it well. If China stops buying US Treasuries, US interest rates skyrocket and US imports from China plummet even more. Since China has focused so heavily on export industries, the drop in GDP in the short term would make shifting production to domestic oriented industries long and painful. The Chinese govt doesn't want to risk the unrest during such a transition.
"Where do you park your wealth in a global recession?
Mr. Beach | 07.30.08 - 7:28
Historically speaking, gold and silver."
In the broader sense, in something that they think is going to hold some or all of its value no matter what. Historically, that's been precious metals. But the top one percent, or their money managers, may have other ideas these days. Commodities?
That's the question, actually: what holds its value in bad times? In theory, if you could find a toilet paper manufacturer that wasn't overpriced, wouldn't be a bad investment.
Sorry. Sometimes I forget this isn't a little clubhouse with 20 people who actually know Conjure Bag's history.
I always like to dust off the nothingburger when GM makes announcements like they did today. 15% of the workforce out. It is what I predicted when Banker declared their big write off a "nothingburger"
I don't think the Chinese leaders know how to get out of their mess. If they quickly strengthen the yuan, they risk massive social unrest and political instability.
By choosing inflation and growth, they've signed up for a few more turns of their vendor finance model: employ millions, export goods, get dollars, and recycle into treasuries.
Over the past few years, the magic of rising home prices made it pretty easy for the vendor financing to find its way into the pocket books of every day Americans.
Now that the MEW, HELOC spigots have been closed, that pipeline of cash has broken.
The next pipeline has already been primed and will probably be expanded greatly in the not too distant future: Congress will borrow and send out cash. Lots of it.
Does Bush go out with a bang or a whimper? He said Iran will not be allowed atomic weapons. I think he means it. If he doesn't do it will the Marin County girl reincarnated as the Israeli PM do it herself or force Bush to by saying she will act if he doesn't?
This is the big question between now and next year. IMO. The economy? It will depend on the outcome of this geopolitical problem.
"and in practicality, if you look at the inflation objectives that central banks throughout the world have chosen, they are all around the same number. Very very small differences. The difference is actually a little bit larger for emerging market countries because of [can't understand this phrase] issues, but for advanced countries, almost everybody, you know, the numbers are usually between 1 and a half and two and a half percent."
Umm, 2.5% is 66% larger than 1.5% and that makes a HUGE difference when you calculate how much purchasing power your money loses after a number of years.
Yeah, with all these big layoffs (auto, airlines, retail, banks, mortgage lending, RE, construction, who did I leave out?) I'm wondering how the hell we got a happy jobs report out of all that?
That's the question, actually: what holds its value in bad times? In theory, if you could find a toilet paper manufacturer that wasn't overpriced, wouldn't be a bad investment.
Don't count on it. In India, the poor people can't afford toilet paper. They do handshakes with the left.
And if it needs any further clarification, my opinion is there are a lot of people in powerful positions getting paid an insane amount of money who are making optimistic predictions about the US and global economy that have nothing to do with reality.
I'm not quite ready to join mp in the "dark ages" but I see this getting ugly. I'm just hoping that those of us who worked our assess off, saved, etc don't get taken down with the ship. I'll take the Great Depression. I don't want the Dark Ages. Anyone who says Roubini hasn't been spot on is an idiot.
Predicting the weather isn't easy. Predicting the pace of economic demise in the 21st century when everything was invented in the last few years and all the big players get to lie and the "regulators" cover for them, is also tricky. If you are off by a few years but right on the direction, you are doing something right. And my retirement account thanks you.
I'll reiterate. Rather than gaze at Libor TED spreads and shipping rates, the prudent man might be checking on the whereabouts of our aircraft carriers. More than two in the Indian ocean littoral and things are likely to happen.
I don't see a massive dark ages style financial blow up. In electrical engineering, you learn to use capacitors, inductors and resistors to corral signals within your margins.
In our financial world, we have the mother of all signal conditioners: global central banks.
Any truly dark ages style event will be met with tremendous liquidity injections.
"we get a shock, it may shock inflation away from our long run goal, and by the way, not just in the upside, we've had many cases of actually inflation rates which have gone too low"
BULLSHIT! Inflation has never gone too low. Fuck you fred. Tightening lending standards, rising interest rates, and unwillingness to borrow may cause a collapse in credit and money velocity, but that is a symptom of a debt based monetary system and an economy reliant on it. You cannot have inflation too low because inflation does not go below 0. Lack of inflation is good for long term investment decisions which is good for the economy.
Signal Conditioners? Nice! Until blown out with Amp and Volt surge. Useless. Unknown subatomic unit is overpowering our presumptions. Boom, like an EMP, grid down. Financial institutions like Babel, destroyed. Where to go from here? You better have hard-refined, unyielding basic skill sets. If not, well read Robinson Crusoe. Yum, yum. Flesh fed upon other beasts, grain, fine wine and cheeses. Grills up just wonderful. Another helping? You had to Ask? We will EAT YOU! THERE WILL BE BLOOD! and it will be delicious!
Other than that nothing to note here.
Son of mp has an engaging analogy for what's going on. He likens the activity in America to a flywheel. People toiled for decades to get the industrial flywheel spinning and, once it was, it took little effort to keep it going. At some point, however, people decided to stop adding energy to the wheel.
Now, they're extracting energy from the wheel. It's still spinning, but
not as fast as before. Everyone says, "Look, it's spinning, everything is fine!"
But, everything isn't fine. At some point, they'll no longer be able to extract any significant energy from the wheel and the game will be over.
As I write, America is selling off its machine tools, its productive capacity, for scrap value, sometimes less. The rest of the world is buying those tools and shipping goods back to us made with those same tools.
Why? I'm not sure, but I do know that part of the answer lies in the fact that most people today don't want to work in jobs where they get oil or grease on their hands. Young people go to college and get degrees, expecting to be managers of other people.
Friends, they are dead weight.
Oh, sure, you can argue that industry is obsolete. You can say that it's all about "information" now, but who's going to make your car, your airplane?
You want a defense industry? Sorry, it isn't going, it's gone. This country can no longer build a main battle tank. Remember how long it took get armored Humvees to Iraq. Well, I'll tell you why. This country no longer has the industrial capability to do it efficiently. That's why.
Hell, they barely have the capability to manufacture firearms. You want a nuclear reactor vessel? You won't get one here, you've got to go to Japan for it and here I was thinking that's "high tech."
Boys and girls, you've been bullshitted by the "captains" of industry, who have been busily selling off the seed corn in the name of quarterly profits to keep your 401K happy.
Enjoy it while you can, because the wheel is about to stop.
I foresee deflation up to a point, but equilibrium almost always sets the clock back to some acceptable reference point man -- these cats that are talking about the end of the world fail to see that only some parts, some fractions, components, elements will be shattered beyond repair. We are no where near a bottom in this subprime implosion, but IMHO, we will se more of the same, i.e, a perplexing blend of confusion as to why things are hanging together and that nagging curiosity as to why things are not in total chaos. The glue that hold together the fabric of our economic reality is coming unwound like an old baby blanket that has been worn down, barfed on, pee'd on, dragged around the yard a few times and hidden from view -- but in the final hour, the thing is still filled with love.
"There's two ways of doing this. One is we can get fancy and do optimal control simulations, that's one way of doing it. Another way that Lars Spencer discussed, described it is, you put out different choices of paths, choose a path for inflation that has an implication for a path that you would expect to happen in output, then the committee would look at it and say 'what looks good'. So I call this the 'Mikey likes it' approach. If you are a little bit older and know what I'm talking about. Does mikey like it, and does it look reasonable, and that's actually exactly the way you want to think about doing monetary policy"
Now you know the truth. The Fed doesn't care about the quality of the numbers because the numbers don't directly factor into the "mikey likes it" decision making process.
Yeah! But give us a small time frame and corridor of urgency. WE could create ANYTHING! WE could develop any device for any need. Just give us the tools, we'll finish the job. Your cynicism presumes upon our defeatism. Won't happen. Exigency calls, we will develop and create. However, just holding steady now to see how the shakeout finishes. Thereupon, WE WILL OWN YOU, or make good products and services. Time is our only constraint.
@misean: We have only one system: fractional reserve banking. Everything possible will be done to defend it. We're not going back to a gold standard.
Any substantial threat to the system (e.g. threat of Bear Stearns bankruptcy causing cascading cross defaults) will be met with overwhelming liquidity.
The "patient" (US economy, banking system & stock market) are on life support as we speak...and the "physicians" (Bush, Congress, Paulson, Bernanke/Fed, Cox) are ALL members of the "New" Working Group in a DAILY, desperate attempt to keep the "patient" alive for another day.
The problem is that heavy "medicine" being employed is insuring a significantly more painful eventual death.
"Misean, imagine if engineers ran the Fed and Treasury. We can dream, can't we.
Actually I do a lot of economic analysis by modeling circuits and waveforms."
Very interesting thoughts. An it gave me a pause. I dropped out of engineering my senior year and went econ...then ended up a network and systems engineer.
I find that modern econ is run by mathematical modelers. Now that's not engineering modelers, who actually have to make something that WORKS, but people who can play in fantasy land.
I became an Austrian (few mathematical models, very basic, just used to explain the logic of curve moves) because I found such models didn't have any way of modeling human behavior (or Human Action...as a toss to my name sake). So I think logical constructs are a better tool.
However, as I've been getting into Plasma Universe Theory, I may have to change my mind that such analysis, applying such thoughts as you have posited might be beneficial.
Haven't made up my mind yet, but it is an intriguing point of view.
Don't count on it. In India, the poor people can't afford toilet paper. They do handshakes with the left.
In Muslim countries you eat, turn pages of the Koran, and shake hands with the right, use the left for other things. Never offer a Muslim your left hand.
Company Name\tState\tWeiss
Safety
Rating
INDYMAC BK FSB \tCA \t E-
INTEGRITY BK \tGA \t E-
FEDERAL TRUST BANK \tFL \t E-
MAGNET BANK \tUT \t E-
SOUTHERN COMMUNITY BK \tGA \t E-
FREEDOM BK \tFL \t E-
AMERICAN STERLING BK \tMO \t E-
FIRST PRIORITY BK \tFL \t E-
FIRST SUBURBAN NB \tIL \t E-
FIRST PERSONAL BK \tIL \t E-
ISN BK \tNJ \t E-
EBANK \tGA \t E-
MAIN ST BK \tMI \t E-
PENNSYLVANIA BUSINESS BK \tPA \t E-
STOCKMANS BANK \tOK \t E-
RIVERGREEN BK \tME \t E-
AMERIBANK INC \tWV \t E-
HORIZON BANK \tIA \t E-
PLATINUM COMMUNITY BK \tIL \t E-
FIRST TUSKEGEE BK \tAL \t E-
Even Warren Buffett can't escape the credit crunch.
Top-rated Berkshire Hathaway Inc. offered the highest yield over benchmark rates it's paid to issue $1 billion of five-year debt, according to data compiled by Bloomberg. The company, which gets about 40 percent of its revenue from finance-related businesses, is paying the same spreads as Coca-Cola Enterprises Inc., a bottling company rated six steps lower, paid yesterday.
Even as stocks rally, the Federal Reserve keeps its spigot open to Wall Street and federal regulators act to stop naked short-selling, bond investors aren't persuaded that the global credit crisis is easing. They're forcing the best-rated corporate borrowers, especially those tied to the finance industry, to pay the highest yields since the last recession.
Actually Gary Shilling (http://www.agaryshilling.com) has been more accurate than Roubini - just not as publicly vocal. Go to his site and look at the INSIGHT newsletter page. His newsletter will cost you a few hundred, but you get 40+ pages of graphs and data per month. Uber-nerd indeed.
And I believe Gary's big final call is coming soon to an economy near you.
Exercise in talking my book ("A slim volume" --- Robyn)
Could we have a non-disastrous world with NO reserve currency? The dollar is a mess, but I see the alternatives also have problems.
I think the endgame could be some countries deciding that letting their currencies appreciate would gain more by increasing public purchasing power than it would cost with employment (this would be countries with safety nets, and/or ones that consider the unemployment victims expendable).
I have a vague sense that there could be a burst of dollar spending while they could still be used to get anything of value.
David Blitzer, managing director and chairman of the Index Committee at Standard and Poor's, discusses the latest S&P/Case Shiller home-price index, which showed price declines continued to worsen in May:
rich, concerning Mr Beach - "How did you get to be so intelligent?"
I think Mr Beach is seeing the game plan. Anything to keep the velocity up. Because once it slows appreciably the next play in the playbook isn't so attractive.
There's a scramble play in the playbook too. It may start this weekend, with the Iranian showdown.
In the United States, my colleague at the Stern School, Nouriel Roubini, who is a perennial pessimist on economic issues, has suggested that the losses in the United States in the current subprime/financial sector problems could be a trillion dollars. But that's in a $13 trillion economy, so we're talking 8 percent loss. And again, this is the face value, not the final real cost, which is probably about half of that. So we're talking maybe, in a worst-case scenario, losses equivalent to 4-5 percent of GDP. That's half of the real value of the losses relative to the size of the economy in Japan. So there is really no comparison in the scale of the problem here.
There is always a slowdown in the eighth year of a two-term presidency," Light said. "Both parties believe their candidate will win and they don't want to do anything that will embarrass their candidate."
oh boy, where to start...
the system isn't working if this issue of 'election paralysis' is accurate.
Oh yeah! I called this. Sure I wasn't the only one...but I called this on my own analysis. So :
"Many who were earning comfortable salaries as brokers and account managers are now turning to staffing agencies to find new jobs, and in many cases, to explore new careers.
As mortgage companies continue to fold, their employees are struggling, largely without success, to find jobs with comparable pay."
Who thinks the market trades on the Advance GDP figure - estimate 2.4% ? I think it's a red herring, partly because it's skewed by the rebates and then because the deflator is a wishing number, but maybe I'm off base.
"Many who were earning comfortable salaries as brokers and account managers are now turning to staffing agencies to find new jobs, and in many cases, to explore new careers."
Enjoy AmeriCorps!
all this chest beating of gloom & doom is funny indeed. Yet, the broader market is not even down 20%. GDP growth in the 2nd quarter is expected to be about 2%.
Going by the endless drumming here and elsewhere, it would appear world is coming to an end. The Bear propensity to gloominess & dark pessimism is just outrageous. Little do they know, it is also injurious to their health.
I'm going fishing in alpine county for a few days starting sunday.Last year BS blew up when I was on a lovely trout stream.This year looks MUCH more exciting,so I recommend that those with colanders hook up a few 12 volt car batteries,crack a cold one and enjoy the show starting monday.I'll settle for fresh caught trout and some icy sierra nevada and come back to view the carnage refreshed.
My mistake in spelling. Chekhov = Checkov. But your mistake in taking a full bullet between your unaware eyes. BTW Chekov makes a fine caliber ubersonic missile. Chew lead, funny russian misunderstander. BTW, how's your family? Did you like the pie and bakeries my wife sent over?
Ef, this is just so rich. Remeber I'm an IT guy...These people have no sk1||z at all:
"Besides competing with the other Arizonans looking for jobs, people from mortgage are also battling their lack of experience in other industries. While many were proficient in their previous positions, staffing agencies say not all job applicants are familiar with Microsoft Office, a skill required by most employers."
6 figures and no knowledge except fast talking people into option arms. Used car salesmen who think they're knowledge workers. This is mal-investment of human capital folks. As we Austrians call it.
The company, which gets about 40 percent of its revenue from finance-related businesses, is paying the same spreads as Coca-Cola Enterprises Inc., a bottling company rated six steps lower, paid yesterday.
Now that's scary... #1 Coca-Cola is considered poor rated. (I wasn't following them) #2, that Birkshire has issues raising $1Billion. Couldn't Warren just lend that to them?
@Misean
In my neck of the woods, option arms means an AK with a foldable stock and sling. Whuts yers mean? You damn complex, incomprehensible august augur of almightyism?
"In my neck of the woods, option arms means an AK with a foldable stock and sling. Whuts yers mean? You damn complex, incomprehensible august augur of almightyism?"
I stood at the exact spot in Patriarch's Ponds where the bottle of oil fell and broke. Bulgakov's memorial apartment is not too far from there. It's getting to be a long time, but faithful fans used to place a rose on the table, visible from the doorway..
Perhaps the Margarita Cafe is still across the street from the park, where I couldn't get a meal because the place was closed for lunch. That was then.
Sebastian is right, there have been trillions lost, yet very little impact on the economy, thus, what is next?
Auto giant GM, Chrysler go under, more retailers like Sears go BK, middle class restaurateurs go out of business, lending stops in most segments including student loans, Commercial real estate values get a 40% haircut while in dollar terms res real estate on the coasts get 50% decreases in value...
Do you think 10,900 was the bottom? I'm sensing it might be, but the financials always seem to find a way to out-do their previous poor performance.
I am also a little concerned that the global growth story may be getting long in tooth. Our industrial companies have done very well through most of this market turmoil. A global slow down will definitely hurt them.
Still the GDP and jobs numbers certainly do not indicate global Armageddon that is often suggested by the bearish contingent on this board.
As long as we're on the subject of Russia, I've seen what a society looks like when it utterly collapses. The US is nothing like that at all. A recession in the US would look like delirious prosperity in the Russia of 1991.
It was very scary, in a way. I spoke with Gen. Geli Batenin in the fall of '91, at the Institute for International Relations. He was adviser to the Russian government on nuclear weapons, and he was quite worried. People in the US were also concerned.
I used to pass by there often. Just off Tverskaya Ulitsa. Close to Mayakovskaya metro?
Funny but I was re-reading "Heart Of A Dog" on vacation a few weeks ago. Sharik reminds me of Americans, slovenly proletarians.
Lived in Moscow off and on from 98 to 04. Across the river at Kutuzofsky 22.
From what I read, the 'boys' (Putin and Medvedev) have cornered the gas market around the Capsian. They are doing a deal with Iran-India-China. If the U.S. or Isreal are going to intervene, they better hurry.
BT writes: The "patient" (US economy, banking system & stock market) are on life support as we speak...and the "physicians" (Bush, Congress, Paulson, Bernanke/Fed, Cox) are ALL members of the "New" Working Group in a DAILY, desperate attempt to keep the "patient" alive for another day.
The problem is that heavy "medicine" being employed is insuring a significantly more painful eventual death.
The physicians are curing all that ails the economy:
Peconic Bay - What stops the feedback loop this early in the down cycle ? More stimulus checks ? The consumer isn't credit worthy and lender capital is still getting destroyed, to $0.20 marks. 1200 sounds like resistance to any upside move after we break through 1080.
Yeah, Russia's a tough nut! Their centrifuges consisted entirely of gulag labour running 24/7 on lifted bicycles with a belt spinning out coal spendings. Their nuclear weapons were homing pigeons with X-ray chest plates strapped on. Total dominative reach? About 75 km. if carrier didn't get hungry.
Funny story. I was at a briefing in 82 and it seems there was concern on the part of some that Russia was importing via conduits 10's of thousands of Atari games. Seems they figured out a way to use the chips for their missle guidence systems.
Does anyone else see protectionism in our future ?
I think as long as the manufacturers have factories here they will be allowed to continue to ship goods
here no matter where they re produced
Moi Boyzsha, Pavel. You would not recogonize Moscow. It resembles any Western Megalopolis. At least Putin has banned those horrible casinos. Making the move to the hinterlands. Chuck Norris had an interest in one or two and would visit for PR purposes once or twice a year.
Flat prices have gone to the moon. I sold mine too early.
Thinking out loud here. My predictions are that when Barry becomes president that we will start getting a leadership directive assisted by government funding. If I were to guess what it would be, I would say an alternative energy push. Not only do we already have the presure now to do something, the US has the skills, money, inovative energy and entrepenural spirit to produce products for export, if not energy itself. I don't think it will be bridges to nowhere like Japan since that would not help pay down the national debt eventually.
Roubini has proved prescient so his words deserve far more respect than most others. I would like to know the European countries he thinks will NOT have a recession. He may say so but you have to pay to access his opinions now and I haven't done that. Anybody know?
I would love to make stuff in America and sell it, but there are two little problems with that in the USA:
1. Taxes
2. Health care
It's too risky. Hire somebody and they own your *ss down at the EDD. Don't hire somebody, they might own your *ss too. Seriously, one viable exit plan I have as a small business with employees in an employment bind is to simply go out of business.
Roubini and others believe that the southern members of the EU are at risk. Spain in particular but also southern France, Italy and Greece. Basically anyone that touches the Med.
IMO, The EU will begin cutting rates for political purposes. They do not want the 'dream' to unravel. But it will eventually.
Back on topic. The U.S. has implemented a less than zero interest rate policy (inflation adjusted), fiscal stimulus (too little, too late IMHO), massive liquidity injections by the Fed and repeated attempts by the Treasury to limit the damages (MLEC to Covered bonds). Still the system is fragile and the credit crunch continues.
Roubini's earlier predictions are already reality, so I, for one, take his predictions seriously. If the EU and Asians start declining they will drag us down with them because of the export slowdown that CR mentions.
Great rant MP, I still like the smell of grease on my hands but I am a fossil and I don't have a lot of hope that all these college boys (and girls) that were raised to be managers will have a clue what to do when the manufacturing has to get local due to the cost of fuel and the loss of the dollars buying power.
I hope all the Fed's magic alphabetical potions work, because if they don't then the only other hope is a massive fiscal stimulus. War has been the traditional motivation for such as many have mentioned, but I would hope for something less destructive. Maybe I'm foolish, but I think that we could find something better than killing each other to bootstrap the world into a better system.
Neil writes:
The company, which gets about 40 percent of its revenue from finance-related businesses, is paying the same spreads as Coca-Cola Enterprises Inc., a bottling company rated six steps lower, paid yesterday.
CCE ain't KO. The bottler has a bunch of Europe and a lot of the US, but it isn't the brand.
Gee are more Americans finally coming out of their stupor to see that 25+ yrs of industrial production decline and increasingly financial engineered driven bullshit for the US economy ( especially last 8 yrs under Bush ) with massive market bubbles has created systemic damage.
BOL to American middle class rubes that were sold on the fake American dream....time to 'buck up' for hard times sucker !
Yes, I visited some friends close to the old Avtovaz plant once. Moscow is now like NYC. High rent districts and places to visit only with protection.
Moscow has made an incredible transition. Most of the flats are novy remont. Lushkov really is an elcellent mayor. But this is just Moscow. Go 100km in any direction and it is as you probably remember it.
But there is alway dacha. Humble holy dacha. Where a man can go on weekends and 'dig' potatos.
I was following this am...but had mucho work..did not see end of day shite.
And with Coxsucker saying ALL shorts will get hit...Don't these fucks know they did this shite during the Great Depression...I'm replacing the batteries in the Super Colander Tin Foil Hat. This is annoying.
I think the next turn of events will also put the giddy up on the Alaska natural gas pipeline...huge infrastructure project that will provide domestic energy needs - also the tar sands are a gas pig and will need more gas (and process water) for any serious ramp-up...
The ambition of young people these days is to sit on their asses in a call center, not doing a hell of a lot, then inheriting and living off of their parents estate...........Oh! Wait! Estate!................
Think that was a ref to 'market crack' the long oil/short financials trade...well got some SKF in one account and am basically always long oil working in the industry...OMG does that mean I am a crackhead?! lol
Everything depends on employment. Remember, that much of what consumers purchase is sourced offshore, so the impact of a downturn in consumer spending may not have the same impact on employment as it did during the last consumer led recession in 1991.
I work in the semiconductor industry. After the tech wreck of 2000-01 our industry lost a lot of jobs. Silicon Valley employment shrank by 100,000. Most of those job ended up being move to Asia when the tech sector recovered. Semiconductor companies run with lean headcount and inventories, so they seem to be able to respond to inflections in demand with more agility.
I suspect, but don't know for sure, that the same is true in many other sectors.
It may be possible that the majority of the damaged stays in housing and finance. If so, we muddle through without too much pain.
Although Roubini was certainly right to be bearish on the U.S., it's possible that the decoupling theory ain't dead.
Slowing demand in the developed countries could reduce the pressure on commodity prices. If that were too happen, there is much less need for China and India to slow their growth. They still have sufficient infrastructure development needs that they could continue to print some very impressive growth numbers, even if they fall slightly.
OT: PAB Bankshares, Inc. Announces Second Quarter 2008 Financial Results Page Cannot Be Found
"As we continue to workout or liquidate our problem assets, our focus will remain on preserving our strong capital position to enable us to pursue potential strategic opportunities within our markets once economic conditions improve. We reduced our cash dividend by 35% during the quarter in order to better balance our dividend payout to earnings and to maintain our capital position. Although we do not consider it necessary today, we are prepared to further reduce our dividend or increase our capital position via qualifying debt or equity issuances," stated Welsh.
The race to be the "worlds lowest cost producer is killing the people of the developing world. Its a race where everyone looses. I never bought the global growth story, coupled, decoupled, single or complicated
Thank God we bought our Prague apartment 11 yrs. ago (wife's Czech). That's been our best performing "asset" over the past decade. Sadly, Prague beer is no longer dirt cheap. Food prices, what we're familiar with since we only reside there for a few summer weeks, are the same as in LA now. Czech koruna up 23% against USD last 7 mos.
Yes that well stimulation is pretty cool stuff, those wells come on like gangbusters, go through a savage decline then bleed gas for decades...just going to take ALOT of wells.
Agree like totally. I (unfortunately) have acerage between the Barnett shale and the Haleyville shale. I'm sure energycon can fill in details but with fracking tech, these could be HUGE.
By the way. The producers are paying $25,000 an acre bonuses and a 25% overide.
By making a few simple improvements, Velocity of Money started bringing in buyers. Velocity of Moneys principle owner, Andrew Van Noy said, The market changed and we had a new strategy and luckily we were able to take advantage of it.
The company took over the mortgages, invested in landscaping, and furnished the homes.
It was really important for us to have an image of a nice inviting environment for people, said Velocity of Moneys project manager, Patrick Williams.
Prospective home owners were able to lease with the option to buy, in many cases at the price they were currently paying for rent. Andrew Van Noy says even in slow economies people want to improve their lives and his company is offering a way for families to do that.
The Chases, in turn, were able to shed an unbearable mortgage burden by trading the equity in their two homes for another property in St. George which reduced their monthly payment to $1,600, something they say they can manage.
We didnt get anything at this point but we didnt lose everything like some of these people have, said Susan.
Yeeeeeehaw! Screw the Clampetts, theres gold in them thar shales!
Man that is a whopper of an override, that has to make the breakeven economics a bit challenging...wasn't Chesapeake shutting in production when nat gas was under $7/mcf (been a little while so recollection hazy)?
A 1/4 landowners royalty is pretty typical today for an area with potentially enormous reserves. $25k/acre is frenzy. Unless you plan on drilling every lease, that is a whole lot of wasted money. I suspect $25k might be an extreme exception, but, I really have no idea in Canadian formations in which you are.
Elvis,
$25k is typical if you are in the heart of the formation. As you step out, it declines to $13k or so. Still not bad pesos for us poor starving Texicans.
One of my best friends is an old retired geophyisist for Arco. He turned me on to Mitchel Energy nee Devon about 03.
I love 4 baggers. The Marcellus is supposed to be the next big hottie. Also Fayetteville where those Arkies are born with one leg shorter than the other. Any insights?
Working for a major these days, last I was with an independent those were statistical plays, so you pretty damn near drilled every lease right up - 20% or so were a bust, 60% or so were more or less breakeven and the 20% that were boomers carried the whole show...heard if anyone has pegged a seismic attribute or other geophysical signature to improve their drilling location targets?
@ Misean
Moby Dick?...Leviathan. Gobblin' up the guppies? Got it! Gotta keep the serfs on the land. Cull the hive, reap the honey harvest. Just another word for gettin' screwed over.
Working international these days, though I try to keep up with domestic - have a BIL in Midland, development geologist working for an independent out there. Life sounds pretty sweet though it sounds like housing in Midland is going through its own bubblicious times...of course students of history (and the survivors who lived it, I'm in the student category) recall the "two for one" days for houses in Midland and the first one was damn near free.
I know - I hold his (continued) generalized deflation argument at arms length. But his prediction of this credit crunch has been spot on. He profited mightily from it too I understand.
But ignoring generalized CPI deflation, we are seeing credit and house price deflation. After reading his stuff and understanding it, I've also profited mightily. Deflation comes in many forms, as does inflation.
The Barnett and Fayetteville shale are bubbles waiting to bust. In 12-18 months, the U.S. will be awash in natural gas and prices will be back around $4-5. A lot of the drillers there will lose their shirts.
energyecon,
I don't know that much about oil and gas either. Just enough to be dangerous. And enough to know that I have no idea about the future direction of oil. I think the drilling companies will be extremely busy over the next few years, but I won't trade oil futures.
Energyecon,
I hear you. Had friends in Big Spring back in the 70's. Enjoy while it lasts.
My Arco friend now consults. He makes more in a few days than he made in a month at the major. Cut his teeth on the N. Slope and now does Libya. He used to work Venezuela before Chavez.
I still can't convince him that the Canadian Tar sands are for real. He is old school like me, I guess.
Coming back from Colorado recently and we flew over Ft. Worth. Amazing! A disguised rig every square mile. It reminded me of OK city in the 60's. A really nice wood fence in a residential neighborhood concealing a pump jack.
Misean:
Don't let them fool you. I love numbers but they will NEVER predict human behavior.
My theory is that ideas travel at at least the speed of light, and cause totally unpredictable chain reactions.
Remember the Chinese kid who stood in front of the tank? Some day a factory worker will stand up and say "I want my MTV". No one can stop the Chinese workforce acting ensemble.
This is the first serious downturn where bloggers have existed. Indeed, Bair and co. are starting to even highlight their influence. Roubini (and all of you) wouldn't have had the voice he has today in the past. This is the first downturn where the doom and gloomers have had an ability to preempt the slow moving MSM.
What's the result? I conjecture that the blogs of today are the magazine covers of yesterday. It's ironic, but the blogs broadcasting of Roubini's et al.'s foresight potentially increases the likelihood of type I errors in calling a bottom. In other words, we're seeing the magazine covers before the magazine covers have even been published.
I believe this will prolong the downturn. You only have yourselves to blame.
I saw that and my immediate thought was that it's published by the wrong country......
That's what are situation is like X 5...
You'll never see anything like that from a "professional" institution as it would be just dismissed as shorty's fault.
BTW back from Vegas.......what a red herring that place will become. Almost 13K new rooms coming on line at the end of '09 and gaming revs. are already taking a huge hit. Drove out in the 'burbs and can report that stupidity is still alive and well-both CR and SFR's. Many new projects being worked on as if it was still '02-'05.
Many CRE sites still priced at well over $18 a square foot...actual transactions going off at well below that value. Know of one that was in a recently completed dev. just south east of the strip (completed in '04) that just leased at....get this.....$2.00 per sq ft. with a 4 year agreement.
I also observed lower limits at three high end casinos. Something I have not seen for over 15 years. They actually had $5 black jack tables at Wynne, Palazzo and Bellagio.
They were full though.....spoke to a high limit pit boss at Wynne...says the whales are virtually extinct excepting a few here and there. Says it's worse than early 90's already.
Having said that there were still many people enjoying themselves regardless of financial situations. But I suspect as the ATM has been turned off over the last year the ramifications of over-building in LV will most certainly be borne out regardless of whatever high end customers they can attract. See Macau for the problems that has on an economy built for the wealthy.
"Coming back from Colorado recently and we flew over Ft. Worth" Ross | 07.30.08 - 10:59 pm
Did you catch sight of Rising Star or Cross Plains just to the west?
I used to run well logs on gas wells out there over 30 years ago.
I've been blaming myself for a long time, and people on this blog get mad at me. If someone really is to blame (ie me), it takes away their perceived fun of blaming others.
MS,
Nice to have you back. You were compted of course.
Herr Hess,
Bloggers causing a prolonged downturn? Most of us are penny anti investors. Myself, I'm working on my 3rd million! Gave upon the first 2.
Information has always been available if one knew how to access it. IMO, the mainstream media has been politicized to the point of being shills. They are the ones who kept the folly going.
If an idiot like me saw the train wreck coming, why didn't the 'street'?
Investing has become like a casino. When I got into the business, they were gearing up for 20 million share days at the NYSE. Lucky for us they can't ban us for 'card counting'.
I've become a Spenglarian pirate. I 'intervene amongst the interveners and gamble with money as a ware'.
Yeah,
well first I would expect everyone playing the de-evaluation game, trying to lower rate for their currency against $. SInce it is not going to work - us having lower interest rate because we are important market and foreign firms would rather see their margin disappear then rise prices and and lose market share. By keeping the prices lower in here, they will keep inflation lower in here.
Than the second round of national finger-pointing will start - trade barriers to protect national manufactures. Foreign government will act first, we will retaliate, just because the populous is tired of free trade. So the second attempt will fail as fast as the first one. Failures of those two will lead some governments to take much more radical steps and in the end we all will be screwed by much higher degree.
Since the BRIC countries found so much confidence lately, they will fail to adjust in the timely manner and will suffer the worst of it.
(anyway, somewhere deep inside I hope this scenario will never happen. I hope that rationalism will overcome our "humanity" and we all-world, act with the reason and not due to our fears. however knowing our historical drive towards stupidity during the harsh times, i say fat chance. we are screwed. )
The only things we have to fear are
fear itself changing slowly . public schools .
mental flab . flab . rednecks . purchased government
.
termites . intolerance of casualties . casualties
failing to help deserving farmers . our hidden legal system
complacency . easy trust . orbits of ignorance .
ignorance of orbits . MTV . rap/skinhead culture
.
the American way . ideology . rats .
anthrax . smallpox . mosquitoes . fast food
beef prions . sea level . Katrina I & II .
President McCain . 12th Imamists . lead paint dust .
.
legacy asbestos . mold spores . landlords .
Ohio Courts . dirty bombs . clean bombs . selfism .
mortgages . Wall Street . Larry Kudlow . bird poop
smallfoot more consumers . California . eMe13
Putin . France . the French ..
.
I wanted to resign in 83.
But constructing a vague mission carried the issue.
There are thousands of predators that
should resign; better than mangling the innocent.
I'll fill out the papers.
They should send me the forms, park at
the morgue, and getter done.
Those with ethics and mission must not
resign too soon; they are needed at the fronts.
Yeah, Vegas must be hurting. Yesterday, I just got my 2nd free trip comp in the mail. 3 days/2 nights at the Hard Rock with a comp'd meal for 2 up to $150. Earlier this year it was the Wynn that sent me a similar comp package.
I'm a small timer, seriously. Used to play a lot of low stakes online poker, so I guess my name found its way onto some mailing list.
They won't get much $$ out of me... I'll eat their free food, maybe win or lose a few hundred at poker, but mostly I'll spend all my time at the Hard Rock pool chasing co-eds and cougars.
Consider first the ratio calculated using trailing earnings. For the trailing four quarters, according to Standard & Poor's, reported earnings per share for the S&P 500 have totaled $67, which results in a current P/E ratio of 18.7. Between 1871 and 2003, according to Asness and Cascells, the median of P/E ratios calculated in this way is 13.7.
Based on trailing earnings, therefore, the stock market's current P/E suggests that the market is 36% overvalued.
Consider next the ratio calculated using forward earnings. According to S&P, analysts are projecting total operating earnings per share for 2006 to be $88.59, which yields a P/E ratio of 14.2. The median of comparably-calculated P/E ratios for the 1871-2003 period is around 11, according to estimates from Asness and Casscells.
So according to this approach to calculating P/E ratios, the market is 29% overvalued.
I started looking at this again on 2/21/08 and the P/E was 17.14, EPS @ 78.74 and yield @ 2.05
Wow. Looks like China is ripe for a communist revolution. Good thing that article was so technical that those factory workers at the export plants won't have time to digest it ...
This is the first downturn where the doom and gloomers have had an ability to preempt the slow moving MSM.
Isn't that a rather short-sighted historical perspective? The definition for MSM has changed throughout the past century, starting with newspapers and, one by one, adding radio, tv and now internet. This same discussion happened 40 years ago as (then) New Media opened up New Avenues of expression and dissemination.
This is 2008 - well run blogs ARE part of the MSM, with the same ratio of goodness vs. nonsense as all the other forms of communication.
One other reason for a company to buy back its own stock is to reward holders of stock options. Option holders are hurt by dividend payments, since, typically, they are not eligible to receive them. A share buyback program may increase the value of remaining shares (if the buyback is executed when shares are underpriced); if so, option holders benefit. A dividend payment short term always decreases the value of shares after the payment, so, on the day shares go ex-dividend, option holders always lose. Finally, if the sellers into a corporate buyback are actually the option holders themselves, they may directly benefit from temporarily unrealistically favorable pricing.
MP
I don't care for grease on my hands but good old black dirt is another matter. More americans need to be involved in agriculture as energy costs increase. Oh I forgot too many people would rather get handouts that actually work in the sun picking beans for 12 hours. BTW landscaping is not agriculture. Wait till theres no food in the cities, and most americans are several generations removed from farming. Any plan to revitalize America must include agriculture. Don't even get me started on the farm bill. For the record I have a serious garden but, no aspirations/delusions about self sufficiency.
The US of A economy just can't seem to go into a "recession as definded by the US of A" government.
Stocks head for higher open ahead of GDP reading
Thursday July 31, 8:11 am ET
By Tim Paradis, AP Business Writer
US stocks head for moderately higher open as investors await reading on gross domestic product
NEW YORK (AP) -- U.S. stocks headed for a moderately higher open Thursday as investors await a key reading on the nation's economic output to determine whether a two-day rally will continue.
Wall Street expects the Commerce Department to report that gross domestic product advanced in the second quarter as consumers cashed tax rebate checks. Economists polled by Thomson Financial/IFR predict, on average, that GDP will have increased at a 2.4 percent annualized rate. The report is due at 8:30 a.m. EDT.
Roubini, the anti-Sebastian!
oh yeah, 1st
First?
oh well, 2nd
I for one have been expecting that, which is why I have found your call for a relatively mild recession uncharacteristically off-base.
time will tell, but not too much I hope as my puts do expire someday!
heh, at least i'm not the only false first.
Here is a page with video and audio of frederic mishkin's recent speach and question session.
Event Multimedia: Whither Federal Reserve Communications, July 28, 2008
When I get a chance I'll post some comments with some of his quotes that I'm sure you all will find entertaining.
In the end it all comes down to the dollar. Roubini has been writing about the coming breakdown of Bretton Woods II for some time now -- USD losing its place as the world's reserve currency.
As long as the Chinese, Indians, Petro-nations, etc. continue to lend us money, our Congress, Fed, Companies, Banks, etc. can continue to paper over the problem.
On the face of it, it doesn't make sense. American treausuries don't compensate investors for inflation risk, let alone currency risk.
As we all know, the model followed by dollar hoarders is to export goods in exchange for USD paper. This is all they know to do. They may keep this up for longer than we can imagine.
"anti-Sebastian"..... Anti-who? Who's that?
Seb has disappeared. He'll come back before this bear trap is over. And then he'll disappear again as a more potent downturn will follow.
I take Roubini with a huge grain of salt. He's been crying recession since late 2006.
I think he has overestimated the time span over which the events of late will play out.
As long as the Chinese, Indians, Petro-nations, etc. continue to lend us money, our Congress, Fed, Companies, Banks, etc. can continue to paper over the problem.
Yeah, that'll work right up until the moment it doesn't.
Roubini's predictions may not be rifle accurate, but they have been at least shotgun accurate. Either way you slice it, it's not good and it's not over by a mile.
I don't take Roubini with salt at all. He's been more accurate than any other major economist in the world. His twelve steps to a financial crisis are, if anything, playing out WORSE than he originally laid out.
He was a little early on his call, I agree. He underestimated stupidity. That was just about the only thing he's got wrong.
In the last 12 months his timing has been deadly.
As I noted in a prior thread - Japan mfg output is down 2% in the last Q. Most found the speed/abrupt adjustment surprising.
Time to look at trasports and shipping. I suspect a huge adjustment in this area. CA truck transport (commercial miles driven w/ paid loads) down 18% for June, on a y/o/y basis. JIT deliveries means JIT adjustments.
If this was a war, I'd want Roubini providing my intelligence. The man can see beyond the treeline.
"I take Roubini with a huge grain of salt. He's been crying recession since late 2006.
I think he has overestimated the time span over which the events of late will play out."
I suspect that Roubini, and those like him, underestimated the degree to which the economy could could be hotwired to produce good numbers, long after the fundamentals themselves went south.
Following up on my previous post, expect for the brief period when the Euro ran up to $1.60 and Brazilian supermodels demanded euro-only contracts, the world stores and measures wealth with USD.
Unlike Argentina, where a currency crisis led very quickly to a very nasty recession, it is hard to imagine a scenario where Foreign Central Banks begin to dump USD en masse.
Simply put, where would they go to park their amassed wealth?
Calling "recession" is similar to cost of living statistics. No matter what the experts say, some people are hurting and others prospering and right now, the former is increasing while the latter decreases. Put another way, the top 1% are as happy as pigs in shit, most of the rest of us are less satisfied with the shit.
He underestimated stupidity. That was just about the only thing he's got wrong.
As I get older, I realize that it is very difficult to overestimate stupidity. (And malice too, sadly.)
Simply put, where would they go to park their amassed wealth?....
Simply put why would they want to continue to park their amassed wealth in this kind of neighborhood????
He underestimated panicky short-sighted fixes that ramped up the federal deficit, devalued the dollar, and fueled commodities inflation.
Tell the truckers, airline employees, hotel owners, car dealers, resort workers, etc. that Roubini was wrong. They're all in a deep recession right now...and for years to come.
Had a conversation w/a top 1 percenter a few weeks ago. She was complaining about the price of gas. $100, and it didn't even fill the tank (Escalade, one of many various luxury vehicles). They might not be feeling pain, but they are becoming aware that things ain't what they used to be.
O/T
But I would like some thoughts on the following, if its worth discussing - it sure baffles me...Why trun to debit cards?
"Total spending on credit and debit cards rose 19 percent to $652 billion, the company said. The number of Visa cards in use globally rose 14 percent to 1.6 billion."
Visa's Profit Rises 41% As More Consumers Use Credit, Debit - Bloomberg.com
Awe Beach, you had to say it. Now where did I put my tin-foil colander hat?
Michael Hudson:
MH: I assume that by doom you mean that the dollar will continue to sink against foreign currencies, while price inflation eats away at what wages will buy. The idea that a worse economy will be self-curing is IMF anti-labor ideology and Chicago School propaganda. This is indeed what Nobel Economic Prizes are given for, I grant you. But its Junk Economics. A falling dollar threatens to become self-reinforcing. For starters, dollar-denominated stocks, bonds and real estate are worth less and less in terms of euros, sterling or other harder and foreign currencies. This doesnt provide much incentive for foreigners to invest here. And if we go into a recession (not to speak of depression), there will be even fewer profitable opportunities to invest.
Meanwhile, U.S. import dependency will continue to rise as the economy de-industrializes that is, as it is further financialized. U.S. overseas military spending will throw yet more dollars onto the worlds foreign exchange markets. So a weak economy here does NOT mean that the dollar will strengthen; it means we have a bad investment climate! Austerity will make us more dependent on foreign countries. For a foretaste, just look at what has happened when the IMF has imposed austerity plans on Third World debtors. And remember, last time when Robert Rubin was given a free hand, in reforming Russia under Clinton, the result was industrial collapse and bankruptcy.
MH: I assume that by doom you mean that the dollar will continue to sink against foreign currencies, while price inflation eats away at what wages will buy. The idea that a worse economy will be self-curing is IMF anti-labor ideology and Chicago School propaganda. This is indeed what Nobel Economic Prizes are given for, I grant you. But its Junk Economics. A falling dollar threatens to become self-reinforcing. For starters, dollar-denominated stocks, bonds and real estate are worth less and less in terms of euros, sterling or other harder and foreign currencies. This doesnt provide much incentive for foreigners to invest here. And if we go into a recession (not to speak of depression), there will be even fewer profitable opportunities to invest.
Meanwhile, U.S. import dependency will continue to rise as the economy de-industrializes that is, as it is further financialized. U.S. overseas military spending will throw yet more dollars onto the worlds foreign exchange markets. So a weak economy here does NOT mean that the dollar will strengthen; it means we have a bad investment climate! Austerity will make us more dependent on foreign countries. For a foretaste, just look at what has happened when the IMF has imposed austerity plans on Third World debtors. And remember, last time when Robert Rubin was given a free hand, in reforming Russia under Clinton, the result was industrial collapse and bankruptcy.
MH: I assume that by doom you mean that the dollar will continue to sink against foreign currencies, while price inflation eats away at what wages will buy. The idea that a worse economy will be self-curing is IMF anti-labor ideology and Chicago School propaganda. This is indeed what Nobel Economic Prizes are given for, I grant you. But its Junk Economics. A falling dollar threatens to become self-reinforcing. For starters, dollar-denominated stocks, bonds and real estate are worth less and less in terms of euros, sterling or other harder and foreign currencies. This doesnt provide much incentive for foreigners to invest here. And if we go into a recession (not to speak of depression), there will be even fewer profitable opportunities to invest.
Meanwhile, U.S. import dependency will continue to rise as the economy de-industrializes that is, as it is further financialized. U.S. overseas military spending will throw yet more dollars onto the worlds foreign exchange markets. So a weak economy here does NOT mean that the dollar will strengthen; it means we have a bad investment climate! Austerity will make us more dependent on foreign countries. For a foretaste, just look at what has happened when the IMF has imposed austerity plans on Third World debtors. And remember, last time when Robert Rubin was given a free hand, in reforming Russia under Clinton, the result was industrial collapse and bankruptcy.
Dissident Voice : “The System is Broken. We’re Entering a Two Economy Society”: An Interview with Michael Hudson
If the rest of the world slows down significantly sooner rather than later, then they'll start to drop their rates and probably quite fast. The dollar will strengthen somewhat and this, along with reduced demand from the global slowdown, will further reduce commodity and energy prices.
If that happens, our exports are obviously going to suffer twice: once from the slowdown and second from the stronger dollar. But domestically the economy might start to pick up in other ways as the massive drag of energy costs will be reduced, which will eventually feed into food price reductions. Consumers will have more money to spend, and the more the banks have taken it in the ass through foreclosures, the more unburdened consumers there will be. I think we forget that - every consumer that forecloses is a consumer that probably has more money available now they're back in a rental.
I think the Fed hopes that these things occur roughly at the right time. IOW, exports take us through the short term, and then the global situation looks bad enough that our currency strengthens (in a relative sense), energy/food gets cheaper, and we ride through the second phase limping but not dead.
Just my 2 cents...
My 2 cents is that there's a bunch of people on here, including me, that would like an enumeration of those "other ways".
China, Japan, et al ARE rational investors.
They have amassed their treasury holders in order to keep the U.S. consumer...consuming. Once it becomes clear that they are pushing on a string these rational investors will move their capital elsewhere. I know it is hard for an ameri-centric mind to grasp this but the seasons do change. The US has only even been the US for a mere eye-blink in history. At least consider the possibility that times...they are a changing.
"I think we forget that - every consumer that forecloses is a consumer that probably has more money available now they're back in a rental."
Unless they were living la vida HELOC.
The world is awash in currency right now everywhere you look. It is unlikely that any one central bank is going to find religion and start to strengthen their currency aggressively in the face of domestic upheaval.
As a result, we'll all fall down the rabbit hole together. What we find on the other side continues to be a mystery.
"Once it becomes clear that they are pushing on a string these rational investors will move their capital elsewhere"
Where?
Euro-zone may become deeply unstable in a protracted recession - with the stark contrast between the southern and northern economies.
Domestic bond markets are not very deep in most developing nations.
Slowing demand would mean that parking wealth in commodities like oil is a bad idea.
Where do you park your wealth in a global recession?
I don't see much slowing of grain exports, and a declining dollar could lead to re-industrialization here.
It'll be a slow process, (years or decades not quarters) but the dollar decline is one of the few signs of hope I see. It could wean us off petroleum and favor local production.
Actually, the Chinese govt just announced that they would focus on maintaining growth rather than reducing inflation. That means they'll keep buying US debt to allow them to maintain the renminbi peg where it's at now.
Re: dollar as reserve currency...where would FCB's put their money other than the US? Euro...I don't think so...EU has worse deficits, bigger inflation problem, and is recessionary, along with demographic time bomb. Yen...nope...everyone's been shorting the yen and yields on JGB's are zilch. Plus Japan's national debt is sky high.
So the Chinese will all get credit cards and start living like the Boomers used to when times were fat. Companies will just cruise to them...wow, look how many! Boom times are here again!
The US will be left to die a bankrupt desert of stunned patriots.
We won't be needed much longer. Then we're on our own. Prepare to do a lot of unintended camping.
Roubini? The only thing he should be doing is asking me if I want fries with my Nothingburger.
Either house prices continue to plunge or, the dollar is devalued by inflation. Inflation sucks--but could cure the present predicament. Deflation just sucks.
Mr. Beach - That's the old ceteris paribus way of thinking. The new way of thinking may very well be: "That place is a mess. Why the hell would I want to invest there?"
It's more than just recessions that make now such a dangerous time. It's also the enormous leverage in all parts of the system - real estate, commodities, stocks, bonds.
The fed & treasury (based on their knee jerk/ historic actions) clearly believe that we are on the verge of a financial catastrophy. Who am I to disagree.
Seriously. All thoses morons on TV are paid to sell financial products. How and why would you believe a word they say.
Where do you park your wealth in a global recession?
Mr. Beach | 07.30.08 - 7:28
Historically speaking, gold and silver.
Mr Beach: Simply put, where would they go to park their amassed wealth?
If other leading economies start down the hill into recession, won't they want to call back to home their cash parked in US investments/treasuries/etc.?
They will need to pump up their own economies to prevent widespread unemployment, financial failures, and the resulting political unrest.
Why trun to debit cards?
Easy. People need $100+ to fill up their tanks and they don't like carrying that kind of cash around. Oh, and their credit cards are already maxed out and/or cut off. You don't need credit to have a debit card, just a bank account.
I think cpi inflation at around 4 to 6% is here for a while.
I also think stocks & non treasury bonds will lose value. Real estate will continue its slide.
Commodities will whip saw up and down.
Barely, they are using debit because they do not do cannot get a extension of credit.
Barley, I think tj's got it exactly right. Once the credit card is maxed, you turn to the debit card for the same convenience factors you had before. If my cc was maxed I'd be paying for groceries and gas with a debit card.
12th Percentile, are you instigating again? This whole thing s a Nothingburger, eh? We prop up private corporations and bump the national debt ceiling by $800B to save the financial system...and you ask what's the big deal?
I can only assume you're trying to push people's buttons here, right?
"flirting with, recession."
I flirted with recession once. Yeah, I was drunk, but you know it was late.
Anyhoo, turns out that without beer goggles, she was Wile E. Coyote FUGLY the next morning.
Thankfully I got out before she woke up.
Cheers,
Is there a new Fed facility? Called PFKATPDCF? I love alphabet soup?
The new Permanent Formerly Know As Temporary Primary Dealer Credit Facility will churn out futurative presumption upon the earning power of the USA taxpayer. Like the hedonic adjustments of inflation calculations, you (YES YOU, READER) must become accustomed to fat-free milk as a protein source when previously you had King Crab and Tenderloin. Your dollar shall be diluted. Your ability to freely trade and manage your assets will be hampered. Your liberties shall be imposed upon. Your absolute faiths will be shaken tremendously. Every human possesses their own concept of (heaven, paradise, Shangri-La)--we began an approach to it with the foundation of a new order with new specially protective laws in a New World. The canker and Leprosy of an Old World came to be hosted quietly amoung a small banking elite. The teeth of the dragon sown have spawned a legion of haunting demons which will deprive you of property and life. Andrew Jackson, Woodrow Wilson, Jefferson recognized the inherent danger. N.Rothschild is laughing in his grave. Objective achieved. Yeomen yoked. Henchmen of a cruelty cartel has enslaved the unvigilant majority. How many Pinocchios are enjoying Donkey Island? Greater Fools? None greater than those who presume themselves wiser than their predecessors. We are in Stromboli's grasp...er, International Banking. Dance upon your strings boys, commit your bodies to the cannon. Your bodies are but fodder to your astute and conniving enemies. Your unearned-as-yet possessions are as an albatross upon your neck. Too long ignored is Jimminey Cricket, that still small voice which counsels you to prudent undertaking, which provokes you toward virtue. No! You must have NOW! You must live IMMEDIATE! You do not understand the investment of eternity. Nor do you understand your state and status under heaven. Instead you eat a bread of ignominy and ridicule. Happy must be your estate! Happy your inheritance! Remember as fools mock, they mourn their mocking much longer. Your teeth shall crumble like chalk as you try to digest the ruthless bread of your doings. In consuming, you are consumed. Pulled within a leviathan of your own making. Draw yourselves down, adorn with sackcloth and ashes. You are forlorn, unallied, unknown and despised amoung men. Job's tear have ascendency over you. To be called gentile! How horrible, and yet to deserve it for ignorance and avoidance of the light.
YouTube
- Les voyages de Pinocchio
JimPortlandOR;
China has shown that it wants to focus on export markets...just look at Brad Setser's site; he explains it well. If China stops buying US Treasuries, US interest rates skyrocket and US imports from China plummet even more. Since China has focused so heavily on export industries, the drop in GDP in the short term would make shifting production to domestic oriented industries long and painful. The Chinese govt doesn't want to risk the unrest during such a transition.
"Where do you park your wealth in a global recession?
Mr. Beach | 07.30.08 - 7:28
Historically speaking, gold and silver."
In the broader sense, in something that they think is going to hold some or all of its value no matter what. Historically, that's been precious metals. But the top one percent, or their money managers, may have other ideas these days. Commodities?
That's the question, actually: what holds its value in bad times? In theory, if you could find a toilet paper manufacturer that wasn't overpriced, wouldn't be a bad investment.
12th Percentile, are you instigating again?
Sorry. Sometimes I forget this isn't a little clubhouse with 20 people who actually know Conjure Bag's history.
I always like to dust off the nothingburger when GM makes announcements like they did today. 15% of the workforce out. It is what I predicted when Banker declared their big write off a "nothingburger"
Maybe I need to get out more.
Kung Fu Panda:
I don't think the Chinese leaders know how to get out of their mess. If they quickly strengthen the yuan, they risk massive social unrest and political instability.
By choosing inflation and growth, they've signed up for a few more turns of their vendor finance model: employ millions, export goods, get dollars, and recycle into treasuries.
Over the past few years, the magic of rising home prices made it pretty easy for the vendor financing to find its way into the pocket books of every day Americans.
Now that the MEW, HELOC spigots have been closed, that pipeline of cash has broken.
The next pipeline has already been primed and will probably be expanded greatly in the not too distant future: Congress will borrow and send out cash. Lots of it.
Does Bush go out with a bang or a whimper? He said Iran will not be allowed atomic weapons. I think he means it. If he doesn't do it will the Marin County girl reincarnated as the Israeli PM do it herself or force Bush to by saying she will act if he doesn't?
This is the big question between now and next year. IMO. The economy? It will depend on the outcome of this geopolitical problem.
Mr Beach,
How did you get to be so intelligent?
Frederic Mishkin -
"and in practicality, if you look at the inflation objectives that central banks throughout the world have chosen, they are all around the same number. Very very small differences. The difference is actually a little bit larger for emerging market countries because of [can't understand this phrase] issues, but for advanced countries, almost everybody, you know, the numbers are usually between 1 and a half and two and a half percent."
Umm, 2.5% is 66% larger than 1.5% and that makes a HUGE difference when you calculate how much purchasing power your money loses after a number of years.
Frederic Mishkin is a dumb shit.
More to come.
Monthly stimulus checks would be great. Let's bring it down like Samson. Goobermint housing and monthly checks for all.
12th, sorry I thought you were serious.
Yeah, with all these big layoffs (auto, airlines, retail, banks, mortgage lending, RE, construction, who did I leave out?) I'm wondering how the hell we got a happy jobs report out of all that?
@rich: Now what did you mean by that comment? I'm just doing my patriotic duty -- getting highly caffeinated on Starbucks and reading CR.
Don't count on it. In India, the poor people can't afford toilet paper. They do handshakes with the left.
And if it needs any further clarification, my opinion is there are a lot of people in powerful positions getting paid an insane amount of money who are making optimistic predictions about the US and global economy that have nothing to do with reality.
I'm not quite ready to join mp in the "dark ages" but I see this getting ugly. I'm just hoping that those of us who worked our assess off, saved, etc don't get taken down with the ship. I'll take the Great Depression. I don't want the Dark Ages. Anyone who says Roubini hasn't been spot on is an idiot.
Predicting the weather isn't easy. Predicting the pace of economic demise in the 21st century when everything was invented in the last few years and all the big players get to lie and the "regulators" cover for them, is also tricky. If you are off by a few years but right on the direction, you are doing something right. And my retirement account thanks you.
Now, where is my signed copy of Dow 360,000?
Mr. Beach,
"getting highly caffeinated on Starbucks and reading CR."
Now that's your problem. You gotta go to Lefty's and have a shot or two first, before CR.
Cheers,
"Don't count on it. In India, the poor people can't afford toilet paper. They do handshakes with the left."
Left handed people get to have all the fun.
Cheers,
I'll reiterate. Rather than gaze at Libor TED spreads and shipping rates, the prudent man might be checking on the whereabouts of our aircraft carriers. More than two in the Indian ocean littoral and things are likely to happen.
"[T]here is now fresh evidence that at least a dozen major economies and some emerging markets are at risk of a recessionary hard landing."
Co-Pilot: Captain, it appears both wings have fallen off the plain.
Pilot: Well this might be a hard landing then.
Cheers,
I don't see a massive dark ages style financial blow up. In electrical engineering, you learn to use capacitors, inductors and resistors to corral signals within your margins.
In our financial world, we have the mother of all signal conditioners: global central banks.
Any truly dark ages style event will be met with tremendous liquidity injections.
Frederic Mishkin-
"we get a shock, it may shock inflation away from our long run goal, and by the way, not just in the upside, we've had many cases of actually inflation rates which have gone too low"
BULLSHIT! Inflation has never gone too low. Fuck you fred. Tightening lending standards, rising interest rates, and unwillingness to borrow may cause a collapse in credit and money velocity, but that is a symptom of a debt based monetary system and an economy reliant on it. You cannot have inflation too low because inflation does not go below 0. Lack of inflation is good for long term investment decisions which is good for the economy.
Psychology > Central Banks
Everytime.
Mr. Beach,
"Any truly dark ages style event will be met with tremendous liquidity injections."
I fail to see how currency destruction avoids said problem.
"In electrical engineering, you learn to use capacitors, inductors and resistors to corral signals within your margins."
Right. So how does letting the signals/current RIP jive with this?
Cheers,
Ben has actually said that himself many times.
War is usually the preferred way out of financial catastrophes.
Let's start another talk after Q2'08 GDP number is out. Roubini is so way off the mark it's not even funny.
Any truly dark ages style event will be met with tremendous liquidity injections.
My guess is that will be the coup de grace (or, uh, whiskey) that ushers in the Dark Ages...
Signal Conditioners? Nice! Until blown out with Amp and Volt surge. Useless. Unknown subatomic unit is overpowering our presumptions. Boom, like an EMP, grid down. Financial institutions like Babel, destroyed. Where to go from here? You better have hard-refined, unyielding basic skill sets. If not, well read Robinson Crusoe. Yum, yum. Flesh fed upon other beasts, grain, fine wine and cheeses. Grills up just wonderful. Another helping? You had to Ask? We will EAT YOU! THERE WILL BE BLOOD! and it will be delicious!
Other than that nothing to note here.
Son of mp has an engaging analogy for what's going on. He likens the activity in America to a flywheel. People toiled for decades to get the industrial flywheel spinning and, once it was, it took little effort to keep it going. At some point, however, people decided to stop adding energy to the wheel.
Now, they're extracting energy from the wheel. It's still spinning, but
not as fast as before. Everyone says, "Look, it's spinning, everything is fine!"
But, everything isn't fine. At some point, they'll no longer be able to extract any significant energy from the wheel and the game will be over.
As I write, America is selling off its machine tools, its productive capacity, for scrap value, sometimes less. The rest of the world is buying those tools and shipping goods back to us made with those same tools.
Why? I'm not sure, but I do know that part of the answer lies in the fact that most people today don't want to work in jobs where they get oil or grease on their hands. Young people go to college and get degrees, expecting to be managers of other people.
Friends, they are dead weight.
Oh, sure, you can argue that industry is obsolete. You can say that it's all about "information" now, but who's going to make your car, your airplane?
You want a defense industry? Sorry, it isn't going, it's gone. This country can no longer build a main battle tank. Remember how long it took get armored Humvees to Iraq. Well, I'll tell you why. This country no longer has the industrial capability to do it efficiently. That's why.
Hell, they barely have the capability to manufacture firearms. You want a nuclear reactor vessel? You won't get one here, you've got to go to Japan for it and here I was thinking that's "high tech."
Boys and girls, you've been bullshitted by the "captains" of industry, who have been busily selling off the seed corn in the name of quarterly profits to keep your 401K happy.
Enjoy it while you can, because the wheel is about to stop.
/rant off
CashOnlyHousing,
"Lack of inflation is good for long term investment decisions which is good for the economy."
I like this guy. Little on the hyper side. But couldn't agree more.
Cheers,
I foresee deflation up to a point, but equilibrium almost always sets the clock back to some acceptable reference point man -- these cats that are talking about the end of the world fail to see that only some parts, some fractions, components, elements will be shattered beyond repair. We are no where near a bottom in this subprime implosion, but IMHO, we will se more of the same, i.e, a perplexing blend of confusion as to why things are hanging together and that nagging curiosity as to why things are not in total chaos. The glue that hold together the fabric of our economic reality is coming unwound like an old baby blanket that has been worn down, barfed on, pee'd on, dragged around the yard a few times and hidden from view -- but in the final hour, the thing is still filled with love.
Aint that a nice ending?
Misean, imagine if engineers ran the Fed and Treasury. We can dream, can't we.
Actually I do a lot of economic analysis by modeling circuits and waveforms.
Frederic Mishkin-
"There's two ways of doing this. One is we can get fancy and do optimal control simulations, that's one way of doing it. Another way that Lars Spencer discussed, described it is, you put out different choices of paths, choose a path for inflation that has an implication for a path that you would expect to happen in output, then the committee would look at it and say 'what looks good'. So I call this the 'Mikey likes it' approach. If you are a little bit older and know what I'm talking about. Does mikey like it, and does it look reasonable, and that's actually exactly the way you want to think about doing monetary policy"
Now you know the truth. The Fed doesn't care about the quality of the numbers because the numbers don't directly factor into the "mikey likes it" decision making process.
Yeah! But give us a small time frame and corridor of urgency. WE could create ANYTHING! WE could develop any device for any need. Just give us the tools, we'll finish the job. Your cynicism presumes upon our defeatism. Won't happen. Exigency calls, we will develop and create. However, just holding steady now to see how the shakeout finishes. Thereupon, WE WILL OWN YOU, or make good products and services. Time is our only constraint.
"who have been busily selling off the seed corn in the name of quarterly profits to keep your 401K happy."
I'd say Amen mp, but I'm not particularly religious. So I'll just clap.
Cheers,
@misean: We have only one system: fractional reserve banking. Everything possible will be done to defend it. We're not going back to a gold standard.
Any substantial threat to the system (e.g. threat of Bear Stearns bankruptcy causing cascading cross defaults) will be met with overwhelming liquidity.
@CashOnlyHousing
I fell asleep on my mouse. SNORE!
I'll take your "nothingburger" and up it by a "dirt sandwich"
Sorry to step out of an interesting conversation for a few hours...
The "patient" (US economy, banking system & stock market) are on life support as we speak...and the "physicians" (Bush, Congress, Paulson, Bernanke/Fed, Cox) are ALL members of the "New" Working Group in a DAILY, desperate attempt to keep the "patient" alive for another day.
The problem is that heavy "medicine" being employed is insuring a significantly more painful eventual death.
Ministry of Truth,
"Misean, imagine if engineers ran the Fed and Treasury. We can dream, can't we.
Actually I do a lot of economic analysis by modeling circuits and waveforms."
Very interesting thoughts. An it gave me a pause. I dropped out of engineering my senior year and went econ...then ended up a network and systems engineer.
I find that modern econ is run by mathematical modelers. Now that's not engineering modelers, who actually have to make something that WORKS, but people who can play in fantasy land.
I became an Austrian (few mathematical models, very basic, just used to explain the logic of curve moves) because I found such models didn't have any way of modeling human behavior (or Human Action...as a toss to my name sake). So I think logical constructs are a better tool.
However, as I've been getting into Plasma Universe Theory, I may have to change my mind that such analysis, applying such thoughts as you have posited might be beneficial.
Haven't made up my mind yet, but it is an intriguing point of view.
Cheers,
Mr. Beach,
"will be met with overwhelming liquidity."
You failed to even address the problem with this. Sigh.
Cheers,
rich writes: .
Don't count on it. In India, the poor people can't afford toilet paper. They do handshakes with the left.
In Muslim countries you eat, turn pages of the Koran, and shake hands with the right, use the left for other things. Never offer a Muslim your left hand.
Weakest Banks and Thrifts\tData as of 06/20/2008
http://www.weissratings.com/HL_Bank.asp
Company Name\tState\tWeiss
Safety
Rating
INDYMAC BK FSB \tCA \t E-
INTEGRITY BK \tGA \t E-
FEDERAL TRUST BANK \tFL \t E-
MAGNET BANK \tUT \t E-
SOUTHERN COMMUNITY BK \tGA \t E-
FREEDOM BK \tFL \t E-
AMERICAN STERLING BK \tMO \t E-
FIRST PRIORITY BK \tFL \t E-
FIRST SUBURBAN NB \tIL \t E-
FIRST PERSONAL BK \tIL \t E-
ISN BK \tNJ \t E-
EBANK \tGA \t E-
MAIN ST BK \tMI \t E-
PENNSYLVANIA BUSINESS BK \tPA \t E-
STOCKMANS BANK \tOK \t E-
RIVERGREEN BK \tME \t E-
AMERIBANK INC \tWV \t E-
HORIZON BANK \tIA \t E-
PLATINUM COMMUNITY BK \tIL \t E-
FIRST TUSKEGEE BK \tAL \t E-
Even Warren Buffett can't escape the credit crunch.
Top-rated Berkshire Hathaway Inc. offered the highest yield over benchmark rates it's paid to issue $1 billion of five-year debt, according to data compiled by Bloomberg. The company, which gets about 40 percent of its revenue from finance-related businesses, is paying the same spreads as Coca-Cola Enterprises Inc., a bottling company rated six steps lower, paid yesterday.
Even as stocks rally, the Federal Reserve keeps its spigot open to Wall Street and federal regulators act to stop naked short-selling, bond investors aren't persuaded that the global credit crisis is easing. They're forcing the best-rated corporate borrowers, especially those tied to the finance industry, to pay the highest yields since the last recession.
Buffett Can't Escape Credit Pinch as Debt Costs Soar (Update2) - Bloomberg.com
Warren has about $30 billion PROBLEMS!!!
I thought Indian's were mostly hindu....not muslims?
mp, i dig conjure, but dig your/your son's rant more. Thanks
Actually Gary Shilling (http://www.agaryshilling.com) has been more accurate than Roubini - just not as publicly vocal. Go to his site and look at the INSIGHT newsletter page. His newsletter will cost you a few hundred, but you get 40+ pages of graphs and data per month. Uber-nerd indeed.
And I believe Gary's big final call is coming soon to an economy near you.
Exercise in talking my book ("A slim volume" --- Robyn)
Could we have a non-disastrous world with NO reserve currency? The dollar is a mess, but I see the alternatives also have problems.
I think the endgame could be some countries deciding that letting their currencies appreciate would gain more by increasing public purchasing power than it would cost with employment (this would be countries with safety nets, and/or ones that consider the unemployment victims expendable).
I have a vague sense that there could be a burst of dollar spending while they could still be used to get anything of value.
He says ... buy buy buy-
is he right??
anyone?
Cramer's always right. Just sell what he tells you to buy, because he's gonna start shorting it.
Cheers,
cramer watcher,
A random series of daily buy & sell calls, like BBSBSSSSBBSBSSBBSBSSSBBSBSSBBSS, is probably more accurate, and quite a bit less irritating.
Did anyone see this video from S&P?
The Big Picture
David Blitzer, managing director and chairman of the Index Committee at Standard and Poor's, discusses the latest S&P/Case Shiller home-price index, which showed price declines continued to worsen in May:
"Inflation sucks--but could cure the present predicament."
Inflation leads to social instability. that could lead anywhere.
rich, concerning Mr Beach - "How did you get to be so intelligent?"
I think Mr Beach is seeing the game plan. Anything to keep the velocity up. Because once it slows appreciably the next play in the playbook isn't so attractive.
There's a scramble play in the playbook too. It may start this weekend, with the Iranian showdown.
Subprime: Is the United States Repeating Japan's Experience?
Subprime: Is the United States Repeating Japan's Experience?
In the United States, my colleague at the Stern School, Nouriel Roubini, who is a perennial pessimist on economic issues, has suggested that the losses in the United States in the current subprime/financial sector problems could be a trillion dollars. But that's in a $13 trillion economy, so we're talking 8 percent loss. And again, this is the face value, not the final real cost, which is probably about half of that. So we're talking maybe, in a worst-case scenario, losses equivalent to 4-5 percent of GDP. That's half of the real value of the losses relative to the size of the economy in Japan. So there is really no comparison in the scale of the problem here.
"How many Pinocchios are enjoying Donkey Island? "
I often reflect on Donkey Island.
Credit default swap hit list
\t
Freescale Semiconductor Inc\t817\t-153\t
Wachovia Corp\t231\t-122\t
ArvinMeritor Inc\t807\t-120\t
TRW Automotive Inc\t511\t-94\t
MGIC Invt Corp\t866\t-87
"The economy? It will depend on the outcome of this geopolitical problem."
Could be true. The only black swan with a larger wingspan than war is a global natural calamity, and those are unpredictable.
"Inflation leads to social instability. that could lead anywhere."
Pavel Chichikov
Depression leads to social instability every time--and the citizens are well armed this time.
@Dr. Deflation,
Gary has been calling for deflation since 1979.
He correctly called the demise of OPEC and lost his job over it. He was right (oil $40 to $10) but it sure didn't cause deflation.
If you told me I could wake up each day and my savings would buy more, I would love it. Tain't gonna happen.
It seems velocity to be the only thing the Fed is really watching right now.
As far as I'm concerned housing, although an important part of the equation, is now old news. We know where housing is going.
As CR rightly points out, manufacturing is now on the front line of what's going to happen next.
This is where CR and I might differ. In my view, manufacturing is going to be a debacle, just as housing was.
Why? Just like housing, few realize just how badly in disarray the sector really is.
There is always a slowdown in the eighth year of a two-term presidency," Light said. "Both parties believe their candidate will win and they don't want to do anything that will embarrass their candidate."
oh boy, where to start...
the system isn't working if this issue of 'election paralysis' is accurate.
Chichikov meet Checkov (The Duel by Anton Chekhov - Read Print meet Pavlov.
In other words your crap gets shot and eaten by the dog.
"Depression leads to social instability every time--and the citizens are well armed this time."
Forget it. Not even the Whiskey Rebellion could pull it off, and that was over two hundred years ago.
Oh yeah! I called this. Sure I wasn't the only one...but I called this on my own analysis. So
:
"Many who were earning comfortable salaries as brokers and account managers are now turning to staffing agencies to find new jobs, and in many cases, to explore new careers.
As mortgage companies continue to fold, their employees are struggling, largely without success, to find jobs with comparable pay."
Mortgage professionals flooding temp agencies
Cheers,
Who thinks the market trades on the Advance GDP figure - estimate 2.4% ? I think it's a red herring, partly because it's skewed by the rebates and then because the deflator is a wishing number, but maybe I'm off base.
"bushwacker writes:
Chichikov meet Checkov (The Duel by Anton Chekhov - Read Print meet Pavlov.
In other words your crap gets shot and eaten by the dog."
Chekhov was a great writer and a fine human being. God bless his soul.
"Many who were earning comfortable salaries as brokers and account managers are now turning to staffing agencies to find new jobs, and in many cases, to explore new careers."
Enjoy AmeriCorps!
all this chest beating of gloom & doom is funny indeed. Yet, the broader market is not even down 20%. GDP growth in the 2nd quarter is expected to be about 2%.
Going by the endless drumming here and elsewhere, it would appear world is coming to an end. The Bear propensity to gloominess & dark pessimism is just outrageous. Little do they know, it is also injurious to their health.
CSC,
It gets better. This goes to 11:
"Many who were making six-figures at the height of the housing boom are now taking whatever they can to pay the bills."
6 figs to "Would you like fries with that?" is a bit of a hair cut.
Cheers,
I'm going fishing in alpine county for a few days starting sunday.Last year BS blew up when I was on a lovely trout stream.This year looks MUCH more exciting,so I recommend that those with colanders hook up a few 12 volt car batteries,crack a cold one and enjoy the show starting monday.I'll settle for fresh caught trout and some icy sierra nevada and come back to view the carnage refreshed.
That's a fake Sebastian. The real one always signs off with S. Just a troll. I'll call mock and tell him to get the fire arms ready.
Cheers,
Sebastian is right, there have been trillions lost, yet very little impact on the economy, thus, what is next?
@Checkikovrabinoskyvlabinowitzocizk
My mistake in spelling. Chekhov = Checkov. But your mistake in taking a full bullet between your unaware eyes. BTW Chekov makes a fine caliber ubersonic missile. Chew lead, funny russian misunderstander. BTW, how's your family? Did you like the pie and bakeries my wife sent over?
Ef, this is just so rich. Remeber I'm an IT guy...These people have no sk1||z at all:
"Besides competing with the other Arizonans looking for jobs, people from mortgage are also battling their lack of experience in other industries. While many were proficient in their previous positions, staffing agencies say not all job applicants are familiar with Microsoft Office, a skill required by most employers."
6 figures and no knowledge except fast talking people into option arms. Used car salesmen who think they're knowledge workers. This is mal-investment of human capital folks. As we Austrians call it.
Cheers,
The company, which gets about 40 percent of its revenue from finance-related businesses, is paying the same spreads as Coca-Cola Enterprises Inc., a bottling company rated six steps lower, paid yesterday.
Now that's scary... #1 Coca-Cola is considered poor rated. (I wasn't following them) #2, that Birkshire has issues raising $1Billion. Couldn't Warren just lend that to them?
Got Popcorn?
Neil
Privet, Pavel,
Loved Checkhov but Bulgakov was THE MAN.
Check out CMBX spreads at markit.com
Scary
I thought Chekov piloted the USS Enterprise? Under James T. Kirk...there's another one?
Cheers,
@Misean
In my neck of the woods, option arms means an AK with a foldable stock and sling. Whuts yers mean? You damn complex, incomprehensible august augur of almightyism?
bushwacker,
"In my neck of the woods, option arms means an AK with a foldable stock and sling. Whuts yers mean? You damn complex, incomprehensible august augur of almightyism?"
Still laughing...hard to type...ROFLMAO...
Thanks I needed that...
Bwahahahahaahahha.
Cheers,
"Privet, Pavel,
Loved Checkhov but Bulgakov was THE MAN."
Hi, Ross.
I stood at the exact spot in Patriarch's Ponds where the bottle of oil fell and broke. Bulgakov's memorial apartment is not too far from there. It's getting to be a long time, but faithful fans used to place a rose on the table, visible from the doorway..
Perhaps the Margarita Cafe is still across the street from the park, where I couldn't get a meal because the place was closed for lunch. That was then.
Glad to oblige. I'll eat my one allocate peanut for amusing the great OZ. Now back to sweeping the yellow brick road in my candy cane striped jammies.
Sebastian is right, there have been trillions lost, yet very little impact on the economy, thus, what is next?
Auto giant GM, Chrysler go under, more retailers like Sears go BK, middle class restaurateurs go out of business, lending stops in most segments including student loans, Commercial real estate values get a 40% haircut while in dollar terms res real estate on the coasts get 50% decreases in value...
Sebastian,
Do you think 10,900 was the bottom? I'm sensing it might be, but the financials always seem to find a way to out-do their previous poor performance.
I am also a little concerned that the global growth story may be getting long in tooth. Our industrial companies have done very well through most of this market turmoil. A global slow down will definitely hurt them.
Still the GDP and jobs numbers certainly do not indicate global Armageddon that is often suggested by the bearish contingent on this board.
Best,
Best,
As long as we're on the subject of Russia, I've seen what a society looks like when it utterly collapses. The US is nothing like that at all. A recession in the US would look like delirious prosperity in the Russia of 1991.
It was very scary, in a way. I spoke with Gen. Geli Batenin in the fall of '91, at the Institute for International Relations. He was adviser to the Russian government on nuclear weapons, and he was quite worried. People in the US were also concerned.
Nothing like that now.
Cramer Called bottom. Time to sell...
Privet Pavel,
I used to pass by there often. Just off Tverskaya Ulitsa. Close to Mayakovskaya metro?
Funny but I was re-reading "Heart Of A Dog" on vacation a few weeks ago. Sharik reminds me of Americans, slovenly proletarians.
Lived in Moscow off and on from 98 to 04. Across the river at Kutuzofsky 22.
From what I read, the 'boys' (Putin and Medvedev) have cornered the gas market around the Capsian. They are doing a deal with Iran-India-China. If the U.S. or Isreal are going to intervene, they better hurry.
Take care
BT writes:
The "patient" (US economy, banking system & stock market) are on life support as we speak...and the "physicians" (Bush, Congress, Paulson, Bernanke/Fed, Cox) are ALL members of the "New" Working Group in a DAILY, desperate attempt to keep the "patient" alive for another day.
The problem is that heavy "medicine" being employed is insuring a significantly more painful eventual death.
The physicians are curing all that ails the economy:
YouTube - PRJF Power Rangers Jungle Fury 22 ARISE THE CRYSTAL EYES 2/3
Peconic Bay - What stops the feedback loop this early in the down cycle ? More stimulus checks ? The consumer isn't credit worthy and lender capital is still getting destroyed, to $0.20 marks. 1200 sounds like resistance to any upside move after we break through 1080.
Yeah, Russia's a tough nut! Their centrifuges consisted entirely of gulag labour running 24/7 on lifted bicycles with a belt spinning out coal spendings. Their nuclear weapons were homing pigeons with X-ray chest plates strapped on. Total dominative reach? About 75 km. if carrier didn't get hungry.
And to go with all the corps losses and job losses, a little reading on your tax revenues..............
Safe Haven | US Tax Revenues Go Missing
Hi Ross,
"Close to Mayakovskaya metro?"
Yes, that's it.
I haven't been to Russia in 15 years. You undoubtedly know it by now better than I do.
"From what I read, the 'boys' (Putin and Medvedev) have cornered the gas market around the Capsian..."
My impression of Mr. Putin is that he is an extremely formidable person. I would not want to be someone he is annoyed at.
Hey Shogi,
Funny story. I was at a briefing in 82 and it seems there was concern on the part of some that Russia was importing via conduits 10's of thousands of Atari games. Seems they figured out a way to use the chips for their missle guidence systems.
Creative people.
"Seems they figured out a way to use the chips for their missle guidence systems."
And that's when we figured out we had them.
Yep but look at Moscow, Russia now, compared to NYC. Roles have changed............
The world's most expensive cities
Does anyone else see protectionism in our future ?
I think as long as the manufacturers have factories here they will be allowed to continue to ship goods
here no matter where they re produced
Moi Boyzsha, Pavel. You would not recogonize Moscow. It resembles any Western Megalopolis. At least Putin has banned those horrible casinos. Making the move to the hinterlands. Chuck Norris had an interest in one or two and would visit for PR purposes once or twice a year.
Flat prices have gone to the moon. I sold mine too early.
I miss Moscow. I truely felt more free there.
Thinking out loud here. My predictions are that when Barry becomes president that we will start getting a leadership directive assisted by government funding. If I were to guess what it would be, I would say an alternative energy push. Not only do we already have the presure now to do something, the US has the skills, money, inovative energy and entrepenural spirit to produce products for export, if not energy itself. I don't think it will be bridges to nowhere like Japan since that would not help pay down the national debt eventually.
Roubini has proved prescient so his words deserve far more respect than most others. I would like to know the European countries he thinks will NOT have a recession. He may say so but you have to pay to access his opinions now and I haven't done that. Anybody know?
Manufacturing...
I would love to make stuff in America and sell it, but there are two little problems with that in the USA:
1. Taxes
2. Health care
It's too risky. Hire somebody and they own your *ss down at the EDD. Don't hire somebody, they might own your *ss too. Seriously, one viable exit plan I have as a small business with employees in an employment bind is to simply go out of business.
barely,
Ol' Hank is backing that up with a $30+ billion in TIO added to the slosh tomorrow...
Jim,
Roubini and others believe that the southern members of the EU are at risk. Spain in particular but also southern France, Italy and Greece. Basically anyone that touches the Med.
IMO, The EU will begin cutting rates for political purposes. They do not want the 'dream' to unravel. But it will eventually.
"I miss Moscow. I truely felt more free there."
Ross,
If you felt freer in Moscow it certainly must have changed in a radical way.
I knew some people who had a good modern flat on Taganskaya. They were well connected, so perhaps they managed to hold onto it.
But did you ever see what a cold water communal flat looked like in Moscow? Good Lord, after 70 years of Soviet power, that's the best they could do?
Those poor people.
MOT,
"I don't think it will be bridges to nowhere like Japan since that would not help pay down the national debt eventually."
Well hopefully Ted "bridges to nowhere" Stevens indictment will help.
Cheers,
Back on topic. The U.S. has implemented a less than zero interest rate policy (inflation adjusted), fiscal stimulus (too little, too late IMHO), massive liquidity injections by the Fed and repeated attempts by the Treasury to limit the damages (MLEC to Covered bonds). Still the system is fragile and the credit crunch continues.
Roubini's earlier predictions are already reality, so I, for one, take his predictions seriously. If the EU and Asians start declining they will drag us down with them because of the export slowdown that CR mentions.
Great rant MP, I still like the smell of grease on my hands but I am a fossil and I don't have a lot of hope that all these college boys (and girls) that were raised to be managers will have a clue what to do when the manufacturing has to get local due to the cost of fuel and the loss of the dollars buying power.
I hope all the Fed's magic alphabetical potions work, because if they don't then the only other hope is a massive fiscal stimulus. War has been the traditional motivation for such as many have mentioned, but I would hope for something less destructive. Maybe I'm foolish, but I think that we could find something better than killing each other to bootstrap the world into a better system.
ee, you buy any crack.
Neil writes:
The company, which gets about 40 percent of its revenue from finance-related businesses, is paying the same spreads as Coca-Cola Enterprises Inc., a bottling company rated six steps lower, paid yesterday.
CCE ain't KO. The bottler has a bunch of Europe and a lot of the US, but it isn't the brand.
FASB postpones off-balance sheets 1 year.
FASB Postpones Off-Balance-Sheet Rule for a Year (Update1) - Bloomberg.com
Cook the books for another year boys!!!!!
oe,
"Ol' Hank is backing that up with a $30+ billion in TIO added to the slosh tomorrow..."
How is that a call for crack?
Cheers,
Gee are more Americans finally coming out of their stupor to see that 25+ yrs of industrial production decline and increasingly financial engineered driven bullshit for the US economy ( especially last 8 yrs under Bush ) with massive market bubbles has created systemic damage.
BOL to American middle class rubes that were sold on the fake American dream....time to 'buck up' for hard times sucker !
American dream....time to 'buck up' for hard times sucker !
i got my helmet on. Yee hawwww
Hey Pav,
Yes, I visited some friends close to the old Avtovaz plant once. Moscow is now like NYC. High rent districts and places to visit only with protection.
Moscow has made an incredible transition. Most of the flats are novy remont. Lushkov really is an elcellent mayor. But this is just Moscow. Go 100km in any direction and it is as you probably remember it.
But there is alway dacha. Humble holy dacha. Where a man can go on weekends and 'dig' potatos.
cd,
I was following this am...but had mucho work..did not see end of day shite.
And with Coxsucker saying ALL shorts will get hit...Don't these fucks know they did this shite during the Great Depression...I'm replacing the batteries in the Super Colander Tin Foil Hat. This is annoying.
By annoying I mean pissing me the Ef off!
Cheers,
MoT,
I think the next turn of events will also put the giddy up on the Alaska natural gas pipeline...huge infrastructure project that will provide domestic energy needs - also the tar sands are a gas pig and will need more gas (and process water) for any serious ramp-up...
To paraphrase - "deflation is always and everywhere a monetary phenomena"
The ambition of young people these days is to sit on their asses in a call center, not doing a hell of a lot, then inheriting and living off of their parents estate...........Oh! Wait! Estate!................
Misean- for your wanna be execs.
YouTube - Muppets sing Jim Croce's "Working at the Carwash Blues"
Misean,
Think that was a ref to 'market crack' the long oil/short financials trade...well got some SKF in one account and am basically always long oil working in the industry...OMG does that mean I am a crackhead?! lol
Barely,
Everything depends on employment. Remember, that much of what consumers purchase is sourced offshore, so the impact of a downturn in consumer spending may not have the same impact on employment as it did during the last consumer led recession in 1991.
I work in the semiconductor industry. After the tech wreck of 2000-01 our industry lost a lot of jobs. Silicon Valley employment shrank by 100,000. Most of those job ended up being move to Asia when the tech sector recovered. Semiconductor companies run with lean headcount and inventories, so they seem to be able to respond to inflections in demand with more agility.
I suspect, but don't know for sure, that the same is true in many other sectors.
It may be possible that the majority of the damaged stays in housing and finance. If so, we muddle through without too much pain.
Although Roubini was certainly right to be bearish on the U.S., it's possible that the decoupling theory ain't dead.
Slowing demand in the developed countries could reduce the pressure on commodity prices. If that were too happen, there is much less need for China and India to slow their growth. They still have sufficient infrastructure development needs that they could continue to print some very impressive growth numbers, even if they fall slightly.
i got my helmet on. Yee hawwww
Tim | 07.30.08 - 10:09 pm | #
You mean crash and burn helmet
OT: PAB Bankshares, Inc. Announces Second Quarter 2008 Financial Results
Page Cannot Be Found
"As we continue to workout or liquidate our problem assets, our focus will remain on preserving our strong capital position to enable us to pursue potential strategic opportunities within our markets once economic conditions improve. We reduced our cash dividend by 35% during the quarter in order to better balance our dividend payout to earnings and to maintain our capital position. Although we do not consider it necessary today, we are prepared to further reduce our dividend or increase our capital position via qualifying debt or equity issuances," stated Welsh.
energyecon
Yes I think you are right, also the new gas fracing technology is to have boosted US supply to 100 years. Gas will be it......
The race to be the "worlds lowest cost producer is killing the people of the developing world. Its a race where everyone looses. I never bought the global growth story, coupled, decoupled, single or complicated
"Cook the books for another year boys!!!!!"
cd
or "Cook the books until after the elections, boys!!!!"
CNBC clowns are criminals.
AND
People who listen to CNBC are morons.
THIS IS DISGUSTING.
http://www.cnbc.com/id/15840232?video=808133124&play=1Like%20this%20comment?%20[yes]%20[no]%20(Score:%200%20by%200)
Thank God we bought our Prague apartment 11 yrs. ago (wife's Czech). That's been our best performing "asset" over the past decade. Sadly, Prague beer is no longer dirt cheap. Food prices, what we're familiar with since we only reside there for a few summer weeks, are the same as in LA now. Czech koruna up 23% against USD last 7 mos.
"Its a race where everyone loses."
I thought that was the Neanderthals.
Canadian,
Yes that well stimulation is pretty cool stuff, those wells come on like gangbusters, go through a savage decline then bleed gas for decades...just going to take ALOT of wells.
Buy drillers...........
Canadian mit ze popcorn,
Agree like totally. I (unfortunately) have acerage between the Barnett shale and the Haleyville shale. I'm sure energycon can fill in details but with fracking tech, these could be HUGE.
By the way. The producers are paying $25,000 an acre bonuses and a 25% overide.
Hello, anyone home?
New company offers housing foreclosure solution
New company offers housing foreclosure solution - ABC 4.com - Salt Lake City, Utah News
By making a few simple improvements, Velocity of Money started bringing in buyers. Velocity of Moneys principle owner, Andrew Van Noy said, The market changed and we had a new strategy and luckily we were able to take advantage of it.
The company took over the mortgages, invested in landscaping, and furnished the homes.
It was really important for us to have an image of a nice inviting environment for people, said Velocity of Moneys project manager, Patrick Williams.
Prospective home owners were able to lease with the option to buy, in many cases at the price they were currently paying for rent. Andrew Van Noy says even in slow economies people want to improve their lives and his company is offering a way for families to do that.
The Chases, in turn, were able to shed an unbearable mortgage burden by trading the equity in their two homes for another property in St. George which reduced their monthly payment to $1,600, something they say they can manage.
We didnt get anything at this point but we didnt lose everything like some of these people have, said Susan.
energyecon,
Ah yes. Well I'm sure you know where I was going with it.
Cheers,
Nunca,
"To paraphrase - "deflation is always and everywhere a monetary phenomena"
Nice.
Cheers,
"The producers are paying $25,000 an acre bonuses and a 25% overide."
I think you mean 25% LOR.
Elvis,
I sit corrected. Thanks
stdfs,
Well I can't thank enough for a muppets moment.
Cheers,
Ross,
Yeeeeeehaw! Screw the Clampetts, theres gold in them thar shales!
Man that is a whopper of an override, that has to make the breakeven economics a bit challenging...wasn't Chesapeake shutting in production when nat gas was under $7/mcf (been a little while so recollection hazy)?
Interesting?
http://www.hm-treasury.gov.uk/media/3/E/crosby290708.pdf
stdfs,
Right back at ya...
YouTube - Buddy Rich Live at the Muppets Show
Cheers
A 1/4 landowners royalty is pretty typical today for an area with potentially enormous reserves. $25k/acre is frenzy. Unless you plan on drilling every lease, that is a whole lot of wasted money. I suspect $25k might be an extreme exception, but, I really have no idea in Canadian formations in which you are.
oh yeah and this of course,
YouTube -
Cheers,
Barnett and Haleyville shakes, Elvis...you thinkin' that is Alberta somewheres?
Elvis,
$25k is typical if you are in the heart of the formation. As you step out, it declines to $13k or so. Still not bad pesos for us poor starving Texicans.
Queen's stockbroker raided by police and city watchdogs in biggest ever crackdown on insider trading | Mail Online
First Martha Stewart, now the Queen.
*shales - d'oh!
Whoops, I really wasn't paying too much attention. I saw Canada and something. I was a little too far north. That's a bunch of money.
Energyecon,
Where you at boy?
One of my best friends is an old retired geophyisist for Arco. He turned me on to Mitchel Energy nee Devon about 03.
I love 4 baggers. The Marcellus is supposed to be the next big hottie. Also Fayetteville where those Arkies are born with one leg shorter than the other. Any insights?
I think the financial heart of the US is shifting from Manhattan to Texas.
Ross, Elvis:
Working for a major these days, last I was with an independent those were statistical plays, so you pretty damn near drilled every lease right up - 20% or so were a bust, 60% or so were more or less breakeven and the 20% that were boomers carried the whole show...heard if anyone has pegged a seismic attribute or other geophysical signature to improve their drilling location targets?
Elvis writes:
"Its a race where everyone loses."
I thought that was the Neanderthals.
Elvis | 07.30.08 - 10:19 pm | #
Elvis, you obviously don't live in Idaho.
Houston these days...
@ Misean
Moby Dick?...Leviathan. Gobblin' up the guppies? Got it! Gotta keep the serfs on the land. Cull the hive, reap the honey harvest. Just another word for gettin' screwed over.
Energyecon,
I'm just a dumb old economist/analyst. No real O&G expertise but I used to read the Herold Reports.
If anyone does, Slum-berger probably will or some really smart computer kid with an independent
Ross,
Working international these days, though I try to keep up with domestic - have a BIL in Midland, development geologist working for an independent out there. Life sounds pretty sweet though it sounds like housing in Midland is going through its own bubblicious times...of course students of history (and the survivors who lived it, I'm in the student category) recall the "two for one" days for houses in Midland and the first one was damn near free.
I think the financial heart of the US is shifting from Manhattan to Texas.
Elvis, I sure as hell hope so. For purely selfish reasons, of course.
Ross,
Not all that different - just mix in enough geology and petroleum engineering to talk dangerously - hope they map an extension out your way!
@Ross,
I know - I hold his (continued) generalized deflation argument at arms length. But his prediction of this credit crunch has been spot on. He profited mightily from it too I understand.
But ignoring generalized CPI deflation, we are seeing credit and house price deflation. After reading his stuff and understanding it, I've also profited mightily. Deflation comes in many forms, as does inflation.
Nite all - got to go read my daughter a book - type at you all later.
The Barnett and Fayetteville shale are bubbles waiting to bust. In 12-18 months, the U.S. will be awash in natural gas and prices will be back around $4-5. A lot of the drillers there will lose their shirts.
energyecon,
I don't know that much about oil and gas either. Just enough to be dangerous. And enough to know that I have no idea about the future direction of oil. I think the drilling companies will be extremely busy over the next few years, but I won't trade oil futures.
rich,
At $25k an acre bonus, you might be right.
Energyecon,
I hear you. Had friends in Big Spring back in the 70's. Enjoy while it lasts.
My Arco friend now consults. He makes more in a few days than he made in a month at the major. Cut his teeth on the N. Slope and now does Libya. He used to work Venezuela before Chavez.
I still can't convince him that the Canadian Tar sands are for real. He is old school like me, I guess.
Coming back from Colorado recently and we flew over Ft. Worth. Amazing! A disguised rig every square mile. It reminded me of OK city in the 60's. A really nice wood fence in a residential neighborhood concealing a pump jack.
Misean:
Don't let them fool you. I love numbers but they will NEVER predict human behavior.
My theory is that ideas travel at at least the speed of light, and cause totally unpredictable chain reactions.
Remember the Chinese kid who stood in front of the tank? Some day a factory worker will stand up and say "I want my MTV". No one can stop the Chinese workforce acting ensemble.
Here's something to think about:
This is the first serious downturn where bloggers have existed. Indeed, Bair and co. are starting to even highlight their influence. Roubini (and all of you) wouldn't have had the voice he has today in the past. This is the first downturn where the doom and gloomers have had an ability to preempt the slow moving MSM.
What's the result? I conjecture that the blogs of today are the magazine covers of yesterday. It's ironic, but the blogs broadcasting of Roubini's et al.'s foresight potentially increases the likelihood of type I errors in calling a bottom. In other words, we're seeing the magazine covers before the magazine covers have even been published.
I believe this will prolong the downturn. You only have yourselves to blame.
cable-
I saw that and my immediate thought was that it's published by the wrong country......
That's what are situation is like X 5...
You'll never see anything like that from a "professional" institution as it would be just dismissed as shorty's fault.
BTW back from Vegas.......what a red herring that place will become. Almost 13K new rooms coming on line at the end of '09 and gaming revs. are already taking a huge hit. Drove out in the 'burbs and can report that stupidity is still alive and well-both CR and SFR's. Many new projects being worked on as if it was still '02-'05.
Many CRE sites still priced at well over $18 a square foot...actual transactions going off at well below that value. Know of one that was in a recently completed dev. just south east of the strip (completed in '04) that just leased at....get this.....$2.00 per sq ft. with a 4 year agreement.
I also observed lower limits at three high end casinos. Something I have not seen for over 15 years. They actually had $5 black jack tables at Wynne, Palazzo and Bellagio.
They were full though.....spoke to a high limit pit boss at Wynne...says the whales are virtually extinct excepting a few here and there. Says it's worse than early 90's already.
Having said that there were still many people enjoying themselves regardless of financial situations. But I suspect as the ATM has been turned off over the last year the ramifications of over-building in LV will most certainly be borne out regardless of whatever high end customers they can attract. See Macau for the problems that has on an economy built for the wealthy.
Ciao
MS
"Coming back from Colorado recently and we flew over Ft. Worth" Ross | 07.30.08 - 10:59 pm
Did you catch sight of Rising Star or Cross Plains just to the west?
I used to run well logs on gas wells out there over 30 years ago.
"You only have yourselves to blame."
I've been blaming myself for a long time, and people on this blog get mad at me. If someone really is to blame (ie me), it takes away their perceived fun of blaming others.
Bloggers/central/bankers of the world unite! You have only yourselves to blame!
MS,
Nice to have you back. You were compted of course.
Herr Hess,
Bloggers causing a prolonged downturn? Most of us are penny anti investors. Myself, I'm working on my 3rd million! Gave upon the first 2.
Information has always been available if one knew how to access it. IMO, the mainstream media has been politicized to the point of being shills. They are the ones who kept the folly going.
If an idiot like me saw the train wreck coming, why didn't the 'street'?
Investing has become like a casino. When I got into the business, they were gearing up for 20 million share days at the NYSE. Lucky for us they can't ban us for 'card counting'.
I've become a Spenglarian pirate. I 'intervene amongst the interveners and gamble with money as a ware'.
"the model followed by dollar hoarders is to export goods in exchange for USD paper. This is all they know to do."
Ya, just wait 'till we lop off a bunch of zeros from our currency. That 'ill teach 'em.
MS Welkomen,
What do you think of the 3 hundred point moves we had with below average volume???
What was the traffic like in LV?
Zaftra otrom, tovarische
Quiet on the farm. The horses are nodding. I'm going to tip a cow and go to bed.
Yeah,
well first I would expect everyone playing the de-evaluation game, trying to lower rate for their currency against $. SInce it is not going to work - us having lower interest rate because we are important market and foreign firms would rather see their margin disappear then rise prices and and lose market share. By keeping the prices lower in here, they will keep inflation lower in here.
Than the second round of national finger-pointing will start - trade barriers to protect national manufactures. Foreign government will act first, we will retaliate, just because the populous is tired of free trade. So the second attempt will fail as fast as the first one. Failures of those two will lead some governments to take much more radical steps and in the end we all will be screwed by much higher degree.
Since the BRIC countries found so much confidence lately, they will fail to adjust in the timely manner and will suffer the worst of it.
(anyway, somewhere deep inside I hope this scenario will never happen. I hope that rationalism will overcome our "humanity" and we all-world, act with the reason and not due to our fears. however knowing our historical drive towards stupidity during the harsh times, i say fat chance. we are screwed.
)
The only things we have to fear are
fear itself changing slowly . public schools .
mental flab . flab . rednecks . purchased government
.
termites . intolerance of casualties . casualties
failing to help deserving farmers . our hidden legal system
complacency . easy trust . orbits of ignorance .
ignorance of orbits . MTV . rap/skinhead culture
.
the American way . ideology . rats .
anthrax . smallpox . mosquitoes . fast food
beef prions . sea level . Katrina I & II .
President McCain . 12th Imamists . lead paint dust .
.
legacy asbestos . mold spores . landlords .
Ohio Courts . dirty bombs . clean bombs . selfism .
mortgages . Wall Street . Larry Kudlow . bird poop
smallfoot more consumers . California . eMe13
Putin . France . the French ..
.
Damn, that cow was hard to tip. Sagging udders keep a low center of gravity.
Edd,
You summed it up nicely. You forgot to tell us where we go to resign!
UMmm lead paint dust. Sweet.
I wanted to resign in 83.
But constructing a vague mission carried the issue.
There are thousands of predators that
should resign; better than mangling the innocent.
I'll fill out the papers.
They should send me the forms, park at
the morgue, and getter done.
Those with ethics and mission must not
resign too soon; they are needed at the fronts.
UMmm lead paint dust. Sweet.
Actually lead does taste sweet.
The post-Ionian Romans who could splurge used lead flakes to flavor food.
If your house air has a sweet taste,
get a lead test kit for the air.
Sliding windows are a big source of
leaded paint dust. Danger close.
Yeah, Vegas must be hurting. Yesterday, I just got my 2nd free trip comp in the mail. 3 days/2 nights at the Hard Rock with a comp'd meal for 2 up to $150. Earlier this year it was the Wynn that sent me a similar comp package.
I'm a small timer, seriously. Used to play a lot of low stakes online poker, so I guess my name found its way onto some mailing list.
They won't get much $$ out of me... I'll eat their free food, maybe win or lose a few hundred at poker, but mostly I'll spend all my time at the Hard Rock pool chasing co-eds and cougars.
Sorry if this is a repost.
Asia Times Online :: China News, China Business News, Taiwan and Hong Kong
News and Business.
A very interesting take on the "Dollar Hegemony".
Story from Dec. 9, 2005:
Stocks ain't cheap
P/E ratios remains well above historical norms Mark Hulbert - MarketWatch
Consider first the ratio calculated using trailing earnings. For the trailing four quarters, according to Standard & Poor's, reported earnings per share for the S&P 500 have totaled $67, which results in a current P/E ratio of 18.7. Between 1871 and 2003, according to Asness and Cascells, the median of P/E ratios calculated in this way is 13.7.
Based on trailing earnings, therefore, the stock market's current P/E suggests that the market is 36% overvalued.
Consider next the ratio calculated using forward earnings. According to S&P, analysts are projecting total operating earnings per share for 2006 to be $88.59, which yields a P/E ratio of 14.2. The median of comparably-calculated P/E ratios for the 1871-2003 period is around 11, according to estimates from Asness and Casscells.
So according to this approach to calculating P/E ratios, the market is 29% overvalued.
Fast Forward today: S&P 500 closes @ 1,284.26
P/E @ 16.31
EPS @ 78.74
Yield @ 2.15%
The question I have, has to do with how the EPS of the S&P corporations has increased, while trillions have been lost. That does not compute.
Re: Asia Times
Wow. Looks like China is ripe for a communist revolution. Good thing that article was so technical that those factory workers at the export plants won't have time to digest it ...
for a while.
Einstein: Stock Buyback
Not that anyone is actually online right now, so I'll be brief.
Until a major asymmetric financial event occurs, it's the status quo.
When the "financial 9/11" hits, it could be ugly.
But who wants to wait for that?
This is the first downturn where the doom and gloomers have had an ability to preempt the slow moving MSM.
Isn't that a rather short-sighted historical perspective? The definition for MSM has changed throughout the past century, starting with newspapers and, one by one, adding radio, tv and now internet. This same discussion happened 40 years ago as (then) New Media opened up New Avenues of expression and dissemination.
This is 2008 - well run blogs ARE part of the MSM, with the same ratio of goodness vs. nonsense as all the other forms of communication.
Let's not forget graffitti, which I believe predates the Romans.
rowan,
That fits, doesn't it:
One other reason for a company to buy back its own stock is to reward holders of stock options. Option holders are hurt by dividend payments, since, typically, they are not eligible to receive them. A share buyback program may increase the value of remaining shares (if the buyback is executed when shares are underpriced); if so, option holders benefit. A dividend payment short term always decreases the value of shares after the payment, so, on the day shares go ex-dividend, option holders always lose. Finally, if the sellers into a corporate buyback are actually the option holders themselves, they may directly benefit from temporarily unrealistically favorable pricing.
MP
I don't care for grease on my hands but good old black dirt is another matter. More americans need to be involved in agriculture as energy costs increase. Oh I forgot too many people would rather get handouts that actually work in the sun picking beans for 12 hours. BTW landscaping is not agriculture. Wait till theres no food in the cities, and most americans are several generations removed from farming. Any plan to revitalize America must include agriculture. Don't even get me started on the farm bill. For the record I have a serious garden but, no aspirations/delusions about self sufficiency.
"Go 100km in any direction and it is as you probably remember it."
Privy, potato patch, and a motorcycle leaning against the privy?
The US of A economy just can't seem to go into a "recession as definded by the US of A" government.
Stocks head for higher open ahead of GDP reading
Thursday July 31, 8:11 am ET
By Tim Paradis, AP Business Writer
US stocks head for moderately higher open as investors await reading on gross domestic product
NEW YORK (AP) -- U.S. stocks headed for a moderately higher open Thursday as investors await a key reading on the nation's economic output to determine whether a two-day rally will continue.
Wall Street expects the Commerce Department to report that gross domestic product advanced in the second quarter as consumers cashed tax rebate checks. Economists polled by Thomson Financial/IFR predict, on average, that GDP will have increased at a 2.4 percent annualized rate. The report is due at 8:30 a.m. EDT.