Fiscal Deficits Worsen for States
Submitted by
CalculatedRisk on Wed, 07/23/2008 - 9:44am (210 comments)
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that must not include California-I believe they are 25 mil in the red alone..
Oh Arnold...
good
cd,
$25B...
Just sayin'
Cheers,
Time for the states to start downsizing!
Not spending more than you make = Hoover Economics
Good thing they mostly are mandated to run balanced budgets
It's clear that after we're done bailing out WS, we need to develop a plan to bailout
a) the states,
b) counties,
c) school districts,
d) and finally the lowly tax payers.
Funding will be provided by the printing presses.
Good thing they mostly are mandated to run balanced budgets
That's why I think we're hearing a lot about a stimulus package for the states.
Choose your poison:
a) Hoover Economics
b) Zimbabwe Economics
We lost any good options back in the mid 1990s.
As of March, NY state was running a 5 billion deficit.
curious-er writes:
Funding will be provided by the printing presses.
It's the FED's way of saying 'you have been assimilated
I'll Zibabwe...Their German paper supplier just cut them off. Bah! With good ol' 'merican ingenuity, we could turn whole forests into billion dollar bills.
And we'll all get to call ourselves billionares as we crawl into our refrigerator boxes to go to sleep hungry again.
Cheers,
Fortunately, since any surplus in the good times was taken by Republicans as evidence that taxes were too high, we have huge reserves banked to tide us over in the bad times.
Oh, wait...
HURRY issue more state bonds!
Fortunately, since any surplus in the good times was taken by Republicans as evidence that taxes were too high, we have huge reserves banked to tide us over in the bad times.
In all fairness, the same can be said for Dems who immediately created new programs to spend the surpluses.
I myself lean Dem, but I have heard both sides of this argument.
Seems like we all owe an apology to Gray Davis and Andy Fastow. Men just slightly before their time.
Choose your poison:
a) Hoover Economics
b) Zimbabwe Economics
We lost any good options back in the mid 1990s.
Does option (b) come with the Zimbabwe politics as a package deal? If so, I'll choose the Hoover Economics, please.
California admits to a current shortfall of $18.5 billion. The reality is that the State is scheduled to spend/encumber $22+ billion more than they collect. The difference is one time asset sales or debt going to operating expenses. California does not have a revenue problem, it has a spending problem. It also has a Constitution for all the good that will do.
IMO, and it is opinion, revenues will end up $4-$5 billion below their LAO projections and there exists a near certainty that the State will be forced to make emergency backfills to the counties and cities of a similar magnitude.
In a weird karma the Democrat Legislature is about to prove the long asserted Republican adopted theory of the Laffer Curve.
Oh, did I mention the multibillions the Federal magistrate has ordered in new prison healthcare facilities? Kelso has already let contracts for engineering studies a construction analyses and dropped the bill on the Treasury. Nice that the Federal government is extending a right to prisoners not afforded the general public.
The CA budget agreement is about 2-3 weeks away (due Jul 1st). At that time the 5 leaders will hold a press conference, announce success, and the plan won't survive the afternoon news cycle.
Men just slightly before their time.
Yes, visionaries!
In fact, some of the games they were playing in the energy markets, like withholding production on purpose, may have been the forerunner of the SEC's rules concerning the Group of 19.
When state, county and city employees start getting layoff notices (after state legislatures cut spending to balance their budgets) the housing/banking crisis will get much worse - the sort of death spiral that happened in the 1930's. So those that gloat may not like the result.
As the aftermath of of the mild turndown in early 2000's, the state of Oregon had cut budgets past the bone all the way to taking limbs. The Oregon State Police were down to 5 troopers per shift for the entire state on some shifts. Schools were in dire straits, and medical program cuts threw many out of the ERs.
You want a third-world country, this is the way to get there quickly.
Here's an idea for Calif: just borrow against future lottery money.
friardaddy writes:
Here's an idea for Calif: just borrow against future lottery money.
Only one problem with that idea, it'll be back.
Here's an idea for Calif: just borrow against future lottery money.
Why not i am already borrowing against future winnings
Times are tough for everyone:
Costco Wholesale Corp., the largest U.S. warehouse-club chain, fell the most in more than three years in Nasdaq trading after saying fourth-quarter earnings would be ``well below'' analysts' estimates because of energy costs.
Costco kept prices lower than planned to retain customers, Chief Financial Officer Richard Galanti said today in a statement. The Issaquah, Washington-based company also said it will repurchase an extra $1 billion of its stock.
Record fuel and soaring food costs prompted U.S. consumers to trim spending and make fewer trips to stores. The gasoline unit will suffer a ``negative swing'' in profit, Galanti said. Costco's expenses increased, and fuel profit margin likely narrowed as it tried to lure people with lower prices.
Costco Has Biggest Drop Since 2003 on Profit Forecast (Update2) - Bloomberg.com
....................
friardaddy writes:
Here's an idea for Calif: just borrow against future lottery money.
Lottery money goes to schools can't do this.
Go to Bloomberg and watch Marc Faber's video.
Misean,
I have an old bill from the weimer era, and you can see how they simply restamped the bill with several extra zeros at the end.
For us in the electronic age, I believe floating point numbers used in most banking applications are 64-bit, so 2^63 should be it. FYI: 1 billion is ~2^30, so the presses can run for awhile.
MS! look at Wamu the sacrificial lamb. How come the Fed is not saving this stock where is their patriotism?
"But, but... that lottery money was for education."
"Don't worry, we'll use money from the general fund for education."
"There's money in the general fund?"
"Not really."
OT, but. . . :
"Beige Book: Prices rising even as the economy slows."
Hmmmm....deflation?
Prices rising even as economy slows, Beige Book finds - MarketWatch
How many votes for selling California and Florida to Dubai Holding? How about TDIC?
UPDATE 2-NY gov. sees Wall Street bonus cuts, weak economy
| Reuters
The above link made me want blow my lunch the other day.
Believe it or not, but NY's governor wants federal help for wall street firms. Last years $33 billion wall street bonus pool is projected to fall 20% in 2008 thereby reducing NY's state tax revenues.
You just can't make this stuff up. Apparently, we work to serve wall street bonuses and NY tax revenues. Also, it seems wall street firms are raising capital to fund bonuses.
AHHHHHHHHH! This is just another reason why bailouts SUCK!
More Rubbish
Fannie, Freddie Rescue Plan May Cost $1 Trillion, Bunning Says
Fannie, Freddie Rescue Plan May Cost $1 Trillion, Bunning Says - Bloomberg.com
IF you are Andy Fastow you've got to be stewing about this. How is what he did any different than the banks or what happened in Ca. with the "electricity crisis" with regards to oil trading.
All brought to you by one common thread.
and Ken Lay is not dead either....
Ciao
MS
I have an old bill from the weimer era, and you can see how they simply restamped the bill with several extra zeros at the end.
And I have some old mailed envelopes (which philatelists call "covers") from that period that are covered with postage stamps--postal rates rose so rapidly that people had to use a whole sheet of stamps to send one letter.
To see some examples, go to ebay and search "inflation cover" under stamp collecting.
Get to tha chppah !
If they laid off most of the cops maybe we wouldn't be such a police state anymore.
Rob Dawg,
Yep happens the same way every year.
Revenue's climbed like 40% over 03-07 and they spent every penny. Now, instead of cutting pet programs, they'll jack the schools, CHP, and other useful services.
This year is gonna be fun to watch. Not so much to live through though.
Cheers,
BTW I see you can now go to eBay and buy Zimbabwe inflation covers too. Might be a nice addition to my collection.
CA was 14 BILLION in the hole!.
The only good news is the municipalities are doing better than expected due to prop 13 reform. Despite the massive decline in property values most homes are still assessed below market. This group of homes will be reassessed 2% higher this year.
all this bailout mania going on today and yet the dollar continues it's (totally temporary IMO) ascent.
http://www.weblinks247.com/indexes/idx24_usd_en_2.gif
Gotta love that..
Ciao
MS
to much to bitch about here, a very poor signal
The local gov has a 'solution' at least here in Cook county, Illinois. They just increase property taxes. I (and several neighbors that I know of) just got a 44% property tax increase for our house and thats while the property values are going down all around and more and more foreclosures in the area. We are talking about almost $3000 more per year.
I don't think it's realistic for the U.S. govt. to try to bail out state/local govts. All that would accomplish is the dismantling of federalism. Too many people distrust the feds for that to happen.
I also can't see the most stressed state/local govts. bailing themselves out. I think their fiscal problems are nearly permanent. California, New Jersey, Ohio, Michigan and many cities and counties like Vallejo. The taxpayers won't allow it. They'll protest, as we've already seen in Jeff County, Alabama.
It means defaults. Endless defaults. Probably for the rest of your lifetime, on and off. I feel sorry for people who have public pensions. No real safety net.
o doubt about it.....WM is next..just broke $5.
That means say goodbye to any mutual fund buying....most have a floor of $5.
Ciao
MS
Ciao
MS
all this bailout mania going on today and yet the dollar continues it's (totally temporary IMO) ascent.
They used to blame oil's rise on dollar's decline. Now they explain dollar's rise with oil's decline. Cause and effect just got switched around.
MS,
I don't like the dollar, but where do you go? The euro, yen and aussie $ look ok, but how much or your nut do you really want there?
Gold? Sure, but again, how much and at what price. Oil? Same as gold.
Basically, we're going to continue to be screwed by stagflation imho.
No safe harbors.
No way will they trim the goon squads. I've already noticed an increase in "revenue generation" along the highways and streets. The citizens will fund the boots on our necks.
Al Qaeda wont get ya, but Deputy Dan will taze your civillian ass.
You don;t really think the local governments will cut back so easily. They are going down with a fight - and it will take collective action at the ballot to reign in the beast that was unleashed by the record tax revenue take on debt/consumption binge. Crumbling from below is about right
you cant make this up...Paulson and company-no relation to treasury guy..
after shorting banks is now going to start helping them..
New Paulson fund may invest in banks that need capital - MarketWatch
I have to agree. I get a kick out of people that say "put your $$$ in TIPS bonds". The absolute fallacy of that defies description.....sure I'll take a financial product tied to fake inflation #'s...where do I sign?
Ciao
MS
Go Wamu Woohoo!
Angry Saver
May I point you to agricultural commodities. Less farmland abroad and home for worthless developments. More people who need to eat. Prices will rise.
Rich,
How about some sympathy for those of us that have no public pensions.
Most public pensions are indexed to cpi inflation. Those same defaulting pensions will be bailed out just like housing. The rest of us working stiffs will foot the bill.
"Those same defaulting pensions will be bailed out just like housing"
No way that happens IMO....just another way to stick it to you.
Why would they?? leaving aside the very obvious reasons why they should....they don't seem to care one way or the other. All they are worried about is broker's and primary dealers.
Ciao
MS
Ciao
MS
So... is California too big to fail? The United States?
If the entire planet earth is too big to fail, who will be our backstop?
Re: Lottery Money. Try to get a detailed budget of where that money goes. It's a few billion per year, and still plenty, but just a drop in the total education budget bucket.
That reminds me, we'd better start our economic bucket lists.
Related to deficits in general: Eitan Bernstein of "FBR" was on cnbc this morning. I only caught the end of what he was talking about. Seems he's an ethanol/energy analyst, but can't find any information about his career previous to FBR. His bio page was removed from their website.
We may indeed be trying hard to emulate the Weimar and Zimbabwe. In the next few days Congress is going to give Hanky Panky and Bennie & the Jets a blank check that we are on the hook for.
Isn't it nice to be a Wall Street billionaire? Heads I win speculating on credit on the up swing - tails you Mr. Taxpayer lose as you have to pay for all my gambling losses on the downswing.
Tim,
Land has always taken a beating during a real estate bust. I've been through this before.
Right now I own raw land in rural FL. The "price" is dropping like a stone.
The "value" to me is the same though. R & R away from the foolishness is priceless.
Looks like WaMu is being allowed an orderly exit into that great big conference room in the sky.
MS,
The so called pension from my first job defaulted due to what I consider fraud. Guess what, the fed bailed it out under ERISA I believe. You take a big hair cut though.
I just don't see the fed allowing state pensions to fail while dumb working stiffs are around to take the hit.
Our incentives our SOOOO scewed up.
Is the pizza any good in Seatle?
Cheers,
Tim- "Fannie, Freddie Rescue Plan May Cost $1 Trillion, Bunning Says"
Well, let's see. As part of the package, they're raising the debt ceiling from $9.815 trillion to $10.6 trillion, or $785 billion.
I assume they're not doing that just for shits and grins.
Significant portion of GDP comes from State and Local spending.
Anyone notice FED, the CA thrift, hit $12 today? That's a 300% GAIN! On 3X Vol. In 1 week!
Bear markets are savage to the shorts.
Glad I sold my FED puts last week. They're starting to look pretty attractive again...
mp - .785 looks like a rounding error in the grand scheme of things eh?
Misean writes:
Is the pizza any good in Seatle?
Ask the WaMu vice president when he delivers it to your door in under 30 mins.
Barely,
Shorting is tough business after everyone is aware of the problems like now. It's doubly tough when the U.S. government decides to start writing checks.
Stagflation will devastate what little the boomers have saved. So many have already spent their futures.
And in more good news Toyota beat GM worldwide first half 2008 sales.
Toyota Tops GM In First Half Global Sales
What was that about strength abroad and the advantage of a falling dollar?
Interesting Times, yes, just a blip in life's Grand Scheme. Conjure and I feel like we're sitting at our table on the boat deck, watching everyone re-arranging the chairs.
Barely, I keep repeating, this is not a time to be in the market.
Anyone notice FED, the CA thrift, hit $12 today?
Oh, I noticed, alright. Still have some FEDUA, alas. Don't quite get the catalyst here, though. FED's a zombie.
Angry Saver-
By the time they actually address that, not in the immediate future IMO, I just can't see a funding source for it. The gov't is not a bottomless pit (although they are proving that to be untrue almost on a daily basis). The looting of the system continues until they run out of ammunition. That they are piling it on for the bankers, who got us here, is just like BSC getting in line first before the line gets VERY long.
How much of a haircut did you take and when did that happen?
If you mind sharing...
Ciao
MS
Is it just me, or does it appear that the bear market rally is losing its legs. I'm not a technical trader, but I get the sense that the market is poised for a MASSIVE selloff. All of the shorts have been squeezed out, and prices for financials have been massively inflated. But all the while the fundamentals of the economy have deteriorated and people can't explain why shares are rising despite horrific earnings.
When this market heads south again it is going to be a vicious decline as there will be no more short-covering to add stability.
Its also ironic that the SEC has taken steps to prop up financials, to give them the opportunity to recapitalize. But the "rally" has been supported by banks' statements that they don't need any more capital. As soon as they test the market for more money, their artificially inflated share prices will tank.
Rob Dawg
TM makes a car or two in the US as well.
Besides, GM is a healthcare and pension benefit manager that happens to make a few cars as a sideline.
Gavshire Hathaway, it is not just you. Conjure and I are also convinced that the elevator is going down.
day's not over GH.....this may just be a pause to suck more shorts in.
but I tend to agree....over 600pts in one week is a bit hard to sustain.
Give them about 20 minutes or so and we'll see.
Ciao
MS
Gav,
Who do you think is holding all those shares now and thus are able to short?
Or am I being too cynical...
How many more "ripples" before you think we will have a real recession, CR? Or have you changed your mind about that?
@day's not over GH.....this may just be a pause to suck more shorts in.
agreed. i'm keeping on the sidelines today. and tomorrow.
The Fed did another 28 day "loan" yesterday for $20b......
Temporary Open Market Operations - Federal Reserve Bank of New York
Add in the single day repo today for another $6.75b and you've got just enough $$ to continue to squeeze the shorts balls.
I love how they STILL call these "temporary"
The one from yesterday is the second one in the link.
Ciao
MS
Let these clowns kill each other off. You'll recognize capitulation when you see blood in the street.
Not every bridge has been sold. Yet.
BTW there is nothing "temporary" about one of these almost every single day.
Honestly I stopped looking after the number exceeded $2T.....it just makes no difference to "know about it" any longer. All you need to know is that it's permanent. The funny thing is that when you go into the "permanent facilities" area you are greeted with this:
Federal Reserve Bank of New York - Permanent Open Market Operations
"there are no operations at this time"
Everyday and it's not permanent?...ok
Ciao
MS
A bit off topic - what would you say are the bet short summaries of the economic/financial crisis so far, written so that a layperson could easily understand? Im looking for a couple of articles to send to someone for purposes of catching up on all that has been transpiring since the housing market began unraveling in late 2005. This is not a financial person, but someone that is becoming quite interested.
I dont mind if it goes back further to discuss interest rate policy earlier in the decade, or prior bubbles, etc. But mostly Id like something that focuses on more recent happenings.
The article I was hoping to do better than was the recent one in the NYTimes by Goodman, "uncomfortable answers..."
On Every Front, Anxious Questions and Uncomfortable Answers - NY Times
I thought this was a bit too cursory, and didnt do a very good job of implicating the players that got us to this point, and the "why?" of where we are now. But it did get someone interested in learning more.
Any links would be appreciated. thx!
Marc Faber, badass extraordinaire, is up on Bloomberg.
I am adding ever so incrementally to Jan PUTs on indexes and individual issues not tied to oil or commodities. Many appear bright red on my panel, but I don't believe waiting too long makes sense. I get the sneaking suspicion Iran is gonna take a hit after the election and before the inauguration. Call me paranoid...
I know this is painfully obvious, but until there's a problem our govt cannot bailout, the status quo bullshit will continue.
I'd like to know what THAT problem is and when it will be obvious to Joe and Jane Sixpack.
That's when things will get interesting.
Until then, please pay your local Costco a visit and buy a luxury item - preferably with your AMEX card.
Blood in the streets:
blood in the street Video by Iyah Lazer 18763511321 {JA} 1 857 236 7029 {US} - MySpace Video
(strife imitating art)
Shorting is tough business after everyone is aware of the problems like now. It's doubly tough when the U.S. government decides to start writing checks.
My suspicion is that a lot of the money made shorting stocks just comes from other people who are trying to short and have worse timing.
geoff, today's list of 25 by mish.
google it
barely-
I'll go you one better. Since (at present) it appears likely that McCain just is not going to win how about the suspension of elections under the guise of national security interests that "happens" to coincide with Iran.
It is overly paranoid however did any of you think two planes would be flown into the WTC before it actually happened?
I could have never imagined it. That event taught me to be prepared for ANY eventuality far-fetched as it may seem
Ciao
MS
Thanks BBB - I read that regularly, but Im looking for an easier read for someone who doesnt understand why this is all "necessary" now. That list is more about how the govt is going to screw us, rather than how the financial industry screwed us in the first place to get us here.
Don't walk. Run to read this.
Mish's Global Economic Trend Analysis: You Know The Banking System Is Unsound When....
Then run out of the country.
For those who haven't read James Kunstler's latest post, here's how he ends his commentary:
It's becoming obvious that the Federal Deposit Insurance Corporation will choke and croak on this wad of losses, and its liabilities will also be fobbed onto the taxpayers. In the meantime, though, it will be obvious that the full faith backing of the United States is an empty promise. That may be the near-term endgame for all this pretending. When American depositors get screwed out of their deposits and the deposit insurance doesn't come through, the full force of the fiasco will drag the dollar underwater like the legendary Kraken of old preying on a babe thrown overboard.
Then the forces of darkness will really be loosed.
Things may get so chaotic that Mr. Bush and his circle may actually be removed from the scene before his term in office expires. He could go out of office much the way he came in: by means unconventional. Mrs. Pelosi will keep the seat in the oval office warm for a few months. Then the prosecutions will begin.</i>
By comparison, Roubini is an upbeat kind of chap.
MS,
Here's a link regarding maximum fed payment after a fed pension bailout.
Maximum monthly guarantee tables (PBGC.gov)
A lot of older guys I knew were really hurt by this. Taught me a lesson.
It really irks me that inflation makes it so hard to save. Most can't keep up. 401Ks just won't cut it either. By the time the majority trys to get their money out, a small cadre of money grabbers will have taken it.
"Now, instead of cutting pet programs, they'll jack the schools..."
Exactly so. Here is an old favorite: in the strong income years build a new library or school and as soon as it is complete and funds are dwindling a bit, announce that you cannot afford to fully staff the facilities and that you have to cut back staff and hours of operation. This has worked here in Minnesota time after time after time.
Federal tax rebate checks ``were the only source of cash'' for consumers, said Mark Zandi, chief economist and co- founder of Moody's Economic.com.
Fed Says All District Banks Report `Price Pressures' (Update3) - Bloomberg.com
hmm. ok
there's a youtube about money....
searching...
how it's created who controls', etc..
called 'money master's'
youtube it
Just to be accurate, PBGC is not a federal agency. They are government-sponsored but there is not a government obligation to bail them out. (I know, we've heard that before.)
PBGC only covers private defined benefit plans, not public. The first line of defense for PBGC is to raise premiums on plans. But since private DB plans have been shrinking for years, there's a smaller base of plans to hit up. Many smaller private DB plans are fully funded with insurance, are not part of PBGC, and could go belly-up if the insurance contracts were to default.
This isn't nothing compared to what the US government is about to shove threw the pipe. Let's see WaMu is the sacrificial chicken and what better then a nice big bank failure during the vote just to get the point across of the urgency of bailing out the den of thieves.
WM -20% seems to be the only bank doing that even tough there are others in worse or equal shape. Let's see if it makes threw tommorow.
ac,
Did you watch Faber? Looks like you and he are lookin at the same 8 ball: 1350 s&p.
@barely, gav
XLE index making new lows down 4% and continued oil complex tanking tomorrow will take equities down with it. SPX and XOI move together and the recent divergence is over IMHO. I'll short more tomorrow on oil weakness.
We need higher taxes...
Did you watch Faber? Looks like you and he are lookin at the same 8 ball: 1350 s&p.
I'll watch it now, but I didn't say anything about specific levels in the S&P.
Though right now SKF is on my "short to zero" list.
The failure of GM would probably wipe out PBGC. GM has over $80 billion of pension obligations, about twice as much as PBGC's total assets are worth.
RE: ? from Uncle Billy Vs. Mt. Pelerin
Eitan Bernstein, BBA 96, was named vice president of FBR Capital Markets Corp.s energy and natural resources research group. Prior to joining FBR in May 2005, Eitan followed the U.S. independent oil and gas producers as an associate at Calyon Securities; and before that, he worked in the energy industry for more than six years. He has appeared on business television and is frequently quoted in the print media.
Class Notes Fall/Winter 2007
Friedman, Billings, Ramsey Group Inc., based in Arlington, Va...
"We need higher taxes..."
We also need a rate increase, and I think we're going to get one.
there's also a good DVD for the uninitiated about how the Fed was created called "Freedom to Socialism"
Towards the end it lost me with it's overtly "michael moore-esque" type tones however it is a good watch.
It speaks to the author of "creature from jekyll island"..can't recall his name but it's fairly good...until the ominous music starts in.
This "chap"-the producer- also was a listing producer on "Trading Places" a favorite of mine, and I'm sure of your's.
See no sell-off....
Ciao
MS
@but I didn't say anything about specific levels in the S&P.
My bad, I could've sworn you said you were surprised there hadn't been a rally to 1350.
OT: Can't make this stuff up.
San Diego sues Bank of America over foreclosures
San Diego City Attorney Michael Aguirre said on Wednesday he had filed a lawsuit against Bank of America Corp and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in his city, which he aims to make a "foreclosure sanctuary."
My bad, I could've sworn you said you were surprised there hadn't been a rally to 1350.
I think earlier I said I was surprised we haven't had bigger short rallies given the level of short interest, but that may be more due to a really bad environment.
Faber: He came to Chicago to attend the CFA institute's Financial Analysts Seminar. They got together to give an award to a Canadian academic and pension fund advisor who wrote a book on global pension funds.
Would be nice to have a transcript of that seminar.
Faber: Can't stand his smirkiness. At least Roubini has the decency to rattle on like an emotionless automaton.
Faber: Alumnus of Drexel. Yes, he's definitely one of the good guys. (well he does live in Thailand and contribute to a Thai Children's Charity there).
San Diego City Attorney Michael Aguirre said on Wednesday he had filed a lawsuit against Bank of America Corp and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in his city, which he aims to make a "foreclosure sanctuary."
That will also make it a "mortgage sanctuary" -- free of new mortgages.
AoTC,
Word of caution:
CALIENTE, Calif. - A woman walking her two dogs in a rural area of Southern California was attacked and severely injured by a bear, but managed to escape and drive herself to a nearby fire station.
Ta, Visar!
Looks like Keynsianism is going to fail us. Although I'm sure the socialists among us will in hind sight tell us that the government money was simply not spent in the "right" places.
Thanks for the warning. The bears here in the east are less aggressive in general.
BTW, SKF at $117 is a steal.
"I'm sure the socialists among us will in hind sight tell us that the government money was simply not spent in the "right" places."
Hell, you don't have to be a socialist to know. I was a Goldwater Republican and figured that out.
Jay-
it was a steal at 130 too..
I would play a different sector right..it looks like a bear trap...wait until after this week...
San Diego City Attorney Michael Aguirre said on Wednesday he had filed a lawsuit against Bank of America Corp (NYSE:BAC - News) and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in his city, which he aims to make a "foreclosure sanctuary."
Expired
Now there is a theory for you.
READ THIS, AMAZING SIMILARITY HERE: (taken from Edvard Radzinsky's "The Rasputin File") - January 1914, Russia,"...and Bark (my note - think Paulson) was appointed Minister of Finance(in Tsarist Russia). It was the first time that a state rather than a church appointment had come about at Rasputin's prompting (Rasputin - famous common Peasant who had massive influence with the last Tsar of Russia, he was eventually assasinated) Of course, what had taken place was not merely the appointment of a new minister of finance but a revolution, one which Rasputin did not understand. He only knew that money was now being managed by one of 'ours' (think Goldman Sachs). In fact, it was the end of the policy conducted by Stolypin (former Russian Prime Minister, assasinated by the State) and continued by Kokovstev (Prime Minister retired by the State for not towing the Tsarist/Rasputin line). A minister of finance had been appointed who was a PROTEGE OF THE MIGHTY BANKS. THOSE BANKS WOULD NOW THROUGH THEIR MINISTER OF FINANCE BEGIN RUNNING THE FINANCES OF THE QUASI-FEUDAL STATE. Filippov (a witness during this time) who was himself a banker and knew the machinations of banking from the inside, provided an explanation in the File (investigative file re Rasputin's influence on the last Tsar of Russia): 'Bark (Paulson)...gave the banks promissory notes...[which] began the WIDESPREAD SUBSIDIZATION (Bailouts) OF PRIVATE BANKS WITH STATE FUNDS, ALLEGEDLY IN SUPPORT OF INDUSTRIAL ENTERPRISES...THE FUNDS WERE THEN USED BY THE BANKING CHIEFS TO PURCHASE STOCK CERTIFICATES AND SPECULATE ON THEIR FALL (Shorting Stocks has a long history indeed!), which would PROVE ESPECIALLY DANGEROUS IN THE INITIAL PERIOD OF THE WAR (WWI)..." See we're not like the Soviet Union prior to its demise, we're like Tsarist Russia prior to the execution of the last Tsar. Amazing isn't it?
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rich writes:
"The failure of GM would probably wipe out PBGC. GM has over $80 billion of pension obligations, about twice as much as PBGC's total assets are worth."
Oh good, too big to fail!
Hmmm... Calyon has a large presence in Mexico, Venezuela, and other s. american countries. They say they are very active in the Middle East, but don't seem to have an office address there.
Bernstein has a "BBA" and is one of the most visible/influential energy spokesholes on t.v.? No higher education? And what is this: "he worked in the energy industry for more than six years." Worked where, on an oil rig?
Geoff, send your buddy to iTulip.com
- The Contrary Market View - For Independent Financial Advisor,
Currency Online Trading, Commodity Online Trading, FOREX
MP...
Hell, you don't have to be a socialist to know. I was a Goldwater Republican and figured that out.
It wouldn't have mattered where the money was spent. Moral hazard created by government is what caused the current downturn, and the bailouts we are offering today will set us up for another one of these cycles 10 years down the road. If we didn't have as large of government debt, the USD would be stronger and exporters would not be boosting growth to the degree they are.
Re the bear attack...I would take my chances walking in nature all day long compared to driving the 880 in the east bay or the 10 thru los angeles or dating a jealous filipina lady...
A large part of the Cali's problem is directly related to the Fed. Government's lack of interest in doing anything about illegal immigration. (Won't get into the Corrections Officer's union stranglehold on the state's finances, but this is simple cause and effect here-and I am typically a union supporter). Can you say 'unfunded mandate', in a roundabout way?
AMZN beat estimates, reporting earnings of $158M, or 0.37 cents per share, up from $78M last year. Analysts were predicting $0.26 per share.
Is anyone really surprised? Most of my friends have buy almost exclusively from Amazon prime, especially with $4 gas and 8% sales tax.
"Moral hazard created by government is what caused the current downturn"
Well, moral hazard has its place, but massive debt and missallocation of resources contribute a bit, wouldn't ya think?
California is already a third world country.
argento, can we talk about margins with amazon?
California is already a third world country.
In the US we've adopted 3rd world financial practices and 3rd world leadership.
Now we're just witnessing the consequences.
"Economists: McCain would have more positive impact on stock markets than Obama."
Economists: McCain would have more positive impact on stock markets than Obama - Atlanta Business Chronicle:
It's amusing to see how both sides work the sucker game. With Obama, it's make-believe about "change" from a deeply centrist Clintonite. And now the McCain team claims he'll goose stocks.
Bubbles you can believe in.
Hell, you don't have to be a socialist to know. I was a Goldwater Republican and figured that out.
Goldwater's son just released a book about his dad, changed my view of the candidate. Weird how the political machines just won't let their guys alone, it's bad enough the opponents skewing the opinions, but your own party's in it as well, distorting the other way.
my target of SPX 1300 was almost reached. I am mostly out of my longs.
Will change to Pro-calculatedrisk shortly.
Actually I'm surprised by Amazon beating consensus. I would have expected a slowdown in discretionary spending to override the shift towards online purchases.
AMZN (online) and Walmart (physical) are gobbling up the other retailers - that's not bullish for broad retail sector. Plus this can only last so long, and then it's son long!
Nobody has ever tried Keynesianism. It involves deficit spending during recessions and surpluses during expansions. Just one without the other is not Keynesianism. Clinton came closest - and don't you wish those days were back...
Higher property taxes, higher Fed taxes, higher this and that, e.g, asphalt inflationary destruction set against the instability and decay of dividend/yield reduction/destruction equates to a cross between hyperinflation and stagflation, maybe hyper-stagflation and a liquidity trap, oui?
Uncle Billy ,
Are well today and is your recovery going as planned?
California is already a third world country.
¿Que? No habla.
Um, Amazon didn't beat consensus after backing out onetime gains. So my instinct was correct.
BTW, SKF at $117 is a steal.
not yet, target $100.
Not to indulge in too much market chatter, but Debbie has a point - on a multiple basis even with results like this AMZN is very richly valued as a retailer - with capital expansion for new delivery centers that may entail additional exposure to states looking for sales tax revenue depending on location (viz the litigation with NY, possible TX add on).
Watched this one kinda close, the AH price action started out up 8%, now down 0.5%...welcome to bizarro world! We'll see what tomorrow holds.
Gav,
Link please!
Before we declare that everything is poopy, let's not forget that we've had 60 pretty decent years since 1945 under whatever regime you choose to call it. Suppose we have a few bad years, does that negate the entire 60? Can you prove in any rigoprous fashion that if only your favourite nostrums had been followed things would have been better over that entire time span?
California is already a third world country.
Actually, everyone on the planet wants to live here because of the weather. I'd bet my house on it.
The curve has unwound from the flattest levels with the 2-10-yr yield spread running 136.6.
Has anyone seen this speech Bush gave on increasing the debt?
YouTube -
? v=FrEdjaJt9iY
Public pensions are good because salaries are poor and don't go up much. It's called a 'trade-off' for you supposed econ geniuses. Ask a science or math teacher how much more they could make in the private sector.
Instead, some of you fools will whine about poor public schools, while we have to import teachers from other countries who can't even communicate with their students.
Too many of you want to live in dog-eat-dog world, where one's success and freedom is limited by the confines of a gated community. Or just go to Brazil.
"Economists: McCain would have more positive impact on stock markets than Obama."
"Economists: McCain would have more positive impact on organized Three Card Monte than Obama."
People just don't get it.
Overpriced assets are the source of all our problems -- not the solution.
TOLL FREE phone to your politicians on Capitol Hill:
Please call your Senators and request they do not pass the Housing/Fannie/Freddie Bailout bill, (HR 3221). It is passing the house now. Not much time left.
Call these numbers, tell the person who answers the phone that you wish to be connected with your Senators' office:
1-800-828-0498
1-877-851-6437
1-866-340-9281
1-866-338-1015
It's easy and FREE
"Nobody has ever tried Keynesianism."
Yeah, and nobody has every tried to declare war on terrorism. We've been doing Keynesian invertionalism since LBJ.
It's amazing how people equate 'surpluses' during Clinton's reign (there was no surplus, just a projection of non-deficit spending for 2001 based on tax receipts) with sound economic policy. 1990-2001 was an asset bubble, nothing more.
"Economists: McCain would have more positive impact on stock markets than Obama."
He does seem to have Fantasyland covered.
But seriously, that headline / research is basically translated by my left-field brain as "4 out of 5 bought-off physicians say Cyxoxiova will improve the pulse. The remainder say the generic will improve respiration. Side effects may include cessation of brain-activity, lack of muscle tension or skeletal failure. No guarantee the patient is actually alive at any point. Ask your own doctor. Paid for by Wall Street."
I believe 1350 is my number in the S&P pool.
"Ask a science or math teacher how much more they could make in the private sector"
Huh? I've always heard from teachers that public school teachers make more than the privateers and have that juicy pension.
Or are you talking about them working in the real world?
It's amazing how people equate 'surpluses' during Clinton's reign (there was no surplus, just a projection of non-deficit spending for 2001 based on tax receipts) with sound economic policy.
Excellent revisionism. We need to somehow wave our hands and explain away anything good that happened under the Clinton Administration. Otherwise we might need to ask some painful questions of our ideology.
enjoy this.
http://storage.denninger.net/Financial.wmv
AMZN - earnings miss hidden in the press release:
I was just citing a poster on Marketwatch:
"No, they missed by almost two cents...
Back out the onetime gain, and it looks like .244 cents vs, the street's .26 estimate.
Sneaky f*cks...
Expired
http://finance.yahoo.com/q/ae?s=AMZN"
Public pensions are good because salaries are poor and don't go up much. It's called a 'trade-off' for you supposed econ geniuses.
Check public salaries for teachers, cops or firemen in Cali...or just google Vallejo, for a town going bust on public pensions. Pretty juicy salaries and after 20, full pension and free healthcare for life.
That was the promise...we'll see how much is deliverable.
@ Interesting Times | 07.23.08 - 3:45 pm
Thx, that was a great read of sobering factual reality especially capstone point #25
What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.
Mike "Mish" Shedlock
Mish's Global Economic Trend Analysis
McCain would have more impact if he'd just check back in to the Hanoi Hilton for say 15 years.
Cheers,
He's done it! Bollard cuts interest rates
BREAKING NEWS
CloseBollard cuts interest rate... read more
National Story
RSS Facebook Myspace
He's done it! Bollard cuts interest rates
9:00AM Thursday July 24, 2008
Our high interest rates
* Bollard to make tough call this week
* Reserve Bank tipped to hold rates ahead of September cut
Reserve Bank governor Alan Bollard has cut the Official Cash Rate by 25 basis points, taking it down to 8 per cent - the first rates cut in five years.
Since July 24, 2003, the Reserve Bank governor has raised the official cash rate 13 times, taking New Zealand interest rates to among the highest in the world.
Bollard cuts interest rates - but what will the banks do now? - National - NZ Herald News
So what will BB do?
km4 - Imagine what would happen if all financial papers posted that tomorrow.
Amazon... Bezos... they ring a bell.
The Mechanical Turk at it again?
Here's the final House vote on the Fannie/Freddie taxpayer bailout:
Dems.... ...yea 227... nay 3
Repubs.....yea 45......nay 149
total..yea..272..nay..152
San Diego City Attorney Michael Aguirre
Just so you know, Michael Aguirre is pretty much crazy. He got beat in the first election this spring, but it's going to come down to a run-off election because you need 50% of the vote or more to win. He always has some form of crazy lawsuit cooking.
waitinginPNW - You gotta wonder what is in those 700 pages that were added to the bill last night...
Misean, that was uncalled for.
fried: I have many relatives on LA County Sheriff's pensions. They hover around six-figures with full healthcare for them and their spouse for life.
I sent them a post of Tanta's last year explaining the CDOs that ended something like, "Call. Your. Pension. Manager. Now."
They laughed.
We'll see how that works out.
waitinginPNW writes:
Here's the final House vote on the Fannie/Freddie taxpayer bailout:
total..yea..272..nay..152
Not veto-proof. WWWD?
WWWD? smirk.
@Gavshire Hathaway
I do not get your point about Amazon. Can you explain. Thanks
Interesting Times writes:
km4 - Imagine what would happen if all financial papers posted that tomorrow.
Interesting Times | 07.23.08 - 5:13 pm | #
Yes indeed the new American Revolution WOULD BE televised and I'm afraid it would be much worse than 'tarred and feathered' for the Wall St financial assclowns.
Gav,
Thanks x 10^6, that makes clear the AH price action - from a ~8% pop to ~-2% loss!
Terry,
Why?
TCA,
Shrubboy already said he'd sign it. Gave the house 'cans a chance to vote no for cosmetics going into the election.
Cheers,
wawawa:
Re: AMZN
"A large improvement in operating margin benefited from the one-time sale ... The $53 million one-time non-cash gain from the sale of the European DVD rentals business increased operating margins to 5.3 percent. Without the gain the operating margins would have been much closer to what analysts had been expecting, which was 4.0 percent."
INSTANT VIEW: Amazon profit up, helped by one-time gain
| Reuters
thx Argento
Thanks wawa for link..good stuff.. sending to all my peoples...
Which point on Amazon? That they missed factoring out one-time adjustments? I'm having a hard time figuring out exactly what they are referring to. It might be the following:
Other operating expense (income), net, was $(45) million and $3 million during Q2 2008 and Q2 2007. The increase compared to comparable prior year periods is primarily attributable to the gain recognized on the sale of our European DVD rental assets. As a result of this transaction, we recorded a $53 million non-cash gain included in Other operating expense (income), net on our consolidated statements of operations. We believe that the positive impact of this gain on operating and net income is not predictive of future results or trends.
OT for you Northern California guys:
A rather nice map of the high-foreclosure zips in the greater SF Bay area, with pop-up that compare last-year and this-year foreclosure rates. Cheerily depressing.
Foreclosure Map: Bay Area's Hardest Hit ZIPs
Shrubboy already said he'd sign it. Gave the house 'cans a chance to vote no for cosmetics going into the election.
First he said he'd veto it, then when it appeared there would be enough votes to override his veto he said he'd sign it, much like the spineless ape did with the Healthcare Bill of Rights when he was governor of Texas. I wouldn't be so sure this is a done deal...
Mobile is a very happening economy, but will not avoid the pitfalls
Topsy-turvy financial markets pulled the rug out from under the city of Mobile's proposed bond sale just minutes before it was to be finalized Tuesday morning.
The city had planned to sell $97 million in bonds in order to refinance some existing debt at a lower interest rate and to fund capital projects such as improvements to Ladd-Peebles Stadium and the Alabama Cruise Terminal.
Tentative agreements reached Monday to sell the bonds began falling apart Tuesday morning after Moody's Investors Service announced it was going to review and possibly downgrade the credit rating for the city's bond insurer, Assured Guaranty Corp., according to Preston Bolt, the city's bond attorney.
Bond sale hits a bump - al.com
My last AMZN post...really!
Amazon earnings double as sales keep pace -
Stock pressured after hours on concerns about operating-margin forecast
[snip]
The company forecast a wide range of operating-income results for the quarter, putting the number between $115 million and $160 million. That implies operating margins between 2.7% and 3.7% for the period -- which cause some worry among analysts.
"The big issue for us is the margin guidance is really, really bad," said Tim Boyd of American Technology Research, who has a sell rating on the stock. "Basically we're back to the old Amazon. Anyone can grow their top line if they ignore margins."
[snip]
Misean | 07.23.08 - 5:11 pm |
and
Misean | 07.23.08 - 5:23 pm |
Misean, perhaps that would be better left for a private discussion. I won't start it here.
"Misean, perhaps that would be better left for a private discussion."
Misean, is Terry your mother?
"Let's not drag the neighbors into our personal problems, Son."
the funny part of amzn, is they've always been challenged with margins, as the stock ran from 7 to 100
Thanks Jordan T for the backgound on the SD city attorney. My comment was supposed to be sarcastic.
There was some bizarre bizarre stuff thrown into the bill last minute. One thing was re. help for some foreign train companies down south.
Here is the really really bad news for people who have (like myself) voted Democrat their whole adult life because they were under the impression that the Dems were somehow supportive of the average working American and the Repubs were out to screw everyone but the big companies:
I listened to the whole debate on C-span. There were SO MANY Republicans who spoke out -Eloquently!- and with disgust ! -on the whole idea of bailing out Wall Street at the expense of working Americans.
And NOT ONE Democrat...not one!
Democrats. Wake Up! You have been sold a load of crap by your party.
Eye candy courtesy the L.A. Times:
Tracking California foreclosures: two scary pictures | L.A. Land | Los Angeles Times
Seems like more and more people are using legal size and portrait for graphs, rather than landscape.
UUUGGGH: Breaking on ml-implode -fannie freddie bill bails out banks too:
Mr. Mortgage’s Guide to the TRUTH! » 2nd Mortgage Holders (Banks) Now to be Bailed Out Too – Breaking!
Angry Saver wrote: "Also, it seems wall street firms are raising capital to fund bonuses."
Well, sure. After all, if you don't pay good bonuses, you won't be able to retain the high quality executives that brought the company to its current state.
TCA-
Bush said he wouldn't veto it after a recent emergency talk with Paulson. That's it.
He's in Paulson's pocket. Big surprise.
Bush and all the Dems , except THREE, in Paulsons' pocket.
BTW, for dems who would like to keep voting Dem., there is ONE Dem rep. who has a conscience. She is Kaptur (sp?) of Ohio. She was the only one who came out against the bill unequivocally.
I don't know who the other 2 salvagable Dems are. Might be one from OR. and one from PA. who said they had "reservations" but, also did not state outright that they would vote "no". (Blumenauer and Kanjorski)
Debbie,
OK I lied - the AH quote is back up 6% - they must of had some gooooood koolaid for the conference call!
The mid-point of guidance for margins was 3.2%...
Angry Saver-
Hey now, those Fannie and Freddie execs DESERVE Ultra High Bonuses paid for by...us!
What better way to reward them for Keeping Homes Affordable??!!
Come on now.... Dig Deep! Who KNOWS how high home prices might have gone if it weren't for those compassionate folks at Fannie and Freddie?!
A shit shack in CA. might have gone to 3 million instead of one million without F&F. Studio apts. in Manhattan could be 10 million by now.
Must.Preserve .Fannie. and.Freddie. AT ALL COSTS!!
They keep American homes affordable!!!!
what trail wrote at 4:41pm
word
all that printing will hurt the rain forest.
A shit shack in CA. might have gone to 3 million instead of one million without F&F. Studio apts. in Manhattan could be 10 million by now.
This is kind of ridiculous, if you keep in mind the whole LFKAJ discussion from a few months ago.
Hey Magnolia,
Are you from Mississippi ?
ok so WaMu didn't benefit from this weeks run up in financial stocks
so could this have to do with WaMu not being on the protected list of 19 (from naked shorts?)
Ulises Garcia said he was withdrawing cash from a Wachovia Bank and depositing it into a Bank of America so he could pay his bills online.
However, the Bank of America teller noticed something funny about 10 of the 36 $100 bills Garcia said he received from Wachovia Bank -- they were counterfeit, Local 6's Tony Pipitone reported.
Bank Gave Counterfeit Bills, Couple Says - Orlando News Story - WKMG Orlando
Awesome. "Sorry, we can't accept CASH from that bank anymore."
"Well, sure. After all, if you don't pay good bonuses, you won't be able to retain the high quality executives that brought the company to its current state."
Like that Nardelli fellow at Home Depot.
UUUGGGH: Breaking on ml-implode -fannie freddie bill bails out banks too:
Did you read the article? 2nd mortgage holders can share in future appreciation in return for giving up their loans. Funny kind of "bailout".
First?
Amzn......such is the power of a headline. No one bothers to read anything after that any longer. You just knew they would "beat" however one-time sales benefits do not make a trend. Quite a wide berth on margins going forward-they are turning out to be exactly like AAPL with guidance-at least they produce an actual product.
The only thing missing is another share buyback....as if $15b in debt was not enough at this point.
I gather this will be the bell ringer for Miller. If not then Bezos selling all those shares a few months ago will look rather stupid.
I know he has to build his spaceship....
Ciao
MS
Quite "cute" of AMZN to put the sale of the DVD gain into the operating expense bucket.
EDGAR Pro
Now tomorrow will tell the tale as to whether that gets overlooked or not.
Pretty sneaky
Ciao
MS
Got this little press release late today:
Las Vegas, NV At 2:30 pm PDT on Thursday, July 24th, U.S. Representative Shelley Berkley (NV-01) will join Danny Thompson, Executive Secretary-Treasurer of the Nevada AFL-CIO and Mary Ann Abiuso, AFSCME member and Registered Nurse to discuss the budget crisis facing the state and to urge Congress to help protect Nevadas families with a fiscal relief package.
The downturn in the economy and the crisis in the housing market are national problems that need a Congressional response. Nevada has been hit especially hard by the recent economy downturn.
While Nevada may not yet have a foreclosure sign, it could as the economy pushes state revenues down past what is needed to keep vital state services funded.
The press conference will also feature the release of a new report on Nevadas budget crisis by the American Federation of State, County and Municipal Employees (AFSCME). The report highlights the immediate need for aid to Nevada with a series of recommendations for Congressional action to protect Nevada families. With a budget shortfall of $898 million for FY 2009, almost 14% of the states 2008 budget, Nevada is facing cuts in vital public services, which would thereby exacerbate the downturn, worsen unemployment and poverty, and underfund and undermine infrastructure and public service delivery systems.
BTW this is not the first time AMZN has done this...been doing it for well over 4 year's.
Gee Jeffrey how come no numbers on the Kindle sales? Other than the titles available....more like kindling IMO..
Ciao
MS