Anyone catch the Fed Funds overnight? WTF, is that some EOQ issue or what up?

Federal Funds Data

I didn't hear him complaining about excessive sales and unrealistic prices during the bubble.

Bucky's starting to look like the next "short to zero" trade.

More international fun:

Israel May Attack Iran This Year, Pentagon Official Tells ABC
By Ladane Nasseri and Thomas Penny

July 1 (Bloomberg) -- Israel is increasingly likely to attack Iranian nuclear facilities this year, a U.S. Defense Department official told ABC News.

Iran's government dismissed as propaganda the ABC report on the unidentified Pentagon official's comments. Israeli government officials declined to comment on the report.

An Israeli strike might be triggered by the production of enough enriched uranium at Iran's Natanz nuclear plant to make a bomb, ABC cited the official as saying. A second possible trigger would be the delivery of a Russian SA-20 air-defense system, the installation of which would make an Israeli attack more difficult, the U.S. official told ABC.

[snip]

STOP! hammer time!

The second half recover begins!

I also hear a lot of the "worst since the depression" stuff.

but are things really that bad? life seems better today to me than it did in the late 1970's... but perhaps it's just perception?

If someone was to put out a number for this week's Dow of say, 5% to the downside, I'd take the over. My guess is the hits will just keep comin' from now until 2014, and our next government will have its hands full.

Even the very wealthy might get hurt.

Mr. Broad is going to be disappointed when he discovers that real estate never recovers from its permanently low plateau.

So wealth is evil?

Oh.

Someone is at least telling it as it is.

Oh, please. He's still talking his industry's book, as you can see by scrolling down a few grafs into the story (emphasis mine):

The problem is, people don't believe prices have bottomed out,'' he said. <b>You've got to induce people to buy houses'' with federal policies including tax incentives.

Oh, you mean like the deduction of mortgage interest and, now, PMI? Or the every-two-years $250,000 capital-gains exemption? Those kinds of incentives?

Face it, Eli - the housing souffle is collapsing, and no number of new cooks in the kitchen are going to be able to rescue it.

Moodys sez barn now empty - door closing underway:
Moody's Says Some Employees Breached Code of Conduct on CPDOs
By Emma Moody

July 1 (Bloomberg) -- Moody's Corp. said some members of its credit committee breached its code of conduct when evaluating some structured debt products.

The company has initiated disciplinary proceedings against some employees who were involved in monitoring constant proportion debt obligations, or CPDOs, the company said in a statement distributed today on Business Wire.

[snip]

Moody's Corp. said some members of its credit committee breached its code of conduct

We now have rogue analysts! I thought it was a software bug, no? I guess the software bug story didn't stick.

sequoia:
good point. It may be that my family was just starting out in the late 1970's so we directly took the brunt of stagflation...
I really started my career in 2000, so also tough times.

now I'm 8 years into my career, so it doesn't hurt as much. I guess because I'm where I am.

that said, don't get me wrong, I'm hurting enough just fine (15% pay cut this year).

So wealth is evil?

Wealth without work is evil.

Um, speaking of wealth, did you notice the ad on CR right now (upper right side) for Cadillac?

I'm hurting enough just fine (15% pay cut this year).

YTL - Why did that happen, in your field? I have a daughter hoping to go into med, so I have an ear out.

If it is depressionary - no one told the steel industry yet. Prices aren't exactly 'deflationary' either. Neither are raw material costs as producers are forced to lock into long term relationships with suppliers.

Ya, ya - its all speculation. Whatever.

@Yearning to Learn

Thanks for the Bucky's comment. I now feel stupid. Should have known.

I wouldn't go near the $$ for a ten foot pole. Way too erratic.

12th percentile:
good point. Yeah, I'm a DINK, and we're personally doing fine.

However, I live in a gentrified neighborhood where all my neighbors bought a long long time ago so they're working class. to date, all seem to be doing ok (we're close)
My bros/sisters are firmly near the poverty line. and they're still making it (with some pain). I know when they're not because I cover their bills.

again, don't get me wrong, I feel that the economy is very poor right now. But I'd have a hard time comparing to the GD just yet. the data may be that bad, but I just don't see life that bad. yet. I certainly hope we never have to see soup lines and Hoovervilles.

so please don't misunderstand me. economy is crapola. we have huge structural issues. future looks not great. data streams look icky.

but life on the street for the most part is chugging. people are stressed for sure, but still clunking along.

Where I'm from we call these "rich people problems". Trying to save your house from foreclosure. Trying to be able to retire by 62. I'm still not hearing about increase in homelessness or increase in crime due to poverty or things like that.

unfortunately, I'm not sure we won't hear about such stories. but for now I still think this feels like the late 70's early 80's. let's hope we don't get the 30's.

ISM = 50.2
We are back to happy days.

How about another billionaire's take? From Bloomberg (the mayor, not his eponymous company's terminals), about delays at ground zero:

"The cost of steel and cement and labor has gone up faster than anybody had anticipated..."

Remember folks, it isn't a wage-price spiral because wages aren't rising.

And about the Great Depression: They used to call WWI "the Great War" too...

Outsider:
in general docs are paid by something called "Relative Value Unit" or RVU. everything we do has an associated RVU. Thus a heart transplant gets "x" RVUs and a broken arm gets "y" and a physical gets a "w". you get paid by RVU's. SO if you do a heart transplant and a physical and a broken arm you get w+x+y RVUs. We are then paid based on the # of RVUs.

CMS (the central agency that runs Medicare/Medicaid) determines how many RVUs each medical encounter is "worth". This year they changed the formula. They raised RVUs for some things (like an illness visit to a primary doctor) and they decreased others (like a heart transplant). Then, they reduced how much they would reimburse per RVU by 10.8%.

My field took a hit (what I do gets less RVUs per patient encounter) and then also got hit with the 10.8% reduction in $/RVU. Thus, I will make about 15% less. That said, it's not entirely true, because I've been told by my betters to increase my productivity by 20% to break even. (we can't afford to stay open if we make 15% less so we need to work more).

as for your daughter: she should do medicine if it is her one true love. if she has 2 things she loves and one is medicine, do the other. if she is smart enough and dedicated enough to get into Medical School, she will have other options that will be far more gentle for her life and probably pay better as well. It's much better than it used to be. when I trained I worked 108 hrs/week on average. Now they have limits, but it's still 80 hrs/week while training, and that will go on for years.
And her compensation, although definitely fair, will be nowhere near making her "wealthy" unless she super-subspecializes... and this is exactly what CMS is trying to change.
As for kids: it's getting better for women who want to have kids, but it will limit her with what field she chooses. SO if she wants OB/Gyn or Peds or Family Practice or Internal med or Pathology or Radiology as example. but not things like cardiology or GI or surgery or ortho or any of the procedure based specialties...

Going forward (10-20 years) america will have FAR less subspecialists and far more primary care docs. the reason: subspecialists will continue to get paid less and less while primary doctors will get paid slightly more.

This is partially how medicare/medicaid will start to slow their bulging budgets... don't tell me govt won't do it... they already are. CMS is set to come out with new guidelines dropping compensation further over the next 3 years.

YTL - I grew up in the early 70's and my parents had no savings and very little money. However, we heated our house with wood, built our own house, and grew much of what we ate so there was a baseline of how bad things could get. There was no credit. You eithe rpaid cash or went without. I'm well aware of rich people problems. I still laugh when i see people defaulting on their Mercedes SUV or Hummer. No pity from me if you bought things you wanted instead of just what you needed.

However, over at Sudden Debt a week or so ago he mentioned food stamp participation was at a record high level. I see that as a sign of the poor getting hammered by lack of health care and price increases on everything. Many americans are one health problem away from financial disaster.

Plenty of stories of local food banks being overwhelmed as well.

re yesterday's announcements that corn and wheat have more acreage planting than thought.

ipod: wasn't that data collected in early June BEFORE the storms?

However, great depression this ain't.

My great grandfather died in the big flu in 1918. My grandfather went was the sole breadwinner for the family at age 11 (worked on Wall Street as a runner of some kind, ironically). My other great grandfather got drunk on the job and was crushed on the docks in NYC. My grandfather went to work to support the whole family. He was 18. He was the only one in his extended family with a job for much of the great depression.

In perspective, this all seems pretty mild.

YTL,

I sympathasize. Same problems with engineering. Eye opening about medicine; my career advice is avoid engineering and go into medicine, law, or finance.

Not sure what career advice to give now.... Again, another sign of our decline.

Giaus & idod - I fully expect prices of these commodities to fall. In my professional capacity - not here - I have gone put on the limb & told my clients that... that these 'input prices will not hold - they can't hold up in the face of 'demand destruction'... so you all better be right.

But I've also told them they won't fall back to previous lows, probably not even in real prices - there is new international demand that is NOT going away without a fight - primarily in Asia.

People are fools if they think all that Asian demand is for WalMart shelves in Bubbleville USA only - it isn't.

Nor is corn/beans/wheat going back to pre-insanity prices - not even in real prices - anytime soon.

We are all folks who only see one sliver of the world. Many here only see financial & RE markets and are 'projecting' to everything else. It is as risky & prone to misinterpretation as was projecting everything from dot.bomb or farm crisis.

There will be effects - I'm not convinced these effects are as far reaching as some here have hoped or feared.

People need to consider there just might be more to this story than they anticipate.

Giaus & idod

Sorry for the typos - trying to work & blog - bad mix... so I'll stop working. priorities you know.

[just kidding]

Career advice?

There are no free lunches no matter what you do. Now get back to work.

Markel:

Let me know when your daughters start wearing underwear sewn from potato sacks, and if they get really, really excited when you give them an orange for Christmas.

I grew up in the 60s/70s. I remember feeling pretty good about the Christmas Oranges (there were six of us, we each got two). My dad always told us how good we had it--compared to his childhood--when supper was "nothing but a few potatoes between all of us." He was one of nine children.

I agree that we are a long way from the Great Depression, and even a good stroll away from the 70s, but the signs are bad. Nobody says "liquidity trap" out loud on televison, let alone explaining one, but I think we might be headed that way.

career advice: If your kids are not driven enough to be engineers, doctors, and lawyers but they want to make that kind of money then send them to an ag school or get any science degree and take the exam to be a Pest Control Advisor. They may have to take a few ag classes at a JC to get their qualifications for the license, but the job is learned entirely in the field and a science degree will make them very valuable. No farming experience is required. The average PCA is in their 50's and retirements are increasing. Very few young people are going into the field as they are not aware of it and those who are usually come from a family farm and go back there.

Plus it is nice to work outside and generally you get to live in an area with a cheaper cost of living while making good money.

to all:

I don't mean to imply that medicine doesn't have some great qualities. In the end, for the most part I can go home saying that I did some good for the earth. Or at least that I tried to do some good for the earth.

and going forward, I think that being a doctor will be relatively stable employment. In down times sometimes all you can ask for is stable employment, even if I want to quit my job every 3-4 days or so.

SO although I'll take my 15% pay cut (ok, no paycut but work 20% harder for the same pay) at least I don't have to worry about losing my job (at leat not yet). and although it's always a possibility of large layoffs, in general when times are tough we (docs) just work harder for less since people always get sick and it is a priority for most people to get well again.

so I won't cry too much because I'm somewhat safe and I can't imagine what it would be like if I were a 44 year old GM engineer or a 52 year old RE agent or 36 yo financial analyst.

but going forward new prospective doctors need to realize that in general they will work very hard, and they will be more and more middle income. and that the possibility of nationalized medicine is very very high (I've already said I think it's a 100% chance)

outsider: if your daughter is free for the summer perhaps she can shadow an MD in her chosen profession. My advice is to do this for at least 2 weeks. I have had many college students do this with me. I've found that about 75% of them dislike it once they realize how early they have to get up every day including weekends, and the fact that there are no breaks and no lunch, how there is no "down" time or "break" in the day, and that you're often there late. 25% of them realize that it's exactly what they wanted and go for it.

It's not a liquidity trap we're staring at. That refers to the nominal interest rate going below 0, and interest rates are not dropping. We're facing a reduction in credit due to loss of confidence and reduced bank capital, which is a credit crunch. This is going to be like an old-fashioned panic, which we haven't seen since the GD. Until now in the post-war era the industrialized economies have been able to reflate their way out of panic but this time it's just too big.

I see no reason why this would be worse than the GD. I was expecting a moderate but extended recession, but seeing the drop in bank loans this quarter I'm now expected a depression. That kind of credit crunch is not something you see in a recession. But I think we're talking 1873, not 1933.

Remember folks, it isn't a wage-price spiral because wages aren't rising.

wages will rise in sectors that can strike, successfully, for higher wages.

We may be deleveraging, but the currency peggers are like a huge dollar capacitor that's all charged up....whenever that thing unloads, it's going to confuse the situation of dollar denominated prices quite badly.