"Good examples are less business investment and less local government spending..."
Local governments budget in advance based on tax revenues collected in the past. As a result, there is always a lag between an economic downturn and a resulting reduction in local government spending.
There are lots of cities & counties with budget woes due to purely local conditions/decisions, Vallejo being one notable example. In California, at least, the national economic reality won't wallop the cities for another year. Even in the best-managed cities, FY 2009-10 will get interesting; 2010-11 will be a bitch.
LOL - Bizarro & Rally Monkey one & two... and on a Sunday afternoon too!
If that doesn't qualify as a 'recession indicator' nothing does.
CR - we've discussed this before but does it look like a recession to you yet? I haven't seen much of anything looking like previous recessions (of course the Upper Midwest usually gets mowed pretty close in recessions so my biased view of what to expect is pretty ugly - tumbleweeds going out of parking lots at lots-n-lots of factories).
But even though it does 'look' like it is slowing (my son working in retail concurs)... it doesn't look like what I remember recessions to look like... at least not in my little corner of central fly over.
I've said it before and I'll say it again. The government is lying through it's teeth on inflation numbers, which has the side-effect of making GDP numbers bogus.
Until we get an honest revision of inflation numbers for 2008, the fact that we are in a recession won't be formally acknowledged.
I do, however, hold out some hope that the Obama administration will do the right thing.
That's amazing we are still arguing whether we're in a recession or not.
Europe is tanking and Germany is feeling the pinch through china.
so we are waay under water. But there will be no negative growth until the election that's it.
P.S. I'd like to hear from anybody out there who trades in Muni's. Do you look at anything besides their rating? Because I'd be looking at their CalPERS benefit for non-safety employees (3%@60 has proven fiscally problematic) and the tenure of their City Manager. Just curious.
From Bill Fleckenstein:
As John Williams of Shadowstats.com notes: "Adjusted to pre-Clinton (1990) methodology, annual CPI growth rose to roughly 8.6% in July from 8.3% in June, while the SGS-Alternate CPI [calculated by Williams], which reverses gimmicked changes to official CPI reporting methodologies back to 1980, rose to a 28-year high of roughly 13.4% in July, up from 12.6% in June." And, inflation pressures continue to rise, as previous price hikes work their way through the food chain, ending in the lap of the consumer. (All of which makes a mockery of the absurdly low rates offered in the Treasury market.
Well if you work in the oil and gas, railroad or mining sectors things look pretty good. I guess farmers are doing alright as well but everything else? So in North Dakota and Appalachia things never looked better but it would take 50 North Dakotas to cancel out one California and 8 West Virginias to compensate for New York so, on balance, despite pockets of prosperity, the overall economy has got to be in a real recession.
"CR - we've discussed this before but does it look like a recession to you yet? I haven't seen much of anything looking like previous recessions (of course the Upper Midwest usually gets mowed pretty close in recessions so my biased view of what to expect is pretty ugly - tumbleweeds going out of parking lots at lots-n-lots of factories)."
Dry:
You didn't ask me, but... my wife and I both work at UC Santa Cruz, and the real telling argument is that applications for financial aid have exploded. My wife works across from the financial aid office, and she says it's been mobbed every day this past month or so, much more so than in the past.
I'd call this a sign that the money's not flowing.
"Once again, the 2 questions I need answered. Experts, please advise...
When do I start buying gold bricks?
How deep do I need to bury them in my backyard?"
I'm no expert, but if this question is serious...
1) You buy gold if you believe the dollar is going to tank, one way or the other. Gold is insurance. If you believe that, now is as good a time to buy as any. Don't dillydally waiting for the right price.
2) Who the hell is going to cash your gold bricks? If you believe the international financial system is going to collapse, I guess you need them. If you only think the dollar is, look at a nice gold ETF.
If you must buy gold, buy coins or one-ounce ingots. Stash them in a safe-deposit box and tell no one. Monitor the health of your bank through the various ratings services. If it starts to look like crap, get a box at another bank.
Bob Dobbs I don't doubt requests for financial aid have exploded in California but when tuition keeps going up you could expect that even in a good economy. The cancellation of all those HELOCS is probably a big driving force behind the need for more financial aid for students as well.
This comment by Professor Hamilton raises an interesting question. He seems to think that you can't really fudge a recession call for long (say, by adjusting the CPI) because a recession is not a set of numbers but a real phenomenon wherein adverse positive feedback loops are occurring. Heh. As an electrical engineer this piques my interest.
Also, my little piece of recession datum - there is a lot of laying off going on in the patent law field. Nobody, can lay me off, but I've certainly gotten less busy. This started about six months ago. I suspect patent law is a leading indicator, because companies cut legal budgets way before they start laying people off.
Also I have had two clients go bankrupt and one get sold by corporate to raise cash (hence my extra free time lately). It feels like the tech bubble crash, though not that extreme.
One reason it may not "feel" like a recession in much of the heartland (outside of Michigan) is that this time the farmers and the small industrial companies aren't taking the brunt of it.
Wachovia announced 7000 layoffs last month. This is the same order of magnitude as Bethlehem Steel or GM layoffs in the 80's.
Georgia unemployment is now 6.2%, above the national average for the first time I can ever remember.
Only thing that keeps Ben up at night is how to keep velocity from crumbling. If using bailouts and more stimulus can keep the whole economy from seizing I'm sure he figures everything will work out. Inflation is his friend. Pay attention to what he does, not the silliness in the fedspeak about inflation concerns. Sure he's worried about inflation -- Not having enough!
The US can't be in a recession until after the elections (if Obama wins) or anytime in the next 4 years if McCain wins. Republicans just don't have recessions. Maybe some rough spots, but they are contained, and always past the bottom.
Now, let's get on with some multi-millionaire and oil company tax cuts and other subsidies.
And if, perchance, you think we are in a recession (contrary to the indicators of awesome growth), then it must be that the entire populace and business structure is afraid Obama will quickly call for legislation requiring a recession.
"Bob Dobbs I don't doubt requests for financial aid have exploded in California but when tuition keeps going up you could expect that even in a good economy. The cancellation of all those HELOCS is probably a big driving force behind the need for more financial aid for students as well."
Tuition has gone up, true. But so has the cost of living. I don't argue your HELOC point for a single moment, but in our debt-fueled economy the collapse of HELOCs leads to less spending, which leads to recession. This recession is not caused, IMHO, by the business cycle but by the credit crisis -- aka, the sudden realization that nearly everyone is actually broke and so shouldn't be lent money.
No snark, just honest statement: I'm pretty young, and am loving that I get to buy so many shares for my Roth and 401K at lower prices. I recently maxed out my contribution to both. I'm sorry for people who are trying to get to retirement right now, though.
In the recent past every additional dollar of GDP has been fueled by $5 in credit expansion. Since we are not going to get that kind of credit expansion now just how does the GDP grow?
Inflate like hell and massively under-report PCE. Rigged report. I suppose we could show technical growth during a depression.
bearly | 08.24.08 - 5:27 pm | #
Growth of the war machine, domestic oil production, the size of federal government, soup kitchen start-ups...
One thing to remember when you look at manufacturing areas is the imbalance caused by the "decoupling". In my mind this is mostly a lag, since I have yet to believe that BRIC aggregate demand will expand at the rate needed to power their own economies, so as US finance tanks, it eventually will draw the manufacturing and raw materials sector with it, but that could be a while. In the meantime, the weak dollar and high oil tends to make some production more competitive at home, especially the heavier industries where energy is a big component.
FWIW, dryfly, I have started to heard rumblings of inventory building along the supply chain. If things don't turn around in a month or two I think we will start to see the manufacturing side backing off as well, despite the plans of most of the participant that the bon temps just keep roulez...
It's not "catching a falling knife" when your investment horizon is 30 years and you're not trying day-trade during a bloodbath. I said I was young, not stupid.
Can we all agree that a Reinforcing-Feedback-Loop (tm) looks like a positive-feedback-loop to us non-engineer, underwater-basket weaving, liberal arts majors, while a Countervailing-Feedback-Loop (tm) looks an awful lot like a negative-feedback-loop.
Now THAT's scary. Calling WVa a pocket of prosperity.
I can hear the voices of those snake charmer preachers now, echoing across the hollers.
"For we brought nothing into this world, and it is certain we can carry nothing out. And having food and clothing, with these we shall be content. But those who desire to be rich fall into temptation and a snare, and into many foolish and harmful lusts which drown men in destruction and perdition. For the love of money is a root of all kinds of evil, for which some have strayed from the faith in their greediness, and pierced themselves through with many sorrows."
Could be the time is growing near to trade in our trappings for a dog, horse and ammo, and revert to the ridgerunning ways we barely remember.
A great read on one of the ivory towered economists calling BS on the fed-wall street relationship. Fireworks at the Jackson Hole Members of the Deluded Meeting.
Can we all agree that a Reinforcing-Feedback-Loop (tm) looks like a positive-feedback-loop to us non-engineer, underwater-basket weaving, liberal arts majors, while a Countervailing-Feedback-Loop (tm) looks an awful lot like a negative-feedback-loop.
Nonsense. Underwater-basket weaving, liberal arts majors should know proper use of the hyphen.
"Negative feedback loop" (sans hyphen) indicates the loop is negative. "Negative-feedback loop" implies that the feedback is negative.
Mailgilbs,
I'm much closer to retirement than you are, so I won't touch stocks. But I agree with your reasoning and your 30-year horizon. The most important thing is to have a high savings rate like you seem to have.
Even if your stocks take a beating for the next 2 or 3 years, you're still better off than the guys who blew it on a jacuzzi or Jaguar.
If you come up here sneaking around our area of the woods might get your ass shot. This has been a great place to watch the show but we don't need it getting stunk up with a bunch of city folk.
Next you're going to tell me that Danny Debit doesn't go on the left by the door and Connie Credit doesn't go on the right by the closet when reading a financial statement.
I can't handle too much of this type information on a Sunday.
"A great read on one of the ivory towered economists calling BS on the fed-wall street relationship. Fireworks at the Jackson Hole Members of the Deluded Meeting."
Good article. Of course they're already calling him misguided -- publically at least. Privately, who knows where they've stashed their own money?
I can't think of anybody self employed who isn't feeling it, except some REO real estate agents...
Even my CPA is getting hammered.
Sippn
This is the cycle that will feed upon itself. Worse is when another major bank fails. Self employed (well... small businesses in general) end up having to keep far larger quantities of cash handy. Often $200k to $2M just for the normal cash flow. With Indymac, its hurt more than a few Southern California small businesses.
Small businesses are the linchpin of economic growth. When they contract, everyone else contracts.
I wonder if Industrial production will cross the dotted line in the linked graphs... Quite a bit is being transfered back from overseas. Yea... I know, a hope (pipedream?)
Thanks to Invisible Hand and others. I'm very fortunate to owe nothing whatsoever, which is why I'm even looking at retirement investments. Many of my friends owe around $100K including college/not including mortgage...yet they invest aggressively as well. I think there's room to invest and owe, but I'm free and clear, and have a long horizon. I also wanted to insert a longer view into the discussion.
Some believe this is a cycle with a nasty extra downside given housing. Others think it's The End. If it's The End, what do I care what I might lose? If it's the cycle, I'm happy to buy up what I can.
You are lucky to be in your position. I imagine what I said and others advised was to stay there and not get too aggressive in investing or speculating, as many posters on the site advise. You will do what you do with no further advice from proffered from me beyond my earlier "avoid debt."
JP,
Great observation on the importance of hyphens.
In my opinion, economists shouldn't use the term "feedback loops" unless they work in an office of engineers (as I once did). This is an engineering term that many economists don't get right, and most bosses misunderstand anyway.
If you look at Calculated Risk's use of the term "negative feedback loops", he meant "feedback loops which are negative for the economy". For example, declining investment causes lower GDP causes declining investment causes lower GDP". (An engineer would actually call this a "positive-feedback loop".
I prefer to use terms like "vicious cycle" which are more vivid and easily understood.
Some believe this is a cycle with a nasty extra downside given housing. Others think it's The End. If it's The End, what do I care what I might lose? If it's the cycle, I'm happy to buy up what I can.
Are those your only two possibilities for the current situation? ie Can you elaborate on what's lurking in the middle of those two?
The argument for why I should care whether the current state of the economy qualifies as a 'recession', is circular question-begging. As I understand it following your link, it goes something like:
If it's a recession there will be feedback loops making things much worse - and if there's not, there won't? - and that's why I should care.
But why would there be negative feedback loops making things worse 'if it's a recession'? Is that a mathematical theorem? A law of nature? What if we're not 'in a recession' but the feedback loops come forth anyway? What was the point of the jargon?
I'm guessing it's really just the definition of 'recession', i.e. we call it a 'recession' whenever we enter an economic state in which there are feedback loops making things much worse.
That says to me that whether we're in a recession depends on whether we end up encountering these negative feedback loops that make things much worse. Since we haven't yet (unless your argument is that we have, in which case why not say so?), I don't see the basis for 'caring' whether we're 'in a recession'. I do care whether we encounter the feedback loops (sure hope we don't!) but this is not illuminated or bolstered either way by semantical back-and-forths about 'recession'. The state of the economy is what it is; if things are bad, things are bad, regardless of whether it's officially 'a recession'.
"'Some believe this is a cycle with a nasty extra downside given housing. Others think it's The End. If it's The End, what do I care what I might lose? If it's the cycle, I'm happy to buy up what I can.'
Are those your only two possibilities for the current situation? ie Can you elaborate on what's lurking in the middle of those two?"
JP--for Mailgilbs purposes, yes, there are only two options. Either the world ends, in which case it doesn't matter how much she/he saves, or where she/he puts it (unless, maybe, in a bunker and 30+ years of freeze dried food.) Anything less than a total collapse, and the only thing you can do is just keep steadily buying. Where else would you put it, anyway? In your mattress?
The only thing mailgilbs didn't say was what she/he was investing in. With a timetable like that, best thing is just to buy the market: index funds.
Anonymous | 08.24.08 - 5:38 pm | writes:
Stay out of debt for the next 2 or 3 years and you'll be fine. Debt is going to be the killer for most.
I keep reading that from various people/anonymous commenters, but then I read just as much that inflation (hyper?) will bail out our debts. Not directed at you spec., but you people need to make up your minds. Can't have it both ways. Either debt is a stranglehold or it will be inflated away. I'm of the former opinion.
A recession is negative real GDP for 2 quarters - if you take nominal GDP growth and subtract the real inflation rate as tracked by Shadowstats, we're in deep doodoo.
Look at it this way and we've been in a recession for 9 years. Only heavy borrowing - by the government, business, and consumers - has kept the facade up.
"Some believe this is a cycle with a nasty extra downside given housing. Others think it's The End"
What about a down cycle that lasts for a few more years with asset prices continuing to sink as the economy drifts lower. I suggest some very liquid conservative assets... ST Treasuries and then decide when you get a sense that the economy is stabilizing, then start buying equities. No sense in trying to pick a bottom when it's clear the economy has much further pain ahead. You may be able to buy a lot more for the money AND avoid picking one of the outfits that fails during this mess.
Don't they actually still make stuff in the Midwest?
4runner | 08.24.08 - 4:52 pm | #
Yes - but less than we used to a generation ago... but that is still a lot compared to some other parts of the country.
::::
FWIW, dryfly, I have started to heard rumblings of inventory building along the supply chain. If things don't turn around in a month or two I think we will start to see the manufacturing side backing off as well, despite the plans of most of the participant that the bon temps just keep roulez...
ratefink | 08.24.08 - 5:32 pm | #
I'm seeing 'Phase One' of that process... that would be the 're-forecasting phase' where the uppity-ups look at the 'corporate dashboard' and ask... "Are we really gonna hit our numbers... cause if we aren't then we got waaaaay too much shit built." Peons like me then scramble to ask OUR customer contacts... "Say are you all gonna hit your numbers or what?" It kicks all the way up the supply chain until it pops out onto the store shelves. If it isn't moving there it then all stops... supply chain constipation.
Can't say we are there yet but phase one (the re-forecasting) is well underway with companies I call on & work for.
After reading this thread I'm left to wonder, when do commentators exercise microeconomic analysis?
I'm not alooding to pseudo-psych or "behavioral (macro)economics" at all but any examination of a firm's on going concern and investment prospectus. Certainly some firms' operational scope extends across borders - interstate and international. Still validation of marketing strategy as compared to revenue source and capital (vs debt) formation requires individualized due diligence in order to effect predictable risk management goals.
Which firms in which industries are positioned to obtain "abnormal" returns, irrespective of borrowing cost, ought to be obvious in EDGAR reporting --despite collapse of free risk basis and CAPM comparative metrics of market share.
On the other hand, deducing firm characteristics and behavior from macro price movements assures every investor seeks marginal profit from indexed earnings --subject to time-sensitive triggers. How is that income strategy, much less arbitrage and management conflicts, prudent?
Some believe this is a cycle with a nasty extra downside given housing. Others think it's The End. If it's The End, what do I care what I might lose? If it's the cycle, I'm happy to buy up what I can.
Mailgilbs - It will be more or less what happened in Japan (a better model than the 1930s). 50% haircut in real estate, 80% haircut in equities. Look at JGB yields today and you'll get a picture of the future.
Since you are young and have never seen anything like this, I suggest that you read a bit about the Japan experience, and try to get your head around what happens during deflation. It is very instructive, I promise you.
Before the current jargon of 'negative feedback loops' was born Gunnar Myrdal coined the even more impressive 'circular causation in a cumulative process'.
Now, the most impressive bit of jargon I ever read was on the side of a box of GE flourescent light tubes. As I had been questioned by a college
art professor on the nature of the new lighting being installed in her studio I had memorized it when she approached me again about color rendition. It went " Generally speaking, the visual comfort probability is inversely proportional to the coefficient of utilization'. As the words rolled off my tongue she stared blankly at me but left convinced she was dealing with a man who knew what he was doing.
Since a recession is SUPPOSED to be defined as a contraction in economic activity I would forget cooked government statistics and date the beginning of the recession to the peak in US oil consumption.
diemos: I wouldn't trust even the oil consumption data. There are lots of ways that number can be manipulated (storage on land, storage in tankers, exports of oil, etc. It seems pretty clear that oil spot prices and futures are being manipulated or speculated, so why not consumption?
I'm not saying consumption domestically hasn't falled, but the timing and depth are arguable.
So a 30-year time horizon makes it a sure thing? Don't fall for the Kudlowganda. For example, real estate went from a peak in real terms in 1894, to a low in 1922, 28 years later, down almost 50%. Real prices didn't recover fully after 1894 until 1989. (See Yale Professor Shiller's chart here. )
Assuming you do your homework and come to the (provably correct) conclusion that the tomatoes are currently overpriced, you may begin wondering where to keep your money in the meantime.
If you're convinced we're in for inflation, you could buy foreign currency ETFs and some GLD. If you're convinced it's deflation for sure, you could buy long-dated treasuries and some GLD. If (like me) you don't think you're smart enough to be sure, you might buy all three (well, I'm not enough of a deflationist to buy long treasuries, but I haven't sold all of my dollars).
The willingness and ability of Americans to come back into the housing market over the next few months will determine whether the U.S. economy experiences a mild downturn or the deepest recession in 30 years.
Many economists say that home prices have another 10 percent to fall to bring them into balance with rents and incomes. A fall of that magnitude would elicit a huge sigh of relief from Wall Street and Washington.
Fannie, Freddie Woes Vex Experts And Leave U.S. Hard Choices - WSJ.com
Freddie, Fannie Ills Leave Experts at Loss: The U.S. Treasury will likely be forced to inject funds into Fannie Mae and Freddie Mac, some top economists think, but they're not sure whether it will be enough to bolster the sagging economy.
Heres the truth. There is very little hope for the next generation at this time.
Grossly understated inflation insures that your wage growth will not outpace inflation, and your returns on long term investments will provide real returns that pale in comparison to MOST persons financial planning. Increasing govmt debt insures that your taxes will be higher in the future as well. The elimination of corporate pensions using 401K as an excuse has hurt many. People are no longer retiring, the golden age of being able to actually afford retirement has , at this point I would say that most will never be able to.
You will need market timing and wisdom to achieve returns much greater than the general masses that dollar-cost-avg into their 401ks.
I wonder if the government statistics can (be made to) decouple from reality and continue to flash an "all is well, almost" signal until the economy comes around eventually, thus technically avoiding a recession.
"One reason it may not "feel" like a recession in much of the heartland (outside of Michigan) is that this time the farmers and the small industrial companies aren't taking the brunt of it."
A very interesting observation - especially about farmers. The house price issues have not typically affected rural areas and grains have seen sky-high prices. But we are going to see record or near-record soybean and corn harvests in 2 months... and I think prices are going to go way, way down. The question will be: how many of those farmers were cagey enough to lock in their prices early? And how many countries will still be demanding US ag products once their economies slow down?
I know you collecting data from a lot of interesting places. Here's another: Canadian National Railway (Canada's largest railroad operator) publishes weekly carload data and breaks out by commodity groups such as automobiles, lumber, coal, etc.)
I don't know if a longer timeframe helped folks who bought the broader market in 1929, 1967 or early 2000 too much. And as for those who bought the techs in early 2000 or the banks and/or homebuilders last summer...
"1. When do I start buying gold bricks?
2. How deep do I need to bury them in my backyard?""
I respectfully disagree with buying a gold ETF if your intention is to preserve wealth. The ETFs are fine if you are speculating on the price of gold, but they are still just a paper liability of the entity with whom you contract. You are at the mercy of the counterparty to pay up. Physical gold is no one's liability. I would agree with buying one ounce coins stored in safe deposit box.
Personally, I'd wait until the 600s to buy gold, even though there may be a winter rally brewing now.
This whole scenario is too much like '73/'74, when gold pulled back hard before setting up for the big ascent a few years later. Same goes for equities, more or less, I really don't see the point of going net long in the ol' IRA north of 1150 spx.
tj - Actually I have, and it causes concern. It seems the answer to that problem is to visit your safe deposit box every few months so that it does appear dormant. Hope this isn't too pretentious, but IMO the best is one kilo bars in a safe deposit box in a private bank in Switzerland.
I respectfully disagree with buying a gold ETF if your intention is to preserve wealth.
I agree, an ETF is just another paper promise no different than the dollar.
The whole problem is of course that we could be entering a situation where promises are broken en masse, so there's no reason to think one type of paper will retain its value vs others.
Inflation is just a euphemism for mass theft of real wealth by intentionally degrading financial assets. If that's really what you're trying to defend against there's no point in arguing what's the safest way to entrust your wealth to theives...
Another option is to buy 100 oz. silver bars. They are very marketable, (ebay), and the US gov does not have a history of confiscating silver or making the possession of silver illegal.
Silver is costly to ship, and has the least compelling story of the 4 precious metals, IMO. Palladium is particularly interesting seeing as how Russia isn't on the nicest terms with the rest of the world at the moment.
But if you do want silver, yes, the 100 oz bars are the best option, and make sure to find the old engelhard drip bars, which are generally preferred by dealers.
Yes, though Platinum looks most likely to get hammered a bit more in this commodity pullback if it continues.
Unlike the other 3 (especially the platinum group), silver doesn't have much use as an industrial application these days. It is, however, the prettiest, due to the fact that it makes cool colors when oxidizing. Hard to think of a cooler doorstop.
I respectfully disagree with buying a gold ETF if your intention is to preserve wealth.
If you stay up too late at night, you can come up with a disaster scenario for every way of holding gold.
Bury it in your backyard - somebody sees you do it and digs it back up.
Hide it in the house - get robbed
Safe deposit box - FDR redux
Swiss private bank - uhh, limited nuclear exchange in Eastern Europe
GLD - it's just a paper asset
If we're talking about what you might be able to buy in a 401K, then GLD or miners is what you've got to work with. If we're talking a lot of gold, I'm not keeping it around the house (not to mention that one might decide to leave in a relative hurry and need to take it across the border). And, the last time I checked, you need a significant amount of assets to open an account with a Swiss private bank.
That said, I also use bullionvault.com, since I spend too much time late at night thinking paranoid thoughts (when I'm not catching up on CR threads).
"Silver is costly to ship, and has the least compelling story of the 4 precious metals."
That's funny I made more damn money on silver over the last 7 years then I ever made on gold, even copper, zinc and lead have out performed that hyped up crap until recently.
Apparently you haven't read about states seizing "unclaimed" safe deposit accounts (incorrectly, I might add). Happened with BofA of all places.
tj & the bear | 08.24.08 - 8:20 pm | # "
BofA, "of all places?" That'd be the one place I'd expect. I'll spare you my experiences (and those of my wife, who worked in the old Black Tower), but BofA was and is capable of any combination of incompetence and dishonesty.
I would also ask the question: if box payments are being regularly deducted from an active checking account, I would be very surprised for a competent bank to find grounds for abandonment.
If you stay up too late at night, you can come up with a disaster scenario for every way of holding gold.
Bury it in your backyard - somebody sees you do it and digs it back up.
Hide it in the house - get robbed
Safe deposit box - FDR redux
Swiss private bank - uhh, limited nuclear exchange in Eastern Europe
GLD - it's just a paper asset
My grandfather was a Proctor and Gamble cottonseed engineer, who started getting stock options I think in the '50s. He always thought it was crap to avoid giving him more money...
Won't say what that's worth now...I'll leave it to your imagination.
Why's everybody sounding like Ron Paul's latest newsletter? Are you saying that you think things are so hopeless that I should buy rocks?
The European Central Bank is set to tighten its collateral framework, ECB Governing Council member Yves Mersch was reported as saying over the weekend.
"At the margins there can still be cases where you see dangers of (banks) gaming the system," Mersch told Bloomberg at a Kansas City Federal Reserve-organised meeting of central bankers in Jackson Hole, Wyoming.
No kidding, really? Well knock me over with a feather.
Australia's Macquarie, for example, recently had Australian car-loan assets accepted by the ECB after a complex routing of the assets through a euro-zone affiliate.
No shite, unbelievable.
While the ECB has been eager to reassure troubled money markets that it will keep providing liquidity no matter what, its concern is that banks may take advantage and leave it holding assets worth far less than it thought.
I haven't used it (yet) myself, but I know the Perth Mint has both a gold certificate program as well as direct gold bar ownership/custody. The advantage is that they are easier to deal with than Swiss Banks and have been around longer than Bullion Vault.
The Mint is owned by the government of Perth in Australia.
If I were young and looking over out the next 30 years I would be looking outside the US, this empire has had it's reign and a new one is rising in the east. All empire do the same thing and die of to much debt, the US will be no different. I could be wrong but that is what I see.
mailgilbs
I say go out and have fun, piss it against the wall while you are young. If you save you will be like the people who have payed off their houses and now sit and watch their investment meltdown.
Anonymous, I respect that, but disagree: we've seen over and over that "decoupling" just is not happening. If you really believe that this is not a recession but a permanent downtrend, then I would not recommend investments in the East, as they'll be just a badly off, in the long run.
mailgilbs writes: Why's everybody sounding like Ron Paul's latest newsletter? Are you saying that you think things are so hopeless that I should buy rocks?
You're new here?
What's more frustrating - to me - is that these same commenters stated that debt will be a stranglehold going forward, so get out of debt now. And I asked why, if one believes inflation will ease the payment of debt? And I received zero responses.
I'm a hardcore deflationist. I believe these commodities have topped for several years, and that equities/houses will decline at least another 70% from current levels.
But apparently, the only appropriate bearish position on this site is to be long gold+commodities/short USD. We'll see.
GDP is a crappy measure...by any measure. It is a production metric characterized by nominal prices.
"Real" (deflated) prices aren't much better, IMHO.
A better measure is in the actual amount of goods being improved from raw to finished state(s) and exchanged (irrespective of price).
I think someone upthread mentioned the Canadian Railway stats and I agree regarding their importance (and similar metrics).
The basic thing is: are the people in a country exchanging more or less goods (at any price) relative to some other period? If the citizenry is reducing it's rate of exchange (denominated by any standard- gold, dollars, shiny beads, etc.), then I would argue there is an economic slowdown.
Another way to look at it is to ask yourself whether the folks around you are contributing more of their personal labor to "work" that benefits them personally rather than farming it out to service contractors or buying goods which take the place of human exertion?
When one has little disposable income, he/she gets pretty interested in learning how to "do for themselves" rather than paying another or buying a gadget to do it for them.
Is that bad? Tax-wise, sure. Less exchange means less tax revenue of all types. Is that bad for the average person? Only if less time to play video games equals decrease in standard of living.
The random seeming negative comments on this blog come from a deeper analysis.
How familiar are you with the complex securities that were created out of mortgage debt, student loan debt, credit card debt etc?
The financial players have been selling and trading highly leveraged assets that are now falling in value. Every mortgage or student loan or credit card default has secondary and tertiary financial effects.
They have also been selling CDO's, basically insurance against defaults on corporate debt. In a recession that insurance will come due.
They've also been selling 'auction rate securities', for which the market has recently died. Various attorneys general are forcing them to buy them back at face value.
No one knows what the fallout will be when all of the financials lose more money than they are worth at once.
That's part of it. There are also unknown aspects to our international financial relations in the future.
ren...thanks. Yes, I do know about these derivatives, but I don't understand it thoroughly. I admit that I think after the downside, there will be an upside. I think that there is a chastening period that we've yet to go through....which is why I'm planning on buying conservatively throughout.
But apparently, the only appropriate bearish position on this site is to be long gold+commodities/short USD. We'll see.
Whoa whoa whoa, I don't know where you got that idea. A big group of us holds the motley crew of ultrashorts like SRS and SKF. I think a small position in precious metals makes sense as a sort of doomsday hedge.
Heh, I'll give you a response. I'm also decidedly in the deflation camp. But I'm not necessarily in the opinion that you should pay off debt. If you truly believe in deflation, rather than paying down debt, you should take that money and short a market index. Or use it to buy ultrashort ETFs.
IMO, PMs will likely due fine -- historically they've held up in both inflation and deflation. What we've seen lately has been the unwinding of a popular trade; long PMs/short dollar/short financials. I expect the correction to finish in the next few weeks, then a long term target a bit above 1,000 for GLD.
They're also a small bit of insurance in case I'm wrong on the deflation bit.
Gavshire Hathaway writes:
PMs will likely due fine -- historically they've held up in both inflation and deflation...I expect the correction to finish in the next few weeks, then a long term target a bit above 1,000 for GLD.
Seeing how GLD is currently trading at 81.08 I'd say that's better than "holding up well".
energyecon writes:
Didn't you get the memo about Conjure Bag going long USD - what, was it like two weeks ago - anyone recall?
Here's what I posted on <a href="http://www.haloscan.com/comments/calculatedrisk/5707918285170716390/?dt=1213085438#489843>06.09.08: "Everyone here who's bearish the dollar vis a vis many currency, simply open up an account and sell the USD against that currency. In fact, leverage yourself if you're so sure. I think the USD has bottomed against the EUR, Pound, Canadian $, Australian $, NZ $"
Doggy Dog World writes:
Whoa whoa whoa, I don't know where you got that idea. A big group of us holds the motley crew of ultrashorts like SRS and SKF.
I've scaled into ultrashorts over the last two weeks (very good buy on TWM - within 0.10 of the low); however, I read 10 times the number of Short Bucky! comments as I do Short Financials - even though I know most people believe financial stocks will continue lower.
What's more frustrating - to me - is that these same commenters stated that debt will be a stranglehold going forward, so get out of debt now. And I asked why, if one believes inflation will ease the payment of debt? And I received zero responses.
My two cents: inflation will help banks
and the government get out of part of their problems. Those of us whose incomes do not keep up with inflation will get pounded. A rainy day is coming, and I'd rather have depreciated dollars saved for it than have them incinerated on interest charges.
Just got in from one of my favorite resteraunts in Denver Pappadeuxs. Almost half the tables were empty at 6:00 on a Sunday. I have never been seated withen half an hour at this time of day much less seen it half empty. We are screwed without a doubt.
I come here to cheer myself up cause it reminds me how depressed everyone else is. Surprised someone hasn't mentioned the NWO yet. Or the Amero. Yawn, getting sleepy now. Thanks for the memories....
all these cases can be made, one stronger than the others but whatever
what can not be argued in my opinion is that the dollar is anything other than toast, burnt, crisp, crunched, and shattered.
our leaders have destroyed our currency.
this paradigm has one exception
the world goes absolutely crazy, bat shit, war fever, and the country with the strongest armed forces is the country with the strongest currency, and thats , um US... (or other similar conflagration (pandemic!!!)
so barring that, gold goes up relative to the dollar,
Mersch Says ECB to Announce Changes to Collateral Rules Soon
I think the whole idea behind the sell off in the Euro was this very real worry that the ECB was accepting too many bad assets worse than even the Bank of England or the US FED. This may reverse the trend as many of the dollar shorts were blown out...
tj & the bear writes:
Me neither. Crisis = Opportunity, ya know.
Not disagreeing; but more <a href="http://en.wikipedia.org/wiki/Chinese_translation_of_crisis>precisely (via Wikipedia): The Chinese word weiji (危機 translated as "crisis") is often said to be composed of the characters for "danger" and "opportunity"; the implication being that in Chinese culture, a crisis is regarded not merely as a danger, but also as an opportunity.
"Throughout the 12 months of the crisis, it is difficult to avoid the impression that the Fed is too close to the financial markets and leading financial institutions, and too responsive to their special pleadings, to make the right decisions for the economy as a whole," he wrote in a paper presented to the conference.
Critics like Buiter worry that the Fed's unprecedented actions — including financial backing for JPMorgan Chase & Co.'s takeover of Bear Stearns Cos. — are putting taxpayers on the hook for billions of dollars of potential losses. They also say it encourages "moral hazard," that is, allowing financial companies to gamble more recklessly in the future.
Fed Chairman Ben Bernanke, who spoke to the conference on Friday, defended the Fed's actions, saying they were "necessary and justified" to avert a meltdown of the entire financial system, which would have devastated the U.S. economy.
Anonymouse,
A high inflation rate is not inconsistent with a collapse in house prices. In fact I think it's very likely that we will average 5-10% inflation rates over the next 3 years, while house prices drop a cumulative 20% or more.
House prices depend on cheap credit, and I think that we will have a credit-starved economy for the next 3 to 5 years. Your expectation of a 70 percent decline is extreme, but possible if walkaways soar and foreigners quit buying our bonds and dump the $2 trillion they now own.
And here's <a href="http://www.straightdope.com/columns/001103.html>Cecil Adams take:
"...perhaps what we've got here is a lot of people who don't understand their own language. Let's inquire more closely. Ji, taken by itself, means moment, chance, or opportunity (also machine, but let's disregard that), as in zhuan ji (change opportunity), shi ji (time opportunity), qi ji (cutting-in opportunity), or tou ji (plunge-into opportunity). Wei, on the other hand, means dangerous, precarious, high, as in wei xian (danger risk), wei shi (danger time), or wei hai (danger damage).
So the danger/opportunity interpretation isn't completely baseless. But let's stop kidding ourselves. The simplest explanation is that wei ji literally means precarious moment--a pretty close approximation of crisis, and not necessarily one meant to suggest a paradox. No doubt the rendering of ji as opportunity is the work of a nonnative speaker who naively added the optimistic twist this word implies to speakers of English. Wu Hung, a Chinese scholar at the University of Chicago, says that originally wei ji didn't even mean crisis. "Ji has a range of meanings, including opportunity but also danger," he says. "When the third-century Chinese began to use the word wei ji, they simply meant danger--a meaning emphasized by both characters."
Hope that's satisfactory for an unsolicited response.
Something tells me there's no way GLD could reach $1000. If I'm not mistaken, HSBC serves as the "custodian" of the trust's gold. If gold were to reach the levels implied by that increase, HSBC would announce that "all your gold are belong to us"
An interesting evening tonight. Stopped off at WalMart to get some crackers and for the first time EVER saw a couple being escorted out of the store in handcuffs. Then, I stopped off at the local downtown liquor store. Some guy was buying a crack stem and used a credit card. He was asked about ID, and he told the clerk that it was his girlfriend's card, and he went ahead and ran the thing to sell the pipe.
Next up: No more credit at the liquor store.
Frank Zappa's "Advance Romance" lyrics:
No more credit
From the liquor store
Suit is all dirty, boy
Shoes is all wore
Tired and lonely, my
Heart is all sore
Advance romance
I can't stand it no more
Told me she loved me
I believed what she said
Took me for a sucker, boy
All corn-fed
Next thing I knew
She had a bolt on the door
Advance romance
I can't use it no more
She took George's watch
Like they always do
(It was a Timex, too!)
No more money, boy
I shoulda knew
The way she do me, boy
She might do you, too
Advance romance
People I am through!
Potato-head Bobby
was a friend of mine
Open three of his eyes
In the food stamp line
Open four of his eyes
In the food stamp line
Open five of his eyes
In the food stamp line
Open six of his yes
In the food stamp line
Said she might be a devil
But she sure was fine
Advance romance
He wanna try it one time
Later that night
He drop on by
Told her all he wanna do
Was step up and say "Hi"
Half an hour later
She had frenched his fry
Advance romance
Bobby, say good-bye
"I respectfully disagree with buying a gold ETF if your intention is to preserve wealth. The ETFs are fine if you are speculating on the price of gold, but they are still just a paper liability of the entity with whom you contract. You are at the mercy of the counterparty to pay up...."
awgee nailed it, and thats why the rise and fall, from month to month, of gold is immaterial, IF
you are not about speculation, but insurance policy.
Still, swapping out ingredients for cheaper ones has the potential to alienate consumers already stretched by high gasoline prices and a weak economy. In a cost-cutting effort in the 1990s, Campbell Soup Co. reduced the amount of meat in its chicken noodle soup.
This has squirrel substitution written all over it!
This month, McDonald's Corp. said it's testing less expensive ways to make its $1 double cheeseburger; already, some restaurants are selling the burger with one slice of cheese instead of two. And in a Thursday interview, Burger King Holdings Inc. CEO John Chidsey said the chain is testing a smaller Whopper Jr. hamburger as it tries to overcome high ingredient costs.
I noticed that my favorite Ramen noodle dinners which were Japanese and now are Chinese are more expensive and less tasty. Alarmingly, this is just like 1978-1979 when album pressings suffered horribly. There were far more major warps, non-concentric trackings, reduced thickness, you name it!
John Andrews, director of the New Hampshire Local Government Center, says the effects of the poor economy are trickling down to local communities. Revenues from motor vehicle registrations and building permits are down in many towns, while the cost of health insurance, heating oil, gasoline and even asphalt for road projects are way up.
Given the economic downturn, some town officials are looking ahead to next March's town meetings with the expectation that budgets will be held at current levels because residents can't afford higher taxes.
I think we see both: deflation followed by inflation. We're currently in the deflation stage. What happens if this gets substantially worse? I think Bernanke or his successor will be forced to inflate like crazy in order to preserve our fractional banking system.
How far we go into the deflationary abyss is up for debate. In Bernanke's 2002 deflation speech (I've posted the link here a few times.), he outlines a range of options available to the Fed to stop deflation. He also suggests that the Fed is more afraid of deflation than inflation.
To date, there have been three change orders totaling more than $106,000 on the construction contract with the bulk of these increases attributed to asphalt and roadwork.
A $76,764 change order was "to adjust the asphalt price due to the low bidder's refusal to sign the contract plus no other contractor would hold their price throughout the contract," according to contract administration documents signed by the architect, contractor and Coweta County Schools.
Another $24,455 change order was approved to meet county specifications requiring a three-inch binder (asphalt product) instead of a two-inch binder on the parkway leading to the school.
I just read an AP article that said school districts are cutting out busing in a lot of communities in several states to save on diesel fuel costs. Parents and kids are complaining that, besides being unsafe, it takes 20 min. to walk.
I can hear it now - a new generation's mantra: "When I was a kid I walked 10 miles uphill to school every day - both ways"
Ghastly. Don't tell me we're going to have to go back to walking to school. If that's not a sign of recession, nothing is.
Higher taxes, more debt, less food, higher costs, more bank failures, more bailouts, more corruption unchecked, more debt, less savings, higher taxes, more debt, higher taxes...
In Shirley, buses will no longer pick up students who live less than 2 miles from school. In Chelmsford, though the buses are still running, many students must now pay a $200 fee to ride. And across the region, classroom temperatures might feel a bit crisper as schools open in the next few weeks.
Gas prices shot up an estimated 35 percent to 40 percent nationwide in the past year, while food costs jumped between 12 percent and 20 percent.
Those grumbling yellow buses — which have 25- to 100-gallon tanks and chug along at seven to eight miles per gallon — can cost as much as $400 to $500 to fill. That has forced schools across the country to make cost-saving shortcuts on service or to charge fees.
Mr. Beach writes:
He also suggests that the Fed is more afraid of deflation than inflation.
This is a key point in the inflation v. deflation debate. I've read his speech a number of times and I do not recall him explicitly stating that the Fed is afraid of deflation - as in they're afraid they cannot control/defeat it.
In John Mauldin's 2004 book Bull's Eye Investing, he devotes a chapter specifically to this speech. And Mauldin's interpretation differs from most but was very insightful to me. He argued that, in the speech, Bernanke is actually arguing that deflation is controllable via those methods he lists, and that therefore Bernanke believes deflation is not a problem. John agrees with him on this point. I do not.
That was a key turning point in my argument that this is a deflationary outcome: because the Fed (via Bernanke) believes that it can defeat deflation rather easily, because it's no problem - we have a printing press, etc.
But watch out for that liquidity trap - it's a real bitch, as Japan as seen for almost 2 decades.
—East Lyme students will soon be hoofing it a few extra blocks to catch the school bus, part of a plan to save thousands in gasoline costs.
The school district is cutting almost 200 bus stops from its daily routes, saying a consultant estimated they could save up to $10,000 in fuel costs.
The change affects students in all grades from kindergarten through high school in the southeastern Connecticut town.
Seven struggling schools got new principals and a number of new teachers to try and help turn those schools around. To save money on fuel, CMS eliminated about 3,000 bus stops.
If students (and workers) can walk/bike more, then that is a productivity enhancement. That would be "good" deflation. Not to mention being healthier and requiring fewer medical interventions later-a net investment.
In a 4-0 vote, with trustee Lara York absent, school board members voted Monday to rescind their previous decision that secondary students had to live a minimum of three miles from the campus in order to use district transportation.
During the past school year, junior high students living at least 1 1/2 miles from campus and high school students living 2 1/2 miles or farther were eligible to ride the buses.
Although the change to secondary transportation would have saved the district about $1 million, it also would have affected about 1,100 students and eliminated buses altogether at seven of the 10 junior and senior high schools and caused an eighth school to limit its bus route to just one stop.
On Monday -- after weeks of being flooded with e-mails and testimonies from students, parents and bus drivers opposed to the changes -- board members decided to restore transportation services to their former levels for fall semester, using $235,000 from a reserve to fund the increased operational costs.
The cuts to secondary transportation were approved in May as part of a package to slash $9.3 million from the district's budget in anticipation of bad news
My questions on that school district are two fold:
Are the schools in question in areas in which there are sidewalks and walkways? In my state - PA - The schools are legally liable for safety of the students from doorstep to school and vice-versa (this from a school principal). If school's in a rural area, then do we really want kids walking on roadsides and inviting an accident?
What are parking facilities like at the school? If poor, then you have all kinds of parking problems in surrounding neighborhoods or in rural setting.
For my opinion, the money should be saved on the infrastructure end of things. Why does a school need a multimillion multiuse artifical turf field? Or large ticket weightlifting facility for the football team? Both are examples from my local area.
let those kids walk so we can give the money to GM, Ford and Chrysler
GM, Ford Seek $50 Billion From U.S., Double Request (Update3)
By Jeff Green
Aug. 22 (Bloomberg) -- General Motors Corp., Ford Motor Co., Chrysler LLC and U.S. auto-parts makers are seeking $50 billion in government-backed loans, double their initial request, to develop and build more fuel-efficient vehicles.
The grafts in Hamilton's piece were interesting. Showing all of those recessions since 1950. One of the steepest was in 1957. I was a child, but I remember that one. I was hungry all the time. It is not that we experienced hunger, but our diet changed from one rich in protein (ie meat) to mostly carbohydrate (pasta, potatoes, etc). This is not real deprivation, just a physiological reaction to a changed diet. But it was a change that was directly the result of my father's loss of his job.
Things look bad today and maybe, in real macroeconomic terms, even worse than 1957. But I doubt that it will effect my food purchases all that much.
Aug. 25 (Bloomberg) -- Most of the bond strategists and salesmen that Resolution Investment Management Ltd.'s Stuart Thomson talked to last August expected the credit crunch to be long over by now. Instead, money markets show there's no end in sight, and it may even worsen.
It's like an ongoing nightmare and no one is sure when we're going to wake up,'' said Thomson, a money manager in Glasgow at Resolution, which oversees $46 billion in bonds.Things are going to get worse before they get better.''
In a replay of the last four months of 2007, interest-rate derivatives imply that banks are becoming more hesitant to lend on speculation credit losses will increase as the global economic slowdown deepens. Binit Patel, an economist in London at Goldman Sachs Group Inc., said in an Aug. 21 report that nations accounting for half of the world's economy face a recession.
I know they did it last year and I'll check to see if/when they do it this year is that $1.00 store chain Dollartree had a Xmas Lay-A-Way program. My mind blew when I saw a sign.One of the saddest things I've ever ran across,but I'm sure that there will be a lot worse coming up!
She became ill with fever and couldn't get out of bed and walk a few miles to ask for help, and the next time someone brought her a rabbit or squirrel to eat and a jar of canned vegetables, they were all dead. Remember that back then, few people had cars or phones. If you needed to tell someone something, you had to walk to their house.
"All of which is why my belief is, we wind up worse off than Japan, not as bad as GD."
What are the indicators for depression - 6 qtrs -ve GDP & 20% unemployment? We may just forget about 6 straight qtrs of -ve GDP. Even UE is rigged. We will never get even a technical recession.
mailgilbs writes:
"It's not "catching a falling knife" when your investment horizon is 30 years and you're not trying day-trade during a bloodbath. I said I was young, not stupid."
... but perhaps has Buffett says (talking about Sovereign Funds) if not dumb money at least "naive money"
what is the point of buying in a descending market???
It seems to me it is a good time for the long term investors -young or not- to learn about the markets AND the changing global financial forces, and to learn to read (long term) charts. Charts =the flow of money do not lie (and they are not saying "buy" at this time).
Only the pros who have to be invested should be in the game right now.
Not to worry about older people who are retired (or about to), at least some of them got (and took) good advice and got out of stocks entirely last year. That would be at least an example where as traders we did help more than just ourselves
What are the indicators for depression - 6 qtrs -ve GDP & 20% unemployment? We may just forget about 6 straight qtrs of -ve GDP. Even UE is rigged. We will never get even a technical recession.
bearly | 08.24.08 - 11:48 pm | #
If we have a 'depression' you won't need the gov't to tell you its here.
Billy Hill, it was just weird going into the liquor store tonight and seeing that weird scene with the credit card. Then I remembered the cassette tape I used to have with those lyrics "No more Credit at the Liquor Store". It was on his "Make a Jazz Noise Here" double-cassette tape. I don't have it anymore. Never knew what the title was until I googled all over and found the thing! I always thought it was humorous with the decent blues guitar in it.
"And I asked why, if one believes inflation will ease the payment of debt? And I received zero responses."
Price and commodity inflation does not necessarily translate into wage inflation. Prices could continue to rise and folks may have less to pay with and will find it more difficult to pay off debt.
On March 5, 1933, the day after Roosevelt's inauguration, he called a special session of Congress which instituted a mandatory four-day bank holiday. This act provided for the reopening of banks after federal inspectors had declared them to be financially secure.
The bill also gave the Secretary of the Treasury the authority to confiscate the gold of private citizens, in exchange for an equivalent amount of paper currency which was subject to later devaluation with relation to gold.
Despite the importance of the bill, it was passed in immense haste by Congress. Few, if any, Congressmen had the chance to read the bill; most were only able to hear the clerk read it. Quite a few Congressmen vocally protested the haste in which the bill was considered, but nevertheless it was passed sight unseen.
Within 300 days of the act's passage, 5,000 banks had passed inspection and were reopened. Roughly two-thirds of U.S. banks quickly reopened under this act, and faith in banking institutions was somewhat restored.
[And I asked why, if one believes inflation will ease the payment of debt? And I received zero responses.]
A good chunk of debt is revolving and other forms of variable rate interest. That will be a killer this cycle, as real wages are negative. Globalization has finally caught up with us.
"Major food makers are quietly altering their recipes on candy, dairy products and other top-selling lines, adding fillers and substituting cheaper ingredients to cut costs amid the commodities boom."
I have no idea what these boxes of junk used to contain before, and in my perspective the changes make little difference.
Being a buyer of fresh food ONLY, I keep wondering how people can eat the mountains of crap I see piled up in carts in supermarket lines and still be walking around after 60.
awgee writes:
"And I asked why, if one believes inflation will ease the payment of debt? And I received zero responses."
Price and commodity inflation does not necessarily translate into wage inflation. Prices could continue to rise and folks may have less to pay with and will find it more difficult to pay off debt.
awgee | 08.24.08 - 11:59 pm | #
Inflation is the increase in money supply & money-like instruments (credit) which are accepted as 'money' - period. Deflation is the opposite - period. Forget 'prices' - they are symptoms of supply, demand of both products AND the supply of fiat they are priced in. Inflation/deflation is a factor but not THE ONLY factor setting prices.
I see no reason why rising prices whether from 'inflation' or from real shortages/surpluses would automatically translate into higher wages... for some sure, the increased money has to go somewhere & somebody will capture it but that doesn't mean everyone or even most of us will see increases, real or nominal - see South America & their episodes with 'inflation' to see how extreme the wage & wealth distribution can remain in inflationary environments.
The Fed won't be able to accomplish a massive re-inflation on their own - they'll need treasury's help. They'll get it too IF the banking system teeters due to continued deflationary pressures (asset price declines). They will not sit idle and watch the banking system collapse - they will do something.
The outcome for us (whether they successfully re-inflate or fail) won't be painless by any means but who said it would be painless? If anyone even suggested that then they were a fool.
excerpt: But, in 2006, you could still go out to Kansas and buy an acre of farmland for only about $1,000. Adjusted to 1880 prices, that is only about $25, or barely 15% of the peak prices set 120 years ago.
Doc at the Radar Station said remember party lines and I remembered that my Grandmother told that when she was a girl in rural Ky.people would call the central operator and tell her they would sing.play,read a bible verse/poem,ect at a certain time.Central would call and tell all the people on the line that "Uncle Floyds gonna play his fiddle(or whatever) at 7:00" and those who wanted to would listen in.They also had group sings of songs and hymns.Simple Times.Heartwarming.
"Inflation is the increase in money supply & money-like instruments (credit) which are accepted as 'money' - period. Deflation is the opposite - period. Forget 'prices' - they are symptoms of supply, demand of both products AND the supply of fiat they are priced in. Inflation/deflation is a factor but not THE ONLY factor setting prices."
I gave up trying to explain what inflation and deflation are. So many people are misinformed, I have found it more useful to refer to inflation as monetary inflation and price increase as price inflation. It seems that sometimes it is more important to be able to communicate than to be right. I also not use the terms asset deflation or wealth destruction and price decreases.
one could imagine inflation with a decrease in the absolute number of dollars (money supply) if the quantity of goods and services in the marketplace decreased even faster than the money supply
The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.
\tAs inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 pack of gum will cost $1.02 in a year.
Most countries' central banks will try to sustain an inflation rate of 2-3%.
from wikipedia
In classical political economy, inflation meant increasing the money supply, while deflation meant decreasing it (see Monetary inflation).[citation needed] Economists from some schools of economic thought still retain this usage. Classical political economists from Hume to Ricardo did distinguish between and debate the cause and effect: the Bullionists, for example, argued that the Bank of England had overissued banknotes (increased the money supply) and caused 'the depreciation of banknotes' (inflation).[6]
...
Mainstream economists maintain that inflation is a measure of changes in the general level of prices. Thus the difference is that Austrian economists claim that inflation is the very action of producing more units of money, whereas mainstream economists regard inflation as the effect rather than the cause.[9] While most schools of economics agree that price levels are affected by changes in the money supply relative to the level of economic activity, the link with the quantity of money is not direct: for example, changes in price levels are affected by the velocity of money, and inflation can occur with a substantial lag between the increase in the quantity of money and the increase in the general price level.
If there are 55 Visitors Online, why are only about five or six of those visitors posting? Is it a case of, "Better to keep silent and be thought a fool, than to open one's mouth and remove all doubt"? Or do the non-posters just feel they have nothing important to say? Or maybe they feel that if they contribute, someone will denigrate that which have posted or show some fallacy or something?
I mock turtle writes:
one could imagine inflation with a decrease in the absolute number of dollars (money supply) if the quantity of goods and services in the marketplace decreased even faster than the money supply
whooooeeee
mock turtle | 08.25.08 - 12:27 am | #
We could see that happen IF peak oil is real - declining money supply & increasing prices simultaneously. Have fun with that scenario Ben...
Pitchforks,Torches&Pikes World: That would have been interesting if there were those types of things going on the party lines. Back in 1974 there was seven or so households on our party line. To call anybody in our prefix you just dialed the last four numbers to get their house. We had this yellow card you kept next to your phone with the numbers of the others on the party line. To call somebody on your party line you dialed the last four digits of their number and hung up the phone. Your phone would start to ring and when it quit ringing the other party had picked up. There were times of the day when it was hard to call out. Then you had to deal with the gossips that would unscrew the part of the receiver you talk in at the bottom (without taking the phone off the hook) and remove it, then lift the phone off the hook to listen in to your conversations. When they removed the mic before lifting the handle, it was hard to detect.
If there are 55 Visitors Online, why are only about five or six of those visitors posting? Is it a case of, "Better to keep silent and be thought a fool, than to open one's mouth and remove all doubt"? Or do the non-posters just feel they have nothing important to say? Or maybe they feel that if they contribute, someone will denigrate that which have posted or show some fallacy or something?
awgee | 08.25.08 - 12:33 am | #
There are a lot of lurkers - most forums I read often I lurk & don't post much or at all. Big Picture, Econbrowser, Naked Capitalism, etc.
mock turtle, My uncle worked for the telephone company as a lineman and there was this number you could call to get a test signal I believe it was 777-8888 or something like that. It was a signal generator that would ramp up in frequency and then drop off in a cyclic manner and it was REALLY LOUD.
Got a party line when we moved out into the country. Dad figured out private lines were available but the phone company just didn't want anyone to know. We got ours shortly thereafter.
BTW, back in the 80's I learned this long number that when you dialed would tell you the number you were calling from. Came in handy sorting out unlabeled modem lines.
I have trouble doing it,but I think if someone would post the lyrics to the singer Dar William's song "Bought and Sold"they would apply to a lot of these threads.
We finally got the number of people on our party line reduced from 7 to 3 in 1978 (out in BFE place mind you-I think there was a regulatory change). A private line still wasn't even optional then. When digital keypads took over, it was probably too cumbersome to deal with letters-although it was probably easier to remember the lettered prefixes. Interesting that they still print them! If it wasn't for 1-800-xxx-xxxx numbers that probably wouldn't even exist anymore.
Well we're heading for a past that you leave not defend,
Where the downtowns hold the sadness of
you can't go back again.
It's there you'll find the rust and debtors,
Motel signs with missing letters.
Cause there's a monster on the outskirts,
says it knows what your town needs,
Then it eats it up like nothing and won't spit out the seeds.
And we can be the super shoppers,
we can say we're really smart
We can say our town is doing fine without a beating heart,
We can even say the money saved is all our own,
It's bought and sold, it's bought and sold.
And we're heading out for nasty business,
keeps our country growing,
Where the weapons that we're selling
are the only seeds we're sowing,
You get to blow the fruits of all your labors,
Sell F-16's to all the neighbors.
And we know that it's for maney,
and that's how the west gets bargained,
You know the last time this happened,
even Vietnam got jargoned.
And you can say they're out to hunt you,
you can say they're out to fish you,
You can join a gang of restless boys
or start your own militia,
You can even say your violence is all your own,
It's bought and sold, it's bought and sold.
And I look up to the people who are less bought than I,
You can show them what you're selling,
and they'll only ask you why.
And their paychecks don't have lots of zeros,
They're my friends and they're my heroes.
And the TV sets are angry cause they just can't make 'em pay,
But I like the way these people read the signs and walk away,
And we can call ourselves the makers
and the keepers of the times,
We can spend our sand dollars
and sand nickels and sand dimes,
We can even say prosperity is all our own,
It's bought and sold, it's bought and sold.
We can even say our loneliness is all our own,
It's bought and sold, it's bought and sold.
It's bought and sold, it's bought and sold.
Well we're heading for a past that you leave not defend,
Where the downtowns hold the sadness of
you can't go back again.
It's there you'll find the rust and debtors,
Motel signs with missing letters.
Cause there's a monster on the outskirts,
says it knows what your town needs,
Then it eats it up like nothing and won't spit out the seeds.
And we can be the super shoppers,
we can say we're really smart
We can say our town is doing fine without a beating heart,
We can even say the money saved is all our own,
It's bought and sold, it's bought and sold.
And we're heading out for nasty business,
keeps our country growing,
Where the weapons that we're selling
are the only seeds we're sowing,
You get to blow the fruits of all your labors,
Sell F-16's to all the neighbors.
And we know that it's for maney,
and that's how the west gets bargained,
You know the last time this happened,
even Vietnam got jargoned.
And you can say they're out to hunt you,
you can say they're out to fish you,
You can join a gang of restless boys
or start your own militia,
You can even say your violence is all your own,
It's bought and sold, it's bought and sold.
And I look up to the people who are less bought than I,
You can show them what you're selling,
and they'll only ask you why.
And their paychecks don't have lots of zeros,
They're my friends and they're my heroes.
And the TV sets are angry cause they just can't make 'em pay,
But I like the way these people read the signs and walk away,
And we can call ourselves the makers
and the keepers of the times,
We can spend our sand dollars
and sand nickels and sand dimes,
We can even say prosperity is all our own,
It's bought and sold, it's bought and sold.
We can even say our loneliness is all our own,
It's bought and sold, it's bought and sold.
It's bought and sold, it's bought and sold.
One more OT for the Niteowls.....During the mid and late 40's(Until more people started having their own phones),the NYC phone co. took in almost a Million dollars a day,every day,from pay phones.
"A number of pretty young people are about to learn some interesting lessons about Value Traps. (This week's examples FNM FRE LEH etc.)"
Ahh to be young again and never having gone through a true bear market. You know the type that scars you for life and fundamentally changes your investment habits permanently?
I remember having the 30 year time-line during the dot-com bust and dollar cost averaging in on the "strong" companies like CSCO, JDSU, INTC etc.. You know doing the "smart" thing like everyone recommended. Just stick with the strong companies with strong fundamentals and ride out small bumps in the road?
7 years later I'm still sitting on 50% losses in some of these companies.
"7 years later I'm still sitting on 50% losses in some of these companies."
I know a lot of people that have a closet full of Bennie baby's that have done a lot worse then that and I think some commodity bulls may get the lesson in the near future as well.
Anonymous at 1:17.......You mention remembering.I can remember the date of the 1987 crash very easily because I lost 87,000 that day.The Miata sports car had just came out(With a waiting list and a prem.) and I had been doing pretty good and was going to get one(a little under 20k I think it was).BANG! 87k loss(on paper,made it all back later,but a lot later)No Miata for me!
The schools are legally liable for safety of the students from doorstep to school and vice-versa (this from a school principal).
Another principal claimed this, when a school didn't want to put a bike rack in because it would encourage kids to ride their bikes to school. The students had actually raised all the money for it, but this was the excuse. However, I was not able to find a single case where a school was successfully sued for somebody walking/riding to school.
bearly wrote:
[And I asked why, if one believes inflation will ease the payment of debt? And I received zero responses.]
A good chunk of debt is revolving and other forms of variable rate interest. That will be a killer this cycle, as real wages are negative. Globalization has finally caught up with us.
That is exactly what I am counting on! I have borrowed every damn dollar I could at long term fixed rates (5.25% for most of it). I could pay it all off in cash and then some but will leave it in short term stuff as the interests rates rise. I wouldn't want to lend long and borrow short in that kind of environment.
"Anonymous at 1:17.......You mention remembering.I can remember the date of the 1987 crash very easily because I lost 87,000 that day.The Miata sports car had just came out(With a waiting list and a prem.) and I had been doing pretty good and was going to get one(a little under 20k I think it was).BANG! 87k loss(on paper,made it all back later,but a lot later)No Miata for me!"
6 months before the bottom fell out from the tech-market in 2000 our little street in the Bay Area was basically all paper millionaires due to stock options. 6 months later it had changed for most of my neighbors to either nothing left on paper, out of a job or barely holding on to a job.
A good neighbor was 2 weeks away from initial vesting of stock-options and bought a new Corvette (his dream car). He told me the exact words he used to his wife were "Look honey, what could happen in 2 weeks?". 6 months later no corvette, no job and wife looking for a new job.
You mean liquor stores give credit? What a dumb idea that is. I get stuck with the hangover. Anonmymous is right. I was trading one time, and would compute my trades on a monthly basis. I was up 8k for the month, with about 30 minutes to go till closing. I just got greedy, went the other way on a trade I had completed, and got HAMMERED. It scared the hell out of me it happened so quickly and violently. I wasn't able to trade for a few weeks. Lost the 8K too.
My best screw up was trying to scalp a biotech stock. I had an order in at $10 below last days closing price. When I woke up I was a bit queasy about the order and decided to cancel my order. Had to phone them at that point. Told the wife I would cancel the order when I got to work (figuring what could happen in half an hour). Got to work to find my order placed and the stock $50 down. Turns out that was the day the whole genome sequencing bubble cracked.
That was good for a quick 10K or more in losses. Needless to say I don't try to scalp trades anymore.
I'm here late because I'm trying to figure out what happened to my essay/post that linked the RGE Monitor to the fascinating D.E. Shaw, Bezos, and the Mechanical Turk. Do you remember this post? It isn't coming up when I search the site. Roubini as the Mechanical Turk; that actually fits a little since he spent some time in Turkey.
Despite the importance of the bill, it was passed in immense haste by Congress. Few, if any, Congressmen had the chance to read the bill; most were only able to hear the clerk read it. Quite a few Congressmen vocally protested the haste in which the bill was considered, but nevertheless it was passed sight unseen.
Same as it ever was.
Personal debt eats up your earnings, you don't get to pay with cheaper dollars cause they're being spent on stuff that's costing you more. The winners are the banks and the government. What's good for those guys doesn't necessarily benefit you. The way the world works is: what's bad for those guys is bad for you; what's good for those guys is bad for you. Unless you're rich, then you're sitting on the other side of the table. And being rich in this environment is not having debt.
If there are 55 Visitors Online, why are only about five or six of those visitors posting? Is it a case of, "Better to keep silent and be thought a fool, than to open one's mouth and remove all doubt"? Or do the non-posters just feel they have nothing important to say? Or maybe they feel that if they contribute, someone will denigrate that which have posted or show some fallacy or something?
Yes, I plead guilty to both of the above charges. the other 54 are from the FDIC, the FBI, Homeland Security and the Fed.
mailgilbs: what's your company match on the 401k? mine is at 50% so, but it's in one of the poorer recent performers (GE common stock)...even with its dreadful recent performance, the 50% match pretty much covers losses...i did turn a pretty penny when I sold at $43 and bought back in at $31-32 a few months ago though...
either way take the long view, you probably won't LOSE money if it's a 401k type match situation...if it's just direct investing in stocks, i'd probably be a bit more risk-averse in your shoes (i'm in very similar ones) with the current market environment...
Hell....with something like 286 posts to wade through, it takes a bit of time to see if there's anything I can contribute to, or debate with, LOL.
oldtrader | 08.25.08 - 4:01 am | #
smaller packagings with same price for many things, esp ice cream .
Hardees hamburgers appear to have bread crumbs in the patties
Burger king whopper patties are so small you cant see them without removing the top from the bun
There is evidence of squeezes and attempt to keep prices from rising by merchants. This DOES NOT happen in an inflationary environment. They know higher prices will be lower sales.
David Pearson writes:
I haven't used it (yet) myself, but I know the Perth Mint has both a gold certificate program as well as direct gold bar ownership/custody. The advantage is that they are easier to deal with than Swiss Banks and have been around longer than Bullion Vault.
The Mint is owned by the government of Perth in Australia.
Google Perth Mint for their web site.
... or you could Google perth mint robbery --- they don't call WA the wild west for nothing....
I believe the economy is in recession and the negative feedback loops have started to kick-in.
What you mean is "positive feedback loop" towards the downside.
A negative-feedback loop is a GOOD thing - it dampens the system's reaction. Positive-feedback is the one that creates a spiraling situation, either downward or upward.
Volker the Viking writes:
"mock turtle writes:
sometimes no news is bad news
bloomberg, market watch, CBS, drudge, raw story and many others all silent on Jackson Hole"
what happened? seems to me that some had the courage to demonstrate common sense, and that others (still) tried to make common sense appear controversial
US economy is a friggin joke. Even UK has relatively larger manufacturing sector (16 % of GDP) than USA (12-13 %). Imports into US are bigger than all American yearly industrial production put together.
70 percent of GDP is pure consumption, that must a world record. That means now, when the spending party is over, at least 70+ million out of 154 million American workforce are now useless and soon out of work. That is not a recession or depression. No, that is an abyss, supermassive hellhole.
Pitchforks,Torches&Pikes World writes:
"Anonymous at 1:17.......You mention remembering.I can remember the date of the 1987 crash very easily because I lost 87,000 that day!"
I was not trading in 87 or even invested into anything US, so I am just looking at the SPX charts here with the indicators I routinely use. Sorry guys but that huge drop was a no brainer to avoid. Early in the week of October 5-12 the day rsi crossed the 50 line, the MACD crossed to downside (and that right on the 0 line), all stoch. were pointing down. Finally the close below 310 on Oct. 12 was the penultimate warning , SPX retraced up the next day only to fall and CLOSE again below 310 on the 14... if you did not get out then... you did not deserve to keep the money.
(the weekly charts context was even more ominous)
Genevieve: You may be suffering from "20/20 hindsight". Perhaps the significance your "obvious" indicators was not "known", or they were not available, at that time? (I don't strictly know that, but one can never judge past decisions based on lesson learned from those very events or later, even though it happens routinely, and the "judges" are universally people who were not on the spot right then and there.)
I think you meant to say a 'positive' feedback loop. That's the type that is self-amplifying and tends away from equilibrium - a negative feedback loop is self-stabilizing and tens to return a system to equilibrium.
Unless the negative feedback overdampens the system to the point that it ceases to oscillate and thus dies. Equilibrium in a system is not such a simple thing to produce. By it's nature it is a balancing act. Depending on the nature of the system, equilibrium can come as a result of positive or negative feedback.
I will give you that "www.stockcharts.com " did not exist, but the VERY first thing I ever did before buying a SINGLE share of anything was to watch the prices for a bit and PLOT prices and do it all by hand and with a calculator as I did not have any software. Just to see if there was any kind of info in the patterns. This requirement was always obvious to me. And yes I was trading in 2000 and I was all sold out well before the crash thank you.
lesson #2 : do not make excuses (lame) for failure to do your job as a trader (if you are in the market you ARE a TRADER, just your time frame varies individually). Making cheap excuses, I was not told that by my broker...duh!... I did not know etc... leads to more failures, admitting mistakes is a far better way to progress.
Too many people take market gains as some kind of entitlement and do not make any effort whatsoever to understand how "things work". They sure are an easy prey for the Wall Street clique. One of my high school teachers asked us once: "do you prefer to be stupid or lazy?" and she added "in fact there is not difference in the result"
Knife catching is used to describe purchasing good assets by the business end....when leveraged idiots get enough margin calls to start up a deleveraging feedback loop, eventually "good stuff" has to be sold to pay for the margin call, because the "bad stuff" is worthless.
In the dot com collapse, CSCO still looked good from $82 all the way back down to $8, and now it's back in the $24s...but you don't want to catch it in the $82 -> $24 range...that's knife catching. This is why the experienced hands wait for the "thud" of the knife sticking in the floor, before they grab it by the handle...
KnotRP writes:
"Knife catching... CSCO still looked good from $82 all the way back down to $8... but you don't want to catch it in the $82 -> $24 range...that's knife catching. This is why the experienced hands wait for the "thud" of the knife sticking in the floor, before they grab it by the handle..."
good point and good example IMO.
to me that points out mostly perhaps that it is helpful to look at monthly charts and not only weekly charts in such strong moves down.
the montly charts clearly signaled the safe buy point to be in April 03, at 15 + (that is conservative), in addition to the nice "handle formation" in the 15-13 range just before
BTW CSCO seems in a downtrend now , support at 20 (major historic pivot)? need to see this week's close to confirm trend long term. that volume around 30 sure does not look encouraging either.
Also apologies for seeming so "rough" in posts above, well in fact that is just my true personality coming out at times, sorry.
Billionth!!
I've loaded my buy at market sp500 futures orders...my entire 401k...
here's to you, bizarro!
My entire portfolio is 100% long US. I'm bullish.
Negative feedback loops or positive feedback loops?
Until we clear up that definition we'll stay in limbo.
"Good examples are less business investment and less local government spending..."
Local governments budget in advance based on tax revenues collected in the past. As a result, there is always a lag between an economic downturn and a resulting reduction in local government spending.
There are lots of cities & counties with budget woes due to purely local conditions/decisions, Vallejo being one notable example. In California, at least, the national economic reality won't wallop the cities for another year. Even in the best-managed cities, FY 2009-10 will get interesting; 2010-11 will be a bitch.
positive feedback loop....leading to ever more negative states.
yes, that's a pun.
LOL - Bizarro & Rally Monkey one & two... and on a Sunday afternoon too!
If that doesn't qualify as a 'recession indicator' nothing does.
CR - we've discussed this before but does it look like a recession to you yet? I haven't seen much of anything looking like previous recessions (of course the Upper Midwest usually gets mowed pretty close in recessions so my biased view of what to expect is pretty ugly - tumbleweeds going out of parking lots at lots-n-lots of factories).
But even though it does 'look' like it is slowing (my son working in retail concurs)... it doesn't look like what I remember recessions to look like... at least not in my little corner of central fly over.
You?
Dryfly--
Don't they actually still make stuff in the Midwest?
Once again, the 2 questions I need answered. Experts, please advise...
I've said it before and I'll say it again. The government is lying through it's teeth on inflation numbers, which has the side-effect of making GDP numbers bogus.
Until we get an honest revision of inflation numbers for 2008, the fact that we are in a recession won't be formally acknowledged.
I do, however, hold out some hope that the Obama administration will do the right thing.
That's amazing we are still arguing whether we're in a recession or not.
Europe is tanking and Germany is feeling the pinch through china.
so we are waay under water. But there will be no negative growth until the election that's it.
P.S. I'd like to hear from anybody out there who trades in Muni's. Do you look at anything besides their rating? Because I'd be looking at their CalPERS benefit for non-safety employees (3%@60 has proven fiscally problematic) and the tenure of their City Manager. Just curious.
From Bill Fleckenstein:
As John Williams of Shadowstats.com notes: "Adjusted to pre-Clinton (1990) methodology, annual CPI growth rose to roughly 8.6% in July from 8.3% in June, while the SGS-Alternate CPI [calculated by Williams], which reverses gimmicked changes to official CPI reporting methodologies back to 1980, rose to a 28-year high of roughly 13.4% in July, up from 12.6% in June." And, inflation pressures continue to rise, as previous price hikes work their way through the food chain, ending in the lap of the consumer. (All of which makes a mockery of the absurdly low rates offered in the Treasury market.
Well if you work in the oil and gas, railroad or mining sectors things look pretty good. I guess farmers are doing alright as well but everything else? So in North Dakota and Appalachia things never looked better but it would take 50 North Dakotas to cancel out one California and 8 West Virginias to compensate for New York so, on balance, despite pockets of prosperity, the overall economy has got to be in a real recession.
let's call it a Resselectio
"CR - we've discussed this before but does it look like a recession to you yet? I haven't seen much of anything looking like previous recessions (of course the Upper Midwest usually gets mowed pretty close in recessions so my biased view of what to expect is pretty ugly - tumbleweeds going out of parking lots at lots-n-lots of factories)."
Dry:
You didn't ask me, but... my wife and I both work at UC Santa Cruz, and the real telling argument is that applications for financial aid have exploded. My wife works across from the financial aid office, and she says it's been mobbed every day this past month or so, much more so than in the past.
I'd call this a sign that the money's not flowing.
How do you call that ?
http://www.nasdaq.com/econoday/reports/US/EN/New_York/jobless_claims/year/2008/weekly/34/chart.gif
RE: less business investment
See asphalt and local budgets
"Once again, the 2 questions I need answered. Experts, please advise...
I'm no expert, but if this question is serious...
1) You buy gold if you believe the dollar is going to tank, one way or the other. Gold is insurance. If you believe that, now is as good a time to buy as any. Don't dillydally waiting for the right price.
2) Who the hell is going to cash your gold bricks? If you believe the international financial system is going to collapse, I guess you need them. If you only think the dollar is, look at a nice gold ETF.
If you must buy gold, buy coins or one-ounce ingots. Stash them in a safe-deposit box and tell no one. Monitor the health of your bank through the various ratings services. If it starts to look like crap, get a box at another bank.
Bob Dobbs I don't doubt requests for financial aid have exploded in California but when tuition keeps going up you could expect that even in a good economy. The cancellation of all those HELOCS is probably a big driving force behind the need for more financial aid for students as well.
"Many people may not care whether our current situation meets the formal definition of a recession, but as I've explained previously, you should. ..."
I could stil give a rats ass less whether we are or not.
This comment by Professor Hamilton raises an interesting question. He seems to think that you can't really fudge a recession call for long (say, by adjusting the CPI) because a recession is not a set of numbers but a real phenomenon wherein adverse positive feedback loops are occurring. Heh. As an electrical engineer this piques my interest.
Also, my little piece of recession datum - there is a lot of laying off going on in the patent law field. Nobody, can lay me off, but I've certainly gotten less busy. This started about six months ago. I suspect patent law is a leading indicator, because companies cut legal budgets way before they start laying people off.
Also I have had two clients go bankrupt and one get sold by corporate to raise cash (hence my extra free time lately). It feels like the tech bubble crash, though not that extreme.
One reason it may not "feel" like a recession in much of the heartland (outside of Michigan) is that this time the farmers and the small industrial companies aren't taking the brunt of it.
Wachovia announced 7000 layoffs last month. This is the same order of magnitude as Bethlehem Steel or GM layoffs in the 80's.
Georgia unemployment is now 6.2%, above the national average for the first time I can ever remember.
Don't assume this recession is like past ones.
Only thing that keeps Ben up at night is how to keep velocity from crumbling. If using bailouts and more stimulus can keep the whole economy from seizing I'm sure he figures everything will work out. Inflation is his friend. Pay attention to what he does, not the silliness in the fedspeak about inflation concerns. Sure he's worried about inflation -- Not having enough!
FAIR GAME; What Will Mac 'n' Mae Cost You and Me? - NY Times
Good look at the possible implications of the coming freddie/fannie bailout.
Thanks Bob,
In truth, question 1 was serious... question 2 notsomuch.
The US can't be in a recession until after the elections (if Obama wins) or anytime in the next 4 years if McCain wins. Republicans just don't have recessions. Maybe some rough spots, but they are contained, and always past the bottom.
Now, let's get on with some multi-millionaire and oil company tax cuts and other subsidies.
And if, perchance, you think we are in a recession (contrary to the indicators of awesome growth), then it must be that the entire populace and business structure is afraid Obama will quickly call for legislation requiring a recession.
/snark
"Bob Dobbs I don't doubt requests for financial aid have exploded in California but when tuition keeps going up you could expect that even in a good economy. The cancellation of all those HELOCS is probably a big driving force behind the need for more financial aid for students as well."
Tuition has gone up, true. But so has the cost of living. I don't argue your HELOC point for a single moment, but in our debt-fueled economy the collapse of HELOCs leads to less spending, which leads to recession. This recession is not caused, IMHO, by the business cycle but by the credit crisis -- aka, the sudden realization that nearly everyone is actually broke and so shouldn't be lent money.
No snark, just honest statement: I'm pretty young, and am loving that I get to buy so many shares for my Roth and 401K at lower prices. I recently maxed out my contribution to both. I'm sorry for people who are trying to get to retirement right now, though.
In the recent past every additional dollar of GDP has been fueled by $5 in credit expansion. Since we are not going to get that kind of credit expansion now just how does the GDP grow?
Hold that thought, mailgilbs, while you go take a crash course on "Catching Falling Knives."
anon, on Gretchen's NYT article, interesting that she doesn't mention China's warning from the other day, but I guess geopolitics is beyond her scope.
"just how does the GDP grow"
Inflate like hell and massively under-report PCE. Rigged report. I suppose we could show technical growth during a depression.
Good look at the possible implications of the coming freddie/fannie bailout.
anon | 08.24.08 - 5:16 pm |
unusual to call a Gretchen article good on the CR blog...Wait til Tanta finds out
"just how does the GDP grow"
Inflate like hell and massively under-report PCE. Rigged report. I suppose we could show technical growth during a depression.
bearly | 08.24.08 - 5:27 pm | #
Growth of the war machine, domestic oil production, the size of federal government, soup kitchen start-ups...
I'm pretty young, and am loving that I get to buy so many shares for my Roth and 401K at lower prices.
Then you're going to be freaking ecstatic by late 2009!
One thing to remember when you look at manufacturing areas is the imbalance caused by the "decoupling". In my mind this is mostly a lag, since I have yet to believe that BRIC aggregate demand will expand at the rate needed to power their own economies, so as US finance tanks, it eventually will draw the manufacturing and raw materials sector with it, but that could be a while. In the meantime, the weak dollar and high oil tends to make some production more competitive at home, especially the heavier industries where energy is a big component.
FWIW, dryfly, I have started to heard rumblings of inventory building along the supply chain. If things don't turn around in a month or two I think we will start to see the manufacturing side backing off as well, despite the plans of most of the participant that the bon temps just keep roulez...
ratefink: what industry do you work in?
It's not "catching a falling knife" when your investment horizon is 30 years and you're not trying day-trade during a bloodbath. I said I was young, not stupid.
mailgilbs,
Stay out of debt for the next 2 or 3 years and you'll be fine. Debt is going to be the killer for most.
In my local paper today for the first time they mentioned "feed back loop."
404 Page Not Found | Idaho Statesman
didn't mention "negative." We're just getting up to speed here and everyone is still in denial..... we have a long to fall here in Idaho.
One of those basic materials suppliers. We'll be the last ones to feel it, but once we go down, we tend to stay down.
Ya aren't measuring it because ya aren't measuring the right stuff...
I can't think of anybody self employed who isn't feeling it, except some REO real estate agents...
Even my CPA is getting hammered.
Mailgilbs said: I'm pretty young, and am loving that I get to buy so many shares for my Roth and 401K at lower prices.
A number of pretty young people are about to learn some interesting lessons about Value Traps. (This week's examples FNM FRE LEH etc.)
As the estimable Mr Ritholtz has pointed out, a lot of money in Bear Markets is lost on the way down by trying to catch the falling knife.
Wait for it to hit the floor, bounce and then stop moving. Then pick it up by the handle. Trust me on this one, there is no rush.
Can we all agree that a Reinforcing-Feedback-Loop (tm) looks like a positive-feedback-loop to us non-engineer, underwater-basket weaving, liberal arts majors, while a Countervailing-Feedback-Loop (tm) looks an awful lot like a negative-feedback-loop.
Now THAT's scary. Calling WVa a pocket of prosperity.
I can hear the voices of those snake charmer preachers now, echoing across the hollers.
"For we brought nothing into this world, and it is certain we can carry nothing out. And having food and clothing, with these we shall be content. But those who desire to be rich fall into temptation and a snare, and into many foolish and harmful lusts which drown men in destruction and perdition. For the love of money is a root of all kinds of evil, for which some have strayed from the faith in their greediness, and pierced themselves through with many sorrows."
Could be the time is growing near to trade in our trappings for a dog, horse and ammo, and revert to the ridgerunning ways we barely remember.
Buiter Provokes Wrath at Jackson Hole, Says Fed Too Close to Wall Street « naked capitalism
A great read on one of the ivory towered economists calling BS on the fed-wall street relationship. Fireworks at the Jackson Hole Members of the Deluded Meeting.
Can we all agree that a Reinforcing-Feedback-Loop (tm) looks like a positive-feedback-loop to us non-engineer, underwater-basket weaving, liberal arts majors, while a Countervailing-Feedback-Loop (tm) looks an awful lot like a negative-feedback-loop.
Nonsense. Underwater-basket weaving, liberal arts majors should know proper use of the hyphen.
"Negative feedback loop" (sans hyphen) indicates the loop is negative. "Negative-feedback loop" implies that the feedback is negative.
How's that for throwing gasoline on a fire?
Mailgilbs,
I'm much closer to retirement than you are, so I won't touch stocks. But I agree with your reasoning and your 30-year horizon. The most important thing is to have a high savings rate like you seem to have.
Even if your stocks take a beating for the next 2 or 3 years, you're still better off than the guys who blew it on a jacuzzi or Jaguar.
Joe Six Pack
If you come up here sneaking around our area of the woods might get your ass shot. This has been a great place to watch the show but we don't need it getting stunk up with a bunch of city folk.
JP:
Next you're going to tell me that Danny Debit doesn't go on the left by the door and Connie Credit doesn't go on the right by the closet when reading a financial statement.
I can't handle too much of this type information on a Sunday.
Even if your stocks take a beating for the next 2 or 3 years, you're still better off than the guys who blew it on a jacuzzi or Jaguar.
Depends on whether the jacuzzi/Jaguar lands a wealthy spouse, I think. Those could be killer investments.
Anonymous writes:
mailgilbs,
"Stay out of debt for the next 2 or 3 years and you'll be fine. Debt is going to be the killer for most."
I think the best advice is to stay out of any debt forever, if you can.
I think the best advice is to stay out of any debt forever, if you can.
Amen.
Don't pay others to live beyond your immediate means.
Ah, but who said I was a city folk? The way I figure it, ya'll gonna need all the extra kin you can find.
"A great read on one of the ivory towered economists calling BS on the fed-wall street relationship. Fireworks at the Jackson Hole Members of the Deluded Meeting."
Good article. Of course they're already calling him misguided -- publically at least. Privately, who knows where they've stashed their own money?
JP.
Throw gas on fire ?
Fire gas ?
Getting confusing !
Boy in hospital after 'gas lighting' stunt backfires - Telegraph
MDF
I can't think of anybody self employed who isn't feeling it, except some REO real estate agents...
Even my CPA is getting hammered.
Sippn
This is the cycle that will feed upon itself. Worse is when another major bank fails. Self employed (well... small businesses in general) end up having to keep far larger quantities of cash handy. Often $200k to $2M just for the normal cash flow. With Indymac, its hurt more than a few Southern California small businesses.
Small businesses are the linchpin of economic growth. When they contract, everyone else contracts.
I wonder if Industrial production will cross the dotted line in the linked graphs... Quite a bit is being transfered back from overseas. Yea... I know, a hope (pipedream?)
Got Popcorn?
Neil
Thanks to Invisible Hand and others. I'm very fortunate to owe nothing whatsoever, which is why I'm even looking at retirement investments. Many of my friends owe around $100K including college/not including mortgage...yet they invest aggressively as well. I think there's room to invest and owe, but I'm free and clear, and have a long horizon. I also wanted to insert a longer view into the discussion.
Some believe this is a cycle with a nasty extra downside given housing. Others think it's The End. If it's The End, what do I care what I might lose? If it's the cycle, I'm happy to buy up what I can.
Canuckcurrentlygrowingcanabis
CSC is that you? The end is near better start stocking up
Dear mailgilbs,
You are lucky to be in your position. I imagine what I said and others advised was to stay there and not get too aggressive in investing or speculating, as many posters on the site advise. You will do what you do with no further advice from proffered from me beyond my earlier "avoid debt."
Haralambos
LA Seller writes:
Once again, the 2 questions I need answered. Experts, please advise...
Didnt Dr. Evil over at Goldman make a call for Gold to hold at the $ 666 level; patience my son......
JP,
Great observation on the importance of hyphens.
In my opinion, economists shouldn't use the term "feedback loops" unless they work in an office of engineers (as I once did). This is an engineering term that many economists don't get right, and most bosses misunderstand anyway.
If you look at Calculated Risk's use of the term "negative feedback loops", he meant "feedback loops which are negative for the economy". For example, declining investment causes lower GDP causes declining investment causes lower GDP". (An engineer would actually call this a "positive-feedback loop".
I prefer to use terms like "vicious cycle" which are more vivid and easily understood.
Some believe this is a cycle with a nasty extra downside given housing. Others think it's The End. If it's The End, what do I care what I might lose? If it's the cycle, I'm happy to buy up what I can.
Are those your only two possibilities for the current situation? ie Can you elaborate on what's lurking in the middle of those two?
The argument for why I should care whether the current state of the economy qualifies as a 'recession', is circular question-begging. As I understand it following your link, it goes something like:
If it's a recession there will be feedback loops making things much worse - and if there's not, there won't? - and that's why I should care.
But why would there be negative feedback loops making things worse 'if it's a recession'? Is that a mathematical theorem? A law of nature? What if we're not 'in a recession' but the feedback loops come forth anyway? What was the point of the jargon?
I'm guessing it's really just the definition of 'recession', i.e. we call it a 'recession' whenever we enter an economic state in which there are feedback loops making things much worse.
That says to me that whether we're in a recession depends on whether we end up encountering these negative feedback loops that make things much worse. Since we haven't yet (unless your argument is that we have, in which case why not say so?), I don't see the basis for 'caring' whether we're 'in a recession'. I do care whether we encounter the feedback loops (sure hope we don't!) but this is not illuminated or bolstered either way by semantical back-and-forths about 'recession'. The state of the economy is what it is; if things are bad, things are bad, regardless of whether it's officially 'a recession'.
"'Some believe this is a cycle with a nasty extra downside given housing. Others think it's The End. If it's The End, what do I care what I might lose? If it's the cycle, I'm happy to buy up what I can.'
Are those your only two possibilities for the current situation? ie Can you elaborate on what's lurking in the middle of those two?"
JP--for Mailgilbs purposes, yes, there are only two options. Either the world ends, in which case it doesn't matter how much she/he saves, or where she/he puts it (unless, maybe, in a bunker and 30+ years of freeze dried food.) Anything less than a total collapse, and the only thing you can do is just keep steadily buying. Where else would you put it, anyway? In your mattress?
The only thing mailgilbs didn't say was what she/he was investing in. With a timetable like that, best thing is just to buy the market: index funds.
Anonymous | 08.24.08 - 5:38 pm | writes:
Stay out of debt for the next 2 or 3 years and you'll be fine. Debt is going to be the killer for most.
I keep reading that from various people/anonymous commenters, but then I read just as much that inflation (hyper?) will bail out our debts. Not directed at you spec., but you people need to make up your minds. Can't have it both ways. Either debt is a stranglehold or it will be inflated away. I'm of the former opinion.
A recession is negative real GDP for 2 quarters - if you take nominal GDP growth and subtract the real inflation rate as tracked by Shadowstats, we're in deep doodoo.
Look at it this way and we've been in a recession for 9 years. Only heavy borrowing - by the government, business, and consumers - has kept the facade up.
"Some believe this is a cycle with a nasty extra downside given housing. Others think it's The End"
What about a down cycle that lasts for a few more years with asset prices continuing to sink as the economy drifts lower. I suggest some very liquid conservative assets... ST Treasuries and then decide when you get a sense that the economy is stabilizing, then start buying equities. No sense in trying to pick a bottom when it's clear the economy has much further pain ahead. You may be able to buy a lot more for the money AND avoid picking one of the outfits that fails during this mess.
Don't they actually still make stuff in the Midwest?
4runner | 08.24.08 - 4:52 pm | #
Yes - but less than we used to a generation ago... but that is still a lot compared to some other parts of the country.
::::
FWIW, dryfly, I have started to heard rumblings of inventory building along the supply chain. If things don't turn around in a month or two I think we will start to see the manufacturing side backing off as well, despite the plans of most of the participant that the bon temps just keep roulez...
ratefink | 08.24.08 - 5:32 pm | #
I'm seeing 'Phase One' of that process... that would be the 're-forecasting phase' where the uppity-ups look at the 'corporate dashboard' and ask... "Are we really gonna hit our numbers... cause if we aren't then we got waaaaay too much shit built." Peons like me then scramble to ask OUR customer contacts... "Say are you all gonna hit your numbers or what?" It kicks all the way up the supply chain until it pops out onto the store shelves. If it isn't moving there it then all stops... supply chain constipation.
Can't say we are there yet but phase one (the re-forecasting) is well underway with companies I call on & work for.
Keep ya posted...
After reading this thread I'm left to wonder, when do commentators exercise microeconomic analysis?
I'm not alooding to pseudo-psych or "behavioral (macro)economics" at all but any examination of a firm's on going concern and investment prospectus. Certainly some firms' operational scope extends across borders - interstate and international. Still validation of marketing strategy as compared to revenue source and capital (vs debt) formation requires individualized due diligence in order to effect predictable risk management goals.
Which firms in which industries are positioned to obtain "abnormal" returns, irrespective of borrowing cost, ought to be obvious in EDGAR reporting --despite collapse of free risk basis and CAPM comparative metrics of market share.
On the other hand, deducing firm characteristics and behavior from macro price movements assures every investor seeks marginal profit from indexed earnings --subject to time-sensitive triggers. How is that income strategy, much less arbitrage and management conflicts, prudent?
(Assume I'm not a polar bear.)
Some believe this is a cycle with a nasty extra downside given housing. Others think it's The End. If it's The End, what do I care what I might lose? If it's the cycle, I'm happy to buy up what I can.
Mailgilbs - It will be more or less what happened in Japan (a better model than the 1930s). 50% haircut in real estate, 80% haircut in equities. Look at JGB yields today and you'll get a picture of the future.
Since you are young and have never seen anything like this, I suggest that you read a bit about the Japan experience, and try to get your head around what happens during deflation. It is very instructive, I promise you.
"What can't happen, is about to"
Before the current jargon of 'negative feedback loops' was born Gunnar Myrdal coined the even more impressive 'circular causation in a cumulative process'.
Now, the most impressive bit of jargon I ever read was on the side of a box of GE flourescent light tubes. As I had been questioned by a college
art professor on the nature of the new lighting being installed in her studio I had memorized it when she approached me again about color rendition. It went " Generally speaking, the visual comfort probability is inversely proportional to the coefficient of utilization'. As the words rolled off my tongue she stared blankly at me but left convinced she was dealing with a man who knew what he was doing.
we're just getting warmed up, the slide will accelerate from here
Since a recession is SUPPOSED to be defined as a contraction in economic activity I would forget cooked government statistics and date the beginning of the recession to the peak in US oil consumption.
Is everyone forgetting that the revised Q407 GDP went negative last release? This Thursday should reveal more.
diemos: I wouldn't trust even the oil consumption data. There are lots of ways that number can be manipulated (storage on land, storage in tankers, exports of oil, etc. It seems pretty clear that oil spot prices and futures are being manipulated or speculated, so why not consumption?
I'm not saying consumption domestically hasn't falled, but the timing and depth are arguable.
Thanks bearly and leftback. I'll be reconsidering my stance.
So a 30-year time horizon makes it a sure thing? Don't fall for the Kudlowganda. For example, real estate went from a peak in real terms in 1894, to a low in 1922, 28 years later, down almost 50%. Real prices didn't recover fully after 1894 until 1989. (See Yale Professor Shiller's chart here. )
Speaking of Shiller, I wouldn't be putting my hard earned money into equities until I knew whether prices were reasonable or not. Start here:
Irrational Exuberance
and here:
Smithers & Co. - q & FAQs
Assuming you do your homework and come to the (provably correct) conclusion that the tomatoes are currently overpriced, you may begin wondering where to keep your money in the meantime.
If you're convinced we're in for inflation, you could buy foreign currency ETFs and some GLD. If you're convinced it's deflation for sure, you could buy long-dated treasuries and some GLD. If (like me) you don't think you're smart enough to be sure, you might buy all three (well, I'm not enough of a deflationist to buy long treasuries, but I haven't sold all of my dollars).
Home buyers hold fate of U.S. economy
Home buyers hold fate of U.S. economy
| Reuters
The willingness and ability of Americans to come back into the housing market over the next few months will determine whether the U.S. economy experiences a mild downturn or the deepest recession in 30 years.
Many economists say that home prices have another 10 percent to fall to bring them into balance with rents and incomes. A fall of that magnitude would elicit a huge sigh of relief from Wall Street and Washington.
hahaha "many economists" is like "some say".
another 10%? or could it be 20 or 30%. Any guarantees (with hard cash bonds) behind those 'forecasts'?
yea, esp with FNM/FRE issues, how is the housing market supposed to recover? or is it the other way around?
FAIR GAME; What Will Mac 'n' Mae Cost You and Me? - NY Times
Fair Game: What Will Mac 'n' Mae Cost You and Me? Up and down FannieÂ’s and FreddieÂ’s capital structure, debt and equity holders want to know how a bailout would affect them.
Fannie, Freddie Woes Vex Experts And Leave U.S. Hard Choices - WSJ.com
Freddie, Fannie Ills Leave Experts at Loss: The U.S. Treasury will likely be forced to inject funds into Fannie Mae and Freddie Mac, some top economists think, but they're not sure whether it will be enough to bolster the sagging economy.
"If it's a real recession, it should be evident in the 2008:H2 GDP numbers."
How can anything be evident in a GDP which is presently using a PCE deflator of 1.1%?
mailgilbs,
Heres the truth. There is very little hope for the next generation at this time.
Grossly understated inflation insures that your wage growth will not outpace inflation, and your returns on long term investments will provide real returns that pale in comparison to MOST persons financial planning. Increasing govmt debt insures that your taxes will be higher in the future as well. The elimination of corporate pensions using 401K as an excuse has hurt many. People are no longer retiring, the golden age of being able to actually afford retirement has , at this point I would say that most will never be able to.
You will need market timing and wisdom to achieve returns much greater than the general masses that dollar-cost-avg into their 401ks.
Japan's experience is a walk in the park compared to where we're headed.
mailgilbs,
Why go long? Unlike the past you have inverse index ETFs. Going long now is like buying an overpriced house.
I wonder if the government statistics can (be made to) decouple from reality and continue to flash an "all is well, almost" signal until the economy comes around eventually, thus technically avoiding a recession.
"One reason it may not "feel" like a recession in much of the heartland (outside of Michigan) is that this time the farmers and the small industrial companies aren't taking the brunt of it."
A very interesting observation - especially about farmers. The house price issues have not typically affected rural areas and grains have seen sky-high prices. But we are going to see record or near-record soybean and corn harvests in 2 months... and I think prices are going to go way, way down. The question will be: how many of those farmers were cagey enough to lock in their prices early? And how many countries will still be demanding US ag products once their economies slow down?
Japan had personal savings; we have personal debt.
Japan had a thriving value-added export economy. We export grains and IOUs.
Japan's major problem was commercial real estate, which didn't directly affect the consumer, unlike our problem with residential.
The biggest one... energy was cheap and plentiful throughout most of the 90s.
All of which is why my belief is, we wind up worse off than Japan, not as bad as GD.
The existence of the feedback loop has been proven time and again; otherwise we wouldn't always laugh about "containment".
And if, perchance, you think we are in a recession (contrary to the indicators of awesome growth), then it must be that...you are a whiner.
The Gospel according to Phil Gramm.
CR:
I know you collecting data from a lot of interesting places. Here's another: Canadian National Railway (Canada's largest railroad operator) publishes weekly carload data and breaks out by commodity groups such as automobiles, lumber, coal, etc.)
http://www.cn.ca/investor/perfmeasures/en_InvPerfMeasures.shtml
YoY changes:
Automotive: Down 19.6%
Lumber: Down 24.3%
Auto are down for obvious reasons, lumber is down due to less homes being built.
Some interesting trends can be watched via this data on a weekly basis.
zackattack,
Worse than GD for sure -- compare the numbers going in...
30 years, eh?
I don't know if a longer timeframe helped folks who bought the broader market in 1929, 1967 or early 2000 too much. And as for those who bought the techs in early 2000 or the banks and/or homebuilders last summer...
"1. When do I start buying gold bricks?
2. How deep do I need to bury them in my backyard?""
I respectfully disagree with buying a gold ETF if your intention is to preserve wealth. The ETFs are fine if you are speculating on the price of gold, but they are still just a paper liability of the entity with whom you contract. You are at the mercy of the counterparty to pay up. Physical gold is no one's liability. I would agree with buying one ounce coins stored in safe deposit box.
105 Year Dow
Keep in mind that the bull markets in this chart occurred for very different reasons, none of which exist today.
possible implications of the coming freddie/fannie bailout
Treasuries become junk bonds?
Personally, I'd wait until the 600s to buy gold, even though there may be a winter rally brewing now.
This whole scenario is too much like '73/'74, when gold pulled back hard before setting up for the big ascent a few years later. Same goes for equities, more or less, I really don't see the point of going net long in the ol' IRA north of 1150 spx.
caveat: I'm a total fucking idiot.
awgee,
Apparently you haven't read about states seizing "unclaimed" safe deposit accounts (incorrectly, I might add). Happened with BofA of all places.
bgates,
Don't wait, DCA into it.
"One thing's for certain. This recession will have the most intense action sequences in recent memory." (Film Review)
tj - Actually I have, and it causes concern. It seems the answer to that problem is to visit your safe deposit box every few months so that it does appear dormant. Hope this isn't too pretentious, but IMO the best is one kilo bars in a safe deposit box in a private bank in Switzerland.
I respectfully disagree with buying a gold ETF if your intention is to preserve wealth.
I agree, an ETF is just another paper promise no different than the dollar.
The whole problem is of course that we could be entering a situation where promises are broken en masse, so there's no reason to think one type of paper will retain its value vs others.
Inflation is just a euphemism for mass theft of real wealth by intentionally degrading financial assets. If that's really what you're trying to defend against there's no point in arguing what's the safest way to entrust your wealth to theives...
Assuming it gets to that point.
ac,
No assuming necessary.
edit - does "NOT" appear dormant.
Another option is to buy 100 oz. silver bars. They are very marketable, (ebay), and the US gov does not have a history of confiscating silver or making the possession of silver illegal.
First time for everything.
Silver is costly to ship, and has the least compelling story of the 4 precious metals, IMO. Palladium is particularly interesting seeing as how Russia isn't on the nicest terms with the rest of the world at the moment.
But if you do want silver, yes, the 100 oz bars are the best option, and make sure to find the old engelhard drip bars, which are generally preferred by dealers.
bgates,
Least compelling? Hmmmm...
Yes, though Platinum looks most likely to get hammered a bit more in this commodity pullback if it continues.
Unlike the other 3 (especially the platinum group), silver doesn't have much use as an industrial application these days. It is, however, the prettiest, due to the fact that it makes cool colors when oxidizing. Hard to think of a cooler doorstop.
IIRC, you can purchase 100 oz silver bars from Tulving for a good price and shipping is included. Gotta love palladium at these prices.
Of interest, the gold bug blogs are reporting that physical is all but impossible to purchase from dealers right now.
Not at this time; Tulving is sold out of everything but bags of pre-'64 coins when it comes to silver.
I respectfully disagree with buying a gold ETF if your intention is to preserve wealth.
If you stay up too late at night, you can come up with a disaster scenario for every way of holding gold.
Bury it in your backyard - somebody sees you do it and digs it back up.
Hide it in the house - get robbed
Safe deposit box - FDR redux
Swiss private bank - uhh, limited nuclear exchange in Eastern Europe
GLD - it's just a paper asset
If we're talking about what you might be able to buy in a 401K, then GLD or miners is what you've got to work with. If we're talking a lot of gold, I'm not keeping it around the house (not to mention that one might decide to leave in a relative hurry and need to take it across the border). And, the last time I checked, you need a significant amount of assets to open an account with a Swiss private bank.
That said, I also use bullionvault.com, since I spend too much time late at night thinking paranoid thoughts (when I'm not catching up on CR threads).
"Silver is costly to ship, and has the least compelling story of the 4 precious metals."
That's funny I made more damn money on silver over the last 7 years then I ever made on gold, even copper, zinc and lead have out performed that hyped up crap until recently.
bgates,
I'd counter your arguments but am short one hand for a few days.
Can't say we are there yet but phase one (the re-forecasting) is well underway with companies I call on & work for.
Keep ya posted...
dryfly
thanks, real world feedback from the heartland always appreciated.
" tj & the bear writes:
awgee,
Apparently you haven't read about states seizing "unclaimed" safe deposit accounts (incorrectly, I might add). Happened with BofA of all places.
tj & the bear | 08.24.08 - 8:20 pm | # "
BofA, "of all places?" That'd be the one place I'd expect. I'll spare you my experiences (and those of my wife, who worked in the old Black Tower), but BofA was and is capable of any combination of incompetence and dishonesty.
I would also ask the question: if box payments are being regularly deducted from an active checking account, I would be very surprised for a competent bank to find grounds for abandonment.
If you stay up too late at night, you can come up with a disaster scenario for every way of holding gold.
Bury it in your backyard - somebody sees you do it and digs it back up.
Hide it in the house - get robbed
Safe deposit box - FDR redux
Swiss private bank - uhh, limited nuclear exchange in Eastern Europe
GLD - it's just a paper asset
If a giant asteroid hits the Earth it might melt.
Thanks alot. Now where did I put my sleeping pills?
My grandfather was a Proctor and Gamble cottonseed engineer, who started getting stock options I think in the '50s. He always thought it was crap to avoid giving him more money...
Won't say what that's worth now...I'll leave it to your imagination.
Why's everybody sounding like Ron Paul's latest newsletter? Are you saying that you think things are so hopeless that I should buy rocks?
The European Central Bank is set to tighten its collateral framework, ECB Governing Council member Yves Mersch was reported as saying over the weekend.
"At the margins there can still be cases where you see dangers of (banks) gaming the system," Mersch told Bloomberg at a Kansas City Federal Reserve-organised meeting of central bankers in Jackson Hole, Wyoming.
No kidding, really? Well knock me over with a feather.
Australia's Macquarie, for example, recently had Australian car-loan assets accepted by the ECB after a complex routing of the assets through a euro-zone affiliate.
No shite, unbelievable.
While the ECB has been eager to reassure troubled money markets that it will keep providing liquidity no matter what, its concern is that banks may take advantage and leave it holding assets worth far less than it thought.
Ya think?
Page Not Found | Reuters.com
These dumb asses. Benny is still accepting used tampons while the ECB has Finlay figured out they might be getting the shaft.
I haven't used it (yet) myself, but I know the Perth Mint has both a gold certificate program as well as direct gold bar ownership/custody. The advantage is that they are easier to deal with than Swiss Banks and have been around longer than Bullion Vault.
The Mint is owned by the government of Perth in Australia.
Google Perth Mint for their web site.
mailgilbs
If I were young and looking over out the next 30 years I would be looking outside the US, this empire has had it's reign and a new one is rising in the east. All empire do the same thing and die of to much debt, the US will be no different. I could be wrong but that is what I see.
mailgilbs
I say go out and have fun, piss it against the wall while you are young. If you save you will be like the people who have payed off their houses and now sit and watch their investment meltdown.
Anonymous, I respect that, but disagree: we've seen over and over that "decoupling" just is not happening. If you really believe that this is not a recession but a permanent downtrend, then I would not recommend investments in the East, as they'll be just a badly off, in the long run.
Canuck etc....I have cats to look after!
mailgilbs writes:
Why's everybody sounding like Ron Paul's latest newsletter? Are you saying that you think things are so hopeless that I should buy rocks?
You're new here?
What's more frustrating - to me - is that these same commenters stated that debt will be a stranglehold going forward, so get out of debt now. And I asked why, if one believes inflation will ease the payment of debt? And I received zero responses.
I'm a hardcore deflationist. I believe these commodities have topped for several years, and that equities/houses will decline at least another 70% from current levels.
But apparently, the only appropriate bearish position on this site is to be long gold+commodities/short USD. We'll see.
I just finished hiding my Zimbabuean dollars. It took 3 days of heavy digging.
The prospect for inflation to allow U.S. debt holders to pay off their debt with total ease is about the same a the Democrats winning the South.
But that doesn't stop people from writing endless books/articles/blogs about both.
Oh, I forgot to tell you, now I know what "another day another dollar" means.
GDP is a crappy measure...by any measure. It is a production metric characterized by nominal prices.
"Real" (deflated) prices aren't much better, IMHO.
A better measure is in the actual amount of goods being improved from raw to finished state(s) and exchanged (irrespective of price).
I think someone upthread mentioned the Canadian Railway stats and I agree regarding their importance (and similar metrics).
The basic thing is: are the people in a country exchanging more or less goods (at any price) relative to some other period? If the citizenry is reducing it's rate of exchange (denominated by any standard- gold, dollars, shiny beads, etc.), then I would argue there is an economic slowdown.
Another way to look at it is to ask yourself whether the folks around you are contributing more of their personal labor to "work" that benefits them personally rather than farming it out to service contractors or buying goods which take the place of human exertion?
When one has little disposable income, he/she gets pretty interested in learning how to "do for themselves" rather than paying another or buying a gadget to do it for them.
Is that bad? Tax-wise, sure. Less exchange means less tax revenue of all types. Is that bad for the average person? Only if less time to play video games equals decrease in standard of living.
We have a couple of 100 oz silver bars from the last go round.
mailgilbs
The random seeming negative comments on this blog come from a deeper analysis.
How familiar are you with the complex securities that were created out of mortgage debt, student loan debt, credit card debt etc?
The financial players have been selling and trading highly leveraged assets that are now falling in value. Every mortgage or student loan or credit card default has secondary and tertiary financial effects.
They have also been selling CDO's, basically insurance against defaults on corporate debt. In a recession that insurance will come due.
They've also been selling 'auction rate securities', for which the market has recently died. Various attorneys general are forcing them to buy them back at face value.
No one knows what the fallout will be when all of the financials lose more money than they are worth at once.
That's part of it. There are also unknown aspects to our international financial relations in the future.
re: ag
me too, but windshields>rear-views
ren...thanks. Yes, I do know about these derivatives, but I don't understand it thoroughly. I admit that I think after the downside, there will be an upside. I think that there is a chastening period that we've yet to go through....which is why I'm planning on buying conservatively throughout.
But apparently, the only appropriate bearish position on this site is to be long gold+commodities/short USD. We'll see.
Whoa whoa whoa, I don't know where you got that idea. A big group of us holds the motley crew of ultrashorts like SRS and SKF. I think a small position in precious metals makes sense as a sort of doomsday hedge.
mailgilbs,
No problem. Lots of useful links on this blog, including info on derivitives if that interests you.
A-mouse,
Didn't you get the memo about Conjure Bag going long USD - what, was it like two weeks ago - anyone recall?
@Anonymouse
Heh, I'll give you a response. I'm also decidedly in the deflation camp. But I'm not necessarily in the opinion that you should pay off debt. If you truly believe in deflation, rather than paying down debt, you should take that money and short a market index. Or use it to buy ultrashort ETFs.
IMO, PMs will likely due fine -- historically they've held up in both inflation and deflation. What we've seen lately has been the unwinding of a popular trade; long PMs/short dollar/short financials. I expect the correction to finish in the next few weeks, then a long term target a bit above 1,000 for GLD.
They're also a small bit of insurance in case I'm wrong on the deflation bit.
Newton spent 1/3 of his adult life studying gold. IMO he was way ahead of his time. Just google "gold-DNA" and let me now what you think.
Are you saying that you think things are so hopeless that I should buy rocks?
Hardly; a bear market is a bull market with the chart flipped.
anonymouse,
I believe we'll see both.
Who is conjure bag? Heard it/them referenced frequently....
Gavshire Hathaway writes:
PMs will likely due fine -- historically they've held up in both inflation and deflation...I expect the correction to finish in the next few weeks, then a long term target a bit above 1,000 for GLD.
Seeing how GLD is currently trading at 81.08 I'd say that's better than "holding up well".
energyecon writes:
Didn't you get the memo about Conjure Bag going long USD - what, was it like two weeks ago - anyone recall?
Here's what I posted on <a href="http://www.haloscan.com/comments/calculatedrisk/5707918285170716390/?dt=1213085438#489843>06.09.08: "Everyone here who's bearish the dollar vis a vis many currency, simply open up an account and sell the USD against that currency. In fact, leverage yourself if you're so sure. I think the USD has bottomed against the EUR, Pound, Canadian $, Australian $, NZ $"
Doggy Dog World writes:
Whoa whoa whoa, I don't know where you got that idea. A big group of us holds the motley crew of ultrashorts like SRS and SKF.
I've scaled into ultrashorts over the last two weeks (very good buy on TWM - within 0.10 of the low); however, I read 10 times the number of Short Bucky! comments as I do Short Financials - even though I know most people believe financial stocks will continue lower.
http://media.www.nyunews.com/media/storage/paper869/news/2008/01/22/Citystate/Harvard.Yale.Cut.Tuition.In.New.Aid.Plans-3160623.shtml
Anonymouse:
Yep, I now firmly go the deflation camp; the above link is to an article about Harvard and Yale cutting tuition for mid/upper mid income families.
So goes these guys, so will the rest of the bunch go in the next several years.
A friend of ours with a rising HS senior has called the whole tuition package "funny money" and rightfully so.
http://media.www.nyunews.com/media/storage/paper869/news/2008/01/22/Citystate/Harvard.Yale.Cut.Tuition.In.New.Aid.Plans-3160623.shtml
Anonymouse:
Yep, I now firmly go the deflation camp; the above link is to an article about Harvard and Yale cutting tuition for mid/upper mid income families.
So goes these guys, so will the rest of the bunch go in the next several years.
A friend of ours with a rising HS senior has called the whole tuition package "funny money" and rightfully so.
Shorting everything but PMs is a great long term play. Oh, and GH, your target is wayyyyyyy low.
Who is conjure bag?
You don't want to know.
The end is near.
tj & the bear,
GH is calling for GLD to move up 13 fold - what the hell do you think it'll top at?
What's more frustrating - to me - is that these same commenters stated that debt will be a stranglehold going forward, so get out of debt now. And I asked why, if one believes inflation will ease the payment of debt? And I received zero responses.
My two cents: inflation will help banks
and the government get out of part of their problems. Those of us whose incomes do not keep up with inflation will get pounded. A rainy day is coming, and I'd rather have depreciated dollars saved for it than have them incinerated on interest charges.
I read 10 times the number of Short Bucky! comments as I do Short Financials...
We all just assume "Short Financials" at this point
Just got in from one of my favorite resteraunts in Denver Pappadeuxs. Almost half the tables were empty at 6:00 on a Sunday. I have never been seated withen half an hour at this time of day much less seen it half empty. We are screwed without a doubt.
We are screwed without a doubt.
Because the end is near.
Where's my sign?
I need to head out to the intersection.
Anonymouse,
My stupid mistake -- thought gold vs. GLD.
I come here to cheer myself up cause it reminds me how depressed everyone else is. Surprised someone hasn't mentioned the NWO yet. Or the Amero. Yawn, getting sleepy now. Thanks for the memories....
Who needs conspiracies when the truth is worse?
Gavshire Hathaway writes:
Who is conjure bag? Heard it/them referenced frequently....
mp's rhetorical sidekick. Much more colorful than, say, Og...
Re: Who is conjure bag?
A friend
"I come here to cheer myself up cause it reminds me how depressed everyone else is."
I'm not depressed but then again I'm not everyone.
Me neither. Crisis = Opportunity, ya know.
you can argue recession
you can argue stagflation
hell you can even argue expansion with inflation
all these cases can be made, one stronger than the others but whatever
what can not be argued in my opinion is that the dollar is anything other than toast, burnt, crisp, crunched, and shattered.
our leaders have destroyed our currency.
this paradigm has one exception
the world goes absolutely crazy, bat shit, war fever, and the country with the strongest armed forces is the country with the strongest currency, and thats , um US... (or other similar conflagration (pandemic!!!)
so barring that, gold goes up relative to the dollar,
just how much i am not smart enough to calculate.
but it sure has held on better than other PMs
Mersch Says ECB to Announce Changes to Collateral Rules Soon
I think the whole idea behind the sell off in the Euro was this very real worry that the ECB was accepting too many bad assets worse than even the Bank of England or the US FED. This may reverse the trend as many of the dollar shorts were blown out...
tj & the bear writes:
Me neither. Crisis = Opportunity, ya know.
Not disagreeing; but more <a href="http://en.wikipedia.org/wiki/Chinese_translation_of_crisis>precisely (via Wikipedia):
The Chinese word weiji (危機 translated as "crisis") is often said to be composed of the characters for "danger" and "opportunity"; the implication being that in Chinese culture, a crisis is regarded not merely as a danger, but also as an opportunity.
What about this??
"Throughout the 12 months of the crisis, it is difficult to avoid the impression that the Fed is too close to the financial markets and leading financial institutions, and too responsive to their special pleadings, to make the right decisions for the economy as a whole," he wrote in a paper presented to the conference.
Critics like Buiter worry that the Fed's unprecedented actions — including financial backing for JPMorgan Chase & Co.'s takeover of Bear Stearns Cos. — are putting taxpayers on the hook for billions of dollars of potential losses. They also say it encourages "moral hazard," that is, allowing financial companies to gamble more recklessly in the future.
Fed Chairman Ben Bernanke, who spoke to the conference on Friday, defended the Fed's actions, saying they were "necessary and justified" to avert a meltdown of the entire financial system, which would have devastated the U.S. economy.
MT all your arguments assume decoupling.
What if the world goes on, and grows leaving our debt drenched economy behind?
Anonymouse,
A high inflation rate is not inconsistent with a collapse in house prices. In fact I think it's very likely that we will average 5-10% inflation rates over the next 3 years, while house prices drop a cumulative 20% or more.
House prices depend on cheap credit, and I think that we will have a credit-starved economy for the next 3 to 5 years. Your expectation of a 70 percent decline is extreme, but possible if walkaways soar and foreigners quit buying our bonds and dump the $2 trillion they now own.
too big to fail
decoupling will not take place...
until intromission has been completed
And here's <a href="http://www.straightdope.com/columns/001103.html>Cecil Adams take:
"...perhaps what we've got here is a lot of people who don't understand their own language. Let's inquire more closely. Ji, taken by itself, means moment, chance, or opportunity (also machine, but let's disregard that), as in zhuan ji (change opportunity), shi ji (time opportunity), qi ji (cutting-in opportunity), or tou ji (plunge-into opportunity). Wei, on the other hand, means dangerous, precarious, high, as in wei xian (danger risk), wei shi (danger time), or wei hai (danger damage).
So the danger/opportunity interpretation isn't completely baseless. But let's stop kidding ourselves. The simplest explanation is that wei ji literally means precarious moment--a pretty close approximation of crisis, and not necessarily one meant to suggest a paradox. No doubt the rendering of ji as opportunity is the work of a nonnative speaker who naively added the optimistic twist this word implies to speakers of English. Wu Hung, a Chinese scholar at the University of Chicago, says that originally wei ji didn't even mean crisis. "Ji has a range of meanings, including opportunity but also danger," he says. "When the third-century Chinese began to use the word wei ji, they simply meant danger--a meaning emphasized by both characters."
Hope that's satisfactory for an unsolicited response.
Something tells me there's no way GLD could reach $1000. If I'm not mistaken, HSBC serves as the "custodian" of the trust's gold. If gold were to reach the levels implied by that increase, HSBC would announce that "all your gold are belong to us"
Newton spent 1/3 of his adult life studying gold. IMO he was way ahead of his time. Just google "gold-DNA" and let me now what you think.
Surely you don't mean Issac Newton: I can predict the motion of the heavens but not the madness of men.
If so, poor choice. He was a terrible investor.
An interesting evening tonight. Stopped off at WalMart to get some crackers and for the first time EVER saw a couple being escorted out of the store in handcuffs. Then, I stopped off at the local downtown liquor store. Some guy was buying a crack stem and used a credit card. He was asked about ID, and he told the clerk that it was his girlfriend's card, and he went ahead and ran the thing to sell the pipe.
Next up: No more credit at the liquor store.
Frank Zappa's "Advance Romance" lyrics:
No more credit
From the liquor store
Suit is all dirty, boy
Shoes is all wore
Tired and lonely, my
Heart is all sore
Advance romance
I can't stand it no more
Told me she loved me
I believed what she said
Took me for a sucker, boy
All corn-fed
Next thing I knew
She had a bolt on the door
Advance romance
I can't use it no more
She took George's watch
Like they always do
(It was a Timex, too!)
No more money, boy
I shoulda knew
The way she do me, boy
She might do you, too
Advance romance
People I am through!
Potato-head Bobby
was a friend of mine
Open three of his eyes
In the food stamp line
Open four of his eyes
In the food stamp line
Open five of his eyes
In the food stamp line
Open six of his yes
In the food stamp line
Said she might be a devil
But she sure was fine
Advance romance
He wanna try it one time
Later that night
He drop on by
Told her all he wanna do
Was step up and say "Hi"
Half an hour later
She had frenched his fry
Advance romance
Bobby, say good-bye
awgee wrote
"I respectfully disagree with buying a gold ETF if your intention is to preserve wealth. The ETFs are fine if you are speculating on the price of gold, but they are still just a paper liability of the entity with whom you contract. You are at the mercy of the counterparty to pay up...."
awgee nailed it, and thats why the rise and fall, from month to month, of gold is immaterial, IF
you are not about speculation, but insurance policy.
Ok, forget asphalt tonight, this says it all:
Food Makers Scrimp on Ingredients
In an Effort to Fatten Their Profits
Major food makers are quietly altering their recipes on candy, dairy products and other top-selling lines, adding fillers and substituting cheaper ingredients to cut costs amid the commodities boom.
Food Makers Scrimp on Ingredients In an Effort to Fatten Their Profits - WSJ.com
shit, shit, shit!
Re: Also on Friday, Mars Inc., maker of M&Ms candies and Snickers bars, said it's raising some prices and cutting the size of its Funsize candy packs
It all starts with Halloween candy, then Black Friday
cutting the size of its Funsize candy packs
LOL. Thanks, Ralph.
Still, swapping out ingredients for cheaper ones has the potential to alienate consumers already stretched by high gasoline prices and a weak economy. In a cost-cutting effort in the 1990s, Campbell Soup Co. reduced the amount of meat in its chicken noodle soup.
but an ounce of gold is still an ounce!!
(of course you cant eat gold can you!!!)
"shit, shit, shit!"
Could be worse, you could shit and fall back in it.
More squirrel substitution stories:
This month, McDonald's Corp. said it's testing less expensive ways to make its $1 double cheeseburger; already, some restaurants are selling the burger with one slice of cheese instead of two. And in a Thursday interview, Burger King Holdings Inc. CEO John Chidsey said the chain is testing a smaller Whopper Jr. hamburger as it tries to overcome high ingredient costs.
I noticed that my favorite Ramen noodle dinners which were Japanese and now are Chinese are more expensive and less tasty. Alarmingly, this is just like 1978-1979 when album pressings suffered horribly. There were far more major warps, non-concentric trackings, reduced thickness, you name it!
The Chinese word for hamburger is a combination of crisis and squirrel
dc1000= bullish on USD
Get your funsize treats out for local budgets:
John Andrews, director of the New Hampshire Local Government Center, says the effects of the poor economy are trickling down to local communities. Revenues from motor vehicle registrations and building permits are down in many towns, while the cost of health insurance, heating oil, gasoline and even asphalt for road projects are way up.
Given the economic downturn, some town officials are looking ahead to next March's town meetings with the expectation that budgets will be held at current levels because residents can't afford higher taxes.
Inflation vs. Deflation.
I think we see both: deflation followed by inflation. We're currently in the deflation stage. What happens if this gets substantially worse? I think Bernanke or his successor will be forced to inflate like crazy in order to preserve our fractional banking system.
How far we go into the deflationary abyss is up for debate. In Bernanke's 2002 deflation speech (I've posted the link here a few times.), he outlines a range of options available to the Fed to stop deflation. He also suggests that the Fed is more afraid of deflation than inflation.
LP's were so bad that Supertramp's "Breakfast in America" had such a big warp that it blew out one of my speakers due to excessive woofer cone undulation:
Breakfast in America - Wikipedia, the free encyclopedia
Come on, yah think people can keep running debt up in every direction?? Huh, do yoah punk??
New school cost up $5 million
New school cost up $5 million - The Times-Herald
While costs are skyrocketing for school construction, the public funds to build the schools are dwindling.
To date, there have been three change orders totaling more than $106,000 on the construction contract with the bulk of these increases attributed to asphalt and roadwork.
A $76,764 change order was "to adjust the asphalt price due to the low bidder's refusal to sign the contract plus no other contractor would hold their price throughout the contract," according to contract administration documents signed by the architect, contractor and Coweta County Schools.
Another $24,455 change order was approved to meet county specifications requiring a three-inch binder (asphalt product) instead of a two-inch binder on the parkway leading to the school.
I just read an AP article that said school districts are cutting out busing in a lot of communities in several states to save on diesel fuel costs. Parents and kids are complaining that, besides being unsafe, it takes 20 min. to walk.
I can hear it now - a new generation's mantra: "When I was a kid I walked 10 miles uphill to school every day - both ways"
Ghastly. Don't tell me we're going to have to go back to walking to school. If that's not a sign of recession, nothing is.
Higher taxes, more debt, less food, higher costs, more bank failures, more bailouts, more corruption unchecked, more debt, less savings, higher taxes, more debt, higher taxes...
In Shirley, buses will no longer pick up students who live less than 2 miles from school. In Chelmsford, though the buses are still running, many students must now pay a $200 fee to ride. And across the region, classroom temperatures might feel a bit crisper as schools open in the next few weeks.
Gas prices shot up an estimated 35 percent to 40 percent nationwide in the past year, while food costs jumped between 12 percent and 20 percent.
Those grumbling yellow buses — which have 25- to 100-gallon tanks and chug along at seven to eight miles per gallon — can cost as much as $400 to $500 to fill. That has forced schools across the country to make cost-saving shortcuts on service or to charge fees.
Mr. Beach writes:
He also suggests that the Fed is more afraid of deflation than inflation.
This is a key point in the inflation v. deflation debate. I've read his speech a number of times and I do not recall him explicitly stating that the Fed is afraid of deflation - as in they're afraid they cannot control/defeat it.
In John Mauldin's 2004 book Bull's Eye Investing, he devotes a chapter specifically to this speech. And Mauldin's interpretation differs from most but was very insightful to me. He argued that, in the speech, Bernanke is actually arguing that deflation is controllable via those methods he lists, and that therefore Bernanke believes deflation is not a problem. John agrees with him on this point. I do not.
That was a key turning point in my argument that this is a deflationary outcome: because the Fed (via Bernanke) believes that it can defeat deflation rather easily, because it's no problem - we have a printing press, etc.
But watch out for that liquidity trap - it's a real bitch, as Japan as seen for almost 2 decades.
—East Lyme students will soon be hoofing it a few extra blocks to catch the school bus, part of a plan to save thousands in gasoline costs.
The school district is cutting almost 200 bus stops from its daily routes, saying a consultant estimated they could save up to $10,000 in fuel costs.
The change affects students in all grades from kindergarten through high school in the southeastern Connecticut town.
Seven struggling schools got new principals and a number of new teachers to try and help turn those schools around. To save money on fuel, CMS eliminated about 3,000 bus stops.
Anonymous,
Are you a Reuters bot?
Outsider:
Our town's school has a district policy that kids within 2 miles of school have to walk.
But don't worry, the 'rents all drove and wasted gas in a school waiting line. (This dad only did when it was steadily raining.)
Eldest can still walk home from HS with friends and the others have to now take bus since new school is rural.
They preferred walking.
If students (and workers) can walk/bike more, then that is a productivity enhancement. That would be "good" deflation. Not to mention being healthier and requiring fewer medical interventions later-a net investment.
Lazt bastards!
In a 4-0 vote, with trustee Lara York absent, school board members voted Monday to rescind their previous decision that secondary students had to live a minimum of three miles from the campus in order to use district transportation.
During the past school year, junior high students living at least 1 1/2 miles from campus and high school students living 2 1/2 miles or farther were eligible to ride the buses.
Although the change to secondary transportation would have saved the district about $1 million, it also would have affected about 1,100 students and eliminated buses altogether at seven of the 10 junior and senior high schools and caused an eighth school to limit its bus route to just one stop.
On Monday -- after weeks of being flooded with e-mails and testimonies from students, parents and bus drivers opposed to the changes -- board members decided to restore transportation services to their former levels for fall semester, using $235,000 from a reserve to fund the increased operational costs.
The cuts to secondary transportation were approved in May as part of a package to slash $9.3 million from the district's budget in anticipation of bad news
Re: $235,000 from a reserve to fund the increased operational costs.
Are these people retarded?
Re: after weeks of being flooded with e-mails and testimonies
Same thing happens with Bernanke, i.e, no backbone, no accountability, no Volker!
Anonymous:
My questions on that school district are two fold:
For my opinion, the money should be saved on the infrastructure end of things. Why does a school need a multimillion multiuse artifical turf field? Or large ticket weightlifting facility for the football team? Both are examples from my local area.
let those kids walk so we can give the money to GM, Ford and Chrysler
GM, Ford Seek $50 Billion From U.S., Double Request (Update3)
By Jeff Green
Aug. 22 (Bloomberg) -- General Motors Corp., Ford Motor Co., Chrysler LLC and U.S. auto-parts makers are seeking $50 billion in government-backed loans, double their initial request, to develop and build more fuel-efficient vehicles.
The grafts in Hamilton's piece were interesting. Showing all of those recessions since 1950. One of the steepest was in 1957. I was a child, but I remember that one. I was hungry all the time. It is not that we experienced hunger, but our diet changed from one rich in protein (ie meat) to mostly carbohydrate (pasta, potatoes, etc). This is not real deprivation, just a physiological reaction to a changed diet. But it was a change that was directly the result of my father's loss of his job.
Things look bad today and maybe, in real macroeconomic terms, even worse than 1957. But I doubt that it will effect my food purchases all that much.
the money s got to come from somewhere...not here
Aug. 25 (Bloomberg) -- Most of the bond strategists and salesmen that Resolution Investment Management Ltd.'s Stuart Thomson talked to last August expected the credit crunch to be long over by now. Instead, money markets show there's no end in sight, and it may even worsen.
It's like an ongoing nightmare and no one is sure when we're going to wake up,'' said Thomson, a money manager in Glasgow at Resolution, which oversees $46 billion in bonds.Things are going to get worse before they get better.''
In a replay of the last four months of 2007, interest-rate derivatives imply that banks are becoming more hesitant to lend on speculation credit losses will increase as the global economic slowdown deepens. Binit Patel, an economist in London at Goldman Sachs Group Inc., said in an Aug. 21 report that nations accounting for half of the world's economy face a recession.
Mock:
Give them the money with the caveat that the senior management (EVP^)agree to resign.
Let them take it for the team.
I know they did it last year and I'll check to see if/when they do it this year is that $1.00 store chain Dollartree had a Xmas Lay-A-Way program. My mind blew when I saw a sign.One of the saddest things I've ever ran across,but I'm sure that there will be a lot worse coming up!
Is anyone watching ten year Treasuries lately, i.e, the decending yield which is part of that illiquidity thing that looks like liquidity trap?
She became ill with fever and couldn't get out of bed and walk a few miles to ask for help, and the next time someone brought her a rabbit or squirrel to eat and a jar of canned vegetables, they were all dead. Remember that back then, few people had cars or phones. If you needed to tell someone something, you had to walk to their house.
Keep It Trill: Sliding Into The Rabbit Hole: The Great Depression, Part 1
"All of which is why my belief is, we wind up worse off than Japan, not as bad as GD."
What are the indicators for depression - 6 qtrs -ve GDP & 20% unemployment? We may just forget about 6 straight qtrs of -ve GDP. Even UE is rigged. We will never get even a technical recession.
Does anybody remember "party lines"?
Doc at Radar Station: Thanks for posting "Advance Romance". I wonder whether this was Frank Zappa's answer to "Simply Irresisistible."
mailgilbs writes:
"It's not "catching a falling knife" when your investment horizon is 30 years and you're not trying day-trade during a bloodbath. I said I was young, not stupid."
... but perhaps has Buffett says (talking about Sovereign Funds) if not dumb money at least "naive money"
what is the point of buying in a descending market???
It seems to me it is a good time for the long term investors -young or not- to learn about the markets AND the changing global financial forces, and to learn to read (long term) charts. Charts =the flow of money do not lie (and they are not saying "buy" at this time).
Only the pros who have to be invested should be in the game right now.
Not to worry about older people who are retired (or about to), at least some of them got (and took) good advice and got out of stocks entirely last year. That would be at least an example where as traders we did help more than just ourselves
homedad43
think they'd do it for God or country...Naaaa
most of em are followers of rand...its all about self
What are the indicators for depression - 6 qtrs -ve GDP & 20% unemployment? We may just forget about 6 straight qtrs of -ve GDP. Even UE is rigged. We will never get even a technical recession.
bearly | 08.24.08 - 11:48 pm | #
If we have a 'depression' you won't need the gov't to tell you its here.
Billy Hill, it was just weird going into the liquor store tonight and seeing that weird scene with the credit card. Then I remembered the cassette tape I used to have with those lyrics "No more Credit at the Liquor Store". It was on his "Make a Jazz Noise Here" double-cassette tape. I don't have it anymore. Never knew what the title was until I googled all over and found the thing! I always thought it was humorous with the decent blues guitar in it.
"And I asked why, if one believes inflation will ease the payment of debt? And I received zero responses."
Price and commodity inflation does not necessarily translate into wage inflation. Prices could continue to rise and folks may have less to pay with and will find it more difficult to pay off debt.
On March 5, 1933, the day after Roosevelt's inauguration, he called a special session of Congress which instituted a mandatory four-day bank holiday. This act provided for the reopening of banks after federal inspectors had declared them to be financially secure.
The bill also gave the Secretary of the Treasury the authority to confiscate the gold of private citizens, in exchange for an equivalent amount of paper currency which was subject to later devaluation with relation to gold.
Despite the importance of the bill, it was passed in immense haste by Congress. Few, if any, Congressmen had the chance to read the bill; most were only able to hear the clerk read it. Quite a few Congressmen vocally protested the haste in which the bill was considered, but nevertheless it was passed sight unseen.
Within 300 days of the act's passage, 5,000 banks had passed inspection and were reopened. Roughly two-thirds of U.S. banks quickly reopened under this act, and faith in banking institutions was somewhat restored.
Emergency Banking Act - Wikipedia, the free encyclopedia
[And I asked why, if one believes inflation will ease the payment of debt? And I received zero responses.]
A good chunk of debt is revolving and other forms of variable rate interest. That will be a killer this cycle, as real wages are negative. Globalization has finally caught up with us.
Wow, that's really freaky. There WAS a mattress police of sorts back then...
mailgilbs
when one pays back debt during inflationary times...you pay back with dollars that are worth less.
presumably, prices go up,
wages go up,
the cost of everything rises,
but the principal on the debt is fixed as are the interest rates so debtors are to the advantage
"Major food makers are quietly altering their recipes on candy, dairy products and other top-selling lines, adding fillers and substituting cheaper ingredients to cut costs amid the commodities boom."
I have no idea what these boxes of junk used to contain before, and in my perspective the changes make little difference.
Being a buyer of fresh food ONLY, I keep wondering how people can eat the mountains of crap I see piled up in carts in supermarket lines and still be walking around after 60.
sometimes no news is bad news
bloomberg, market watch, CBS, drudge, raw story and many others all silent on jackson hole
True unemployment (or U-6), which includes the unemployed
with no benefits and those with part-time work seeking full-time work is right now at 13%.
U-6 in 1932: 25%. Thus, we are half-way to the unemployment rate of the last depressions ALREADY.
NYTimes had an article about Buiter at Jackson Hole.
End of silly idea: "Advance Romance" came out in 1975, 13 years before "Simply Irresistible".
awgee writes:
"And I asked why, if one believes inflation will ease the payment of debt? And I received zero responses."
Price and commodity inflation does not necessarily translate into wage inflation. Prices could continue to rise and folks may have less to pay with and will find it more difficult to pay off debt.
awgee | 08.24.08 - 11:59 pm | #
Inflation is the increase in money supply & money-like instruments (credit) which are accepted as 'money' - period. Deflation is the opposite - period. Forget 'prices' - they are symptoms of supply, demand of both products AND the supply of fiat they are priced in. Inflation/deflation is a factor but not THE ONLY factor setting prices.
I see no reason why rising prices whether from 'inflation' or from real shortages/surpluses would automatically translate into higher wages... for some sure, the increased money has to go somewhere & somebody will capture it but that doesn't mean everyone or even most of us will see increases, real or nominal - see South America & their episodes with 'inflation' to see how extreme the wage & wealth distribution can remain in inflationary environments.
The Fed won't be able to accomplish a massive re-inflation on their own - they'll need treasury's help. They'll get it too IF the banking system teeters due to continued deflationary pressures (asset price declines). They will not sit idle and watch the banking system collapse - they will do something.
The outcome for us (whether they successfully re-inflate or fail) won't be painless by any means but who said it would be painless? If anyone even suggested that then they were a fool.
mock turtle writes:
sometimes no news is bad news
bloomberg, market watch, CBS, drudge, raw story and many others all silent on jackson hole
mock turtle | 08.25.08 - 12:14 am | #
WTF can they say?
As to long-term time horizon, my favorite example is the Kansas farmland that is still 85% below peak in REAL terms 120 years later.
Ethanol: The Other Corn-Fed Pork by Bill Bonner
excerpt: But, in 2006, you could still go out to Kansas and buy an acre of farmland for only about $1,000. Adjusted to 1880 prices, that is only about $25, or barely 15% of the peak prices set 120 years ago.
Doc at the Radar Station said remember party lines and I remembered that my Grandmother told that when she was a girl in rural Ky.people would call the central operator and tell her they would sing.play,read a bible verse/poem,ect at a certain time.Central would call and tell all the people on the line that "Uncle Floyds gonna play his fiddle(or whatever) at 7:00" and those who wanted to would listen in.They also had group sings of songs and hymns.Simple Times.Heartwarming.
dryfly
i agree, inflation does not necessarily translate into higher wages...often it has, and sometimes not.
but either way those owed money are paid back in dollars that are worth less in terms of buying power
this be true if i have it right that inflation be more and more dollars chasing fewer and fewer goods and services
"Inflation is the increase in money supply & money-like instruments (credit) which are accepted as 'money' - period. Deflation is the opposite - period. Forget 'prices' - they are symptoms of supply, demand of both products AND the supply of fiat they are priced in. Inflation/deflation is a factor but not THE ONLY factor setting prices."
I gave up trying to explain what inflation and deflation are. So many people are misinformed, I have found it more useful to refer to inflation as monetary inflation and price increase as price inflation. It seems that sometimes it is more important to be able to communicate than to be right. I also not use the terms asset deflation or wealth destruction and price decreases.
one could imagine inflation with a decrease in the absolute number of dollars (money supply) if the quantity of goods and services in the marketplace decreased even faster than the money supply
whooooeeee
from investopedia
The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.
\tAs inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 pack of gum will cost $1.02 in a year.
Most countries' central banks will try to sustain an inflation rate of 2-3%.
from wikipedia
In classical political economy, inflation meant increasing the money supply, while deflation meant decreasing it (see Monetary inflation).[citation needed] Economists from some schools of economic thought still retain this usage. Classical political economists from Hume to Ricardo did distinguish between and debate the cause and effect: the Bullionists, for example, argued that the Bank of England had overissued banknotes (increased the money supply) and caused 'the depreciation of banknotes' (inflation).[6]
...
Mainstream economists maintain that inflation is a measure of changes in the general level of prices. Thus the difference is that Austrian economists claim that inflation is the very action of producing more units of money, whereas mainstream economists regard inflation as the effect rather than the cause.[9] While most schools of economics agree that price levels are affected by changes in the money supply relative to the level of economic activity, the link with the quantity of money is not direct: for example, changes in price levels are affected by the velocity of money, and inflation can occur with a substantial lag between the increase in the quantity of money and the increase in the general price level.
I have a couple of questions:
If there are 55 Visitors Online, why are only about five or six of those visitors posting? Is it a case of, "Better to keep silent and be thought a fool, than to open one's mouth and remove all doubt"? Or do the non-posters just feel they have nothing important to say? Or maybe they feel that if they contribute, someone will denigrate that which have posted or show some fallacy or something?
I mock turtle writes:
one could imagine inflation with a decrease in the absolute number of dollars (money supply) if the quantity of goods and services in the marketplace decreased even faster than the money supply
whooooeeee
mock turtle | 08.25.08 - 12:27 am | #
We could see that happen IF peak oil is real - declining money supply & increasing prices simultaneously. Have fun with that scenario Ben...
it cant be the fool thing cause mock turtle is a fat dumb ass
Pitchforks,Torches&Pikes World: That would have been interesting if there were those types of things going on the party lines. Back in 1974 there was seven or so households on our party line. To call anybody in our prefix you just dialed the last four numbers to get their house. We had this yellow card you kept next to your phone with the numbers of the others on the party line. To call somebody on your party line you dialed the last four digits of their number and hung up the phone. Your phone would start to ring and when it quit ringing the other party had picked up. There were times of the day when it was hard to call out. Then you had to deal with the gossips that would unscrew the part of the receiver you talk in at the bottom (without taking the phone off the hook) and remove it, then lift the phone off the hook to listen in to your conversations. When they removed the mic before lifting the handle, it was hard to detect.
Re: Bloomberg, market watch, CBS, drudge, raw story and many others all silent on jackson hole
If there are 55 Visitors Online, why are only about five or six of those visitors posting? Is it a case of, "Better to keep silent and be thought a fool, than to open one's mouth and remove all doubt"? Or do the non-posters just feel they have nothing important to say? Or maybe they feel that if they contribute, someone will denigrate that which have posted or show some fallacy or something?
awgee | 08.25.08 - 12:33 am | #
There are a lot of lurkers - most forums I read often I lurk & don't post much or at all. Big Picture, Econbrowser, Naked Capitalism, etc.
Doc at the radar station
back in the late 50s we would pick up the phone, the operator would answer and i'd tell her my grandparents number, poplar83081 and we'd be connected!
(and i knew she was listening in and telling the entire neighborhood about our shit...talk about warrantless searches sheeesh)
Anonymous writes:
Re: Bloomberg, market watch, CBS, drudge, raw story and many others all silent on jackson hole
I saw that - Yves covered it pretty well.
In his book, A Fool and His Money, (c.1990), John Rothchild [no relation] gave definitive definitions of Inflation and Deflation:
Inflation is when things are worth more than money, but you have more of the latter.
Deflation is when things are worth less than money, but you have more of the former.
mock turtle, My uncle worked for the telephone company as a lineman and there was this number you could call to get a test signal I believe it was 777-8888 or something like that. It was a signal generator that would ramp up in frequency and then drop off in a cyclic manner and it was REALLY LOUD.
What confuses people is CPI -- Consumer Price Inflation.
cpi consumer price index isnt it?
Doc,
Got a party line when we moved out into the country. Dad figured out private lines were available but the phone company just didn't want anyone to know. We got ours shortly thereafter.
BTW, back in the 80's I learned this long number that when you dialed would tell you the number you were calling from. Came in handy sorting out unlabeled modem lines.
yeah Doc i remember...
the numbers were quite quaint
a name as a prefix
in new york where i lived as a kid, near the george washington bridge our number was murryhill 7 8500
I have trouble doing it,but I think if someone would post the lyrics to the singer Dar William's song "Bought and Sold"they would apply to a lot of these threads.
I am a lurker,, leave me alone!
I just realized that the democratic nomination is Obama Bi(n La)den. Talk about a case of unfortunate names...
The woman whose voice Bell uses for all their recorded numbers and messages just retired a couple of months ago.
We finally got the number of people on our party line reduced from 7 to 3 in 1978 (out in BFE place mind you-I think there was a regulatory change). A private line still wasn't even optional then. When digital keypads took over, it was probably too cumbersome to deal with letters-although it was probably easier to remember the lettered prefixes. Interesting that they still print them! If it wasn't for 1-800-xxx-xxxx numbers that probably wouldn't even exist anymore.
Williams Dar - Bought and Sold
Well we're heading for a past that you leave not defend,
Where the downtowns hold the sadness of
you can't go back again.
It's there you'll find the rust and debtors,
Motel signs with missing letters.
Cause there's a monster on the outskirts,
says it knows what your town needs,
Then it eats it up like nothing and won't spit out the seeds.
And we can be the super shoppers,
we can say we're really smart
We can say our town is doing fine without a beating heart,
We can even say the money saved is all our own,
It's bought and sold, it's bought and sold.
And we're heading out for nasty business,
keeps our country growing,
Where the weapons that we're selling
are the only seeds we're sowing,
You get to blow the fruits of all your labors,
Sell F-16's to all the neighbors.
And we know that it's for maney,
and that's how the west gets bargained,
You know the last time this happened,
even Vietnam got jargoned.
And you can say they're out to hunt you,
you can say they're out to fish you,
You can join a gang of restless boys
or start your own militia,
You can even say your violence is all your own,
It's bought and sold, it's bought and sold.
And I look up to the people who are less bought than I,
You can show them what you're selling,
and they'll only ask you why.
And their paychecks don't have lots of zeros,
They're my friends and they're my heroes.
And the TV sets are angry cause they just can't make 'em pay,
But I like the way these people read the signs and walk away,
And we can call ourselves the makers
and the keepers of the times,
We can spend our sand dollars
and sand nickels and sand dimes,
We can even say prosperity is all our own,
It's bought and sold, it's bought and sold.
We can even say our loneliness is all our own,
It's bought and sold, it's bought and sold.
It's bought and sold, it's bought and sold.
Well we're heading for a past that you leave not defend,
Where the downtowns hold the sadness of
you can't go back again.
It's there you'll find the rust and debtors,
Motel signs with missing letters.
Cause there's a monster on the outskirts,
says it knows what your town needs,
Then it eats it up like nothing and won't spit out the seeds.
And we can be the super shoppers,
we can say we're really smart
We can say our town is doing fine without a beating heart,
We can even say the money saved is all our own,
It's bought and sold, it's bought and sold.
And we're heading out for nasty business,
keeps our country growing,
Where the weapons that we're selling
are the only seeds we're sowing,
You get to blow the fruits of all your labors,
Sell F-16's to all the neighbors.
And we know that it's for maney,
and that's how the west gets bargained,
You know the last time this happened,
even Vietnam got jargoned.
And you can say they're out to hunt you,
you can say they're out to fish you,
You can join a gang of restless boys
or start your own militia,
You can even say your violence is all your own,
It's bought and sold, it's bought and sold.
And I look up to the people who are less bought than I,
You can show them what you're selling,
and they'll only ask you why.
And their paychecks don't have lots of zeros,
They're my friends and they're my heroes.
And the TV sets are angry cause they just can't make 'em pay,
But I like the way these people read the signs and walk away,
And we can call ourselves the makers
and the keepers of the times,
We can spend our sand dollars
and sand nickels and sand dimes,
We can even say prosperity is all our own,
It's bought and sold, it's bought and sold.
We can even say our loneliness is all our own,
It's bought and sold, it's bought and sold.
It's bought and sold, it's bought and sold.
bought and sold dar williams
I have a cousin who made VP at Bell without having a college degree.Never happen nowadays unless it was the owner's son.
sorry DOC for the RE
went to youtube first to see if...
bye
One more OT for the Niteowls.....During the mid and late 40's(Until more people started having their own phones),the NYC phone co. took in almost a Million dollars a day,every day,from pay phones.
"A number of pretty young people are about to learn some interesting lessons about Value Traps. (This week's examples FNM FRE LEH etc.)"
Ahh to be young again and never having gone through a true bear market. You know the type that scars you for life and fundamentally changes your investment habits permanently?
I remember having the 30 year time-line during the dot-com bust and dollar cost averaging in on the "strong" companies like CSCO, JDSU, INTC etc.. You know doing the "smart" thing like everyone recommended. Just stick with the strong companies with strong fundamentals and ride out small bumps in the road?
7 years later I'm still sitting on 50% losses in some of these companies.
"7 years later I'm still sitting on 50% losses in some of these companies."
I know a lot of people that have a closet full of Bennie baby's that have done a lot worse then that and I think some commodity bulls may get the lesson in the near future as well.
Anonymous at 1:17.......You mention remembering.I can remember the date of the 1987 crash very easily because I lost 87,000 that day.The Miata sports car had just came out(With a waiting list and a prem.) and I had been doing pretty good and was going to get one(a little under 20k I think it was).BANG! 87k loss(on paper,made it all back later,but a lot later)No Miata for me!
The schools are legally liable for safety of the students from doorstep to school and vice-versa (this from a school principal).
Another principal claimed this, when a school didn't want to put a bike rack in because it would encourage kids to ride their bikes to school. The students had actually raised all the money for it, but this was the excuse. However, I was not able to find a single case where a school was successfully sued for somebody walking/riding to school.
"The woman whose voice Bell uses for all their recorded numbers and messages just retired a couple of months ago."
Pitchforks: You're in a time warp! It's been a year almost to the day.
As for recession, yes, it's here. I know this because:
a) The very suave manager at our local mexican restaurant is having a psychotic breakdown trying to keep up revenues
b) The Personal Savings Rate seems to have gone positive for the last few months, which it tends to do during recessions.
St. Louis Fed: Series: PSAVERT, Personal Saving Rate
bearly wrote:
[And I asked why, if one believes inflation will ease the payment of debt? And I received zero responses.]
A good chunk of debt is revolving and other forms of variable rate interest. That will be a killer this cycle, as real wages are negative. Globalization has finally caught up with us.
That is exactly what I am counting on! I have borrowed every damn dollar I could at long term fixed rates (5.25% for most of it). I could pay it all off in cash and then some but will leave it in short term stuff as the interests rates rise. I wouldn't want to lend long and borrow short in that kind of environment.
"Anonymous at 1:17.......You mention remembering.I can remember the date of the 1987 crash very easily because I lost 87,000 that day.The Miata sports car had just came out(With a waiting list and a prem.) and I had been doing pretty good and was going to get one(a little under 20k I think it was).BANG! 87k loss(on paper,made it all back later,but a lot later)No Miata for me!"
6 months before the bottom fell out from the tech-market in 2000 our little street in the Bay Area was basically all paper millionaires due to stock options. 6 months later it had changed for most of my neighbors to either nothing left on paper, out of a job or barely holding on to a job.
A good neighbor was 2 weeks away from initial vesting of stock-options and bought a new Corvette (his dream car). He told me the exact words he used to his wife were "Look honey, what could happen in 2 weeks?". 6 months later no corvette, no job and wife looking for a new job.
UB,
WTF are you doing here so late?
Squirrel to inflation ratio/CPI x GDP = deflation!
CONJURECAST
Peak Core CPI: 2008-Q4
Conjure says, "Have a nice day."
Conjure says, "October, probably."
You mean liquor stores give credit? What a dumb idea that is. I get stuck with the hangover. Anonmymous is right. I was trading one time, and would compute my trades on a monthly basis. I was up 8k for the month, with about 30 minutes to go till closing. I just got greedy, went the other way on a trade I had completed, and got HAMMERED. It scared the hell out of me it happened so quickly and violently. I wasn't able to trade for a few weeks. Lost the 8K too.
Lefty,
My best screw up was trying to scalp a biotech stock. I had an order in at $10 below last days closing price. When I woke up I was a bit queasy about the order and decided to cancel my order. Had to phone them at that point. Told the wife I would cancel the order when I got to work (figuring what could happen in half an hour). Got to work to find my order placed and the stock $50 down. Turns out that was the day the whole genome sequencing bubble cracked.
That was good for a quick 10K or more in losses. Needless to say I don't try to scalp trades anymore.
mock turtle writes:
sometimes no news is bad news
bloomberg, market watch, CBS, drudge, raw story and many others all silent on Jackson Hole
Mainly because those dipshits don't understand WTF is going on. They are operatives within an idiocracy.
Hi Anonymous,
I'm here late because I'm trying to figure out what happened to my essay/post that linked the RGE Monitor to the fascinating D.E. Shaw, Bezos, and the Mechanical Turk. Do you remember this post? It isn't coming up when I search the site. Roubini as the Mechanical Turk; that actually fits a little since he spent some time in Turkey.
Thanks for the update Conjure Bag
Hell....with something like 286 posts to wade through, it takes a bit of time to see if there's anything I can contribute to, or debate with, LOL.
Despite the importance of the bill, it was passed in immense haste by Congress. Few, if any, Congressmen had the chance to read the bill; most were only able to hear the clerk read it. Quite a few Congressmen vocally protested the haste in which the bill was considered, but nevertheless it was passed sight unseen.
Kind of like the Patriot Act
Re debt and inflation
Same as it ever was.
Personal debt eats up your earnings, you don't get to pay with cheaper dollars cause they're being spent on stuff that's costing you more. The winners are the banks and the government. What's good for those guys doesn't necessarily benefit you. The way the world works is: what's bad for those guys is bad for you; what's good for those guys is bad for you. Unless you're rich, then you're sitting on the other side of the table. And being rich in this environment is not having debt.
awgee writes:
I have a couple of questions:
If there are 55 Visitors Online, why are only about five or six of those visitors posting? Is it a case of, "Better to keep silent and be thought a fool, than to open one's mouth and remove all doubt"? Or do the non-posters just feel they have nothing important to say? Or maybe they feel that if they contribute, someone will denigrate that which have posted or show some fallacy or something?
Yes, I plead guilty to both of the above charges. the other 54 are from the FDIC, the FBI, Homeland Security and the Fed.
mailgilbs: what's your company match on the 401k? mine is at 50% so, but it's in one of the poorer recent performers (GE common stock)...even with its dreadful recent performance, the 50% match pretty much covers losses...i did turn a pretty penny when I sold at $43 and bought back in at $31-32 a few months ago though...
either way take the long view, you probably won't LOSE money if it's a 401k type match situation...if it's just direct investing in stocks, i'd probably be a bit more risk-averse in your shoes (i'm in very similar ones) with the current market environment...
Hell....with something like 286 posts to wade through, it takes a bit of time to see if there's anything I can contribute to, or debate with, LOL.
oldtrader | 08.25.08 - 4:01 am | #
News of the wierd.
FINANCE - - Top News - Comcast.net
Heres what Ive noticed:
smaller packagings with same price for many things, esp ice cream .
Hardees hamburgers appear to have bread crumbs in the patties
Burger king whopper patties are so small you cant see them without removing the top from the bun
There is evidence of squeezes and attempt to keep prices from rising by merchants. This DOES NOT happen in an inflationary environment. They know higher prices will be lower sales.
David Pearson writes:
I haven't used it (yet) myself, but I know the Perth Mint has both a gold certificate program as well as direct gold bar ownership/custody. The advantage is that they are easier to deal with than Swiss Banks and have been around longer than Bullion Vault.
The Mint is owned by the government of Perth in Australia.
Google Perth Mint for their web site.
... or you could Google perth mint robbery --- they don't call WA the wild west for nothing....
Perth Mint Swindle - Wikipedia, the free encyclopedia
Mb It seems to argue stagflation or in other words becoming poorer.
OT: MARI Quarterly Fraud Report (August 2008)
http://www.marisolutions.com/pdfs/mba/mortgage-fraud-report-2008Q1.pdf
The report confirms that Illinois is number three currently, and I promise we will work harder over the next 12 months to create more fraud.
I believe the economy is in recession and the negative feedback loops have started to kick-in.
What you mean is "positive feedback loop" towards the downside.
A negative-feedback loop is a GOOD thing - it dampens the system's reaction. Positive-feedback is the one that creates a spiraling situation, either downward or upward.
"Hardees hamburgers appear to have bread crumbs in the patties"
Those aren't breadcrumbs; they're the Soylent Green.
If there are 55 Visitors Online, why are only about five or six of those visitors posting?
How many people are meeting in Jackson Hole again?
Volker the Viking writes:
"mock turtle writes:
sometimes no news is bad news
bloomberg, market watch, CBS, drudge, raw story and many others all silent on Jackson Hole"
what happened? seems to me that some had the courage to demonstrate common sense, and that others (still) tried to make common sense appear controversial
Ex-BOE Official Slams Fed, Sparking Hottest Jackson Hole Debate - Bloomberg.com
Ex-BOE Official Slams Fed, Sparking Hottest Jackson Hole Debate
US economy is a friggin joke. Even UK has relatively larger manufacturing sector (16 % of GDP) than USA (12-13 %). Imports into US are bigger than all American yearly industrial production put together.
70 percent of GDP is pure consumption, that must a world record. That means now, when the spending party is over, at least 70+ million out of 154 million American workforce are now useless and soon out of work. That is not a recession or depression. No, that is an abyss, supermassive hellhole.
Pitchforks,Torches&Pikes World writes:
"Anonymous at 1:17.......You mention remembering.I can remember the date of the 1987 crash very easily because I lost 87,000 that day!"
I was not trading in 87 or even invested into anything US, so I am just looking at the SPX charts here with the indicators I routinely use. Sorry guys but that huge drop was a no brainer to avoid. Early in the week of October 5-12 the day rsi crossed the 50 line, the MACD crossed to downside (and that right on the 0 line), all stoch. were pointing down. Finally the close below 310 on Oct. 12 was the penultimate warning , SPX retraced up the next day only to fall and CLOSE again below 310 on the 14... if you did not get out then... you did not deserve to keep the money.
(the weekly charts context was even more ominous)
Genevieve: You may be suffering from "20/20 hindsight". Perhaps the significance your "obvious" indicators was not "known", or they were not available, at that time? (I don't strictly know that, but one can never judge past decisions based on lesson learned from those very events or later, even though it happens routinely, and the "judges" are universally people who were not on the spot right then and there.)
I think you meant to say a 'positive' feedback loop. That's the type that is self-amplifying and tends away from equilibrium - a negative feedback loop is self-stabilizing and tens to return a system to equilibrium.
Unless the negative feedback overdampens the system to the point that it ceases to oscillate and thus dies. Equilibrium in a system is not such a simple thing to produce. By it's nature it is a balancing act. Depending on the nature of the system, equilibrium can come as a result of positive or negative feedback.
cm:
Indicators I am using are "ancient" and were known well before 1987.
Relative strength index - Wikipedia, the free encyclopedia
MACD - Wikipedia, the free encyclopedia created in 1960s
Stochastic oscillator - Wikipedia, the free encyclopedia
I will give you that "www.stockcharts.com " did not exist, but the VERY first thing I ever did before buying a SINGLE share of anything was to watch the prices for a bit and PLOT prices and do it all by hand and with a calculator as I did not have any software. Just to see if there was any kind of info in the patterns. This requirement was always obvious to me. And yes I was trading in 2000 and I was all sold out well before the crash thank you.
lesson #2 : do not make excuses (lame) for failure to do your job as a trader (if you are in the market you ARE a TRADER, just your time frame varies individually). Making cheap excuses, I was not told that by my broker...duh!... I did not know etc... leads to more failures, admitting mistakes is a far better way to progress.
Too many people take market gains as some kind of entitlement and do not make any effort whatsoever to understand how "things work". They sure are an easy prey for the Wall Street clique. One of my high school teachers asked us once: "do you prefer to be stupid or lazy?" and she added "in fact there is not difference in the result"
Knife catching is used to describe purchasing good assets by the business end....when leveraged idiots get enough margin calls to start up a deleveraging feedback loop, eventually "good stuff" has to be sold to pay for the margin call, because the "bad stuff" is worthless.
In the dot com collapse, CSCO still looked good from $82 all the way back down to $8, and now it's back in the $24s...but you don't want to catch it in the $82 -> $24 range...that's knife catching. This is why the experienced hands wait for the "thud" of the knife sticking in the floor, before they grab it by the handle...
I should clarify -- CSCO did not look good at $82, but that's beside the point...it had levered up to $82, so that was the given starting point.
KnotRP writes:
"Knife catching... CSCO still looked good from $82 all the way back down to $8... but you don't want to catch it in the $82 -> $24 range...that's knife catching. This is why the experienced hands wait for the "thud" of the knife sticking in the floor, before they grab it by the handle..."
good point and good example IMO.
to me that points out mostly perhaps that it is helpful to look at monthly charts and not only weekly charts in such strong moves down.
the montly charts clearly signaled the safe buy point to be in April 03, at 15 + (that is conservative), in addition to the nice "handle formation" in the 15-13 range just before
BTW CSCO seems in a downtrend now , support at 20 (major historic pivot)? need to see this week's close to confirm trend long term. that volume around 30 sure does not look encouraging either.
Also apologies for seeming so "rough" in posts above, well in fact that is just my true personality coming out at times, sorry.
recession is obviously what we WERE in.. when gas hit 4.00 it turned into a DEPRESSION.
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