Personal Income for August Indicates Consumer Recession
Submitted by
CalculatedRisk on Mon, 09/29/2008 - 4:36am (158 comments)
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Frist
Eric is a dog.
Meh
The Con Revolution's mission is almost accomplished...
We need CARP, Consumer's Ass(et) Relief Program.
WASHINGTON (AP) Hotly contested legislation to bail out the reeling financial industry has survived a key test vote on the House floor.
Members of the House voted 220 to 198 Monday morning to move the bill forward. They approved ground rules for its consideration in the chamber, including three hours of general debate and a final vote, likely by midday.
The initial action on the House floor came not long after President Bush once again urged passage of the legislation. He said that a yes vote would be a vote to prevent economic damage to you and your community.
Repost from end of last thread. Forget the Greenspan Put. We now have the Paulson Put:
Is Goldman Gambling On A Treasury Put?
John Carney | Sep 29, 08 8:45 AM
Goldman Sachs (GS) has long said that it doesn't have a better crystal ball than its (increaingly diminishing number of) rivals. It is simply more agile in responding to changing different market questions. The latest evidence of this is the news that Goldman plans to buy $50 billion in assets from troubled banks and is talking with regulators about the purchase, according to the Financial Times.
The asset acquisition is being billed as part of Goldman's transition into commercial banking. But it's hard to escape the impression that Goldman also views this as a far less risky than it might be otherwise, as the Troubled Asset Relief Program (or whatever they're calling it today) will give them something of a government put if those assets continue to fall. You have to love that deal: if the value improves, Goldman is money good; if it declines, Goldman declares the assets frozen and sells them to the Treasury.
A recession? My Republican friends told me that was all in my head and I was whining...You mean they were wrong?
Hey - maybe we'll focus on economic data today. It's been like 3 or 4 weeks of nothing but financial crises!
Thank you Paulson. You have WIPED out the 401k's of millions.
Overnight we have witnessed yet another instance of billions in equity and debt obliterated.
Where is the bailout for us?
In before Sebastian.
At least my 1.2% raise was only pushed back 3 months and I should finally be getting my 08' merit raise next week.
But hey, I suppose I should just keep my flippen mouth shut and be satisfied I even have a job.
Right.
Maybe if I get laid off Barak, Nancy, Harry, Chris, Barney and George can give me a big fat bailout.
Hell, I'll settle for 7 billion...
If the bill passes I reserve the right to update my name to we are all really screwed. Past that, I reserve the right to change my name to we are totally screwed after the bill passes and the market crashes anyway. I also now make a claim on we all have no hope at all for five years from now when I can no longer pay for internet access and have to talk to fellow Americans in the soup and bread line about the good 'ole days.
our little homebrew shop was slammin' over the weekend, with numbers usually reserved for 2 weeks before Xmas! I'm long on hops.
Sacramento banker accused of embezzlement lobbies for bailout
By Andrew McIntosh - amcintosh@sacbee.com
Published 12:00 am PDT Monday, September 29, 2008
A veteran Sacramento mortgage banker who has been lobbying Congress to pass the $700 billion bailout has been accused of defrauding 11 of his former branch managers and embezzling $879,000 from them in the collapse of his Folsom mortgage brokerage in 2007.
The allegations against John A. Courson, owner of the defunct Folsom-based Central Pacific Mortgage Co., are described in a civil lawsuit filed last year by eight of Central Pacific's former branch managers in California, two in Maryland and one in Florida.
Courson, 66, is chief operating officer of the Mortgage Bankers Association of America in Washington, D.C. The industry group's members include 2,400 companies and 370,000 people from the real estate finance world: mortgage companies and brokers, banks, thrifts and insurance companies.
As chief operating officer, Courson is the leader and public voice for the association, which spent $2.2 million and employed nine lobbyists in Washington during the first six months of 2008, federal lobbying filings show.
Last week, Courson sent letters to House and Senate members urging them to support quick passage of legislation that would enable the Treasury to purchase billions in distressed mortgage-related assets from companies in the mortgage finance world.
Courson also issued a widely quoted statement urging legislators to stop bickering.
"We would encourage both parties and both chambers to set aside the issues that will only bog down the process and pass a clean bill that will stabilize the markets and help keep families in their homes without permanently damaging the real estate finance system."
Courson, a resident of Rancho Murieta, was named chief operating officer July 22. He is scheduled to become MBA president in January.
Interview requests rejected
Through a spokeswoman, he declined a request to be interviewed about the embezzlement and fraud allegations.
"John has decided we're not doing interviews on this particular topic," MBA spokeswoman Cheryl Crispen said.
Asked if the association was aware of fraud and embezzlement allegations against Courson when it hired him, Kieran Quinn, chairman of the board of the Mortgage Bankers Association, issued a written statement.
"John was very forthcoming about all the details surrounding the closing of Central Pacific Mortgage," Quinn's statement says. "John is an experienced, unwavering and respected leader who will guide MBA and the industry through these challenging times."
In court documents, Courson has denied wrongdoing in several civil court cases filed against him after Central Pacific's collapse on Feb. 26, 2007, including the fraud and embezzlement allegations that his former branch managers have leveled against him.
Fresno lawyers Jeff Reich and Shane Reich, who represent the former Central Pacific branch managers, did not return calls seeking comment.
The former branch managers allege that Courson, former executive vice president John Cassell and former chief financial officer Ed Fuchs violated civil provisions of the Racketeer Influenced and Corrupt Organizations Act, or RICO, by scheming to defraud his branch managers using interstate phones, faxes, Internet and mail.
The plaintiffs in the case, now before the U.S. District Court for Eastern California, include former Central Pacific branch managers from San Diego, Kern County, Santa Rosa, Eureka, Visalia and Florida.
Fuchs, a Fair Oaks resident, declined to comment, citing the pending lawsuit. Cassell, a Rancho Murieta resident, said: "I wish I could respond, but we'll let the court filings speak for themselves."
Mark Van Brussel, an attorney representing Courson and his two other former executives, is on vacation and unavailable to comment, said Kristina Launey, a second attorney working on the case, who also said she was not authorized to comment.
Lehman Brothers litigation
Last year, Courson also was accused of a $1.6 million civil fraud by Lehman Brothers Bank of New York, the giant Wall Street investment bank that filed for bankruptcy protection two weeks ago.
curious-er writes:
"We need CARP, Consumer's Ass(et) Relief Program."
Of course, what we're all getting is the "Corporate Relief Assistance Program: otherwise known as CRAP.
Still holding to your moderate recession outlook, CR?
“a vote to prevent economic damage to you and your community.”
Once again, the idiot defines an impossible goal. The goal of this bill is (obviously) to prevent failure of major financial institutions. It will not prevent recession, restore house prices, put unemplyed back to work or in any other way "prevent economic damage to your community". This misrepresentation always sets us up for problems later and Bush has an endless history of this.
There will be another stimulus package. It's a matter of when it will happen. Congress will call an emergency session once they get home and see how bad things are.
FDIC: Wachovia didn't Fail.
FDIC = Baghdad Bob.
Is section 8 still in the final draft? I have trouble with my reader.
GWB and the congress sure did a good job of scaring the hell out of everybody.
FDIC: Wachovia didn't Fail.
roflol...that's why the FDIC is involved. What was the price paid to shareholders by the way?
Is section 8 still in the final draft? I have trouble with my reader.
Essentially, yes. There was a great recap of last nights conference call with the banks on naked capitalism. Hopefully, you have a strong stomach...
SS, is that to say I should start drinking now?
Just watched a guy on UK tv claiming he was robbed by gubbmint when they took over B&B, he was a shareholder...
Question for the group at large - if WAMU has "failed" but been sold and Wachovia has not "failed" but been sold - what does that mean in terms of account safety/insurability going forward?
In some circles, the thought was the earlier your bank failed, the more money would be left in the FDIC kitty to pay it out.
Now that the FDIC can probably tap Treasury for what it wants, is that no longer the case - a failure will be paid, period, for new failures?
What about the WAMU failure, and the Wachovia kind of failure?
OT:
Bloomberg report that CP is in fact rolling and has been rolling all month.
Someone should tell Congress
- Bloomberg.com
TED Spread 3.32
I don't know. The monthly declines are still being driven by the tax rebate program, as stated in the BEA's news release:
"Excluding these rebate payments,
which are discussed more fully below, DPI increased $58.4 billion, or 0.5 percent, in August,
increased $79.3 billion, or 0.8 percent, in July, and increased $42.8 billion, or 0.4 percent, in June."
On an annual basis, real disposable income grew 0.3% and real PCE grew 0.1%. These growth rates are certainly not worth writing home about, but nevertheless, they are still positive.
Rebecca
BB writes:
TED Spread 3.32
Wow. What's the highest it's ever been?
from yves:
2) Waiting a couple of weeks because no one has any idea when or where the next bomb will blow up. In other words, all their doomsday scenarios about Black Monday were B.S. They screamed the check had to be written by Monday, but now they're saying they actually have a few weeks before they need to cash it. Plus, this will allow them to "seek guidance" from GS, JPM, and other selfless public servants about where the money should be funneled.
they lied! i'm shocked.
Thats Ballgame Comrades writes:
BB writes:
TED Spread 3.32
Wow. What's the highest it's ever been?
3.44 now and this is probably the highest.
Should we be looking ahead to the eventual default by America on its Treasury debt? If, as some have predicted, the cost will be 2 to 7 times as high as the estimated 700 billion, surely this is an outcome we should consider, no?
How long will China, Japan and Middle East hang in there holding paper that is not only declining in value as the dollar falls, but could be outright worthless?
And for those of you who think it will never happen, how many of you thought a year ago we would be where we are today?
SS, is that to say I should start drinking now?
To paraphrase a bumper sticker I see around here "If you're not drinking yet, you haven't been paying attention."
Wow. What's the highest it's ever been?
Over 4 last week intraday I believe.
Jeb Hensarling, leader of the House GOP conservative caucus, is opposing the bill:
RSC | Media Center | Statement on the Voting Against the Paulson Plan for Financial Markets
In my heart and in my mind, I believe that this plan is fraught with unintended consequences, would force generations of taxpayers to pick up the tab for Wall Street losses, and could permanently and fundamentally change the role of government in the American free enterprise system. Once the government socializes losses, it will soon socialize profits. If we lose our ability to fail, we will soon lose our ability to succeed. If we bail out risky behavior, we will soon see even riskier behavior. "
ok, what's the next bank.
DSL, NCC, STI,BAC, bk?
Sorry if this is beating a dead horse, but has anybody else noticed that the overnight FF rates is now 1%
?
Ella, WTF?
I thought the credit market was frozen? And that article says it's rolling, and rolling cheap?
Everybody should read that.
"If, as some have predicted, the cost will be 2 to 7 times as high as the estimated 700 billion"
See, there is the core of the 'undefined' question!
What will cost that much? What is the goal? What is the putsch intended to do? What is an appropriate expenditure and what is not? Undefined... once the spending starts, everything and everybody is worthy as long as they are on the right side politically and contributed properly.
Of course companies that produce something have CP that is rolling, we have a banking crisis, so all the bankers are scared. Throughout history it has proven to be a very profitable strategy to gain power, claim emergency, throw out existing rule of law, and grab money. We just have a front row seat this time. Hopefully our lawmakers can do their job and stop this power grab.
If everything is so urgent, then we should just wait and then put the 700 billion to work, the taxpayers will get a better deal.
WASHINGTON, Sept. 29 /PRNewswire-USNewswire/ -- With an agreement reached on a $700 billion financial bailout package, the Committee for a Responsible Federal Budget (CRFB) urges lawmakers to turn their attention to how to pay for it.
\tYears of borrowing have already left the U.S. government in a weakened state, said Maya MacGuineas, CRFB president. Lawmakers need to behave responsibly and figure out how to pay for this package rather than just sticking it on the nations tab. One clear cut lesson to come out of all this is the dangers of excessive borrowing.
\tThe Committee for a Responsible Federal Budget makes three recommendations to our nations leaders:
\t1) The presidential candidates need to rethink their tax and spending priorities. The budget plans of both Sen. McCain and Sen. Obama would increase the deficit by hundreds of billions of dollars a year (see Promises, Promises: A Fiscal Voter Guide at Budget Watch a joint project with CRFB and the Pew Charitable Trusts). Given the tremendous outlay to which the federal government has just committed, Senators McCain and Obama need to scale back their promises and focus instead on fixing the United States broken budget.
\t2) Congress and the new President need to work together to pass a budget plan that will reduce future budget deficits - currently projected to continue as far as the eye can see - and deal with the countrys long-term imbalances, where over $50 trillion has been promised with no plan on where the funds would come to pay for these promises.
\t3) Finally, Congress should commit that any monies that flow back to the federal government from repayments or equity stakes taken in financial companies from the bailout package should go directly to paying down the national debt. This bailout package will push the U.S. over the $10 trillion debt marker - an inauspicious accomplishment. If the government does recoup any of the payments, it would be scandalous for Congress to try to use those funds for other priorities such as tax cuts or new spending rather than making a dent in repaying all that it is borrowed.
\tSeven hundred billion dollars is a gargantuan amount of money, concludes MacGuineas. That many zeros should serve as a wake-up call for Congress to get its fiscal house in order.
\tCRFB does not support any candidate for office, advocate for any single specific fiscal goal, or take a position on any proposed policy.
\tAbout The Committee for a Responsible Federal Budget
\tThe Committee for a Responsible Federal Budget is a bipartisan, non-profit organization committed to educating the public about issues that have significant fiscal policy impact. The committee is made up of some of the most important budget experts in the country including many of the past chairmen of the House and Senate Budget Committees, directors of the Congressional Budget Office and the Office of Management and Budget, and members of the Federal Reserve Board. For more information about the Committee for a Responsible Federal Budget, visit crfb.org
\tAbout U.S. Budget Watch
\tU.S. Budget Watch is a project designed to increase awareness of the important fiscal issues facing the country through and beyond the election. The project draws attention to the presidential candidates tax and spending policies to help voters become better informed about these issues and to track the new presidents fiscal policies after the election. U.S. Budget Watch is a project of the Committee for a Responsible Federal Budget at the New America Foundation and is supported by the Pew Charitable Trusts. None of these organizations support or oppose any candidate for office. Budget Watch
Once the government socializes losses, it will soon socialize profits.
Not likely.
sterlingerl wrote:
"Should we be looking ahead to the eventual default by America on its Treasury debt?"
Hard to say if we could actually see a default. But it could certainly mean much higher interest rates to secure lenders for future treasury issuance, exacerbating the cost to service all of this new debt.
Somebody a while ago suggested an intermediate future with deflation AND higher interest rates. I'm beginning to think this may be more likely.
I don't see how we can avoid higher taxes. And don't forget the state and local governments are hurting too, so taxes across the board may have to go up - even in a recession/depression.
Of course the credit market is rolling. Anybody worth lending to has access to money....cheap money even.
The credit crunch only applies to those too risky to lend to....as it should be.
This whole "credit crunch" is just credit standards trying to return to rational, normal levels. Amazing that our Gov't is putting up such resistance to that outcome.
safe_as_apartments writes:
Once the government socializes losses, it will soon socialize profits.
Not likely.
safe_as_apartments | 09.29.08 - 9:25 am | #
I agree, they wouldn't do anything that would actually benefit the people of this country, that would be sacreligous.
Comrade Baron Von Helmut III writes:
ok, what's the next bank.
regionals
"Should we be looking ahead to the eventual default by America on its Treasury debt?"
When a government's debt is denominated in it's own currency, it won't "default" as in stop making payments (like Argentina did recently). It will print.
Consider going long on green ink.
Some guy called me just now. He said he was "Ted Spread from the future" and told me he was 13. Funny, he didn't sound like a teenager...
What will the Dow be at open?
The credit crunch only applies to those too risky to lend to....as it should be.
-
yes and no. certainly those risky borrowers are feeling it terribly, and i agree, it should be so, but it is driving up the "cost" of money for everyone.
any idea, historically speaking, how long it takes for a crunch to run its course (i.e. standards to return to "normal"?)
This is exhausting.
I have a lot going on between work, family, and local issues . . . I don't know how much of this I can take!
The economics/finance crease in my frontal lobe is waaay overstimulated.
Gary, I completely understand, I'm the same way, sleeping is near impossible anymore and depression has set in...
3m, 6m, 12m... oh, wow.
CNBC: Citigroup to Cut Dividend to 16 Cents; To Raise $10 Billion in Common Equity (story developing)
What will the Dow be at open?
Dow 0.36000!
A little truth from the GOV. on what part of the credit is frozen would be helpful. These scare tactics are disgusting.
The weak need to fail otherwise it will be a drag on us all.
Gary, I completely understand, I'm the same way, sleeping is near impossible anymore and depression has set in...
Don't you mean "psychological recession"?
The American Press share that the each American taxpaper can expect to pay a little over $2,000 to pay for Bail Out Plan. Yet, no one has said how this debt will be passed along to us. I live on a budget....I need to know when and how this debt will be passed along to me. Any thought?
Don't you mean "psychological recession"?
One Salient Oversight | Homepage | 09.29.08 - 9:32 am | #
My bad, sorry Phil
The weak need to fail otherwise it will be a drag on us all.
The weak are failing and being absorbed into MS, GS, JPM, BoA and C.
Those in the group above will be safeguarded.
RP, you'll pay through inflation.
Don't you mean "psychological recession"?
--
nice!
don't worry fellow commentors, gary and comrade kristina are mentally well capitalized. no need for concern.
@ Matt,
"but it is driving up the "cost" of money for everyone."
Not yet it isn't. But if they insist on not allowing credit markets to properly price risk than this is going to be the only possible outcome.
I thought Citi was teetering on the brink themselves, did they achieve "favorite son" status?
I need to know when and how this debt will be passed along to me. Any thought?
Higher inflation; lower wages over the medium term; portfolio not going anywhere; etc
Mr. T,
We have a winner!!!
You are correct sir!!!
We need 700 billion dollars to continue lending to people/business with a questionable ability to repay the loans. Brilliant solution.
Until we get back to lending standards as they were before the recent past, this "crisis" will not abate. It will be painful for some in that unwinding process, as it should be for most of them who took a gamble on risky investments, and should feel pain.
Comrade Kristina writes:
I thought Citi was teetering on the brink themselves, did they achieve "favorite son" status?
Just did with Wachovia deal.
Citi is way too big to fail.
Sadly, they may be too big to save without killing the dollar.
What exactly will be "inflating"?
This bill will make things worse. The uncertainty of action and lack of clear direction from the Treasury will keep the markets frozen.
Ultimate moral hazard.
What exactly will be "inflating"?
Anything tradable.
TED: 3.48
You are depressed because you are trapped, and you are keenly aware of it.
Many of you saw the movie "Titanic".
We are in steerage. The lifeboats are down, the privileged are comfortably seated.
You, on the other hand, are reaching your hands between the bars, beseeching someone to help.
That someone has long ago made a decision not to help.
That is why you are depressed. I suggest that you move from depression to action in a timely way.
TED at 3.48
one salient oversight,
i know we have had the inflation/deflation discussion before, but i still can't wrap my head around it as a whole.
how does lower wages and a flatlining portfolio equal inflation?
would that not be deflation (less money everywhere) with an increase in the price of some goods and services?
if anyone can recommend good readings on inflation or deflation i would appreciate it.
seems to be a matter of opinion here, i've seen good points made on both sides.
google finance is wonky this morning, but DOW is off over 100 in the first minute of trading
good thing you can't short the financials
One of the great things about being a Wilshire 5000 watcher is that you can easily quantify the losses.
For example, the W5000 has just lost 144.08 points in the last two minutes. That means $144.08 billion has been lost.
@ Max.
"Ultimate moral hazard."
Oh we're well beyond Moral Hazard. Not sure what you call this.
o credit, no fire water...
Not sure what you call this.
Tyranny.
Any one have any feelings re FITB?
RE Wachovia deal.
Federal Deposit Insurance Corporation offered assistance to the deal and agreed to share losses on a $312bn pool of loans.
I thought that FDIC was all about insuring deposit not loans. Just what will this cost us.
As market openings go, this one was no big deal. It's just a down day not Armageddon.
Fascism, Tyranny which ever has a nicer ring to it...
$201.74 Billion lost so far on the Wilshire 5000 after 4 minutes.
Just thought you needed to know...
"no credit, no fire water..."
Our whole Ponzie scheme economy requires ever expanding debt.
Dow being down will help that bailout vote pass in 3-4 hours.
Has everyone listened to the Analyst Call?
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OuterBeltway, I have no problem with action, but what action? I can't seem to figure my way out of this in my mind which scares me. I usually have a clear idea of what it is that I need to do, now nothing seems like it would make a difference anyhow...That is my dilemma...I've been writing the congresscritters and miracle of miracles my ignorant Senator (Nelson FL)is actually listening and has many reservations about the deal but I still have little hope of this being stopped.
Here's action.. Get your Rep. to listen to the Analyst Call!
If the FDIC has such broad powers to sell off banks, why do we need to throw away 700b on the Fed?
One discovers the Exec. Comp. limits are fluff, there is no big hurry, and Treasury will have "broad discretion" to help whomever it wants to help. Also pricing is completely TBD.
Anonymous - correct, but this financial perpetuum mobile doesn't work for ever...
now it ends...
You are depressed because you are trapped, and you are keenly aware of it.
Many of you saw the movie "Titanic".
We are in steerage. The lifeboats are down, the privileged are comfortably seated.
I'm not sure using the Titanic is a good analogy.
For starters, which of us gets to draw the naked chick?
I'm not sure using the Titanic is a good analogy.
If this mess is like the Titanic movie.
I want to be the iceberg.
Ah...
We missed Glitner bank in Iceland being nationalized. They don't have a big war chest there relative to the problem...
I'm not sure using the Titanic is a good analogy
It's not.
The Titanic wasn't purposely scuttled by its captain.
Matt:
Assets will deflate, because no one can afford to buy them. No demand, prices fall. Example: real estate, cars.
Currency will inflate because we'll have to print money (we won't be able to borrow, remember) in order to re-invest in the economy to re-start it. That's "fiscal stimulus".
The things we must buy from abroad, using a devalued currency, will "cost" more. That's another form of inflation.
We will have inflation of the currency, inflation of the price of foreign goods, and deflation in the price of domestic assets that no one can afford anymore.
The reason they can't afford them is because their incomes fell. They fell long ago from globalization, but were held up artificially by borrowing over the past 20 years.
Crash now is caused by end of borrowing regime. Long overdue, long predicted. That's what the "permabears" have been saying for the past 10 years, and now it's here.
Brontide writes:
If the FDIC has such broad powers to sell off banks, why do we need to throw away 700b on the Fed?
Brontide | 09.29.08 - 9:44 am | #
That seems to be the 700 billion dollar question. It occurs to me they are almost out major institutions to fail...
"Ted at 3.48"
Curiously this seems like a big deal if the federal funds rate is dropping to 1. Doesnt it just mean that in reality the US government has rediculously low cost of borrowing at the moment and other banks just have a more normal rate of borrowing?
If the US government were forcing the FF rate to 1 and the market was lending at higher rates it would be a big deal but is that happening?? Treasury yields have been rediculously low and were getting lower across the curve today?
At face value every man and his dog has faith in the credit of the United states and you are all saved?
OuterBeltway said it better than I could've.
I guess "Helecopter" Ben may very well get to test his hypothesis on a real, live, economy.
C-SPAN Live Stream - C-SPAN
House debate. If you want to get a handle on who is going to get tossed out on their ear after they pass this cluster.
outerbeltway,
that was painfully easy for you.
i thank you. i think.
Is it just me or is the cliff diving a bit more severe this morning?
Dick Armey opposes the bailout:
Why I Oppose the Wall Street Bailout | FreedomWorks
"As a Public Choice professor, I used to begin class each semester with Armeys Axiom number one: The market is rational and the government is dumb. Those quick to call for more regulation forget the power of markets, and refuse to acknowledge government culpability in the current mess. Time and again, governments the world over have attempted to outsmart the market and the current legislation is no exception. And time after time, markets respond, toppling the best-laid government plans as they move to correctly price the underlying assets in exchange.
Why's the market going down.
I thought with shorting banned, we only go up.
Where's my pony?
Why's my back all sticky?
Why's my back all sticky?
It's raining, comrade. =)
How much cliff diving before the panic really starts to sink in? ( dow off 2%, nasdaq off almost %3 in 20 minutes of trading )
Aren't the circuit breakers set for 5%?
Okay this is not a run-of-the-mill bad opening. I haven't seen a bounce at all this morning.
1st circuit breaker is 10%
Since there are no way to oppose the Congress. Vote the congress out. They do not belong to the america
"I thought that FDIC was all about insuring deposit not loans."
Maybe it is now all about patching it up and getting the hell out so the next administration can get cratered when it blows.
The more they act like this is a done deal, the more I wonder.
My magic eight ball keeps saying "Ask Again Later."
Brontide writes:
How much cliff diving before the panic really starts to sink in? ( dow off 2%, nasdaq off almost %3 in 20 minutes of trading )
The sheeples are too punch-drunk for there to be a true panic, IMO
Okay this is not a run-of-the-mill bad opening. I haven't seen a bounce at all this morning.
No shorts = NO BID.
Okay, the Wilshire 5000 has just dipped below 12,000. It's down 2.88%. $355.74 Billion so far gone this morning.
Maybe they are not sure the Bank Bonanza will pass.
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Interesting note from another forum:
The US has morphed into Mexico ala 1982 when they first imposed capital controls so you couldn't repatriate any of your money and then they devalued the peso by over 50%. So first they froze your money and then they took 50% of it away.
I suported the Paulson Plan with no transparency and unlimited resources but this bailout plan is a disaster... it wil be seen as an 'eat the rich' plan.
My opinion is that it was rich people wasting money and earning huge fees that got us into this mess and it will be rich people wasting money and earning huge fees that will get us out of this mess... however it is starting to look increasingly as if those rich people will be speaking with accents.
ew thread. I got first comment. Get me a shrubbery!
Popeye writes:
1st circuit breaker is 10%
someone else can correct me if wrong, but if 5% by 10:30 it stops 30 minutes
if 10% by 2 PM it stops 1 hour
Comrade Kristina:
Steps to problem-solving: recognize the fundamental problem. Don't expend energy chasing the symptoms. Then generate solutions, pick them, and implement.
Recognize the fundamental trends. The reason capital is being withdrawn from the American economy and sent elsewhere is because the profits are elsewhere, and we, the middle class, aren't useful as money-makers anymore.
You are now on your own to rebuild an economy, without benefit of your savings, or your capacity to borrow, and without your former competitive advantages in a now-globalized world.
And it's happening suddenly. That's the macro-level bad news.
This is OT for this forum, but the good news is that many other people recognize the fundamental problems, and are thinking about coping mechanisms that will work over the intermediate and long term. That's where I'm concentrating my efforts.
I have no advice about dealing with the short term, except "don't expect help from people that either can't or don't want to help". National government is so corrupt, it must fail in a big way in order for change to happen. Look to yourself for change.
What the cr*p just happened...
emails! faxes! phones! shake their windows and rattle their walls! This bill must not pass! if we do not stand up now, when? call call and call again!
It gives me no comfort that I knew this was coming. I only feel sick.
if the passing of this plan creates a huge 10% bounce, indexes will be back to where they were hovering during mid August.
if the trajectory continues, a 10% bounce will take us back to .. friday ..
Look up SEC rule 80B
Invest FAQ: Exchanges: Circuit Breakers, Curbs, and Other Trading Restrictions
For the 3Q of 2008 (which we are still in today), a 10% move is defined as 1200 Dow points, 20% is 2400 points, and a 30% move is 3600 points.
from the NYSE:
Level 1 Halt
A 1,200-point drop in the DJIA before 2 p.m. will halt trading for one hour; for 30 minutes if between 2 p.m. and 2:30 p.m.; and have no effect if at 2:30 p.m. or later unless there is a level 2 halt.
Level 2 Halt
A 2,400-point drop in the DJIA before 1:00 p.m. will halt trading for two hours; for one hour if between 1:00 p.m. and 2:00 p.m.; and for the remainder of the day if at 2:00 p.m. or later.
Level 3 Halt
A 3,600-point drop will halt trading for the remainder of the day regardless of when the decline occurs.
Circuit Breaker Rules:http://www.nyse.com/press/circuit_breakers.html
JS writes:
Aren't the circuit breakers set for 5%?
I heard that they removed the circuit breakers a while ago.
http://www.nyse.com/press/ circuit_breakers.html
ok, we have a bounce back up in all three indices.
ew thread, second reminder
rats try again
NYSE, New York Stock Exchange > About Us > News & Events > Media Resources > Media Resources
Is there a contest for the DOW today? I'm in at 7.6%.
Peter-san writes:
got it, thanks
The 5% is for the CME
If the markets drop enough, the 401k masses will beg for just the chance to "save" their retirement. The younger generations will pay for this, with interest. Can't we just get the deeds to the houses, if we are going to buy them for 100 cents on the dollar? I don't know what collateral we would get for credit cards--pinky fingers?
MS down 9.5% since open - so what is that as a return on $9b, annualized?
CNBC: "Massive liquidity injection" from Fed in conjunction with other central banks - liquifying the system with "100's of billions dollars"
Credit markets appear to be beyond help at this point...
CNBC: "Massive liquidity injection" from Fed in conjunction with other central banks - liquifying the system with "100's of billions dollars"
They're going to need another bailout before this one even passes at the rate they're blowing through the Fed's balance sheet.
Outer Beltway, have you ever read Three Kingdoms?
NCC knocking on the door of the undertaker to choose a nice type of wood for their box.
DSL seems peppy, so I'm guessing that NCC goes away first.
I really am glad that there's no shorting, so that all those folks who don't understand capital structure can buy in at full value. Oh and the treasury/fdic too when they take their warrants.
They are not liquifying - They are DILUTING.
We, the PEOPLE, need control of our CURRENCY.
This is the root of our problem. The people have no control over our money.
don't worry fellow commentors, gary and comrade kristina are mentally well capitalized. no need for concern.
matt | 09.29.08 - 9:33 am | #
Well played, well played.
sorry if redundant: for those without a TV right now but have web access. csapn.com has live feed on the bailout debate, you can see/hear if your rep is for/aginst. good stuff.
The fact that the bill advanced to debate is very bad. That vote is almost always the "real" vote that determines whether a bill passes. The headline vote is generally just for show. It's very rare for somebody to vote to advance and then vote against but very common to do it the other way. That way essentially allow Reps to oppose a bill but vote for it "officially" so they don't have negative consequences.
Fair Economist writes:
The fact that the bill advanced to debate is very bad. That vote is almost always the "real" vote that determines whether a bill passes.
I wonder if that will be the case this time...doesn't Nancy P. need the majority of republicans on board to go forward...it looks to me like HALF the house doesn't want this thing...I don't see how you get a republican majority out of that.
The Dems said they had 125 Dems and needed 100 Reps. Slightly > 1/2 for each party. 220 to advance indicates they have it. True, almost half the House opposes, but almost only counts in hand grenades and H-bombs.
OK, not so bad. This vote seems to be about a rider amendment. Something to do with tax breaks for first responders. Vote was mostly along party lines. Definitely not along pro/con for the bailout.
Comrade Kristina said: "OuterBeltway, I have no problem with action, but what action? I can't seem to figure my way out of this in my mind which scares me. I usually have a clear idea of what it is that I need to do, now nothing seems like it would make a difference anyhow...That is my dilemma..."
You're succumbing to the MSM and CR's "only way out is in a pine-box" mentality. You have to fight it and regain your reason.
My suggestion: Put pen to paper or keystrokes to Excel, find out exactly what your financial position is like, and see if it matches the headlines.
For example, my position: As to my house and mortgage, where I live I have yet to see a year-over-year drop in housing prices, although I'm expecting no appreciation this year. I can comfortably make my 5.75% fixed-rate mortgage and I have 41% equity in my house and it's continuing to rise.
Earlier in the year, January, after the SP500 had already fallen -15%, I bought into an SP500 Index fund with a portion of my retirement savings. That's down about -7.5%, but it's paying a 2%+ dividend. "Up" would be better than "down", of course, but hardly a disaster. Even an occasional bad year of being down -15% is insignificant for a long-term investment.
Recently, about a week ago, I bought into a group of 6 small-cap stocks with strong price and earnings momentum, plus a business development company paying a high dividend, ACAS. I'm upside-down on that investment by about -3.5%, also well within expectations.
Although I don't have any investments or savings there, I even do a little banking with Wachovia. Yet even with its issues, what's going to be the impact on my finances? Nothing, business as usual.
The MSM and the bearish blogosphere are like the Bush Administration in their shameless pushing of people's hot-buttons to further their own agendas. Don't allow it.
Sebastia
Sebastian,
Your fundamental error is in underestimating balance sheet effects. This is not so much an "income recession" as an "asset depression". WaMu, Lehman, AIG etc were all making "profits" all the way into their respective doom. If you simply looked at their reported profits, you would never have figured anything wrong - all the action was on the balance sheet.
In much the same way, the balance sheet of USA as a nation is in bad shape. Reported GDP figures are essentially irrelevant, when you face a balance sheet as bad as what the US, trouble is guaranteed.
Do a gut check on how you have been bullish all along, yet the bears have been essentially right - in fact, CR wasn't sufficiently pessimistic, it turns out - notice how many people are warming to Jas nowadays around here!
I'm not sure using the Titanic is a good analogy
It's not.
The Titanic wasn't purposely scuttled by its captain.
Krazy Henry's | Homepage | 09.29.08 - 9:46 am | #
You are right, a better analogy would be the Graf Spee. The Capitans are also pretty simalar in that analogy
"As a Public Choice professor, I used to begin class each semester with Armeys Axiom number one: The market is rational and the government is dumb. Those quick to call for more regulation forget the power of markets, and refuse to acknowledge government culpability in the current mess. Time and again, governments the world over have attempted to outsmart the market and the current legislation is no exception. And time after time, markets respond, toppling the best-laid government plans as they move to correctly price the underlying assets in exchange.
Angry Renter | 09.29.08 - 9:52 am | #
Dick Armey's opposition would be a point in favor of the bill. He was a key dickwad getting us into this mess.
All this info. makes my nipples erect!
I believe the -2.4% number you are posting is annualized, but when you say "the change in real PCE in Q3 will be about minus 2.4%" it sounds like a quarterly change that implies 70% of Q2/Q3 GDP will be -2.4%. Right now Q3 PCE is down -0.5% Q/Q. Even if September PCE falls 1% (a near all time high level fall), PCE would decline 0.8% Q/Q which could possibly be balanced by growth in exports & other components (making the headline Q3 GDP change positive).