OT: "Fannie Mae has also been named in several class actions already, and it wont be the last; a few hours after the Merrill suit was filed, a shareholder lawsuit was brought against Northern Trust for materially misrepresent[ing] the liquidity of and risks associated with auction rate securities."
Ha! When the unemployed of California look for "their" bailouts when their unemployment expires - they'll be told about the evils of government help, and told to fend for themselves.
The unemployment rate in the Fresno County was 9.7 percent in August 2008, down from a
revised 10.1 percent in July 2008, but above the year-ago estimate of 7.4 percent. This
compares with an unadjusted unemployment rate of 7.6 percent for California and 6.1 percent
for the nation during the same period.
when I first started reading this (terrific) blog, I could not understand for the life of me what had happened to home prices in Fresno, as Fresno always had significantly higher unemployment than the rest of the state. Who could afford those home prices in Fresno. Now we know it was all Countrywide.
Moreover, the unemployment rates in "strong" states like North Carolina, New York, Texas are all hitting multiyear highs (never mind Nevada, Florida, etc..).
Good to know California is sponsoring programs like "Lean Manufacturing," where they pay to train your management how to lay off more workers and not miss a beat.
California: Working at cross purposes for a better tomorrow.
an irrational belief that new lending should cover bad lending of the past.
In an abstract sense, considering only the borrower, you're right. Joe's Mildly Undercapitalized Paint Stores is roughly as creditworthy as he was last month. But, a loan requires a borrower and a lender. The lenders have capital requirements, and regardless of the reason they lost the capital, they really can't make the loan until the capital is restored. They can't raise it in the equity markets right now, so they will have to push up loan rates. It's not fair that the borrowers of tomorrow must make up for the losses of yesterday, but the losses are real and somebody has to make them up. The existing equity holders can't make up anymore than they already have, or they have to stop making loans. Do you have an alternate to swallow the losses? Paulson and company want it to be the taxpayer but I'm pretty sure that's not your speed.
The California unemployment rate hasn't "hit" 7.7%. Rather the California unemployment rate has blown through all previous measures and was last clocked at 7.7% and accelerating.
CR, I don't mean to be annoying about this but are you reconsidering all your well reasoned and well supported ideas as to the speed of at which events are transpiring? It seems from housing to employment events are unfolding far faster than you've suggested.
So, have we settled the "inflation" vs. "deflation" debate yet?
Also, CR sounds mad, and he is normally as unflappable as Obama. This is almost as unsettling to me as the substance of what I've been reading about...
There is a bill pending in the CA legislature banning foreclosures for 2 years....it will probably pass....
I googled "California banning foreclosures" - forgetting that Banning is a ground zero for the RE crash. Grrrr.
OK, here's a link The ban if for foreclosures where fraud is involved. However, they're considering calling ALL Countrywide originations fraud so it could have a very substantial effect. Especially on BofA. Short BofA!
Couldn't California just follow the pattern suggested by Paulson et al this morning? Sure they're already running a deficit, but if they just spend a fifty billion dollars to pay local firms to hire people, the unemployment numbers will temporarily see an artificial drop, thus solving the problem forever.
There doesn't seem to be much wage deflation, drop in employment, or reduction in home prices in Silicon Valley. Any pointers to the contrary would be appreciated.
In my state we have no income tax (WA), only sales tax. Our legislature will go into session in Jan with a 2B shortfall and only a 0.50B rainy day fund. J6P, who makes higher than the average national wage here, isn't spending as much as he used to. New figures place WA state unemployment at 6 percent. And we have been hit very little by the downturn, compared to other states.
Shares of SKF will be in demand after today since shorting is not allowed. They should be trading at a premium because the smart money knows the market is artificially inflated and will want to be on the sell side.
SKF isn't creating more shares since the counter party cannot short financials to mitigate risk. More demand, less supply means a move upward. This also limits our downside risk if the market goes up.
Fund is only down 20%. I thought it would be worse.
We're setup for a major crash now when Oct 2nd comes around. Figures this ban would expire in October. Longs will be selling since they will be anticipating a lift on the ban, but there will be no buyers since shorts have all covered
If they manage to pass that bill putting a 2 year stay on CA foreclosures, just imagine how excited lenders will be to make loans in CA.
Oh well, I'm sure the government will have a solution for that too. It is so wonderful to know that our government has the solution for EVERYTHING! No need to think critically, bad decisions will always be rectified at taxpayer expense.
Crispy& Cole said: "Sebastian - you should be the President with those great ideas..."
It's not an "idea" or a "solution", it's just reality. Construction in California slowed down, but a hurricane in Texas caused severe damage in both housing and infrastructure that has to be repaired. Nobody caused the damage in Texas for the specific purpose of sopping-up unemployed workers in California, but the repair work still needs doing. This is simply what happens with the economy of a large country, resources shift around to where they're needed.
I swear to God, I'll never understand how people can have such a narrow, un-nuanced view of the economy when news and information are so readily available to anyone who wants it.
I swear to God, I'll never understand how people can have such a narrow, un-nuanced view of the economy when news and information are so readily available to anyone who wants it.
Kind of like you telling people to go long and they lose 25%? Or saying NEW was buy before they went bk? Yeah, I can't understand either!
deb writes:
If they manage to pass that bill putting a 2 year stay on CA foreclosures, just imagine how excited lenders will be to make loans in CA.
... any new loans being made in CA are going to be money good, the underwriting standards are so tight.
What this does is legislate a 2-year period during which the banks do not have to load more REO onto their books from their existing mortgage exposure.
davlee1972 on yahoo/skf writes 1. Shares of SKF will be in demand after today since shorting is not allowed. They should be trading at a premium because the smart money knows the market is artificially inflated and will want to be on the sell side.
I bought some SKF directly at market open for about $89, now doing pretty well. I have a sizeable position, though, and my concern isn't so much that I wake up Monday morning and it's at $80 (so I lose 15%, big whoop), but that the whole fund blows up over the weekend because its counterparties are destroyed.
Do you have any ideas as to the likelihood of this risk occurring?
I swear to God, I'll never understand how people can have such a narrow, un-nuanced view of the economy when news and information are so readily available to anyone who wants it.
Sebastian
Funny, I can think of a dozen people off the top of my head who were just thinking the same thing.
"Kind of like you telling people to go long and they lose 25%? Or saying NEW was buy before they went bk? Yeah, I can't understand either!
crispy& cole | Homepage | 09.19.08 - 2:04 pm | # "
There's a run on roofing tarps at Home Depot as wanna-be-wealthy suburbanites wrap their SUVs in the blue tarps as a show of their support for Paulson's plan to "protect their investments". (snark).
crispy& cole said: "Kind of like you telling people to go long and they lose 25%? Or saying NEW was buy before they went bk? Yeah, I can't understand either!"
No, it's worse than that. Anybody can make a bad call on a stock or the market, but not even understanding or wanting to understand that different regions of the country and different sectors of the economy have a natural ebb and flow, that just because things are bad in one area doesn't mean they're bad everywhere, that's just obtuse, being deliberately blind.
You know, like what virtually every poster today is accusing government policy-makers of.
You cant make everyone happy! (Or as I usually say politicians shouldn't shouldn't meddle with dynamic systems)
The American Bankers Association objected to the U.S. Treasury's plan to insure money-market mutual funds, saying it may compromise the ability of banks to attract and keep deposits.
Money-market mutual funds will be able to pay higher interest rates to customers than banks, without any apparent limit on the size of an individual's investment, said Edward Yingling, chief executive officer of the Washington-based trade group.
According to Wiki ( A source you can always trust)
California is responsible for 13% of the United States' gross domestic product (GDP).
also
The economy of California is a dominant force in the economy of the United States, with California paying more to the federal system than it receives in direct monetary benefits.
"Does this change the GDP number for the US eventually?" he asked. "Why Yes!" he replied, once again to himself.
"The American Bankers Association objected to the U.S. Treasury's plan to insure money-market mutual funds, saying it may compromise the ability of banks to attract and keep deposits."
... hmmn, Paulson triggering a run on the banks? Not good ... dang, this was supposed to be easy ...
And re-hired in Galveston. Imagine that, Hurricane Ike was just last weekend, and it's already off everybody's radar.))
S.
Sebastian | 09.19.08 - 1:49 pm | #
The "broken window" argument is a well understood economic fallacy. You statements are dishonest.
Additionally, many things won't be rebuilt, like much of Boliver peninsula. Much of it was already uninsured. A lot of wealth just evaporated. Infrastructure is badly damaged and many people aren't working at their jobs.
There are many ranchers near the Bolivar peninsula (I know them) and a lot of land was inundated with salt water and many cattle died. The land will have to lie unused for a year or two.
Basic research has been halted at the large medical center until cleanup occurs. Most of Houston waits for power to get started on the cleanup and then eventually back to normal work.
many people lost a lot of personal wealth and many small businesses will not survive.
Actually, your comment is not only dishonest its pathetic and disgusting.
anonymouse ---any ideas on the potential blowup of skf ie counterparty risk? or are people trying to spread FUD?
Notice that skf has completely decoupled now from xlf? There is no exchanging with the underlying index, cuz shorting is banned. And there is no share creation either, so the supply is fixed.
If there is demand for skf, the price will necessarily rise without much respect for xlf. There is a possibility it will start trading like an option on the value of xlf when shorting is reinstated.
So, have we settled the "inflation" vs. "deflation" debate yet?
isn't this a tie, going into extra innings? in the home dug-out deflation of US assets, in the away dug out inflation of US consumables? with a bullpen of ponies that pitch filthy c-notes?
LOL. Since the Dow has actually DROPPED since 9:31 a.m., everyone is now touting -- OMFG! STOCKS UP 785 POINTS IN TWO DAYS. ECONOMY IS ROCKING AND ROLLING!! YES!!!
Never mind that if you had told some folks on Jan 1, 2008, (when Dow was over 13,200) that we would be UP to 11,300 on Sept. 19, 2008, they would have probably just skipped the fun and leapt from a window.
If Cali moves first, a la Bear, do we get a bailoot too? If anything is too big to fail, it's California.
Also, I move to stop with the un-economic/finance, totally random political stuff. Some come here to escape the mindless 'rah-rah' Red and Blue garbage.
Comradess Dark & Stormy Night said: "There's a run on roofing tarps at Home Depot as wanna-be-wealthy suburbanites wrap their SUVs in the blue tarps...."
Hmm... I wonder if I could hide my SUV under a tarp so the repo man won't find it. Seems to work for the IBs....
Funny about 9 months ago I said CA would be the first top top 7% and the rest would settle at just aove 7%...most laughed, or rather had unruley comments.
Thats Ballgame Comrades writes:
LOL. Since the Dow has actually DROPPED since 9:31 a.m., everyone is now touting -- OMFG! STOCKS UP 785 POINTS IN TWO DAYS. ECONOMY IS ROCKING AND ROLLING!! YES!!!
... Dow is looking rather overbought at this point. Next couple of hours are likely to be interesting.
Currently Minister of Cannabis writes:
Good to know California is sponsoring programs like "Lean Manufacturing," where they pay to train your management how to lay off more workers and not miss a beat.
California: Working at cross purposes for a better tomorrow.
Currently Minister of Cannabis | 09.19.08 - 1:43 pm | #
Don't knock 'Lean' - the goal isn't to lay off a few of your own though if enough waste is eliminated that is the result - the REAL GOAL is to force your competition to lay off ALL of their workers.
BTW - 'Lean' is something I understand & have seen at work - it is a net positive but like everything there are 'winners' and 'losers'...
"The market just came to the realization that values in credit assessments were far from the mark. Now, we're rapidly adjusting to that reality--and there's a lot more pain coming down the pipe."
Sean Egan, CEO, Egan-Jones Ratings
"Low rates won't do anything to handle the real issue for these companies, which is solvency."
William Poole, former president, St. Louis Federal Reserve
With all this talk about CA running deficits, it's worth noting:
If you're a Keynesian, you can support deficits in bad times and surpluses in good. The government provides countercyclical inputs, smoothing the economy (A "negative feedback loop" ). Of course, cutting spending/raising taxes in good times requires discipline politicians typically haven't had.
If you're not keen on Keynes, government can always just spend enough every year that the debt/GDP ratio remains constant. Deficit spending every year (that the GDP grows), and no deterioration of of the state's financial position.
There's other possibilities, but they're all likely to be less optimal ("worse") than the foregoing.
crispy& cole writes:
nades writes:
C&C wasn't it c&c before?
LOL. Changed back. I have been messing mith my name and URL too many times
crispy& cole
Back to lower-case, eh? I guess the deflationistas were right. Here I thought the caps were a sure sign of inflation.
By the way, Sebastian is right that damage in Galveston will require rebuilding, which creates jobs. However, damage in Galveston also contracted economic activity, which removes jobs. The net result requires empirical analysis for which insufficient data is available, in my opinion. Projecting from Katrina is not avisable; credit was more readily available then, as was government assistance.
Barley writes: I have not heard anybody remind the group that today is Friday...who is taking major pizza orders, and where?
Just had a pizza for lunch at Uno, here in a DC suburb. This should have been the lunch rush. The place has over 100 tables. Only three tables of two customers each were occupied. The McDonalds lot across the street was full.
Senate Banking Committee Chairman Chris Dodd (D-Conn.) said Friday that the legislative proposal to try and solve Wall Streets woes would not turn into a Christmas tree for the slew of leftover measures lawmakers are pushing before the session ends next week.
Is there anyone who thinks it at all possible that the short ban won't be extended the additional 45 days?
The only way it won't be is if the ban produces such artificial inflation in financial stock prices that CNBC et al realize that stock price and company value have been totally decoupled.
John McCain is still ruminating about "bailouts" to his constituants and still wanting Cox fired. He made no mention of the new plan.
Meanwhile:
"Obama, who seeks to secure a stronghold on the economy as a campaign issue, met this morning with senior economic advisers including former Treasury Secretary Robert Rubin and former Fed Chairman Paul Volcker. (Warren)Buffett, chairman of Berkshire Hathaway Inc., and one-time Treasury chief Paul O'Neill participated by telephone." Yahoo! 404 - Page Not Found
Actually, your comment is not only dishonest its pathetic and disgusting.
Red Pill | 09.19.08 - 2:15 pm | #
The wealth destruction & suffering is very sad & regrettable - however one thing is certain - disasters drive employment at least for a while.
Not everyone wins and some are really hurt - but to get back to half of where the region was prior to the storm will require a big up tick in direct labor needs.
Won't be a comfort to the ranchers or the researchers - but for oil field workers & welders & related construction workers - there will be shortages in those work forces for at least two years due the damage that will need to be repaired.
Will the workers who rebuild Galveston really come from California? You speak as if the United States is some sort of inviolable entity. Call me a cynic but there is this big country called Mexico just next to Texas where workers make ever so slightly less than Californians. My guess is that much of the labor that rebuilds the Gulf Coast is coming from Mexico and the countries further south hardly from California.
Won't be a comfort to the ranchers or the researchers - but for oil field workers & welders & related construction workers - there will be shortages in those work forces for at least two years due the damage that will need to be repaired.
dryfly | 09.19.08 - 2:34 pm | #
Great. That means that new investment will suffer because these resources are diverted to restoring destroyed wealth.
Will the workers who rebuild Galveston really come from California? You speak as if the United States is some sort of inviolable entity. Call me a cynic but there is this big country called Mexico just next to Texas where workers make ever so slightly less than Californians. My guess is that much of the labor that rebuilds the Gulf Coast is coming from Mexico and the countries further south hardly from California.
kevin de bruxelles | 09.19.08 - 2:35 pm | #
They'll come from all over the world - a lot of the infrastructure down there requires sophisticated skills - especially on the rig, platforms, pipelines & refineries.
CR
The true down-turn in Ca labor force is much higher. The earliest lay-offs were primarily the illegals. It was only after that pool diminished did the official counting start. I have no idea of the number of illegals laid off but would 3% of work-force be too high?
Then actual labor down-turn is much higher.
Also an adjustment needs be made for the small number of Gov't employees laid off Getting a new labor pool of non-farm non-gov't legal+illegal workers laid off would I am sure give a more jaw-dropping number.
Finally I wonder about comparing current jobless data with Depression data. It would be my guess that the "non-farm" always included in the statistic goes back to the times when farm employment was a much larger portion of the labor force. Are the 25% depression figures non-farm?
Tidbits from AP coverage of Paulson's press conference:
-"The administration is asking Congress to give it sweeping new powers to execute the plan. Paulson said it "needs to be big enough to make a real difference and get to the heart of the problem." Paulson gave few details but said he would work through the weekend with leaders of Congress from both parties to flesh out the program, the biggest proposed government intervention in financial markets since the Great Depression. Members of the Senate Banking Committee said they had yet to receive details of the proposal, but were ready to move quickly when they do"...hello, Senators, you need to actually look at the legislation and debate it, not just sign whatever the executive hands you!
-"Paulson gave few details but said he would work through the weekend with leaders of Congress from both parties to flesh out the program"...so this isn't really a plan, it's a PR stunt...
="the government announced plans to temporarily insure money-market deposits"...stupid and unnecessary...
-"At a news conference in which he only took three questions, Paulson was asked"...only three questions; the press corp is derelicting its duty...
"he true down-turn in Ca labor force is much higher. The earliest lay-offs were primarily the illegals. It was only after that pool diminished did the official counting start. I have no idea of the number of illegals laid off but would 3% of work-force be too high?"
Another California anecdotal; the "casual labor pool" of illegals in front of the local hardware store was running 80-100 people daily a couple of years ago. Now it's down to five or ten. The illegals either went back to the fields -- or home.
The underlying weakness in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded. These illiquid assets are choking off the flow of credit that is so vitally important to our economy.
We are seeing the impact on homeowners and neighborhoods, with 5 million homeowners now delinquent or in foreclosure. What began as a sub-prime lending problem has spread to other, less-risky mortgages, and contributed to excess home inventories that have pushed down home prices for responsible homeowners.
The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy. This troubled asset relief program must be properly designed and sufficiently large to have maximum impact, while including features that protect the taxpayer to the maximum extent possible.
I am convinced that this bold approach will cost American families far less than the alternative a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion.
I look forward to working with Congress to pass necessary legislation to remove these troubled assets from our financial system.
Nobody in the Senate can keep the pork off this bill, unless the Senators as a group agree to keep the bill trimmed down. Speaker of the House Pelosi is the only one who might have the clout to keep 'ol Tannenbaum from being bent to the ground under the weight of tinsel, and she'd really have to crack her party discipline and parliamentary procedure whips to pull it off.
However, this is definitely one to contact your Congressman/Senator on.
Great. That means that new investment will suffer because these resources are diverted to restoring destroyed wealth.
long skf | Homepage | 09.19.08 - 2:36 pm | #
Absolutely - that is the real 'cost'... not just the actual rebuild cost but opportunity cost from what didn't get built. If we had a huge surplus in that sector (oil patch) it wouldn't be such a problem. We don't have those surpluses. That's why 'drill, drill, drill' has died as an issue - at least for a couple years until the backlog on broken is repaired. First it will be 'fix, fix, fix'.
The good news is it sounds like most of the platforms/rig/pipelines came through somewhat okay (was reading reports today) - the work force in the region is reeling though. Can't get work done if the workers have no where to live.
dryfly: I'm watching a Lean transformation right now. I agree with you, but if the market is shrinking I wouldn't expect to be able to grow sales enough to sop up all the new efficiency. So we become leaner, businesses doesn't grow, and people get whacked. Not that this is a bad thing, mind you...it just seems odd to have the State of California paying for it.
Economic activity to repair economic destruction is not a net economic benefit. Rebuilding in Texas will be financed by insurance and government payouts, which will be financed by higher premiums, taxes and interest rates - every dollar spent in Texas is a dollar reallocated from someone else's pocket. Also, 1.0mio+ jobs lost in the residential housing bust are not offset by 100k jobs mopping up and rebuilding.
Looks like my 1.0 trillion federal budget deficit forecast for next year is going to come in very light, unless the feds hire AIG's accounting department to keep the books.
WASHINGTON (AP) At least 49 offshore oil platforms, all with production of less than 1,000 barrels a day, were destroyed by Hurricane Ike as it raced across the Gulf of Mexico, and some may not be rebuilt, the Interior Department said Thursday.
It said in the latest hurricane damage assessment that the platforms altogether accounted for 13,000 barrels of oil and 84 million cubic feet of natural gas a day. There are more than 3,800 production platforms in the Gulf producing 1.3 million barrels of oil and 7 billion cubic feet of gas each day.
Most remain shut down.
The report by Interior's Minerals Management Service said the agency was conducting helicopter flyovers of the Gulf waters to investigate unconfirmed reports of oil spills and oil sheens, but that it was too early to issue any definitive findings.
"There are no reports of oil impacting the shoreline or affecting birds and wildlife from releases in the Gulf of Mexico federal waters," said the agency.
The agency also said five gas transmission pipeline systems sustained damage, although the extent of damage is not yet known. It earlier had reported four oil drilling rigs had been destroyed and another damaged.
Meanwhile, the Energy Department reported that as of midafternoon Thursday, 12 of 31 refineries in Texas and Louisiana, with a total production capacity of 3 million barrels a day, remained shut down as a result of the hurricane that swept through the region on Sept. 13. A number of the others are operating at reduced runs.
"Funny, I can think of a dozen people off the top of my head who were just thinking the same thing."
Thanks RD, I needed that.
Sebby,
It's not off my radar. I'm still flipping light switches on even though I've been back since Monday and without power. There has been so much destruction of wealth down here that the rebuilding effort will be a blip, relatively speaking. Working assets have been destroyed as have the associated jobs. Yes, insurance and goverment money will pour in to help rebuild, but the net impact to our economy will be negative.
Gotta run. Hope to check in again within a couple of days. Wonder if our economy will be nationalized by then.
If they lift the ban on short selling financials, will we see a drop? If they DON'T lift the ban, for obvious reasons, will that inspire confidence?
Either way, I don't think the market can continue to rally with that elephant in the room.
I suspect when the dust settles a tad on Monday, the shorts will regroup and choose another weak sector to raid, like consumer discretionary or some weak technology names. I wonder which sector the SEC will put off limits next for shorting.
it just seems odd to have the State of California paying for it. - CSC
Cali is paying for it so the mass of lay offs occur at other firms in say Mississippi & Ohio. Seriously.
I saw the same thing here in Minnesota a number of years ago [we've been doing it since 'Lean' was a baby] - we've had a lot less unemployment than other states we compete with. Not immune [our costs are as high here as Cali] but it helps.
Sounds like that is one of the GOOD things Cali is doing.
I suspect when the dust settles a tad on Monday, the shorts will regroup and choose another weak sector to raid, like consumer discretionary or some weak technology names. I wonder which sector the SEC will put off limits next for shorting.
That may be part of the plan. If another sector sees a lot of shorting next week, the SEC can use a fresh ban on short sales in that sector as a justification for extending the existing ban without raising a lot of eyebrows. Wash, rinse, repeat until November.
too bad they spooked the entire population with the intervention moves this week. People won't understand, but with the depth of the action they will understand it is really bad
This market doesn't last till Oct. 2. It has no floor
dryfly: That makes sense. Thanks. I would rather see Cali become more friendly to small business, but it does make sense in light of the exodus California has seen with the big boys.
The BLS statistics suggests that 2.5 mil of 15.1mil CA workers were governmental assuming minor layoffs (More than 10,000 part-time and seasonal workers lose their jobs and 200,000 could have their compensation slashed pending budget approval. Controller John Chiang vows not to implement the order....Aug1)suggests that the non-farm non-govt workers has just about a 9% unemployment figure
Hundreds of people whose beachfront homes were wrecked by Hurricane Ike may be barred from rebuilding under a little-noticed Texas law. And even those whose houses were spared could end up seeing them condemned by the state.
"This market doesn't last till Oct. 2. It has no floor"
Comrade, if party says floor must be established, it means the floor will be established, no matter the sacrifices.
p.s. I would rather call it; the market has no confidence....
My boss just helped one of the customers to wire 2 mln from WaMu; she was with them for ages (they knew her mother, etc...), the employees @ WaMu knew her by name and were crying. So did she.
Seems like I read on oildrum recently that skilled workers needed to build in the oil fields are in short supply, causing projects to be put on hold. The workload from Ike won't help.
If there are contractors looking for work, they can go to Hati, lots of hurricane damage there as well. Of course, there is not much if any money to pay for labor and materials...
If there were good reason to view this plan as a one-off it might receive more support. As it is it hardly seems like a Pareto efficient solution. More like "If you let me die you will slip in my blood and hurt yourself."
I work as an it contractor at large fortune 100 energy co in california. I was told next friday will be by last day. Most projects are being put on hold, and expenses being cut back.
Vega writes:
What is California's remedy to budget shortfalls?
Raise taxes...
I am glad I fled to NV, no state income tax here
Vega, it takes 2/3 vote to set budget / raise taxes. CA has been at an impasse since the Gov is insisting on a balanced budget and the Rs have been insisting on no raised taxes. This is the longest we've gone w/o a budget.
Maybe a deal soon, but the Gov has already vetoed prior deals: Page not found
Maybe they'll smarten up and send the 6 MILLION illegals in that state home finally. What will it take for people to wake up in that state? 10%, 20% unemployment? God damn idiots.
A "positive" feedback loop... ugh
Where is nemo? Californians are doomed.
Que up for the breadlines..
Would it bother you if I rounded off the unemployment to 5%?
Does CA have a large farm payroll?
Now that our government has no money, don't expect any unemployment checks or social security checks either for that matter..."No BREAD for you!!"
OT: "Fannie Mae has also been named in several class actions already, and it wont be the last; a few hours after the Merrill suit was filed, a shareholder lawsuit was brought against Northern Trust for materially misrepresent[ing] the liquidity of and risks associated with auction rate securities."
Compliance Week: The Big Picture
Ha! When the unemployed of California look for "their" bailouts when their unemployment expires - they'll be told about the evils of government help, and told to fend for themselves.
Where is nemo? Californians are doomed.
I think Nemo is trying not to be one of the unemployed. He said he had employment other than being "First".
Here we go. So what does even a 0.3% increase in unemployment do to the state budget deficit? Bad things, I'll wager.
I'm standing by my mailbox waiting for my support check from the government.
The unemployment rate in the Fresno County was 9.7 percent in August 2008, down from a
revised 10.1 percent in July 2008, but above the year-ago estimate of 7.4 percent. This
compares with an unadjusted unemployment rate of 7.6 percent for California and 6.1 percent
for the nation during the same period.
when I first started reading this (terrific) blog, I could not understand for the life of me what had happened to home prices in Fresno, as Fresno always had significantly higher unemployment than the rest of the state. Who could afford those home prices in Fresno. Now we know it was all Countrywide.
Fear not 'ol downtrodden ninja loans for the unemployed are right around the corner. We got our fraud back.
CR, you must promise to post on the day you reassess your belief that unemployment won't go above 8%.
A mere blip. Nothing can stop this rally. (Well, except common sense reasserting itself, and I ain't holding my breath for that).
There is a bill pending in the CA legislature banning foreclosures for 2 years....it will probably pass....
Well that ends the mortgage market in CA!
Watchtovia,
Comrade Badger.
Moreover, the unemployment rates in "strong" states like North Carolina, New York, Texas are all hitting multiyear highs (never mind Nevada, Florida, etc..).
Good to know California is sponsoring programs like "Lean Manufacturing," where they pay to train your management how to lay off more workers and not miss a beat.
California: Working at cross purposes for a better tomorrow.
Rob Dawg:
(continuing from an earlier thread)
an irrational belief that new lending should cover bad lending of the past.
In an abstract sense, considering only the borrower, you're right. Joe's Mildly Undercapitalized Paint Stores is roughly as creditworthy as he was last month. But, a loan requires a borrower and a lender. The lenders have capital requirements, and regardless of the reason they lost the capital, they really can't make the loan until the capital is restored. They can't raise it in the equity markets right now, so they will have to push up loan rates. It's not fair that the borrowers of tomorrow must make up for the losses of yesterday, but the losses are real and somebody has to make them up. The existing equity holders can't make up anymore than they already have, or they have to stop making loans. Do you have an alternate to swallow the losses? Paulson and company want it to be the taxpayer but I'm pretty sure that's not your speed.
And its only just beginning
A lot of commercial construction workers will be let go over the next year.
........
Mike, will do. My view hasn't changed yet ... but obviously there are some downside risks.
JohnF, Banning foreclosures? Why don't they ban layoffs? That would fix the unemployment problem. (sorry for the sarcasm!)
Best to all.
Why did they run huge deficits in boom years? And why didn't anyone tell them they shouldn't?
Comrades,
Imperial county all ready at 25% U-3 unemployment. Great Depression PEAKED at 25% U-6 (much broader).
Grapes of Wrath in reverse!
Deficient writes:
Why did they run huge deficits in boom years? And why didn't anyone tell them they shouldn't?
Deficient,
It is written the CA constitution that they must run deficits.
There is no such thing as a surplus in CA.
CA has always been a trail-blazer...
whatever, give up on society.
"and probably more layoffs. A vicious cycle ..."
And lower tax receipts. Is CA on the list that I can't short ?
Distortions, Imbalances, unintended consequences are a result of imposed rules.
A minor lexographical nit.
The California unemployment rate hasn't "hit" 7.7%. Rather the California unemployment rate has blown through all previous measures and was last clocked at 7.7% and accelerating.
CR, I don't mean to be annoying about this but are you reconsidering all your well reasoned and well supported ideas as to the speed of at which events are transpiring? It seems from housing to employment events are unfolding far faster than you've suggested.
Grapes of Wrath in reverse!
Not until AZ, NV, and OR start posting signs "No work for Calies!"
Not only in Cali, Blackhat.
I think the usual stance is that there are no 'boom times' only 'recoveries from previous downturn.'
what Rob Dawg said...respectfully.
bearly,
You could be a country party on some of the local muni-bonds.
There will be more failure.
......
So, have we settled the "inflation" vs. "deflation" debate yet?
Also, CR sounds mad, and he is normally as unflappable as Obama. This is almost as unsettling to me as the substance of what I've been reading about...
burnside,
I know. sigh.
ades writes: "...A lot of commercial construction workers will be let go over the next year."
And re-hired in Galveston.
Imagine that, Hurricane Ike was just last weekend, and it's already off everybody's radar.
))
S.
CA to get a bailout per Paulson and Bush...unemployemnt to got to ZERO...we are saved
I mean defaults...
......
And re-hired in Galveston.
Imagine that, Hurricane Ike was just last weekend, and it's already off everybody's radar.
)) - Sebastian
The "broken window" economic stimulus hasn't been used in decades. Thanks for the the reminder that some people never learn.
There is a bill pending in the CA legislature banning foreclosures for 2 years....it will probably pass....
I googled "California banning foreclosures" - forgetting that Banning is a ground zero for the RE crash. Grrrr.
OK, here's a link The ban if for foreclosures where fraud is involved. However, they're considering calling ALL Countrywide originations fraud so it could have a very substantial effect. Especially on BofA. Short BofA!
Oh right.
Seb,
Its a possibility. I wonder how many people migrated for Katrina.
(Well how many honest workers migrated)
I'll see if I can google it.
I'm thinking its mostly locals just building more.
....
Sebastian writes:
nades writes: "...A lot of commercial construction workers will be let go over the next year."
And re-hired in Galveston.
Sure just like NOLA
Couldn't California just follow the pattern suggested by Paulson et al this morning? Sure they're already running a deficit, but if they just spend a fifty billion dollars to pay local firms to hire people, the unemployment numbers will temporarily see an artificial drop, thus solving the problem forever.
Sebastian - you should be the President with those great ideas...
Not only is Paulson going to relieve the banks of their toxic waste, but he is going to give them US government gold for it.
US Government to secure mortgage market | News | Money Marketing
C&C wasn't it c&c before?
......
Damn, 24.7% unemployment in Imperial County.
The Fed needs to put a freeze on any selling of any kind in the CA economy. That'll learn em.
There doesn't seem to be much wage deflation, drop in employment, or reduction in home prices in Silicon Valley. Any pointers to the contrary would be appreciated.
Dow is now down 40 since 9:31 a.m.
But never mind. It's a huge, banner day. Stocks are soaring globally! How high will they go??!!?! Joy, joy.
2 years of free rent? I'm jealous.
In my state we have no income tax (WA), only sales tax. Our legislature will go into session in Jan with a 2B shortfall and only a 0.50B rainy day fund. J6P, who makes higher than the average national wage here, isn't spending as much as he used to. New figures place WA state unemployment at 6 percent. And we have been hit very little by the downturn, compared to other states.
How about a
Calculated
Risk
Asset
Program
????
Anecdotal: contractor type at the gym this morning saying he has work, but most of his friends don't.
That said, a housepainter we know is keeping busy -- repainting Fannie Mae REOs in Watsonville.
ades writes:
C&C wasn't it c&c before?
LOL. Changed back. I have been messing mith my name and URL too many times
You can make pretty good money stripping out abandoned copper. It's the new day trading.
Can't the Fed just ban unemployment?
If they manage to pass that bill putting a 2 year stay on CA foreclosures, just imagine how excited lenders will be to make loans in CA.
Oh well, I'm sure the government will have a solution for that too. It is so wonderful to know that our government has the solution for EVERYTHING! No need to think critically, bad decisions will always be rectified at taxpayer expense.
Big deal. California is headed for double digit unemployment rates just like all of the other socialist countries.
I know we are not supposed to expect anything more from CNBC, but I can't help but laugh at their chyron "Hope on the Horizon."
Crispy& Cole said: "Sebastian - you should be the President with those great ideas..."
It's not an "idea" or a "solution", it's just reality. Construction in California slowed down, but a hurricane in Texas caused severe damage in both housing and infrastructure that has to be repaired. Nobody caused the damage in Texas for the specific purpose of sopping-up unemployed workers in California, but the repair work still needs doing. This is simply what happens with the economy of a large country, resources shift around to where they're needed.
I swear to God, I'll never understand how people can have such a narrow, un-nuanced view of the economy when news and information are so readily available to anyone who wants it.
Sebastia
Now that everything is rosy again, I expect the rate in CA to be down to 3% next month. Hank gives you his word on it.
Could someone kindly point me to the link of the paper that Bernanke wrote about all the things that could be done to forestall debt deflation?
Thanks
I swear to God, I'll never understand how people can have such a narrow, un-nuanced view of the economy when news and information are so readily available to anyone who wants it.
Kind of like you telling people to go long and they lose 25%? Or saying NEW was buy before they went bk? Yeah, I can't understand either!
God, before you know, they will try to get a mortgage on the White House and use the money to bailout the banks....
deb writes:
If they manage to pass that bill putting a 2 year stay on CA foreclosures, just imagine how excited lenders will be to make loans in CA.
... any new loans being made in CA are going to be money good, the underwriting standards are so tight.
What this does is legislate a 2-year period during which the banks do not have to load more REO onto their books from their existing mortgage exposure.
"I swear to God, I'll never understand how people can have such a narrow, un-nuanced view of the economy. . ."
Check this out, Seb:
Parable of the broken window - Wikipedia, the free encyclopedia
Then come on back and share some more of your nuanced views.
P.S. Shouldn't you be slinking away from this blog in shame?
davlee1972 on yahoo/skf writes 1. Shares of SKF will be in demand after today since shorting is not allowed. They should be trading at a premium because the smart money knows the market is artificially inflated and will want to be on the sell side.
I bought some SKF directly at market open for about $89, now doing pretty well. I have a sizeable position, though, and my concern isn't so much that I wake up Monday morning and it's at $80 (so I lose 15%, big whoop), but that the whole fund blows up over the weekend because its counterparties are destroyed.
Do you have any ideas as to the likelihood of this risk occurring?
I swear to God, I'll never understand how people can have such a narrow, un-nuanced view of the economy when news and information are so readily available to anyone who wants it.
Sebastian
Funny, I can think of a dozen people off the top of my head who were just thinking the same thing.
"Kind of like you telling people to go long and they lose 25%? Or saying NEW was buy before they went bk? Yeah, I can't understand either!
crispy& cole | Homepage | 09.19.08 - 2:04 pm | # "
Trolls are pretty easy to understand.
You don't have to work my children. Free houses for everyone and HELOCs for life.
(Almost as good a deal as we gave Wall Street)
c&c: I have been messing mith my name and URL too many times
I was wondering if someone was stealing your handle.
I remember whene "Tanta" wrote something that was had a huge libertarian slant to it.
I called her out on it and of course it wasn't her.
.......
There's a run on roofing tarps at Home Depot as wanna-be-wealthy suburbanites wrap their SUVs in the blue tarps as a show of their support for Paulson's plan to "protect their investments". (snark).
I'm just waiting for the CA unemployment to rise more and then have someone say it is "contained to CA"
I'll bet anyone 10$ that it happens in the next 4 months.
........
crispy& cole said: "Kind of like you telling people to go long and they lose 25%? Or saying NEW was buy before they went bk? Yeah, I can't understand either!"
No, it's worse than that. Anybody can make a bad call on a stock or the market, but not even understanding or wanting to understand that different regions of the country and different sectors of the economy have a natural ebb and flow, that just because things are bad in one area doesn't mean they're bad everywhere, that's just obtuse, being deliberately blind.
You know, like what virtually every poster today is accusing government policy-makers of.
Sebastia
anonymouse ---any ideas on the potential blowup of skf ie counterparty risk? or are people trying to spread FUD?
Ha!
You cant make everyone happy! (Or as I usually say politicians shouldn't shouldn't meddle with dynamic systems)
The American Bankers Association objected to the U.S. Treasury's plan to insure money-market mutual funds, saying it may compromise the ability of banks to attract and keep deposits.
Money-market mutual funds will be able to pay higher interest rates to customers than banks, without any apparent limit on the size of an individual's investment, said Edward Yingling, chief executive officer of the Washington-based trade group.
.................
Bankers Object to U.S. Money-Market Fund Insurance (Update1) - Bloomberg.com
I'm just waiting for the CA unemployment to rise more and then have someone say it is "contained to CA"
I believe that statement will be to unemployment as the phrase "My neighborhood is immune" is to foreclosure.
According to Wiki ( A source you can always trust)
California is responsible for 13% of the United States' gross domestic product (GDP).
also
The economy of California is a dominant force in the economy of the United States, with California paying more to the federal system than it receives in direct monetary benefits.
"Does this change the GDP number for the US eventually?" he asked. "Why Yes!" he replied, once again to himself.
Pray for THE BIG ONE! No California=No Problem.
Pimco's Gross wants 65cents on the Dollar??????
Nuts.
"The American Bankers Association objected to the U.S. Treasury's plan to insure money-market mutual funds, saying it may compromise the ability of banks to attract and keep deposits."
... hmmn, Paulson triggering a run on the banks? Not good ... dang, this was supposed to be easy ...
And re-hired in Galveston.
Imagine that, Hurricane Ike was just last weekend, and it's already off everybody's radar.
))
S.
Sebastian | 09.19.08 - 1:49 pm | #
The "broken window" argument is a well understood economic fallacy. You statements are dishonest.
Additionally, many things won't be rebuilt, like much of Boliver peninsula. Much of it was already uninsured. A lot of wealth just evaporated. Infrastructure is badly damaged and many people aren't working at their jobs.
There are many ranchers near the Bolivar peninsula (I know them) and a lot of land was inundated with salt water and many cattle died. The land will have to lie unused for a year or two.
Basic research has been halted at the large medical center until cleanup occurs. Most of Houston waits for power to get started on the cleanup and then eventually back to normal work.
many people lost a lot of personal wealth and many small businesses will not survive.
Actually, your comment is not only dishonest its pathetic and disgusting.
Fuck Yeah!
davlee1972 on yahoo/skf writes:
anonymouse ---any ideas on the potential blowup of skf ie counterparty risk? or are people trying to spread FUD?
I have faith in Hank & Be
anonymouse ---any ideas on the potential blowup of skf ie counterparty risk? or are people trying to spread FUD?
Notice that skf has completely decoupled now from xlf? There is no exchanging with the underlying index, cuz shorting is banned. And there is no share creation either, so the supply is fixed.
If there is demand for skf, the price will necessarily rise without much respect for xlf. There is a possibility it will start trading like an option on the value of xlf when shorting is reinstated.
"1st Dude Todd Palin"
ROFL
Tanya Stafel writes:
So, have we settled the "inflation" vs. "deflation" debate yet?
isn't this a tie, going into extra innings? in the home dug-out deflation of US assets, in the away dug out inflation of US consumables? with a bullpen of ponies that pitch filthy c-notes?
LOL. Since the Dow has actually DROPPED since 9:31 a.m., everyone is now touting -- OMFG! STOCKS UP 785 POINTS IN TWO DAYS. ECONOMY IS ROCKING AND ROLLING!! YES!!!
Never mind that if you had told some folks on Jan 1, 2008, (when Dow was over 13,200) that we would be UP to 11,300 on Sept. 19, 2008, they would have probably just skipped the fun and leapt from a window.
If Cali moves first, a la Bear, do we get a bailoot too? If anything is too big to fail, it's California.
Also, I move to stop with the un-economic/finance, totally random political stuff. Some come here to escape the mindless 'rah-rah' Red and Blue garbage.
Comradess Dark & Stormy Night said: "There's a run on roofing tarps at Home Depot as wanna-be-wealthy suburbanites wrap their SUVs in the blue tarps...."
Hmm... I wonder if I could hide my SUV under a tarp so the repo man won't find it. Seems to work for the IBs....
What percent of US GDP comes from California?
Probably around 20%.
Funny about 9 months ago I said CA would be the first top top 7% and the rest would settle at just aove 7%...most laughed, or rather had unruley comments.
I'll take a little bow now, thx
Since I was born in Cali, they'll probably make me help with the bailout.
I have not heard anybody remind the group that today is Friday...who is taking major pizza orders, and where?
How do prospective buyers of WM determine value after the TARP announcement? Does it hold the sale up?
Thats Ballgame Comrades writes:
LOL. Since the Dow has actually DROPPED since 9:31 a.m., everyone is now touting -- OMFG! STOCKS UP 785 POINTS IN TWO DAYS. ECONOMY IS ROCKING AND ROLLING!! YES!!!
... Dow is looking rather overbought at this point. Next couple of hours are likely to be interesting.
Excuse the trading perspective.
Sebastian
Hope you enjoy your little banana republic and the serfdom that is going to come with it.
Currently Minister of Cannabis writes:
Good to know California is sponsoring programs like "Lean Manufacturing," where they pay to train your management how to lay off more workers and not miss a beat.
California: Working at cross purposes for a better tomorrow.
Currently Minister of Cannabis | 09.19.08 - 1:43 pm | #
Don't knock 'Lean' - the goal isn't to lay off a few of your own though if enough waste is eliminated that is the result - the REAL GOAL is to force your competition to lay off ALL of their workers.
BTW - 'Lean' is something I understand & have seen at work - it is a net positive but like everything there are 'winners' and 'losers'...
but.. The government said the recession is over!
FDIC FRIDAY! 6 or 7 more hours until we know who is the lucky whore...
Yes, but when the dow only finishes up 120 for the day, that won't stop the Mainstream Media from throwing around the word "SOAR" everywhere.
It's Friday afternoon. Do you know where your bank is?
Who wants to bet on tonight's bank failures, or did Sheila create a moratorium on bank failures until election day?
"The market just came to the realization that values in credit assessments were far from the mark. Now, we're rapidly adjusting to that reality--and there's a lot more pain coming down the pipe."
Sean Egan, CEO, Egan-Jones Ratings
"Low rates won't do anything to handle the real issue for these companies, which is solvency."
William Poole, former president, St. Louis Federal Reserve
You can check out any time you like...
Sebastian writes:
nades writes: "...A lot of commercial construction workers will be let go over the next year."
And re-hired in Galveston.
Imagine that, Hurricane Ike was just last weekend, and it's already off everybody's radar.
))
S.
Sebastian | 09.19.08 - 1:49 pm | #
If you can weld to 'pipe line specs' - get your ass down to oil patch - they'll pay just about whatever you ask.
With all this talk about CA running deficits, it's worth noting:
If you're a Keynesian, you can support deficits in bad times and surpluses in good. The government provides countercyclical inputs, smoothing the economy (A "negative feedback loop"
). Of course, cutting spending/raising taxes in good times requires discipline politicians typically haven't had.
If you're not keen on Keynes, government can always just spend enough every year that the debt/GDP ratio remains constant. Deficit spending every year (that the GDP grows), and no deterioration of of the state's financial position.
There's other possibilities, but they're all likely to be less optimal ("worse") than the foregoing.
crispy& cole writes:
nades writes:
C&C wasn't it c&c before?
LOL. Changed back. I have been messing mith my name and URL too many times
crispy& cole
Back to lower-case, eh? I guess the deflationistas were right. Here I thought the caps were a sure sign of inflation.
By the way, Sebastian is right that damage in Galveston will require rebuilding, which creates jobs. However, damage in Galveston also contracted economic activity, which removes jobs. The net result requires empirical analysis for which insufficient data is available, in my opinion. Projecting from Katrina is not avisable; credit was more readily available then, as was government assistance.
"moratorium on bank failures until election day?
"
nope, only untill the first snow; that's the best time of year in the "Magadan"
Is there anyone who thinks it at all possible that the short ban won't be extended the additional 45 days?
The net result requires empirical analysis for which insufficient data is available, in my opinion.
Economics is EASY once you understand that wealth is STUFF, ie. material goods that satisify human wants and needs.
The more stuff your economy produces, the wealthier you become.
Wars and natural disasters wipe out existing capital stock and wealth, and take decades to recover from.
Down 80 from this morning's highs now.
UYG on the anti-short list, comrades ?
Barley writes: I have not heard anybody remind the group that today is Friday...who is taking major pizza orders, and where?
Just had a pizza for lunch at Uno, here in a DC suburb. This should have been the lunch rush. The place has over 100 tables. Only three tables of two customers each were occupied. The McDonalds lot across the street was full.
Glad it's contained.
Down 80 from this morning's highs now.
Jesus I moved into a quarter-position in SDS at the close yesterday like an idiot but I may make out green today.
Thats Ballgame Comrades writes:
Down 80 from this morning's highs now
Oh Crap, time to ban something else I guess. No SELLING of stocks?
Bill Gross needs a surprise war to juice up T-Bills.
Not even pretending anymore.
Is there anyone who thinks it at all possible that the short ban won't be extended the additional 45 days?
The only way it won't be is if the ban produces such artificial inflation in financial stock prices that CNBC et al realize that stock price and company value have been totally decoupled.
John McCain is still ruminating about "bailouts" to his constituants and still wanting Cox fired. He made no mention of the new plan.
Meanwhile:
"Obama, who seeks to secure a stronghold on the economy as a campaign issue, met this morning with senior economic advisers including former Treasury Secretary Robert Rubin and former Fed Chairman Paul Volcker. (Warren)Buffett, chairman of Berkshire Hathaway Inc., and one-time Treasury chief Paul O'Neill participated by telephone."
Yahoo! 404 - Page Not Found
Looks like they banned volume - it's all hanging out at the lows waiting for price to join the party!
Dodd can say that, but it won't hold much weight.
Short covering rally should start any minute now.
oh wait.
I got the answer,
California is responsible for 13% of the United States' gross domestic product (GDP). The state's GDP is at about $1.7 trillion (as of 2006).
The GDP increased at an annual rate of 3.1% in the first quarter of 2005
Actually, your comment is not only dishonest its pathetic and disgusting.
Red Pill | 09.19.08 - 2:15 pm | #
The wealth destruction & suffering is very sad & regrettable - however one thing is certain - disasters drive employment at least for a while.
Not everyone wins and some are really hurt - but to get back to half of where the region was prior to the storm will require a big up tick in direct labor needs.
Won't be a comfort to the ranchers or the researchers - but for oil field workers & welders & related construction workers - there will be shortages in those work forces for at least two years due the damage that will need to be repaired.
I have not heard anybody remind the group that today is Friday...who is taking major pizza orders, and where?
Barley
Well, FFDIC told us, last night, that it was Cali in locale;)
According the White House Dep. Chief of Staff - These moves will also help companies remove bad Credit Card Debit, as well...........
Party On!
Sebastian,
Will the workers who rebuild Galveston really come from California? You speak as if the United States is some sort of inviolable entity. Call me a cynic but there is this big country called Mexico just next to Texas where workers make ever so slightly less than Californians. My guess is that much of the labor that rebuilds the Gulf Coast is coming from Mexico and the countries further south hardly from California.
Dodd is going to ask they ban "sweetheart loans" from Countrywide to Friends of Angelo. No more of them. No sir.
No more Christmas Trees indeed....
Pot.
Kettle.
Black.
Won't be a comfort to the ranchers or the researchers - but for oil field workers & welders & related construction workers - there will be shortages in those work forces for at least two years due the damage that will need to be repaired.
dryfly | 09.19.08 - 2:34 pm | #
Great. That means that new investment will suffer because these resources are diverted to restoring destroyed wealth.
Will the workers who rebuild Galveston really come from California? You speak as if the United States is some sort of inviolable entity. Call me a cynic but there is this big country called Mexico just next to Texas where workers make ever so slightly less than Californians. My guess is that much of the labor that rebuilds the Gulf Coast is coming from Mexico and the countries further south hardly from California.
kevin de bruxelles | 09.19.08 - 2:35 pm | #
They'll come from all over the world - a lot of the infrastructure down there requires sophisticated skills - especially on the rig, platforms, pipelines & refineries.
Won't help California much at all.
CR
The true down-turn in Ca labor force is much higher. The earliest lay-offs were primarily the illegals. It was only after that pool diminished did the official counting start. I have no idea of the number of illegals laid off but would 3% of work-force be too high?
Then actual labor down-turn is much higher.
Also an adjustment needs be made for the small number of Gov't employees laid off Getting a new labor pool of non-farm non-gov't legal+illegal workers laid off would I am sure give a more jaw-dropping number.
Finally I wonder about comparing current jobless data with Depression data. It would be my guess that the "non-farm" always included in the statistic goes back to the times when farm employment was a much larger portion of the labor force. Are the 25% depression figures non-farm?
The Greatest Gold Heist in Human History.
plschwartz writes:
CR
This is correct and thanks for adding your thoughts.
jo6pac
The race to the bottom continues
Tidbits from AP coverage of Paulson's press conference:
-"The administration is asking Congress to give it sweeping new powers to execute the plan. Paulson said it "needs to be big enough to make a real difference and get to the heart of the problem." Paulson gave few details but said he would work through the weekend with leaders of Congress from both parties to flesh out the program, the biggest proposed government intervention in financial markets since the Great Depression. Members of the Senate Banking Committee said they had yet to receive details of the proposal, but were ready to move quickly when they do"...hello, Senators, you need to actually look at the legislation and debate it, not just sign whatever the executive hands you!
-"Paulson gave few details but said he would work through the weekend with leaders of Congress from both parties to flesh out the program"...so this isn't really a plan, it's a PR stunt...
="the government announced plans to temporarily insure money-market deposits"...stupid and unnecessary...
-"At a news conference in which he only took three questions, Paulson was asked"...only three questions; the press corp is derelicting its duty...
"he true down-turn in Ca labor force is much higher. The earliest lay-offs were primarily the illegals. It was only after that pool diminished did the official counting start. I have no idea of the number of illegals laid off but would 3% of work-force be too high?"
Another California anecdotal; the "casual labor pool" of illegals in front of the local hardware store was running 80-100 people daily a couple of years ago. Now it's down to five or ten. The illegals either went back to the fields -- or home.
OT - Statement by Secretary Henry M. Paulson, Jr. on Comprehensive Approach to Market Developments
hp-1149: Statement by Secretary Henry M. Paulson, Jr. on Comprehensive Approach to Market Developments
The underlying weakness in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded. These illiquid assets are choking off the flow of credit that is so vitally important to our economy.
We are seeing the impact on homeowners and neighborhoods, with 5 million homeowners now delinquent or in foreclosure. What began as a sub-prime lending problem has spread to other, less-risky mortgages, and contributed to excess home inventories that have pushed down home prices for responsible homeowners.
The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy. This troubled asset relief program must be properly designed and sufficiently large to have maximum impact, while including features that protect the taxpayer to the maximum extent possible.
I am convinced that this bold approach will cost American families far less than the alternative a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion.
I look forward to working with Congress to pass necessary legislation to remove these troubled assets from our financial system.
Nobody in the Senate can keep the pork off this bill, unless the Senators as a group agree to keep the bill trimmed down. Speaker of the House Pelosi is the only one who might have the clout to keep 'ol Tannenbaum from being bent to the ground under the weight of tinsel, and she'd really have to crack her party discipline and parliamentary procedure whips to pull it off.
However, this is definitely one to contact your Congressman/Senator on.
Some GOOD Financial News if you are a senior.
Monthly Medicare premiums to hold steady next year; no increase for first time since 2000.
Expired
Great. That means that new investment will suffer because these resources are diverted to restoring destroyed wealth.
long skf | Homepage | 09.19.08 - 2:36 pm | #
Absolutely - that is the real 'cost'... not just the actual rebuild cost but opportunity cost from what didn't get built. If we had a huge surplus in that sector (oil patch) it wouldn't be such a problem. We don't have those surpluses. That's why 'drill, drill, drill' has died as an issue - at least for a couple years until the backlog on broken is repaired. First it will be 'fix, fix, fix'.
The good news is it sounds like most of the platforms/rig/pipelines came through somewhat okay (was reading reports today) - the work force in the region is reeling though. Can't get work done if the workers have no where to live.
dryfly: I'm watching a Lean transformation right now. I agree with you, but if the market is shrinking I wouldn't expect to be able to grow sales enough to sop up all the new efficiency. So we become leaner, businesses doesn't grow, and people get whacked. Not that this is a bad thing, mind you...it just seems odd to have the State of California paying for it.
Economic activity to repair economic destruction is not a net economic benefit. Rebuilding in Texas will be financed by insurance and government payouts, which will be financed by higher premiums, taxes and interest rates - every dollar spent in Texas is a dollar reallocated from someone else's pocket. Also, 1.0mio+ jobs lost in the residential housing bust are not offset by 100k jobs mopping up and rebuilding.
Looks like my 1.0 trillion federal budget deficit forecast for next year is going to come in very light, unless the feds hire AIG's accounting department to keep the books.
businesses = business. Blah for no edit function.
WASHINGTON (AP) At least 49 offshore oil platforms, all with production of less than 1,000 barrels a day, were destroyed by Hurricane Ike as it raced across the Gulf of Mexico, and some may not be rebuilt, the Interior Department said Thursday.
It said in the latest hurricane damage assessment that the platforms altogether accounted for 13,000 barrels of oil and 84 million cubic feet of natural gas a day. There are more than 3,800 production platforms in the Gulf producing 1.3 million barrels of oil and 7 billion cubic feet of gas each day.
Most remain shut down.
The report by Interior's Minerals Management Service said the agency was conducting helicopter flyovers of the Gulf waters to investigate unconfirmed reports of oil spills and oil sheens, but that it was too early to issue any definitive findings.
"There are no reports of oil impacting the shoreline or affecting birds and wildlife from releases in the Gulf of Mexico federal waters," said the agency.
The agency also said five gas transmission pipeline systems sustained damage, although the extent of damage is not yet known. It earlier had reported four oil drilling rigs had been destroyed and another damaged.
Meanwhile, the Energy Department reported that as of midafternoon Thursday, 12 of 31 refineries in Texas and Louisiana, with a total production capacity of 3 million barrels a day, remained shut down as a result of the hurricane that swept through the region on Sept. 13. A number of the others are operating at reduced runs.
"Funny, I can think of a dozen people off the top of my head who were just thinking the same thing."
Thanks RD, I needed that.
Sebby,
It's not off my radar. I'm still flipping light switches on even though I've been back since Monday and without power. There has been so much destruction of wealth down here that the rebuilding effort will be a blip, relatively speaking. Working assets have been destroyed as have the associated jobs. Yes, insurance and goverment money will pour in to help rebuild, but the net impact to our economy will be negative.
Gotta run. Hope to check in again within a couple of days. Wonder if our economy will be nationalized by then.
Best,
hiker90
If they lift the ban on short selling financials, will we see a drop? If they DON'T lift the ban, for obvious reasons, will that inspire confidence?
Either way, I don't think the market can continue to rally with that elephant in the room.
I suspect when the dust settles a tad on Monday, the shorts will regroup and choose another weak sector to raid, like consumer discretionary or some weak technology names. I wonder which sector the SEC will put off limits next for shorting.
Living from weekend to weekend, the US Treasury keeps markets alive with "unthinkable" market intervention/manipulation.
the shorts will regroup and choose another weak sector to raid
Ding, ding, ding.
it just seems odd to have the State of California paying for it. - CSC
Cali is paying for it so the mass of lay offs occur at other firms in say Mississippi & Ohio. Seriously.
I saw the same thing here in Minnesota a number of years ago [we've been doing it since 'Lean' was a baby] - we've had a lot less unemployment than other states we compete with. Not immune [our costs are as high here as Cali] but it helps.
Sounds like that is one of the GOOD things Cali is doing.
Treasury says plans to purchase $10 billion of mortgage-backed securities this month and may purchase more in future months
What is California's remedy to budget shortfalls?
Raise taxes...
I am glad I fled to NV, no state income tax here
I suspect when the dust settles a tad on Monday, the shorts will regroup and choose another weak sector to raid, like consumer discretionary or some weak technology names. I wonder which sector the SEC will put off limits next for shorting.
That may be part of the plan. If another sector sees a lot of shorting next week, the SEC can use a fresh ban on short sales in that sector as a justification for extending the existing ban without raising a lot of eyebrows. Wash, rinse, repeat until November.
"dryfly writes:
Actually, your comment is not only dishonest its pathetic and disgusting.
Red Pill"
dryfly is on the roll today, absolutely everything he said does make economic sense,
unless you work for a union.
Why unions, well because those correlate the pay not to the worker efficiency and knowledge but rather to the worker seniority.
too bad they spooked the entire population with the intervention moves this week. People won't understand, but with the depth of the action they will understand it is really bad
This market doesn't last till Oct. 2. It has no floor
Ask China -70% this year how that worked out
When do you think we will know what's in this deal?
oh and last time I checked, short interest on MS was like 4%
Abandon thread, a new one is afloat.
"When do you think we will know what's in this deal?"
Just as soon as it's too late to do anything about it.
dryfly: That makes sense. Thanks. I would rather see Cali become more friendly to small business, but it does make sense in light of the exodus California has seen with the big boys.
Comrade Canadaman writes:
oh and last time I checked, short interest on MS was like 4%
Oh those dastardly short sellers, only 4% and major panic was caused. The power they hold.
Longs in this markets are going to be in for a rude awakening.
Here is an excel file detailing unemployment rates for all states since Jan 08 thru Jun 08.
It is sharply rising in FL, NV, CA.
Got Gold?
Workforce Informer, Home
Thanks Bob
The BLS statistics suggests that 2.5 mil of 15.1mil CA workers were governmental assuming minor layoffs (More than 10,000 part-time and seasonal workers lose their jobs and 200,000 could have their compensation slashed pending budget approval. Controller John Chiang vows not to implement the order....Aug1)suggests that the non-farm non-govt workers has just about a 9% unemployment figure
For Sebastian:
http://www.msnbc.msn.com/id/26780578/
Hundreds of people whose beachfront homes were wrecked by Hurricane Ike may be barred from rebuilding under a little-noticed Texas law. And even those whose houses were spared could end up seeing them condemned by the state.
Just sayin'...
"This market doesn't last till Oct. 2. It has no floor"
Comrade, if party says floor must be established, it means the floor will be established, no matter the sacrifices.
p.s. I would rather call it; the market has no confidence....
My boss just helped one of the customers to wire 2 mln from WaMu; she was with them for ages (they knew her mother, etc...), the employees @ WaMu knew her by name and were crying. So did she.
p.s. NO I don't work for WaMu...
Seems like I read on oildrum recently that skilled workers needed to build in the oil fields are in short supply, causing projects to be put on hold. The workload from Ike won't help.
If there are contractors looking for work, they can go to Hati, lots of hurricane damage there as well. Of course, there is not much if any money to pay for labor and materials...
Fair (but not necessarily equitable) Economist -
If there were good reason to view this plan as a one-off it might receive more support. As it is it hardly seems like a Pareto efficient solution. More like "If you let me die you will slip in my blood and hurt yourself."
comrade awgee writes:
"Not only is Paulson going to relieve the banks of their toxic waste, but he is going to give them US government gold for it."
Um, no. There is no gold in there:
latest monthly statement
The real unemployment rate is in excess of 10% . There a lots of people that that not included in the statics .
I work as an it contractor at large fortune 100 energy co in california. I was told next friday will be by last day. Most projects are being put on hold, and expenses being cut back.
It shouldn't be a problem for workers to move from CA to TX. All they have to do is find someone to buy their house. Oh, wait...
Vega writes:
What is California's remedy to budget shortfalls?
Raise taxes...
I am glad I fled to NV, no state income tax here
Vega, it takes 2/3 vote to set budget / raise taxes. CA has been at an impasse since the Gov is insisting on a balanced budget and the Rs have been insisting on no raised taxes. This is the longest we've gone w/o a budget.
Maybe a deal soon, but the Gov has already vetoed prior deals:
Page not found
Instead of raising taxes, the Gov cut all gvmt workers to minimum wage.
Gov. lays off 10,000 workers - Los Angeles Times
BTW that's 10k of your unemployed right there.
It's a little more complicated out here than "omg CAians taxx0rs luls".
Comrade Kidbuck - are you near Manassas? That landscape sounds very familiar.
egative feedback loop
Hey CR,
Are restaurants still overcrowded in CA?
Does CA have a large farm payroll?
On the books? No. Off the books? Si.
Maybe they'll smarten up and send the 6 MILLION illegals in that state home finally. What will it take for people to wake up in that state? 10%, 20% unemployment? God damn idiots.