PeakVT, it depends on how quickly that happens (savings rate up signficantly). Roubini predicted 4% to 5% contraction peak to trough - that would be pretty stunning.
Somehow I can't grasp the idea that with the trillions of dollars of bailout money working their way through the system we are completely out of the woods on the inflation front...
"On the bright side, facilitating the continued transfer of trillions of taxpayer dollars to every over-leveraged, debt-burdened company and individual in America ought to keep me and my staff busy for quite some time to come ...
What does Yellen know anyway? What spoil sport. The market says no significant contraction. So UP UP UP!
I trust the market. It is rational individual actors acting rationally to the benefit of each own. A group of individuals acting rationally together means that the larger interests are being served best too. So when a corporation, as an individual, announces layoffs, it means it is a good thing and we will all benefit and therefore no contraction will occur.
So UP UP UP! Home Depot is a definite buy! Chrysler too! Bob Nardelli is a genius. He knows how to build value (why else would GM buy Chrysler?).
I get the mbs stuff and generally what's happening with them. But what about the CDO's? Do they show on financials? Will companies redeem them from counterparties?
I want to apologize to Bernanke, Paulson, and my fellow US Citizens:
I want to apologize for causing our economy to slide into a (blank)sion.
Although I pay off my credit cards every month, my family has switched exclusively to paying cash for everything.
I realize that this economy's well being is predicated on the use of credit. However, I am acting in my personal self interest and if that means throwing millions out of work due to my reducing the velocity of money, so be it.
Roubini predicted 4% to 5% contraction peak to trough - that would be pretty stunning.
"Stunning"? Honestly, CR, I'm stunned that you'd be stunned by that possibility.
If I recall, from its 1929 peak the GDP shrank by about 30% through '32. If the next four years wind up being only one-sixth to one-eighth as bad as the Great Depression in those terms I, for one, would be pleasantly surprised.
I think at this point a 4-5% retracement is almost inevitable.
Never mind those plunging prices homeowners have suffered since 2006 - Thornberg is predicting residential real-estate owners nationwide will collectively lose another $15 trillion over next year. Thats good for home shoppers sitting on the sidelines, says Johannes Moenius, business and economics professor at the University of Redlands.
Looks like the yen carry trade has been stick saved. But, how are the Japanese going to make money with the Americans out of commission? What, they are going to try to turn their Japanese people into Americans buy giving them more money to save? Good luck with that trick!
"Thank you Senator Schumer for stepping up to the plate. Secretary Paulson should have been asked to resign the second after you saw Section 8. The bailout was a load of bull. Ask the Minneapolis Fed."
This is a power struggle and he needs our support. It makes no difference what his personal motives are. He is challenging Paulson directly.
CR,
can I please also sell some ludicrous ads in my comments ?
and can you please how to do this (for my account of course)?
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Re: I've always wondered about Japan's high personal savings rate.
From a BoJ research paper:
To summarize, Japan's household savings rate has been increasing from 1990 because the motivation to save among individual segments has been rising due to different perceptions of risk: (1)the middle-aged and elderly low-income households feel anxiety regarding employment conditions, (2)the young households feel anxiety regarding pension systems, and (3)the elderly households feel anxiety regarding nursing care.
Are Americans, as whole, just genetically wired for instant gratification?
Are Americans, as whole, just genetically wired for instant gratification?
Basel Too
No. We are bifocal -- like the Japanese. People under about 30 are instantly wired for gratification.
Older people didn't save because they thought their real estate, stocks and 401(k)s would keep going up forever. They thought their jobs and pensions would last forever. Now, they are awakening to reality at the rate of millions per day. They will save more, spend less, and it will be a huge hit on the U.S. economy for years.
older people didn't save because they thought their real estate, stocks and 401(k)s would keep going up forever. They thought their jobs and pensions would last forever.
Rich,
I think it was more like they thought they were saving. Nice house, fully vested over 15 plus years, yeah, thay thought they did it right.
Thing is - they did. If the house was 20% or more down and they maxed contributions.
"For consumers, the credit crunch is one of several negative factors..."
There is a credit crunch, true, but I wonder what the benchmark is when I hear such a statement. I assume Yellen does not regard the bubble years as a desirable norm to return to?
Bernanke is going to speak tomorrow. Guaranteed market drop.
2:00 PM ET : \tFederal Reserve Chairman Ben Bernanke speaks via satellite to the Symposium on the Mortgage Meltdown, the Economy and Public Policy at the University of California at Berkeley.
If Q4 will be ugly, then they'll slam out a new "stimulus package" to make sure The Decider doesn't have a recession/depression on his watch. Then, once the next president gets in, all bets are off as we death-spiral towards socialism while grabbing every last vanishing dollar from the producers and giving it to the deadbeats; the recession will then be the "fault" of the next president, although he'll do a great deal to make it worse, I am sure.
As the hyperinflation took over, how did the people actually get the $10 billion bills? If their savings are in the pre-inflation times, it would, let's say, $1000, or so...
So did the government just literally hand out $10 Billion bills ?
Here's a sobering tidbit from Tyler Cowen at Marginal Revolution:
"Iceland: what does the endgame look like?
Thrainn Eggertsson writes to the FT:
The government of Iceland has now been offered foreign loans that roughly equal the country's gross domestic product. The annual interest payments, say 3-4 per cent, approximately correspond to the country's annual economic growth. Additionally the loans must be paid up.
I believe Thrainn is being generous with that growth estimate. Then he compares Iceland to Germany in 1919 and predicts similar consequences (I don't think he means that as a threat, however). Instead, I wonder what it is like for a country to be truly, permanently bankrupt. And a further difficulty lies on the horizon. Circa 2000, fish accounted for 70 percent of the country's export earnings. Here are many articles on dwindling cod stocks, the number one item sold by Icelandic fishermen.
I genuinely cannot imagine what the endgame looks like."
Me either...70% of your country's actual exportable product is fish. I think we are looking at a country that is totally bankrupt. They've got next to nothing to export, at a time when most countries are looking to reduce imports. Maybe Iceland can ask Canada if they can be annexed by Canada in exchange for assumption of the debt. Seriously...
From Jesse's Cafe Americain
"30 October 2008
Even in a "Market Meltdown" and a "Once-In-A-Lifetime Financial Panic...."
...the Other People's Money (OPM) managers can still find time to paint the tape into the end of month.
When this coat dries, they might try to slip on one more layer of paint before the weekend, but if we break to the downside we would look for a complete retrace of this rally to retest the lows.
Why? Because it is based solely on speculation, market manipulation and esperimentation by the Fed and Treasury. It is not based on anything organic to the economy, neither reform nor restructuring.
Wall Street corruption is one of the biggest impediments to an economic recovery. It has become an inefficient obstacle to capital allocation, price discovery, and real economic growth.
The US financial system represents a general systemic risk to the rest of the world because of the manipulation of the US dollar as reserve currency to serve the short term secular interests of a small but powerful financial elite."
They leave, go to Norway. Maybe diehards stay around. Or go hard core and make it one big Macau from the old days. Maybe sell the country and put the $ in a trust. They already sold their genotype.
Can someone explain Mish's and CR's deflation view in light of the fiat currency every soverign nation has adopted.
Prices may retreat from lack of demand but without a hard asset like gold backing a buck, yen or lire, how you gonna avoid inflation when the available currency begins expanding exponentially by printing more and more? Anyone able to help me through this paradox?
"I don't get this logic. Why would a Democratic-controlled Congress want to benefit the Decider to the detriment of the One?"
True, but as long as King Henry is running around, is Congress even a factor? They caved on the Bailout, so why not cave on this? Or, in the coming endgame, can the Fed just hand out money all over the place as part of the "special super powers" granted by the Bailout?
If I should buy a conundrum at Walmart (they would have the lowest price, yes?) and a fogging machine and mirror from Home Depot (they still have those how to people don't they) wouldn't I be contributing to a false demand for durable goods?
"Thoght the near term risks remain elevated, long term secular conunmdrums will drown out the need for increased lowering of the FFR as inflation moderates.... However, I could concieve a flaw in this analysis, if at such time Collaterized Bottle Bonds are clearly in a bubble..."
These mortgages are contractual agreements by willing parties, to borrow and repay specific sums of money under specific terms. Is the government now supposed to annul those contracts and/or rewrite the terms arbitrarily? Is the government now supposed to take tax money from responsible borrowers who did not buy too much house, or did not borrow excessively on their existing house and give that money to irresponsible borrowers to pay down their debts? Is the government going to unilaterally demand that the lender of the money now must accept less than was contractually promised in repayment? I think most rational people would agree that these approaches would make no sense. Particularly, if there is to be an affordable mortgage market in the future.
If we are talking about people who either bought a home in the last few years that was more expensive than they can afford, or if we are talking about people who borrowed too heavily against their existing home and now cant afford to repay their loan, how does the government fix that in a way that is fair to the rest of us? It is important to remember that these over-extended borrowers are the very people who are responsible for driving house prices to irrational levels in the first place. Without their profligate borrowing and spending, there would have been no housing bubble and home prices would not have risen to unsustainable levels. The fact that money was lent too easily should mean that the lender of that money should bear the risk, and the loss, if any. The fact that some people borrowed in an irresponsible manner and spent the money on over-priced real estate should mean that the borrower, and that borrower only, bear the risk and the loss if any.
If I should buy a conundrum at Walmart (they would have the lowest price, yes?) and a fogging machine and mirror from Home Depot (they still have those how to people don't they) wouldn't I be contributing to a false demand for durable goods?
Well, the fogging machine and mirror you can probably pick up on the cheap on Craigslist from a mortgage banker in CA or FL. You see, they've been sitting in their basements for a couple of years, as they're no longer needed for their initial purpose of qualifying people for jumbo loans. (You know, for those people who couldn't be bothered to exhale.)
Deflation is the contraction of money and credit. Credit is disappearing faster than the Fed can print.
Inflation is the expansion of money and credit.
In monetary deflation you simply have a condition where you cannout prnt as fast as credit dries up.
The deleveraging is simply faster and bigger than the Fed.
If you're buying conundrums from walmart be sure to ask for the Magnums - the cashiers always flirt with you when you show up at check out with them...
moethics said: "Can someone explain Mish's and CR's deflation view in light of the fiat currency every sovereign nation has adopted.
Prices may retreat from lack of demand but without a hard asset like gold backing a buck, yen or lire, how you gonna avoid inflation when the available currency begins expanding exponentially by printing more and more? Anyone able to help me through this paradox?"
Sure. There are no paradoxes, only illogical thinking and mistaken assumptions.
In the logic-problem department, one of the bearish talking-points has perenially been about how real wages aren't increasing to match higher prices and haven't been for years, squeezing the middle class. Well, which is it? Are prices rising or not? And if prices are rising, how is that deflation?
In the mistaken assumption department, there is a pervasive one that takes an incredibly short-run view that just because prices are falling today in some things (housing prices and gasoline, for example) that's "deflation" and not simply prices that both rise and fall like the price of anything else.
Within the past decade gasoline could be had for $1/gallon. Were we in a deflation? Over the past couple of years, when we've seen the price of oil go from under $70/barrel to over $140/barrel and then recently back down under $70/barrel, what happened? Deflation to inflation to deflation again, over the span of a couple of years? Or was that simply what the price of oil has always done, go through wide swings?
Yes. Leverage is credit. De-leveraging is removing the credit.
Look, when a bank lends out at 40:1, as many German banks did, this means for every dollar of actual capital held by the bank (reserve deposits or whatever) they lend 40. They do this because the feel the risk is low and that they can make more money. Once banks relaize that this is pretty silly, the start taking back those 40:1 ratios down to 10:1. That loss of extended credit, hereby a factor of 4, is a quick and massive loss of credit in the system.
The fed then prints to cover that delveraging (effectively leveraging up the system) by putting in real reserves that can actually be used to realize real losses AND so that banks can still lend at (at least) 10:1. Without the fed, most big banks would simply have gone under and then. Well then, you have a Depression. The wave of business collpase would have been staggering.
In fact, it still may happen. The US has dumped $130b into AIG and it STILL may go under. The derivitce exposure to AIG must be staggering.
At one time I thought what the Federal Reserve had to say was noteworthy. What is being said is equivalent to - "In these perilous times we should be prepared for conflict with eastern adversaries" - the day after the attack on Pearl Harbor. Why do we pay these people?
Ah, old Yellen.
Does "Nemo" mean first in any language?
third
I guess Yellen just talked with some of the bankers on Waxman's "Who's your daddy?" list...
How much would the economy have to contract to get the personal savings rate back to 6-8%? That may be where we are headed.
Personal what?
PeakVT, it depends on how quickly that happens (savings rate up signficantly). Roubini predicted 4% to 5% contraction peak to trough - that would be pretty stunning.
Best to all.
I believe that is as close as we will get to one of the Fed governors saying "Put your head between your knees and kiss your @ss goodbye."
They are still seeing smoke only when flames have engulfed the economy.
Somehow I can't grasp the idea that with the trillions of dollars of bailout money working their way through the system we are completely out of the woods on the inflation front...
Is it really contraction, or just a reallocation in spending and investment patterns?
Unless banknotes are burned, or real assets demolished there is no deflation.
Next stop, Weimar!
The 'Chicken Littles' of the world were right.
Thanks, CR.
I'm going to buy a duffle bag tonight. I'll use it as my wallet when hyper-inflation kicks in.
Left on the cutting-room floor:
"On the bright side, facilitating the continued transfer of trillions of taxpayer dollars to every over-leveraged, debt-burdened company and individual in America ought to keep me and my staff busy for quite some time to come ...
"So I got that goin' for me. Which is nice."
What does Yellen know anyway? What spoil sport. The market says no significant contraction. So UP UP UP!
I trust the market. It is rational individual actors acting rationally to the benefit of each own. A group of individuals acting rationally together means that the larger interests are being served best too. So when a corporation, as an individual, announces layoffs, it means it is a good thing and we will all benefit and therefore no contraction will occur.
So UP UP UP! Home Depot is a definite buy! Chrysler too! Bob Nardelli is a genius. He knows how to build value (why else would GM buy Chrysler?).
Stimulus checks somewhat soften the negative shock in Q3.
Q4 figures will show the real picture.
Even if lame duck Congress passes the 2nd stimulus package, it will be February or March earliest.
What's this savings thing? I heard of it somewhere before. Oh, yeah, it's an asian thingie.
"Savings" comes from the Hindi word that means, "Shop on Amazon.com".
Yellen's such a whiner.
The male enhancement supplement mongers are going to be cleaning up over the next couple of years.
MORE HOOPAJOOP!
Please consider the applicability of "personal savings" to a Christian Redemption theme.
Savings is that thing you get when you buy stuff on sale. And everyone knows the best way to increase savings is to buy more stuff on sale.
I get the mbs stuff and generally what's happening with them. But what about the CDO's? Do they show on financials? Will companies redeem them from counterparties?
The Fed might be hollering but they're kinda like Helen Keller screaming for help. Why did nobody here her? She was wearing gloves.
I wonder if she'd vote for lowering interest rates even further...if she were on the FOMC?
Please consider the applicability of "personal savings" to a Christian Redemption theme.
When the rapture comes, I'm going to be pretty damn pissed off if even one of my credit cards is not fully maxed out.
Unfortunately, economic growth in the rest of the world has slowed noticeably.
Ah, globalization insurance, you had a good decade-and-o-half.
I want to apologize to Bernanke, Paulson, and my fellow US Citizens:
I want to apologize for causing our economy to slide into a (blank)sion.
Although I pay off my credit cards every month, my family has switched exclusively to paying cash for everything.
I realize that this economy's well being is predicated on the use of credit. However, I am acting in my personal self interest and if that means throwing millions out of work due to my reducing the velocity of money, so be it.
Wall Street is comical.
All is saved, right after we bulldozed a ton of hedge funds into rubble.
Same goes for the oil markets.
Moral of the story is that leverage kills.
Again.
Now, the Feds are going to give me a pony to make up for the bubble they blew.
Well, gee, thanks.
Someday this war's gonna end...
I only hope that, by "ugly", CR is not invoking the Rule of Kathy Griffin, whereby declining assets are renovated every 3-5 years.
synonyms: window dressing, facade, house o cards, castle built on sand
antonyms: transparent, honest, Medusic
Isn't "savings" that invisible money you "get" when you buy something at a price that is less than another arbitrary but higher price?
I believe you will find this in the same book that defines "Loss" as unrealized (and equally arbitrary) potential gain.
Time to implement negative interest rates! Rebate for money!
Borrow $100 @ 0% interest rate, get note redeemable for $3 in a year.
Sure way to stop deflation in it's tracks.
Remember, you heard it here first!
Roubini predicted 4% to 5% contraction peak to trough - that would be pretty stunning.
"Stunning"? Honestly, CR, I'm stunned that you'd be stunned by that possibility.
If I recall, from its 1929 peak the GDP shrank by about 30% through '32. If the next four years wind up being only one-sixth to one-eighth as bad as the Great Depression in those terms I, for one, would be pleasantly surprised.
I think at this point a 4-5% retracement is almost inevitable.
o inflation if the velocity of money slows incredibly
Thornberg is making Yellen look BULLISH:
Never mind those plunging prices homeowners have suffered since 2006 - Thornberg is predicting residential real-estate owners nationwide will collectively lose another $15 trillion over next year. Thats good for home shoppers sitting on the sidelines, says Johannes Moenius, business and economics professor at the University of Redlands.
15 trillion more loss!!!
Economy experts say area economy could suffer until 2011 - ContraCostaTimes.com
Looks like the yen carry trade has been stick saved. But, how are the Japanese going to make money with the Americans out of commission? What, they are going to try to turn their Japanese people into Americans buy giving them more money to save? Good luck with that trick!
Repost of note to Chuck:
"Thank you Senator Schumer for stepping up to the plate. Secretary Paulson should have been asked to resign the second after you saw Section 8. The bailout was a load of bull. Ask the Minneapolis Fed."
This is a power struggle and he needs our support. It makes no difference what his personal motives are. He is challenging Paulson directly.
I'm giving up. I have this huge debate with Gold Bugs on the other sites and for some reason, even after I explained all the signs of deflation.
THEY STILL BELIEVE IN GOLD!!
They still tell me the coming apocalypse is 100% going to be hyper inflation!!!
This is proving more persistent than housing bubble heads.
I give up.
Explain how Yen trade has been saved.
Thanks.
CR,
can I please also sell some ludicrous ads in my comments ?
and can you please how to do this (for my account of course)?
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*Did you know that certain foods such as soy proteins, "diet" drinks, and others can actually increase your stomach fat ?
More details in the article below
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Washington (AP)--Henry "Hank" Paulson was taken into custody today for attempting to bring a concealed bazooka into the Treasury Building.
Re: I've always wondered about Japan's high personal savings rate.
From a BoJ research paper:
To summarize, Japan's household savings rate has been increasing from 1990 because the motivation to save among individual segments has been rising due to different perceptions of risk: (1)the middle-aged and elderly low-income households feel anxiety regarding employment conditions, (2)the young households feel anxiety regarding pension systems, and (3)the elderly households feel anxiety regarding nursing care.
Are Americans, as whole, just genetically wired for instant gratification?
Are Americans, as whole, just genetically wired for instant gratification?
Basel Too
My girlfriend is out. Anybody know some good porn sites?
Are Americans, as whole, just genetically wired for instant gratification?
Anyone under 40 has been. We are wired. The marketing people know the trigger spots too.
No. We are bifocal -- like the Japanese. People under about 30 are instantly wired for gratification.
Older people didn't save because they thought their real estate, stocks and 401(k)s would keep going up forever. They thought their jobs and pensions would last forever. Now, they are awakening to reality at the rate of millions per day. They will save more, spend less, and it will be a huge hit on the U.S. economy for years.
I thought that we were in an expansionary downclimb.
Damn Elvis, beer just came out of my nose.........
Not funny...
All I can think of when I think of Baby Bommers retiring are those Dennis Hopper Ameriprise commercials and how I just don't see them anymore.
I wonder why....hmmmmmm.
older people didn't save because they thought their real estate, stocks and 401(k)s would keep going up forever. They thought their jobs and pensions would last forever.
Rich,
I think it was more like they thought they were saving. Nice house, fully vested over 15 plus years, yeah, thay thought they did it right.
Thing is - they did. If the house was 20% or more down and they maxed contributions.
Can we expect a CR sighting ?
Mortgage Meltdown Symposium
"For consumers, the credit crunch is one of several negative factors..."
There is a credit crunch, true, but I wonder what the benchmark is when I hear such a statement. I assume Yellen does not regard the bubble years as a desirable norm to return to?
Bernanke is going to speak tomorrow. Guaranteed market drop.
2:00 PM ET : \tFederal Reserve Chairman Ben Bernanke speaks via satellite to the Symposium on the Mortgage Meltdown, the Economy and Public Policy at the University of California at Berkeley.
Elvis, think SpankWire.
If Q4 will be ugly, then they'll slam out a new "stimulus package" to make sure The Decider doesn't have a recession/depression on his watch. Then, once the next president gets in, all bets are off as we death-spiral towards socialism while grabbing every last vanishing dollar from the producers and giving it to the deadbeats; the recession will then be the "fault" of the next president, although he'll do a great deal to make it worse, I am sure.
A smart boomer thought they had it. I think of it as a chair to sit in for that hallmark retirement moment each day.
leg 1 = house = 0 go to leg 2
leg 2 = 401k = 0 go to leg 3
leg 3 = Social Security = not going to be enough = go to leg 4
leg 4 = oh shit
Serious question regarding Zimbabwe:
As the hyperinflation took over, how did the people actually get the $10 billion bills? If their savings are in the pre-inflation times, it would, let's say, $1000, or so...
So did the government just literally hand out $10 Billion bills ?
What was that transaction ?
they'll slam out a new "stimulus package" to make sure The Decider doesn't have a recession/depression on his watch.
I don't get this logic. Why would a Democratic-controlled Congress want to benefit the Decider to the detriment of the One?
Yup - Q4 = -6.3%
Time for "Predict the S&P 500 low for 2009" Contest.
1st Place Prize: autographed Hank Paulson book "How I Help Bush Remove Another U.S. $ 1 Trillion From The U.S. Treasury"
You go first.
Here's a sobering tidbit from Tyler Cowen at Marginal Revolution:
"Iceland: what does the endgame look like?
Thrainn Eggertsson writes to the FT:
The government of Iceland has now been offered foreign loans that roughly equal the country's gross domestic product. The annual interest payments, say 3-4 per cent, approximately correspond to the country's annual economic growth. Additionally the loans must be paid up.
I believe Thrainn is being generous with that growth estimate. Then he compares Iceland to Germany in 1919 and predicts similar consequences (I don't think he means that as a threat, however). Instead, I wonder what it is like for a country to be truly, permanently bankrupt. And a further difficulty lies on the horizon. Circa 2000, fish accounted for 70 percent of the country's export earnings. Here are many articles on dwindling cod stocks, the number one item sold by Icelandic fishermen.
I genuinely cannot imagine what the endgame looks like."
Me either...70% of your country's actual exportable product is fish. I think we are looking at a country that is totally bankrupt. They've got next to nothing to export, at a time when most countries are looking to reduce imports. Maybe Iceland can ask Canada if they can be annexed by Canada in exchange for assumption of the debt. Seriously...
Fed extends $922 billion in special loans
Elvis well played. Very well played.
And yes Americans as a whole are all about the instant gratification.
Fed extends $922 billion in special loans - MarketWatch
From Jesse's Cafe Americain
"30 October 2008
Even in a "Market Meltdown" and a "Once-In-A-Lifetime Financial Panic...."
...the Other People's Money (OPM) managers can still find time to paint the tape into the end of month.
When this coat dries, they might try to slip on one more layer of paint before the weekend, but if we break to the downside we would look for a complete retrace of this rally to retest the lows.
Why? Because it is based solely on speculation, market manipulation and esperimentation by the Fed and Treasury. It is not based on anything organic to the economy, neither reform nor restructuring.
Wall Street corruption is one of the biggest impediments to an economic recovery. It has become an inefficient obstacle to capital allocation, price discovery, and real economic growth.
The US financial system represents a general systemic risk to the rest of the world because of the manipulation of the US dollar as reserve currency to serve the short term secular interests of a small but powerful financial elite."
Absolutely correct.
Iceland contains a secret portal to the underworld. Satanson will buy it through the Treasury to preserve that secret. Iceland will be ours.
Iceleand,
They leave, go to Norway. Maybe diehards stay around. Or go hard core and make it one big Macau from the old days. Maybe sell the country and put the $ in a trust. They already sold their genotype.
I think Jesse has it spot on. I think we visit a DOW with a 6 handle.
Before the election? or just after?
Are Americans, as whole, just genetically wired for instant gratification?
Culturally, yes. And experiencing that gratification is non-negotiable.
Can someone explain Mish's and CR's deflation view in light of the fiat currency every soverign nation has adopted.
Prices may retreat from lack of demand but without a hard asset like gold backing a buck, yen or lire, how you gonna avoid inflation when the available currency begins expanding exponentially by printing more and more? Anyone able to help me through this paradox?
Are Americans, as whole, just genetically wired for instant gratification?
Not receiving it will cause the largest social dislocations.
"I don't get this logic. Why would a Democratic-controlled Congress want to benefit the Decider to the detriment of the One?"
True, but as long as King Henry is running around, is Congress even a factor? They caved on the Bailout, so why not cave on this? Or, in the coming endgame, can the Fed just hand out money all over the place as part of the "special super powers" granted by the Bailout?
Is a contracting economy left with unsightly stretchmarks?
unsightly stretchmarks?
Yes, it is called GM
Anyone able to help me through this paradox?
moethics
I think Greenspan would call it a conundrum. Those conundrums seem to get us in a whole lot of trouble.
I guess Excel 2007 upped the row limit for the Fed to keep track of everything they are buying....
Anyone able to help me through this paradox?
moethics
Sure. First you will need a big mirror. Then get one of those fogging machines. Turn on the machine.
I think Greenspan would call it a conundrum. Those conundrums seem to get us in a whole lot of trouble.
Elvis
blew chunks!
If I should buy a conundrum at Walmart (they would have the lowest price, yes?) and a fogging machine and mirror from Home Depot (they still have those how to people don't they) wouldn't I be contributing to a false demand for durable goods?
Clarendon, the new Wall St
"Thoght the near term risks remain elevated, long term secular conunmdrums will drown out the need for increased lowering of the FFR as inflation moderates.... However, I could concieve a flaw in this analysis, if at such time Collaterized Bottle Bonds are clearly in a bubble..."
Commodity price inflation. Wages, real productivity, stagnation.
Bottle bonds in a bubble? Bailout bill for the bust.
Let's see, we have a declining economy, horrific reports on consumer sentiment, PCE, consumer credit, etc...
This explains why Apple stock has had a nice 25% bounce since hitting its low of about 89 on Oct 9th.
Buy Apple Puts.
Commodity price inflation. Wages, real productivity, stagnation.
oneworldcurrency yogi
or
job losses, investment losses, property losses, currency devaluation, inflation for basics, and demand destruction for commodities causing massive deflation and deflation expectations
Dam had to lay out $16.00 for a bag of my favorite basmati rice...
A conunDrum is what they used to contain the sub-prime meltdown.
Didn't work out so well that.
They should of used one of them drums that have scary stickers on them.
Nostrovia,
Barley, I almost lost it with your mirror and smog machine - too funny very witty.
Bloomberg article on mortgage scammers in Las Vegas. Where else.
Elvis
One word xhamster
Better be using a Linux box.
I always strive to be helpful in my area of expertise.
Working link from C&C:
Economy experts say area economy could suffer until 2011
Economy experts say area economy could suffer until 2011 - ContraCostaTimes.com
These mortgages are contractual agreements by willing parties, to borrow and repay specific sums of money under specific terms. Is the government now supposed to annul those contracts and/or rewrite the terms arbitrarily? Is the government now supposed to take tax money from responsible borrowers who did not buy too much house, or did not borrow excessively on their existing house and give that money to irresponsible borrowers to pay down their debts? Is the government going to unilaterally demand that the lender of the money now must accept less than was contractually promised in repayment? I think most rational people would agree that these approaches would make no sense. Particularly, if there is to be an affordable mortgage market in the future.
If we are talking about people who either bought a home in the last few years that was more expensive than they can afford, or if we are talking about people who borrowed too heavily against their existing home and now cant afford to repay their loan, how does the government fix that in a way that is fair to the rest of us? It is important to remember that these over-extended borrowers are the very people who are responsible for driving house prices to irrational levels in the first place. Without their profligate borrowing and spending, there would have been no housing bubble and home prices would not have risen to unsustainable levels. The fact that money was lent too easily should mean that the lender of that money should bear the risk, and the loss, if any. The fact that some people borrowed in an irresponsible manner and spent the money on over-priced real estate should mean that the borrower, and that borrower only, bear the risk and the loss if any.
If I should buy a conundrum at Walmart (they would have the lowest price, yes?) and a fogging machine and mirror from Home Depot (they still have those how to people don't they) wouldn't I be contributing to a false demand for durable goods?
Well, the fogging machine and mirror you can probably pick up on the cheap on Craigslist from a mortgage banker in CA or FL. You see, they've been sitting in their basements for a couple of years, as they're no longer needed for their initial purpose of qualifying people for jumbo loans. (You know, for those people who couldn't be bothered to exhale.)
She is still mealy mouthed about it. She says "appears likely" instead of "will". Always looking away from the truth.
What do the "conundrums" that Walmart sells look like? LOL
PS What do you do with the "conundrums" you buy? Do they serve a purpose?
This is all scarey as hell and the wealth lost will take generations if ever to rebuild.
Thx Ian.
real estate, stocks and 401(k)s, jobs and pensions...
What more could they do? Mine gold? Print money?
Oh, and random grammar point: Shouldn't the plural be conundra?
It sounds cooler, anyway.
There is a town in central France named Condom. I suppose we need now to rename it Conundrum, right?
recession-year GDP change
1974 (1%)
1981 (1%)
we are down 0.3% as of yet.
Financial Forecast Center's Historical Economic and Market Data
hc,
I tried doing that with the bulls and man thier persistant too.....and thier loaded! not the CSC kind of way either....
Its too bad that the people that created this financial holocaust won't share the pain.
They have more money than God to ride this out.
And to all those veterans like myself ,yes, we are fighting for the freedom for those to use their freedom to financially screw us.
Deflation is the contraction of money and credit. Credit is disappearing faster than the Fed can print.
Inflation is the expansion of money and credit.
In monetary deflation you simply have a condition where you cannout prnt as fast as credit dries up.
The deleveraging is simply faster and bigger than the Fed.
And to all those veterans like myself ,yes, we are fighting for the freedom for those to use their freedom to financially screw us.
Michael LittleBig
People forget to say thanks. Thanks for your service!
Iceleand
Sink it so it can become a modern day Atlantis. Maybe a future generation can create a theme-park hotel based on it.
"where you cannout prnt as fast as credit dries up"
Neuromancer
So deleveraging and credit are one in the same?
If you're buying conundrums from walmart be sure to ask for the Magnums - the cashiers always flirt with you when you show up at check out with them...
I throw in a thanks also to the vets...
its a shame thier not patrolling our borders and in the sierras kicking ass on all the cartel marijuana growers up there!
its better hydro anyway....
I tell you, "saving" is new "black"
Surely all the bailouts will add up to all the wealth destruction more or less equalising out. Hence no deflation or inflation. More or less!
moethics said: "Can someone explain Mish's and CR's deflation view in light of the fiat currency every sovereign nation has adopted.
Prices may retreat from lack of demand but without a hard asset like gold backing a buck, yen or lire, how you gonna avoid inflation when the available currency begins expanding exponentially by printing more and more? Anyone able to help me through this paradox?"
Sure. There are no paradoxes, only illogical thinking and mistaken assumptions.
In the logic-problem department, one of the bearish talking-points has perenially been about how real wages aren't increasing to match higher prices and haven't been for years, squeezing the middle class. Well, which is it? Are prices rising or not? And if prices are rising, how is that deflation?
In the mistaken assumption department, there is a pervasive one that takes an incredibly short-run view that just because prices are falling today in some things (housing prices and gasoline, for example) that's "deflation" and not simply prices that both rise and fall like the price of anything else.
Within the past decade gasoline could be had for $1/gallon. Were we in a deflation? Over the past couple of years, when we've seen the price of oil go from under $70/barrel to over $140/barrel and then recently back down under $70/barrel, what happened? Deflation to inflation to deflation again, over the span of a couple of years? Or was that simply what the price of oil has always done, go through wide swings?
And like that.
Sebastia
Yes. Leverage is credit. De-leveraging is removing the credit.
Look, when a bank lends out at 40:1, as many German banks did, this means for every dollar of actual capital held by the bank (reserve deposits or whatever) they lend 40. They do this because the feel the risk is low and that they can make more money. Once banks relaize that this is pretty silly, the start taking back those 40:1 ratios down to 10:1. That loss of extended credit, hereby a factor of 4, is a quick and massive loss of credit in the system.
The fed then prints to cover that delveraging (effectively leveraging up the system) by putting in real reserves that can actually be used to realize real losses AND so that banks can still lend at (at least) 10:1. Without the fed, most big banks would simply have gone under and then. Well then, you have a Depression. The wave of business collpase would have been staggering.
In fact, it still may happen. The US has dumped $130b into AIG and it STILL may go under. The derivitce exposure to AIG must be staggering.
In Soviet Amerika, economy contract YOU.
You should believe Sebastian when he talks about "illogical thinking and mistaken assumptions".
He has paid a high price to learn about those.
Hoopajoop derivative product:
Money Printed Toilet Paper - Wipe It with Cash from Baron Boby
"out of stock"
"Please consider the applicability of "personal savings" to a Christian Redemption theme."
That's a stitch, sputnik.
"She is still mealy mouthed about it. She says "appears likely" instead of "will". Always looking away from the truth."
She doesn't want anyone to say: Yellen caused the Depression.
"They leave, go to Norway. "
Denmark. Much more congenial to Icelanders.
By the way, the Baltic Dry Index, considered a leading indicator of future economic activity today was 975, down from 12,000 in June.
The shipment of bulk commodities has essentially stopped.
Bloomberg.com:
Personal Finance
Oh, nuts, as I was posting this today's value came up. It is 840..!
Maybe they'll have a two fer one sale on large oceangoing container vessels on the Shopping Channel...
Economy contracting severely???
No shit? Wow. Im glad we have people like that to tell us these things.
Peurto Rico annexes Iceland. Now the Peurto Rico luge team has a place to practice, and Icelanders have a warm spot to visit in the winter.
1st Place Prize: autographed Hank Paulson book "How I Help Bush Remove Another U.S. $ 1 Trillion From The U.S. Treasury"
This seems to cover only his first few days. Does Hank write another installment every month?
Poorer, but wiser.
At one time I thought what the Federal Reserve had to say was noteworthy. What is being said is equivalent to - "In these perilous times we should be prepared for conflict with eastern adversaries" - the day after the attack on Pearl Harbor. Why do we pay these people?