Credit Crisis Indicators: Mixed
Submitted by
CalculatedRisk on Thu, 10/30/2008 - 6:56am (130 comments)
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11th
Now I'm scared. Have the secret police gotten to Nemo?
CR, these numbers are pretty noisy at this point. Not sure day-to-day jitters really tell us much.
Could you maybe include a short-term moving average or something?
(I believe Rob Dawg first suggested this a few days ago. He's right.)
Don't hold your breath...any improvement will be temporary until the next stage of the crisis and we are in stage one of numerous stages.
Nemo is preoccupied with real work. He gets to keep his day job, at least for this quarter. But we are feeling a little understaffed...
CR -
Thanks for summarizing this on a regular basis.
This blog is as real as it gets.
Thx CR
(93rd)
emo
You mean your employers aren't impressed that you have an exceptional percentage of first posts on CR?
Strange metrics for success they have.
I am sure that eventually there will be books written by "insiders" about this whole mess.
I can't wait to read them.
Another indicator is # visitors at this site--it's down because fools think the sucker is staying afloat?
Or perhaps because everyone hates haloscan.
this sucka's goin' dow
[carry-over from previous thread]
People keep talking of a "shippng collapse." I don't doubt shipping is down and heading further in that direction, but where can one find objective evidence of a shipping "collapse"? The news wires have anecdotal stories (like the hyped and misleading Volvo-truck order decline of 99% YTY), but what public information source tracks shipping in "real time"?
CR
if i may make a suggestion
from yestereday excellent and isntructive video from Mathew Padilla
at the end during questions time
a person challenged Padilla saying it was government regulation via fed insurance that created the S & L mess...and thus less reg not more is the solution
Padillas best answer, i believe, would have been to say we tried that...we lived in a world with little or no regulation during the banking panic of 1907 and the gilded age of robber barons
the problem with the S & L crisis is that the gov insured but did NOT regulate, period
CR
thank you for your outstanding blog.. i am in your debt
CR,
I know you're looking at the credit markets, but I think equity market performance (and their inflationary sectors) should be included in tracking improvement vs. deterioration.
For example, it looks to me like every index is trying to reverse it's huge gains from the last 2 days. Esp. important are the glod stocks (XAU). It's weaker than the broad market despite having made a higher high.
WSJ has a piece this AM that is relevant that opens with this:
"The days of rapidly rising grocery prices may be nearing an end as supermarkets push back against food companies that are reporting profit increases.
With corn, wheat and other commodity costs coming off their summer peaks and the economy continuing its slide, grocery chains in the U.S. and abroad are balking at food makers' efforts to raise prices further.
Some retailers are using food companies' earnings reports as leverage to reject price increases, according to industry analysts. Others are pushing for more promotional allowances -- such as buy-one-get-one-free deals -- to help move higher volumes of goods."
Rest of it is behind the pay firewall but this is good news.
Here's my indicator. Look at a two-day S&P 500 chart, and you can see that Mad Max has now finished writing his initials.
Going long leather, and metal boomerangs.
If shipping is way down, doesn't that portend big problems for Walmart? They need stock at this time of year.
Business, financial, personal finance news - CNNMoney.com
Next bailout is the Credit Card Debt forgiveness similar to mortgage rewrites..
All ye foolish savers....
Ye did not live beyond ur means when u could have. Maybe next time..
Cautious Observer writes:
[carry-over from previous thread]
People keep talking of a "shippng collapse." I don't doubt shipping is down and heading further in that direction, but where can one find objective evidence of a shipping "collapse"? The news wires have anecdotal stories (like the hyped and misleading Volvo-truck order decline of 99% YTY), but what public information source tracks shipping in "real time"?
Individual port tonnage.
Why is VIX not an indicator??
CR, someone may have pointed this out already, but these credit crisis indicators aren't "good" or "bad", they simply are.
You're making the erroneous assumption that "middling" bond yields, "low" interest rates, "low" spreads, etc. are indicators of a healthy economy. There is no objectively good target for these indicators. Whatever their values, in a free market they exist to coordinate market activity. If anything, they should be much "worse" right now in order to allow the purge to take place.
The "managing" of indicators to achieve "good" figures is a Keynesian notion and is terribly damaging to the economy. Manipulation of indicators such as interest rates (e.g. FFR), among other government interventions, is one of the main reasons for this crisis. That is why the indicators were "healthy" during the boom years preceding this crisis, even though that was when the disease was spreading with ferocity. Expanding this intervention into other areas (LIBOR, CP) will only make it worse.
OK I'll try my own CCC (convenient causation convention):
GS down 7% today on fears that they are part of an axis of evil.
(snark, Jas)
I'm no expert, Mel, but I'm guessing that it's the other way around. Shipping is way down because Walmart and everybody else doesn't need as much stock this year (going to be a blue Christmas and everybody knows it).
"The trouble with unsustainable systems is that they can't be sustained."
but what public information source tracks shipping in "real time"?
Reports from FedEx, UPS, and the railroads are the closest domestic indicator, AFAIK.
It's important to note that the Baltic Dry is about shipping prices, which are set at the margin, and were très pétillant until recently.
WSJ has a piece this AM that is relevant that opens with this:
"The days of rapidly rising grocery prices may be nearing an end as supermarkets push back against food companies that are reporting profit increases.
Just go to your store where you regularly shop. Prices are already dropping.
The CR visitor index--does anyone have a plot of this? How does it compare to VIX, DJI, etc? Is it a leading indicator?
WBWUCR?
why,
there are a couple of sites tracking the CRVIX indicator...links anyone?
Visitor index in response to Mel | 10.30.08 - 11:35 am | #
Why is VIX not an indicator??
VIX is biased to the bullish side. Uncertainty in stock pricing only increases when the market falls... I wonder why.
[Rates on 30-year fixed mortgages surge to 6.46% from 6.06% on news of Fed rate cut]
LOL!
Mortgage rates spike - Oct. 30, 2008
If shipping is way down, doesn't that portend big problems for Walmart? They need stock at this time of year.
Mel
That's just part of it, finished goods. What about all the other things we consume, and the just in time nature of so many outlets we depend on.
It's possible to see this descent into ugly mui rapido, no?
I've been digging (scratching), it seems the Greeks are at some sort of epicenter and control roughly 1/3 of the fleet. Of course, they're leveraged through London banks. But, what of the other 2/3's? Are they becoming idle? Are they tied up in ports?
Is the pipeline emptying out largely unnoticed since there must yet be a line up at the Western port facilities like LA, Vancouver, Seattle, San Francisco, et.al.
Do I need a nap? Or is this percolating to something bigger than we have yet seen?
Anonymouse and VIX --
CR is not a stock blog. It focuses on the real economy, not the bets being made in the global state-sanctioned casinos.
(Besides, equity traders are morons. Ask any bond trader...)
citizen energyecon --
Google "CR VIX".
Long Beach Shipping
http://www.polb.com/civica/filebank/blobdload.asp?BlobID=5814
Herbert Sandler former CEO of Golden West, on Bloomberg says he couldn't predict future. Says he asked something be done about 2/28, but nobobdy would listen. He didn't like the "bad adjustable rate mortages" Somebody else did everything. Its not the product, its the underwriting, appraisers, realtors, your dog, my dog.Yadda yadda yadda.
--
The Scam Market is mixed too.
Nova,
More and more people see the wisdom of my observationsa and long-term forecasts, e.g., I jutst got this...
-x-x-x-x-x-x-
Hello Jas,
About a year and half ago you wrote to me the following e-mail. Looking back I see how accurate your predictions have been. I no longer see your articles in Financial Sense. Are you writing for some other web page? Will be interested to see your articles. Take Care
-Peter
Hello Peter,
Not the case. I post when I feel like.
Only time will tell. Cult of gurus is rampant and someone has to have the
guts to expose false prophets.
You bet. The only question is will it hit $10. Greater Depression, to begin
during 2008-10, will take care of the demand (it will collapse). China,
India, US economies will be in disarray. Many govts and political systems will fall. Democracy will be exposed as the fraud that it really is -- Domination of Money. Bankers control the economies and the political systems in most democracies these days.
Best regards,
Jas
-x-x-x-x-x-
Jas
Emerging markets become a trap for U.S. banks
Shipping. See Baltic Dry Index. I think CR has shown that before.
There are of course local variations. BDI is global.
volker the viking, yes, we are on the same track. the ships that are stuck in port or at sea, are another immediate tipping point that can't be rescued by throwing US debt at it.
emo-
I highly disagree...this became a stock blog when the entire financial system was leveraged to economic growth. Now some of us (me and others) talk about individual stocks but that doesn't make it any less relevant then the market that is fueled by crap debt to these very stocks.
Not all equity trader's are stupid...just most of them.
Ciao
MS
Nap time. Nothing for me to stress over, yet. Would like to see updated reportage after October numbers.
serf alan greenspend writes:
volker the viking, yes, we are on the same track. the ships that are stuck in port or at sea, are another immediate tipping point that can't be rescued by throwing US debt at it.
You mean I'm right to be concerned? If so then nap is over.
I don't blame anyone to stay out of this market, long or short, with such volatility. It can be a trader's paradise - it can also be a nightmare. 3% indraday moves used to mean something. Now they're taking place in 15 minutes!
Morgan Stanley is now requiring traders to pay for their software needs out of pocket.
emo-
that would be me..I'm the Forrest Gump of stock picking..even though I knew what was going to happen....
Maybe someday I'll get my big hurricane and be the only shrimp boat in the water...
It can be a trader's paradise - it can also be a nightmare.
On a related note, InBev is trying to rework its acquisition of BUD. Evidently, an all cash deal now doesn't seem as tempting as when we had $1.60 Euro.
3:40 today I bet we give back the 700 point gain and then some. All the sheeple that piled on the "bottom" will get crushed as people scurry to take profit.
Looks like official confirmation of a recession might negatively affect the Dow.
looks like thefast moving rally tripped over reality today.
have faith. PPT to show up at 2pm., maybe 1:30, its friday and they want to knock off early.
Shipping. See Baltic Dry Index. I think CR has shown that before.
There are of course local variations. BDI is global.
(Besides, equity traders are morons. Ask any bond trader...)
oh sweet!
another day of battle
let's see...the last time we had this skirmish, i learn'ed that geologists were moron's also.
mb, check calendar..it's thursday
[Morgan Stanley is now requiring traders to pay for their software needs out of pocket]
You mean porn subscriptions too ? Horrific.
Mouse:
Indexes are going to roll over today or tomorrow. The question is how far down do they go.
Flushing HIG now....pretty to watch on the 5 minute..
Ciao
MS
Damn. I flushed my puts a little early.
Quick summary of the Pershing Square proposal for TGT
Yahoo!
Serf Alan Greenspend: just became a billionaire!
If they want to keep this prop job going through the election, they are going to need to bring more yen than this...just sayi
Hi CR,
Any thoughts on why your TreasuryDirect SFP data doesn't match up with the Financial Management Service data
. See for example October 23. Is Treasury rolling some issues (maybe 9/17 35 day) without an announcement?
MS writes:
Flushing HIG now...
IFT? (Insurance Failure Thursday)
volker, a nap with one eye open.
as i see it, the severe drop in commodity prices has caused a halt, or at least a very large bump in some areas of shipping. the credit banking crisis is having an effect in commodity transfer as well.
the ripple is their, but with so many ripples it signals rough seas.
serf ag,
gotta watch for that positive interference occurring with those waves...
NEW YORK, Oct 30 (Reuters) - The cost of insuring debt of Hartford Financial Services Group (HIG.N: Quote, Profile, Research, Stock Buzz) with credit default swaps rose on Thursday, a day after the insurance and financial services company posted a quarterly loss and cut its full-year earnings expectations.
Five-year credit default swaps on Hartford rose by about 42 basis points to about 508 basis points, according to data from Markit Intraday. (
the ripple is their, but with so many ripples it signals rough seas.
serf alan greenspend
Perhaps a euphemism...
citizen energyecon, hee hee, in kayaking we call them clapotis, and they get pretty odd here in NYC.
I'm such an idiot. I closed half of my Nov HIG $20's today when the stock hit $13.
For your Halloween needs:
BEN and HANK - Ben Bernanke and Henry Paulson Horned Masks - BENandHANK.com
OT: used to live in same town as Dr Lessinger. I interviewed him for my now defunct magazine, 'Living Well' after he published 'Penturbia'. Recommended reading for those who want to 'see' how the future could present itself.
gav, don't fret.
hit the call spreads ...sell'em!
I don't think anything is functioning in terms of world trade with behavior like this:
http://www.netdania.com/Products/FinanceChart21/FinanceChart-2-1.asp?symbol=EURUSD|netdania_fxa&name=EUR/USD
One credit indicator that gets worse by the day is the plight of hedge funds.
Hedge funds were major sources of capital of all types. Now, they are just frozen with fear.
I listened to a conference call with one hedge fund yesterday. They went to fully hedged and heavy cash in early Oct because: 1) they feared that the fund would lose so much money that the firm would be destroyed (this was said); and 2) they feared massive investor redemptions (unsaid).
They said that they "totally missed" the massive deleveraging in hedge funds as a negative factor, even though they should have at least anticipated their own forced delevaging before early Oct.
Now, they are saying they may jump back into stocks if this rally persists. Of course, this rally is still being driven by too much liquidity, speculation and leverage -- even in the middle of a massive deleveraging.
Hedge funds are just going to lose more money going foward because they've been thrown off their game. They have to try to time entries and exits, and that's not their game.
25% of hedge funds will fold. Maybe another 50% will be down so much that they'll close down funds and start up new ones, to erase highwater marks. But that closing-opening will create huge temporary deleveraging and short opportunities. (It takes 3-6 months to start up a new fund and maybe longer in the new reg climate).
volker, hmmm will check out his site-
Dr. Jack Lessinger.com
Ha sandy, good thought. But that is one hell of a risky game. Writing naked calls on a stock that just dropped 90% (Y/Y) seems a bit crazy. Even to me:)
Citigroup, Credit Suisse Link Loans to Swaps in Shift (Update3) - Bloomberg.com
Do not know if anyone posted this yesterday. Thought it was an interesting development.
gh-
don't beat yourself up about it. In this market booking profit is not a bad thing. Getting greedy and waiting for the next 5-10% will kill you. At some point a stock just stops dropping.
Witness HOG....I said a few days ago that anything under 20 was a gift (for shorts) as it becomes harder and harder to get a larger move down (%-wise). HIG "might" be at that point now...but I have '10 puts...I can sit tight and know that time is on my side and not with them.
Ciao
MS
rich - when will all these HFs close shop? November? Or will it take longer to fully exit their positions? TIA
[I'm such an idiot. I closed half of my Nov HIG $20's today when the stock hit $13]
Think how I feel. I had the $35s and closed @ $20.
They said that they "totally missed" the massive deleveraging in hedge funds as a negative factor, even though they should have at least anticipated their own forced delevaging before early Oct.
The writing on the wall should have been apparent when GS and MS applied to be bank holding companies. The Fed doesn't look to highly upon banks affiliating with hedge funds.
Of course, the word "affiliate" can always be litigated...
Ok...doggies need walkies..back soon.
I get to pass by those Yes on Prop 8 thugs who think legalizing discrimination is going to save the world.
big problem in Ca. is that if you get enough signatures gathered you can put ANYTHING on the ballot.
Sorry for politics but this one is just wrong on so many levels.
Ciao
MS
I haven't been following the HIG implosion, other than to know that there is one.
What exactly is causing it? Was there a rogue London division that was writing naked CDS?
Bond Girl --
That is just bizarre. Doesn't that not make it even easier for hedge funds to drive companies into the ground by shorting their CDSes?
--
Q: Would there be a Credit Crisis if there were no Scam Markets?
Q: Did Goldchain Silverknife have a need to go public after being private for some 120 year?
Q: Could Goldchain have borrowed the capital it needed at reasonable rate during 1990?
It is the Scam Market, Stupid!
(That is at the root of the problem and all Scam Lovers are as guilty, or more, than the Germans that supported the Nazis once they were in power).
Born-and-bred American dopes are incapable of understanding what went wrong. And why it can't be fixed. The same Crooks are in-charge and would remain in-charge until the American system collapses. America, as people have known it, is on its last legs. All good things come to an end!
Jas
Thanks MS. That helps, and I know it was the right thing to do. Time/volatility could have crushed me. Out of curiosity, do you have any other positions you are very confident about?
My most confident bets now are:
1) SPG
2) COF
3) WY
4) WFC
5) GS
6) JPM
7) FED
8) PRU
Good. Death to 2 and 20. When I open my fund it will be 0 and 4.
"Doesn't that not" -> "Does that not"
I really am preoccupied...
Re: stock market
The equities market is a sideshow. As fun as it is to watch breathless CNBC anchoresses, it ultimately amounts to nothing.
Stocks bouncing around are not credit crisis indicators, period.
Nemo, man are you ever right. It is however not unlike watching self absorbed gas bags call a NASCAR event. After all, I'm only here for the beer and the wrecks.
This is how you window dress a financial collapse.
Stocks bouncing around are not credit crisis indicators, period.
Whereas major currencies bouncing around at levels unseen like FOREVER are an indication of a currency crisis which is about as serious as it gets.
http://www.netdania.com/Products/FinanceChart21/FinanceChart-2-1.asp?symbol=EURUSD|netdania_fxa&name=EUR/USD
Why not more attention?
cross 4-6 off your list...They are protected...no matter the fundamentals.
Good list though.
nemo-
The entire market is an indicator.....what it does ultimately decides the outcome(s) for all of us. Just looking at bonds gives you a picture that does not represent the entire system as they still reflect complacency.....that will change.
Ciao
MS
Nemo,
Totally OT, but during last night's comments on the national debt and how much needs to get rolled/re-issued, you thought it would be good to get a visual. Made me curious...
It's not the easiest thing to plot in one chart as I've discovered. But I took the PDF link that someone else posted up and found the Excel (source link at bottom) and came up with the following 4 charts. These only address the t-bills issued since April. And because of the multiple maturities issued on the same date, the chart can get a little goofy so there is a cumulative line on one. The payable chart just shows how much will have to be rolled in the next year or so, to give an idea of just how much is out there. The payable chart suffers from the same multiple issues maturing on the same date, and the period is longer than the issuance period. Still, I don't think it's too bad.
T-Bills issued: http://img357.imageshack.us/img357/1596/tbillissuedcumulce7.png
T-bills issued w/yields: http://img357.imageshack.us/img357/5023/tbillissuedyieldsfl6.png
T-bills issued/payable: http://img357.imageshack.us/img357/6656/tbillissuedpayablewu3.png
T-bill yields by duration: http://img357.imageshack.us/img357/5941/tbillyieldsbymaturitybb6.png
Source: http://www.treasurydirect.gov/govt/reports/pd/pspd/2008/opdr092008.xls
Why not more attention?
I think it was the wise Dr. Bernanke that said currency changes only affects American tourists...
You'd be surprised how vexed the average american gets when trying to understand currency fluctuations.
Due to the fact that NFL has been very unpredictable this year I feel that I have been mislead by sports betting bookies.
I am planning on creating an alliance of sports gambling industry experts who can assemble to seek government assistance in sports gambling debt forgiveness.
Anyone want in?
I am feeling very disenfranchised at the moment.
MS writes:
cross 4-6 off your list...They are protected...no matter the fundamentals
From going up or from going too far down?
I think it was the wise Dr. Bernanke that said currency changes only affects American tourists...
LOL I forgot about that quote. You're right it can't be THAT bad!
cross 4-6 off your list...They are protected...no matter the fundamentals.
That is precisely why I am going after them. Bears are too afraid to play there. Yet. Agree that they are protected, much like Japanese banks were in the '90's. But you can't stop gravity. Even in Japan the largest, most protected, banks saw shares decline by 60+%.
Looks like they found some yen under some couch cushions...
7) FED
I have JANs at several strikes. I noticed a few larger block (inactive stock largely, so it's relative) PUT buys ahead of the monthly financial reports. That suggests downside, to me...
Inflation Pron:
Cash economy in Zimbabwe, with pictures
Mr.Sparkle --
Thank you; those are pretty cool!
I will see if I can find time tonight to put the links on my own blog.
Gavshire Hathaway writes:
cross 4-6 off your list...They are protected...no matter the fundamentals.
That is precisely why I am going after them. Bears are too afraid to play there.
So, if one is currently long, is it time to sell or hold?
[I think it was the wise Dr. Bernanke that said currency changes only affects American tourists...]
My jaw literally dropped when I heard that remark. Almost as inept as the, "should stay largely contained" statement. In congressional testimony no less.
He's in charge of the Fed. Got confidence ?
Anbody know when mutual funds end dressing for statement..Is that this afternoon or tomorrow?
Thanks from forrest gump trading desk...
He's in charge of the Fed. Got confidence ?
With statements like that, none whatsoever!
JoGa,
I would sell. Where is the upside going to come from? The only reason those companies aren't trading 50% lower is because of government intervention. And the Fed/Treasury are losing credibility every day.
But I am also a rabid bear. It has worked very well for me this year (up ~800% so far). It will continue to work, until it doesn't.
Coins!
nemo-
The entire market is an indicator.....what it does ultimately decides the outcome(s) for all of us.
Think you have that backwards. The daily gyrations are entertainment. If this were a stock blog the threads would be choked with hot tips and you wouldn't be here, neither would the bond traders. Luckily there's enough other economic stuff to keep it from attracting too many daytraders. CR focuses on the macro news, excepting where individual companies act as bellweathers.
Maybe in his spare time Nemo can do an analysis and strip out the stock buzz to see what the commenting percentages are.
I'm sitting in 2,4,5,6.
Also have regionals like
ZION STI PNC RF SNV
and
HBC UBS
They can't all survive.
Anyone notice the nice move in the TNX provided by the generous Dr Bernanke ?
^TNX: Basic Chart for 10-YEAR TREASURY NOTE - Yahoo! Finance
To be clear, all puts.
To be clear, all puts.
oneworldcurrency yogi
I would put them all away.
ew post...
Not to miss:
Rep. Elijah Cummings on Bloomberg soon.
Bond Girl,
On the link you posted, Felix Salmon commented today that "Banks have more and better information about borrowers than anybody else, they should be the price-setters. If they let the market decide, on the basis of worse information than the banks themselves have, they're making the whole edifice less robust."
I agree...think it is a ludicrous idea.
I'm with Volker and sdtfs. The stock market gyrations are great fun to watch and snidely comment on, but my interest here is much larger scale.
Gavshire Hathaway writes:
JoGa,
I would sell. Where is the upside going to come from? The only reason those companies aren't trading 50% lower is because of government intervention. And the Fed/Treasury are losing credibility every day.
I'm going to sell, but I plan to wait until the new year so as to place my losses (which wouldn't exist if I had started reading CR 6 months ago) into 2009. It's a very small position.
JPM seems to do a run up whenever the employee stock purchase date nears (1 trade day of Feb, May, Aug, Nov).
don't get me wrong...I do focus on larger issues however please show me how to create profits by focusing on just that. We have vehicles to use....I use them....simply put.
Cause met effect.....effect meet cause.
And that's not a typo...
Ciao
MS
yogi - Rep. Elijah Cummings outrage during the recent hearings was truly fine to watch, wasn't it? Too bad he only had 5 minutes.
I wonder if there are other lurkers like me who miss the back and forth with Ipod, O-Joe and (he who shant be named) about future macroeconomics. I guess there isn't much left to "debate", except whether it's going to be Mad Max or just bread lines.
rich writes:
One credit indicator that gets worse by the day is the plight of hedge funds
CR - would be interesting to get more info on how far hedgies have gone into their deleveraging, and how far they still have to go... probably difficult to get the info...
I'm back into oil services and small e&p's, all at great prices considering opec and peak oil, and hedged with scc (the latter is down today)
MS writes:
don't get me wrong...I do focus on larger issues however please show me how to create profits by focusing on just that. We have vehicles to use....I use them....simply put.
It'd be more like you showing me, MS. I'm a student of strained and failing states and bureaucracies; institutional dysfunction.
Also, I can really kick ass building product lines and release schedules.
You seem to be more of the trading type.
My "trader's instinct" in the first field tells me that you are earning profits in a context that's likely to collapse, so you need to pull those profits out of the currency / trading system they exist in as soon as you decide to really "take them off the table". There's my advice -- the measure of winnings is becoming more and more a form of casino chip, not a real store of worth.
I'm a big fan of relationship and human capital building. Store your fortune in friendships and knowledge and careful maintenance of your house. Gold and crap too if you want, whatever you think will survive the collapse of the representational system we use to store worth. I strongly advise artificial kinship relationships, either peer-based (oath-brotherhood) or client-patron type. They are historically one of the best stores of worth in troubled times.
Gavshire Hathaway writes:
...
But I am also a rabid bear. It has worked very well for me this year (up ~800% so far). It will continue to work, until it doesn't.
Roubini convinced me to go short last Nov, but clearly the potential downside is considerably reduced since then... I was thinking markets would go down at least 60%, not so sure now even though I do expect at least another leg down. you don't have to catch the bottom to do well... my post just above suggests a hedging position. IMO oil is different from all other commodities, first because it immediately disappears and second because it has a cartel.
Here's a graph of the YOY % Change for Inbound and Outbound cargo for the Port Of Long Beach:
Host your images for free: Pixentral.com - Display
Inbound went steady negative around May, Outbound has been trending down but went negative in September.
Tumbril:
Source for that? Esp looking for raw tonnage per time unit.
Byzantine_Runis --
On_the_run posted the URL for the Port of Long Beach:
Port of Long Beach - Homepage
I went in and found the data archives, did some comparison and put the graph together. It's expressed in TEU (# if containers).
10,000 thanks!
This will be a long post. I think there is a lot of fuss about details and not to the point as to causation and cures. Here is the quote from Marriner Eccles, Roosevelt's appointed Chairman of the Federal Reserve as to how income inequality leads to Depression. Very timely even though its about 1929. The US Wealth Distribution as Measured by the Gini Coefficient is .48 or so well behind every industrialized nation save China. Our Wealth distribution is comparable to the Ivory Coast. This is Truly a disaster waiting to happen in a country with civil liberties and a free press. Looking at
http://seekingalpha.com/article/...ming- depression . To see what happened to private debt under Bush.
Massive aggregation of private debt under Bush, from already high levels fueled by a very unequal distribution of income is the cause of the current crisis. Thus the current crisis is the long term most probable result of the "Reagan Revolution"
Eccles Quote
As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery. [Emphasis in original.]
Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.
That is what happened to us in the twenties. We sustained high levels of employment in that period with the aid of an exceptional expansion of debt outside of the banking system. This debt was provided by the large growth of business savings as well as savings by individuals, particularly in the upper-income groups where taxes were relatively low. Private debt outside of the banking system increased about fifty per cent. This debt, which was at high interest rates, largely took the form of mortgage debt on housing, office, and hotel structures, consumer installment debt, brokers' loans, and foreign debt. The stimulation to spend by debt-creation of this sort was short-lived and could not be counted on to sustain high levels of employment for long periods of time. Had there been a better distribution of the current income from the national product -- in other words, had there been less savings by business and the higher-income groups and more income in the lower groups -- we should have had far greater stability in our economy. Had the six billion dollars, for instance, that were loaned by corporations and wealthy individuals for stock-market speculation been distributed to the public as lower prices or higher wages and with less profits to the corporations and the well-to-do, it would have prevented or greatly moderated the economic collapse that began at the end of 1929.
The time came when there were no more poker chips to be loaned on credit. Debtors thereupon were forced to curtail their consumption in an effort to create a margin that could be applied to the reduction of outstanding debts. This naturally reduced the demand for goods of all kinds and brought on what seemed to be overproduction, but was in reality underconsumption when judged in terms of the real world instead of the money world. This, in turn, brought about a fall in prices and employment.
Unemployment further decreased the consumption of goods, which further increased unemployment, thus closing the circle in a continuing decline of prices. Earnings began to disappear, requiring economies of all kinds in the wages, salaries, and time of those employed. And thus again the vicious circle of deflation was closed until one third of the entire working population was unemployed, with our national income reduced by fifty per cent, and with the aggregate debt burden greater than ever before, not in dollars, but measured by current values and income that represented the ability to pay. Fixed charges, such as taxes, railroad and other utility rates, insurance and interest charges, clung close to the 1929 level and required such a portion of the national income to meet them that the amount left for consumption of goods was not sufficient to support the population.
This then, was my reading of what brought on the depression.
Current levels of debt have risen under Bush from a little under the peak of the Great Depression to 350 x GDP. Even with lax credit standards, government support what the current crisis says is that private levels of Debt are unsustainable. Public levels are not nearly at anything like this level.
Markets do two things to deal with debt bubbles if uncontrolled Weimer Germany had hyperinflation and we had a Depression. Note that people should be focusing on the aggregate levels of debt and the relatively high interest rates the public pays as compared to say Japan not the proximate misregulation which caused the immediate crisis. Robert Frank showed how a kind of trickle down leads to insatiable demand for debt amongst the people who have less money.
We need to do two things, none of which is popular in the fragmented US society which tolerates poverty well politically as long as it doesn't result in riots or other social unrest. First revoke the Reagan Tax cuts. Secondly, have massive government investment in productive enterprise, jobs, education, and infrastructure. Alternative energy is a good investment in the long term for sure but whether or not is best at the moment remains to be seen.
Should massive hyperinflation occur, a possibility. We would need to try to enforce a Bretton Woods type agreement. Such might be impossible in todays world. In any event Nixon's move to abolish Bretton Woods in 1971, was probably the wrong one and we may find that another variant of the original formula to our advantage as a nation and also to the World economy.