Mining accounted for 2.25% of the 2.8% drop, with hurricanes getting the blame. Whaaaa? How did these hurricanes do so much more damage than past hurricanes?
Business equipment outpuf off 7.0% (Boeing?). Consumer goods -1.4%. Construction supplies -1.5%. So even discounting the weather, there are some big declines in the month. Very widespread.
"Rest assured that in times of market volatility, Fidelity retains the strength and stability that you've come to expect from us.
As the markets continue to fluctuate, keep in mind:
Market volatility is normal, and is to be expected.
Your investments should reflect your risk tolerance and investment time frame.
Stay focused on your long-term goals.
Fidelity has 60 years of experience providing our customers with the service they need to help them feel confident about where they stand, even through changing market situations. We're here to do the same for you."
"Consumer prices were flat in September as retreating costs for gasoline, clothes and new cars helped to offset rising prices for food, medical care and other things."
You may have heard it last week..however it bears (no pun intended) repeating. Also this was the firm in which a senior manager made a trader dress up like a woman because he traded like a girl....
There is a lawsuit pending on that one.
On the negative side, Crude prices are still double what they were through the 2000-2003 period. Or maybe that's a positive - Crude has more room to get cheaper.
What people are forgetting is that, not only did the hurricanes knock out production in places like Houston and Galveston, which are big places, but it also disrupted gasoline supplies throughout the Southeast. And the fact that one huge financial institution started failing every weekend when Ike struck did not help matters. I personally found that I was great at "sticking to a new budget for about two weeks in September and have since relaxed. My guess is that October activity will be weak, but not nearly as weak as September activity.
Correction on "1996 prices" - I wish. I meant 2006 prices. Too bad they're not 1936 prices...
@Bilbo re: "Fidelity has 60 years of experience"
Got something very similar here as well. Paper mail.
Fidelity Translated: "We've been here ever since the going got good after the War, but we've never faced a crisis this bad. We're worried enough to send you a note, but we don't want YOU to be worried."
Conclusion: In this market, you can't trust anyone with less than 80 years of market experience. (1928-1942 being the critical period, eh?)
Oh wait... No such people. Damn. Can't trust anyone!
It is worth remembering that manufacturing/industrial production is only ~20% of our GDP.
The number needs to be readjusted. If consumer spending was 70%, but is taking a massive hit, that 20% is bigger now. And if the current account is going to start trending back to zero, manufacturing and production might end up being the biggest part of our much smaller economy.
Gold below $800. Is it demand destruction from industrial uses (on topic)? Industrial users might also be selling their raw material into the trading market rather than use it to make products that may not sell. Of course mentioned above somebody big might need cash. We won't be able to tell until/if real gold deliveries resume. That would tell me manufacturers were liquidating raw material inventory confirming the manufacturing output declines.
@safe_as_apartments: "It is worth remembering that manufacturing/industrial production is only ~20% of our GDP."
Except that it's the 20% at the bottom of the pyramid scheme. The rest of the economy is just re-spending the tangible wealth from the industrial production.
And except that it's the part that we need to grow to become less dependent on oil dictatorships and asian creditors...
@Rob Dawg - The jewelry industry has to be getting killed right now. No more MEW, no more stock options = demand destruction. Meanwhile, gold in inventory purchased at bubble prices, and financing costs skyrocketing... Would be an interesting thesis if I had time to trade on it...
I think it's hedge fund redemption for gold on this one. I check out gold prices in other currencies and it's at all time high's in some of them.
If COMEX does not get it's act right, trading might sometime in the future shift to another market which more reflects the paper and physical price.
A titanic market battle the next couple of days between the forces of forced hedgie unwinds vs. option market makers desperately trying to rally closer to the max pain points...
Gold below $800. Is it demand destruction from industrial uses (on topic)?
There is virtually no industrial use for Gold. Plating on electronics?
No - this move is either a fundamental move based on currency movements, inflation/deflation expectations, a reduction in fear - or a technical move (my guess) caused by forced position unwinds on margin calls and redemptions to hedge funds.
There is still a disconnect between the physical and paper market. My dealer (one of the largest in the country) just imposed limits on how many 1KG bars they will sell (up to 10), and have almost no 1oz coins left for sale.
It should be fascinating to watch the Comex prices as some people opt to take delivery.
India's economy slowing has the implications we are seeing in both manufacturing and glod. While it is likely we saw a position liquidation don't discount the possibility that it could be the result of an industrial consumer canceling physical orders be it jewelry or electronics, etc.
the indexes are loco. They whipsaw so fast it must be program trading driven. We've reached some level where chaos is starting to be the dominant theme.
Just my guess, but I think stock prices have near termed bottomed (near term=one month). Everybody knows things are bad, and that (I'm guessing) is reflected in stock prices. I think people have priced in a recession, the next decision point is how deep the recession will be. Just my guess.
anonymous writes:
the indexes are loco. They whipsaw so fast it must be program trading driven. We've reached some level where chaos is starting to be the dominant theme.
Price movements in gold are mostly due to investor demand(speculation). In India, their Diwali festival is near and the physical buying may help a bit but i doubt it unless it falls to maybe 600.
But in most other(and richer countries) investors are buying up the physical in droves.
if hedge funds are collapsing (and I don't think so - most are locked down, no redemptions, they can wait longer than this) then the market underlying must be strong to absorb that much selling.
Mostly a lurker, learner here with an observation--as the shit morphed from real estate to the stock market, so did this blog. When/if the gloom and doom reaches the streets, and crime goes way up, will this become a criminal law site? An agricultural site? An emigration how to site?
The market is absolutely insane. I have to drive to the office now (only 10 minutes or so before I am at my desk) and by the time I get there it may have jumped 500 points in either direction. Weee!
the indexes are loco. They whipsaw so fast it must be program trading driven. We've reached some level where chaos is starting to be the dominant theme.
I'm quite certain that this implies we'll finish deeply in red.
if hedge funds are collapsing (and I don't think so - most are locked down, no redemptions, they can wait longer than this)
They may be locked down for investor withdrawals, but when Mr. Margin calls, you can't really tell him "we're not allowing cash to leave the fund right now".
"if hedge funds are collapsing (and I don't think so - most are locked down, no redemptions, they can wait longer than this) then the market underlying must be strong to absorb that much selling."
Classic case on seeing what you want to see. These markets are institutionally driven.....they have not even begun to sell....when they do watch out. Someone will trump the others when the desire for self-preservation kicks in and break from the pack. This event (going "off-message") will be because they no longer aspire to join the ranks of an ever shrinking club/cartel, namely Hank's boys.
The Philly drop was driven by an orders drop (though the Philly headline index is not a composite of components). Anecdotal reports suggest firms stopped placing orders when they ran into credit troubles.
So while the big splat in IP is weather related, the big splat in Philly seems credit related. So IP may bounce in November, but not enough to make up the October slide by a long shot.
Mostly a lurker, learner here with an observation--as the shit morphed from real estate to the stock market, so did this blog. When/if the gloom and doom reaches the streets, and crime goes way up, will this become a criminal law site? An agricultural site? An emigration how to site?
Is it normal for the averages (e.g., the Dow) to jump, literally, 25 or 30 points in one second? My Ameritrade ticker updates about every second, and the averages are moving from red to green and back to red in chunks of 25 points.
Simple question: which hedge funds are levered and thus vulnerable to margin calls, and if so, what is the typical leverage ratio of a typical hedge fund? It isn't obvious to me that every hedge fund has to run on margin. You can do a lot with a billion dollars of other peoples money without leveraging it.
Switzerland to take on $60 billion of UBS assets.Credit Suisse raising money without Swiss government help
By Steve Goldstein, MarketWatch
Last update: 7:46 a.m. EDT Oct. 16, 2008
LONDON (MarketWatch) -- The Swiss government on Thursday became the first to take troubled assets off a bank balance sheet, reaching a deal to absorb up to $60 billion in mostly mortgage-related assets from UBS.
It isn't obvious to me that every hedge fund has to run on margin. You can do a lot with a billion dollars of other peoples money without leveraging it.
Not really.
Many hedge funds (I worked for one for 13 years) have strategies that produce returns that aren't really all that impressive, on unlevered money. For example, our basic stock trading strategies returned about 5%.
The way you get the really impressive 20% and up numbers everyone loves is by levering that 5% up. (We did 4x).
The problem, of course, is that if your historically stable (sharpe ratio = 3) strategy suddenly jags down, and you lose 25%..... you're wiped out.
Dave writes:
"Just my guess, but I think stock prices have near termed bottomed (near term=one month). Everybody knows things are bad, and that (I'm guessing) is reflected in stock prices. I think people have priced in a recession, the next decision point is how deep the recession will be. Just my guess."
I wish you were right, but there is no driver for any recovery. Home prices still have far to fall in many areas. Jobs continue to disappear. Many households are cash-strapped, and they feel far less wealthy due to large losses in home values and stock prices. Euro zone is in recession, so they don't need our goods. This market is still just figuring out how bad it will be.
The only thing I can say for sure, is "hold on, it is going to be a wild ride". Still think the downside risks far outweigh the upside.
"A fundraiser for a major hedge fund said the period “between now and December 1 is a sort of death march” for the industry.
The chief executive of a leading alternative investment manager said he expected the hedge fund industry to shrink by 50 per cent in coming months – with half the decline coming from withdrawals and half coming from investment losses."
I am told that I can expect great intimidation to not take delivery, or take a settlement in cash. I have been calling on a few friends to try an organize a group to begin placing multiple orders for delivery.
From what I have found, only 2%-3% of the futures contracts result in physical delivery, which is astounding to me.
I am told that Soros, broke the back of the gold market in the 80's doing the same thing when he placed a billion dollar order and insisted on delivery.
The entire physical market has disconnected form the Paper COMEX and LME market.
And the equity market for Gold miners seems even further disconnected.
GFI is getting almost as cheap as calls on GLD at the market for November expiry.
Once whatever we are witnessing finishes, I expect physical prices to fall some, paper prices to surge, and Gold equities to scream.
Of course, if Gold (paper and physical) both fall, many of the miners will have negative margins for each oz of Gold, and the equities will get reamed ala AIG.
I think you might see large private equity groups taking these small miners private and going vertical. Meaning they would refine their own product and cut out the middle.
This is what happened in oil when things disconnected. Exploration took on refining outfits and became totally vertical through to retail stations.
Only in the past 2 years have you seen these larger companies oil companies divest of their retailing arms.
With all the leveraging done over the past 10 years,(consumers, company, gov't, banks etc.), a big giant hedge fund exploding before our eyes. It won't go down without a fight, however.
most hedge funds suck. they just used leverage in a rising market to produce outsized gains. many have lost 20-30% this yr, and redemption orders are submitted. A lot will be liquidated over next 2 months, cause everyone expects market to trade even lower , and funds have proven they aint market neutral.
Oct. 16 (Bloomberg) -- European Union leaders pressed for an overhaul of the global financial system to prevent a repeat of the credit crunch that sparked the biggest stock-market selloff since the Great Depression.
EU leaders called for a global summit as soon as next month to rewrite the 1944 Bretton Woods accord that paved the way for Europe's post-World War II reconstruction and set up the institutions that oversee the world economy today.
Analysts react to Philly Fed survey: "The Philly Fed drop is shocking and we're going to see stocks dive. All the sub-gauges are equally horrendous and paint a bleak pictures of the future."
I don't think that EU has any real power to get its way. They may have delusions of power, but they have only a fraction of the real power they had in 1944 (yes 1944.. not a typo).
OhBoy writes:
Very bad news for the dollar :
EU Pushes for Overhaul of Postwar Financial System
Gav...here's a post I put up for you a few threads back:
MS writes:
Gavshire-
You mentioned yesterday about going long GooG calls but then changed your mind because you felt guidance would be terrible.....GOOG doesn't give forward forecasts. That is the one thing that kept me away from it from the start...sort of "trust us...now give us your money".
JoGa writes:
don't handles also suggest a market support point that is tested and held up, at least temporarily (hence the moniker)?
Support and resistance points are the subject of "technical analysis". I'm not familiar with "handles" being used in that context. Here's a pretty good source: $INDU - SharpCharts Workbench : StockCharts.com
" Average rates on fixed-rate mortgages shot up this week, according to Freddie Mac's survey released Thursday.
The 30-year fixed-rate mortgage averaged 6.46% nationally for the week ending Oct. 16, up more than half a percentage point from last week's 5.94% average. This was the largest weekly increase since the week ending April 17, 1987, when the mortgage rate went up 0.84 percentage point, according to Freddie Mac. The mortgage averaged 6.40% a year ago.
"
I think the days of the USD as the world's reserve currency are numbered.
But all of the other alternatives suck even more.
Yen has been a funding currency for the rest of the world and is clearly not a vibrant economy, nor is there great faith in the seperation of their fiscal/political and monetary policies.
The Euro has people questioning whether the currency can withstand this crisis, as you need to get Germans/Spaniards/Irish and Greeks all on the same page and willing to bail out each other.
The notion that China would be an economic super power larger than the US is as quaint as the decoupling theory... and a managed exchange rate currency isn't going to be in the running to be the new reserve currency anyway.
And Gold or other PM backed fixed exchange rates will prevent countries from managing their competitive currency devaluations, so I don't see either policy makers nor politicians going along with it.
I think people are starting to realize that even though we are putting money in the banks, they are dead anyways. Thier models are broken and there is no way they could pay all this money back. Right now this is money sustaining people's job's on wall street.
There are many theories floating around out there.
I have spoken to friends in London and Hong Kong, and there is something afoot but no one has clear details yet.
Take it at face value:
This was from Jim Willie:
JIM WILLIEÂ…
I got a great source of info who is involved in the current "Post-US World" planning, execution, positioning utterly frightening / jw
"some incredibly nasty "S" coming the USDollar is to be killed off, along with the USTreasury Bond it is to follow a plan, already agreed upon numerous global forces concluded and decided to kill off the US entirely since they could not separate the innocent from the crime syndicates they want to surgically cut off the Wall St guys, big bankers, arms dealers, Dept Treasury, a few global bank centers (IMF, WB) and more but they could not determine a method to do so, while sparing the US population
SO THEY DECIDED TO KILL OFF THE US
a new global currency has been agreed upon, a basket
it will be based upon the euro, ruble, yen, dinar notice the dollar and psterling are not included, therefore to become Third World Nations the common factor is that all four come from export surplus nations the dinar will be gold-backed and bring a sudden end to the Petro-Dollar the ruble is expected before long to also be gold-backed, but smaller in scope after Europe is forced to purchase all energy products from Russia in rubles, big changes word has come to me that a global basket will SOON displace the USDollar that will immediately kick the US into the Third Wold
the Canadian Dollar will survive ok since demanded to purchase commodities
the Chinese will want to keep it down somewhat, in order to render cheap their commodity bill
gold will be over 2000 by January, silver over 25
the paper gold and paper silver prices are now meaningless
the COMEX is setting up for a metals default
look for defaults in oil, gold, silver, and USTBonds before too many months
absolutely frightening nasty "S" is coming
Regarding hedge funds. I know a couple of guys with a fund. They are basically done. Most of their money has been locked up since the Lehman fiasco. Clients are submitting withdrawal orders, but you can't get blood from a stone.
GB@IB.1 - Brent Crude Oil ICE
13 Nov 2008Last/Bid\t70
Ask\t0.000
Net Change\t-2.230
Last Close\t0.000
Prev. Settlement\t72.580
$\tUSD
Date\t16 Oct 2008 10:34
High\t72.160
Low\t68.840
Last Close Date\t16 Oct 2008
Settle Date\t14 Oct 2008
Exchange\tGBIF
Comrade Serf Mike writes:
I think people are starting to realize that even though we are putting money in the banks, they are dead anyways. Thier models are broken and there is no way they could pay all this money back. Right now this is money sustaining people's job's on wall street.
I think you have to draw a distinction between traditional banks and "the shadow banking system". It is the latter that is collapsing, and the former that is being saved. It's the "fake" money that is the subject of this run on the bank.
My real hope going forward is that the fed finally routs an end to inflation forever. Not likely, but very necessary. Money supply should NEVER exceed the underlying growth rate.
Without inflation, wall street would be 75% smaller. And most Americans would be much richer.
State Treasurer Bill Lockyer yesterday said he's increasing the sale by $500 million to $4.5 billion and lowering the potential yield range, which remained a half-percentage point above what the state paid last year. The decision came after individual investors ordered $3.9 billion of notes and before institutions such as money market funds place orders today.
Re: Bretton Woods, it's obviously not in the US interest to lose our status as reserve currency for the world. At the same time, this credit bubble couldn't have grown as big as it did under a framework like Bretton Woods. The massive current account deficits we've been running would have long since caused a healthy recession in the US and inflation in China which would have righted the international trade ship. So if we're not gonna have something like Bretton Woods, then the US needs to find some way to impose discipline on its own system without it.
I can see that scenario unfolding. Treasury can't keep flooding the market with "products" and still think that the chinese are going to play ball. A basket of currencies is a little hard to imagine though.....I say they just tank all Fiat money and just return to the BW standard. Easiest way to accomplish the same thing and you don't have many gov't's with the ability to influence it by either hoarding or printing. I think they want to get away from that...sort of the problem that the US is doing.
Yes, I am aware of that. The best hope is still a weighed currency basket rather than one currency or we will go down a similar road in the very near future. No one nation should have control over the reserve currency and it should not be linked to gold or any PM.
MW writes:
Petersan:
I don't think it is a question of who goes along with it anymore.
The level of discontent and genuine contempt for the US in Europe and Asia is unbelievable.
Funny enough, I used to work for a credit card processor that used such credit requirements for allowing a business to use credit cards.
The model worked because the fraud department I ran watched like a hawk, and stepped in at the first sign of trouble--we kept our fraud losses to around 1 basis point of transaction volume.
Adding on; when we were bought out, the new fraud department didn't understand the fraud/credit model, and their losses jumped by a factor of 20+ within a month.
the dollar will survive fine, because the euro may fall apart. the problems there are not uniform and ecb has no ability to tax to fund the bailout. It will be a shining example of why countries must have their own currencies.
1] The end of western europe as a region of any significance- bad demographics, decreased consumption, innovation hindering environment, still living in the past, stratified society, poor integration of immigrants.
2] The beginning of the end of Australia, NZ and Canada as white dominated societies. While these countries might survive in their present form, they will have to change a lot.They will have to diversify beyond their current economic base, allow innovation and foster integration- otherwise they are screwed. Then again they do have a lot of idiots who live in the 1900s.
In my experience with canucks, only white canadians whose ancestors came to canada before WW2 (canucks) have such uncritical belief in their "superiority".
Almost everyone who came to canada post WW2, especially since the 1960s has a rather dim view of canada and canucks. This dim view of canada is shared by many immigrants irrespective of color or language. Some of worst critics of canucks are brits who moved to canada in the 1960s-and 1970s.
3] The US will probably do better than any western country for one reason- willingness to change. The one trend that has always manifested throughout US history has been a willingness to give up old ideas that are no longer workable. Often this requires a bad event to manifest itself (Civil War, WW1, DG1, WW2, Civil Rights Movement) but things do change for the better. Well most of the time.. at least.
One example- for all the history of poor treatment of non-white people, we today have many rich people, CEOs, well compensated innovators and yes.. kashkari- who are non-white. Compare that to any other country.
4] China is the big unknown. It could either realize the fallacy of neo-mercantilism and encourage it's own citizens to consume. It could also slip back into it's nationalistic shell- and get civil unrest/ posturing/ revolutions etc. Who knows??
5] Other Asian countries (excluding japan)- They have got their s**t together. Should do OK in the medium term. Long term, who knows?? - No one can consistently predict the future beyond 10-15 years.
6] Japan- If they do not become less xenophobic, they are f**ked. Their demographic profile is atrocious. If they get over their xenophobia, they could make it through this storm and end up better than they are now.
7] India- Lots of potential, but the society is too feminised and respectful of old idiots. Once they get over that and realize that they are in it together- they have a bright future. They could also destroy themselves through excessive infighting and mercantile attitudes.
8] Africa- If they get their s**t together and rearrange their boundaries in the way they see fit, things could improve. Peace+ need for more consumers might make it a very good place for growth. Who knows??
9] Middle East- Bright future if they become much less religious. Otherwise they are gonna get nuked one of these days. I feel the latter option is more likely.
Wow, I go get a bowl of Cheerios and the tinfoil futures in the comments section skyrockets.
Look, normally I'm polite when I disagree but anyone who thinks a unified world currency can ignore/exclude a quarter of the world economy is serious tinfoil material. Anybody who thinks a world currency involving a radical Islamist nation and a communist military nation and an emerging oligarchy as member nations is even crazier.
popeye writes:
I think you have to draw a distinction between traditional banks and "the shadow banking system". It is the latter that is collapsing, and the former that is being saved. It's the "fake" money that is the subject of this run on the bank.
popeye | 10.16.08 - 10:52 am | #
Could someone construct or suggest an "indicator" capable of showing the progress of this process? Please?
I don't see how you go to a basket of currencies successfully -- if you are a foreign holder -- without exiting the dollar first to minimize the damage. That's just not happening at all in either currencies or treasuries. For the moment, that just sounds like more gloom and doom...
All of the negative movement in the markets remind me of a great quote by The House Speaker in front of the cameras when the bailout bill was apssed and the next day we went up 700 points and she introduced Barney Frank as "Miestro"..
All looks silly now, makes for a good campaign commercial for the McCain camp...
The dollar will remain the predominant reserve currency -not because the fundamentals demand it but because of the sheer weight of the world's dollar reserves. The Asians have an interest in the status quo.
"Let the cascading walk-away waterfalls begin."
damondidit | 10.16.08 - 11:12 am | #
How bad is it when you easily overhear multiple converstions in the break room at work about this very subject??? Rob Dawg has harped on this since the beginning. When people who work for large stable companies start saying "Fuck It" we are in real trouble. We are close around here...
i dont know how you guys can get into new option positions with the vix so high..
apart from the bad bid/ask spreads, you can be very right about the move in the underlying, and still lose due to sinking vol.. anything near the strike is exorbitant and far away -- well, that's like hoping to be right twice over.
virgile writes:
The dollar will remain the predominant reserve currency -not because the fundamentals demand it but because of the sheer weight of the world's dollar reserves. The Asians have an interest in the status quo.
My default opinion is things will change in a way that they stay the same, but certain people who argue for dollar strength on here fall back to a combination of outright nationalism/racism to predict a future that suits their interests. Normally those same people would not even bring themselves to question the dollar so that is a big step.
Worst comes to worse, the US is poised for a second gilded age where the GDP stays up there but the gini coefficient spikes
Thanks to CR, popeye, etc., who search for the constructive.
Attacked by a bear, you look for a tree. It is rational, not a sign of some kind of weakness to be despised.
It is a component of leadership too, needed now.
Wow, people must have been unimpressed by the dabate last night. Now they know there is no hope when the plan being espoused by the 'conservative' entails supporting high home prices with government intervention by handing out a free pass to the most egregious borrowers in the whole damned debacle.
From the Miami Herald article: Rather than default and ruin their credit, Hardin said people who can make their payments are better off hanging on, since, as with other investments, they will probably come out ahead in the long run. Additionally, many borrowers put no money down, making their eventual return potentially more handsome than others who did.
''If you are upside down now and hold for 15 years, you'll make a return that is competitive. There is almost no scenario where if you held for seven to eight years you would still be under water,'' Hardin said.
Chavez WAS ousted in a coup that we sadly didn't back.
unit472
Wrong, we did and it failed. Methinks our South American strategy is in tatters given the past 6 years.
Presumably some oil and gas production will cease as prices decline. That is why it is not in our long term interest to have very low oil prices.
$75-100 per barrel/$3 per gallon seems reasonable. It encourages producing more oil and alternative energy sources, more fuel efficient vehicles etc.
I've been in favor of putting a floating tariff on imported oil to keep our domestic price in this range
rather than going through the boom bust cycle we had in the 1980's.
I see India invading Pakistan in the name of anti-terrorism. India is a country with more people than the United States, and they all are smarter and harder working. They will have no reason to tolerate the Pakistainis any longer. One has a space program, the other is bankrupt.
With the ISI hurting America in Afghanistan, India and America will ally to colonize the backwards tribespeople of Pakistan. This will help America and the dollar long term by providing a counterweight to China in the medium term.
Chavez WAS ousted in a coup that we sadly didn't back.
unit472 | 10.16.08 - 11:27 am | #
You did back it. That was partly why it failed. The USA doesn't have the sway it used to and the South Americans appear to be sick of your meddling. If Chavez gets ousted it'll have to be from an internally grown and organic coup.
The oil swings have more to do with the insane inelasticity of oil. A 5% drop in oil demand (or increase in supply) halves the price. A worldwide depression could easily drop it from 140 to 35 just on the fundamentals of a 10% cut in demand.
The Chinese were hoarding bigtime up to the Olympics, too. Now they're cutting back purchases to cut their inventory. There's a reason things turned around right around the Olympics.
I see India invading Pakistan in the name of anti-terrorism. India is a country with more people than the United States, and they all are smarter and harder working. They will have no reason to tolerate the Pakistainis any longer.
satan | 10.16.08 - 11:34 am | #
The Pakistanis have Nukes. India isn't going to invade anyone. Put your war porn back in your pants.
Actually I heard the Chinese were burning diesel in lieu of coal for electricity in the run up to the games to reduce the smog over Beijing thus the super high diesel prices in the spring and summer.
This is another reason to stabilize the price of oil via a floating tariff on oil imports. You could use the revenue during low price periods to build a stockpile that would be released when prices began to soar.
Satan makes a fair point that the instability in South Asia is more India's problem than ours. That Pakistan has nukes though is a global
problem as we have seen via Dr. A.Q.
Khan's proliferation efforts.
At some point India may well have to make a tough choice as it did in 1971 and break Pakistan up into further non nuclear pieces.
Now that I am no longer considered bats**t crazy just crazy for my "it's different this time" because the new recent generation of buyers has no moral anchor to their credit/debt obligations we can move on up the fod chain. From REOs to MOAs:
Seems those clever lenders have another trick up their sleeve. Rather than take on the obligations of actual ownership they merely foreclose in the loan but do not take possession of the property. Recall from your extensive UberNerd™ education by Tanta and CR at Calculated Risk that lenders do not foreclose on people or property but loans.
At some point India may well have to make a tough choice as it did in 1971 and break Pakistan up into further non nuclear pieces.
unit472 | 10.16.08 - 11:44 am | #
Once the nuclear genie is out of the bottle you can't put it back. I doubt very much that any country with nuclear weapons is going to be attacked by anyone. The fallout (no pun intended) is just too large. Complete instability and madmen in charge though can turn situations bad pretty quickly. I ws concerned for a while that the USAs idiot in chief might use nukes in iraq. Thankfully he wasn't quite as stupid as he looks.
Weeell, back in 2002, when the US-backed coup failed to unseat Chavez, the average spot oil price for the year was a magnificent $26.18 - just on the high end of the OPEC price-target of $22-28 per barrel.
Back in 2006 Chavez stated quite plainly that OPEC would be happy with a $50 per barrel oil price ( 2006 average oil price was $66.64 ).
Wrong, we did and it failed. Methinks our South American strategy is in tatters given the past 6 years.
What a hubris-laden move that was. Our foreign policy consists of one rule: We don't need friends with oil, only puppet regimes with oil. In the end the coup strengthened Chavez's position, because nothing solidifies power like giving a paranoid cult leader proof to hold up to his followers that they really must all fall in line behind his rhetoric or everyone will be sorry.
Bush respects democratically elected leaders. I know because he always says he does.
I wouldn't call it moving up the food
chain from REO to MOA. This is what has Cleveland, amongst other cities, upset in that the banks do not want back housing in low income areas. It is essentially worthless by the time it is defaulted on.
It's like HUD property. You can get it for nothing if you are willing or crazy enough to live in it but sell it? Only when the NINJA loan system was up and running.
Back in 2006 Chavez stated quite plainly that OPEC would be happy with a $50 per barrel oil price ( 2006 average oil price was $66.64 ).
The only problem is that he's spent the last several years squandering all of the country's oil revenues rather than investing them in infrastructure improvement.
Er guys, the coup leaders had Chavez in their custody. They released him, instead of executing him, when it was apparent they would not have the backing of the USG.
Look, normally I'm polite when I disagree but anyone who thinks a unified world currency can ignore/exclude a quarter of the world economy is serious tinfoil material.
Rob Dawg: yes, a sudden, new, reserve currency would seem implausible. But you have to pause just a moment, and think about how we are seen by the rest of the world. There is deep distrust of the present Inside-the-Beltway political order.
We might think that 19 Arabs in a cave pulled off 9/11, but almost nobody else in the world does. They see fingerprints of an inside job all over the place. We might think that it is okay to use lies to gin up a war in Iraq, in which hundreds of thousands are killed. The rest of the world does not. They see a regime willing to commit mass murder fighting an immoral wars (then not win it). We might think that it is okay for the Israelis, and Zionist Jews, to direct our foreign policy. The rest of the world does not. They see that the present leadership in Washington, when it comes to Israel, is little more than a gaggle of male prostitutes.
We may think that the present regime in Washington is legitimate. The rest of the world does not. We have lost legitimacy -- and this is a big deal.
Re: The Philly Fed diffusion index fell to negative 37.5 in October from positive 3.8 in September. Readings below zero indicate contraction. The decline was much larger than expected.
Look, normally I'm polite when I disagree but anyone who thinks a unified world currency can ignore/exclude a quarter of the world economy is serious tinfoil material.
Rob Dowg, yes, a sudden, new, reserve currency would seem implausible. But you have to pause just a moment, and think about how we are seen by the rest of the world. There is deep distrust out there of the present Washington political order.
We might think that 19 Arabs in a cave pulled off 9/11, but almost nobody else in the world does. They see fingerprints of an inside job all over the place. We might think that it is okay to use lies to gin up a war in Iraq, in which hundreds of thousands are killed. The rest of the world does not. They see a dangerious regime, willing to commit even mass murder. We might think that it is okay for the Israelis, and Zionist Jews, to direct our foreign policy. The rest of the world does not. They see that the present leadership in Washington, when it comes to Israel, is little more than a gaggle of male prostitutes.
We may think that the present regime in Washington is legitimate. The rest of the world does not. We have lost legitimacy in their eyes -- and this is a big deal.
They didn't have a lot of choice - the OAS closed ranks with Chavez - democratically elected and consitutionally secure in his position - and demanded his release, the "loyalist" military/police made it clear that they would not follow their orders, and the counter-coup demonstrations were huge.
One thing that I'm pretty sure of is that Carmona and his buddies didn't fancy the prospect of being necklaced if they tried to tough it out - they really had very little support that was prepared to actually bleed/kill for the cause.
I can't find the transcript, which sucks. It was on TV at the time, when, as things were falling apart, Carmona was complaining about the U.S. backing off their support and turning on him. I remember the comment well because I really expected/hoped it would derail Bush's authority for meaningless war for regime change, given how stellarly incompetent they clearly were at it.
Otto Reich and other administration officials met with Carmona at the white house in the year leading up to the coup, that's been admitted to, and Reich was on the phone with him the day of the coup, "pleading with him" to not suspend the supreme court, the parliament and the constitution.
The other little trick I remember from those events was the administration announcing to congress ahead of schedule and erroneously that Chavez had resigned. Ba ha ha. Ah, and we're still stuck with Bush and they're still stuck with Chavez.
First!
Where's Nemo?
CR posts sky-rocketing.
Where's Nemo?
Comrade Terry | 10.16.08 - 9:31 am | #
Standing in a bread line?
Smells like...
deflation.
from the who-coulda-guessed-it department: Winnebago sales plunged 64% last quarter.
so much for that +200 futures on the dow. Day might still close up hugely come close, but the futures that made cnbc so chirpy vanished in a puff.
Mining accounted for 2.25% of the 2.8% drop, with hurricanes getting the blame. Whaaaa? How did these hurricanes do so much more damage than past hurricanes?
Business equipment outpuf off 7.0% (Boeing?). Consumer goods -1.4%. Construction supplies -1.5%. So even discounting the weather, there are some big declines in the month. Very widespread.
from the who-coulda-guessed-it department: Winnebago sales plunged 64% last quarter.
anonymous | 10.16.08 - 9:36 am | #
They can be lived in. Unfortunately, anyone evicted from a house would probably not afford to buy one or pay for the gas.
yahoo: "stocks points higher after tame inflation reading" LOL
Can I haz airplane-maker bailout now?
Fidelity e-mail concerning my 401k:
"Rest assured that in times of market volatility, Fidelity retains the strength and stability that you've come to expect from us.
As the markets continue to fluctuate, keep in mind:
Market volatility is normal, and is to be expected.
Your investments should reflect your risk tolerance and investment time frame.
Stay focused on your long-term goals.
Fidelity has 60 years of experience providing our customers with the service they need to help them feel confident about where they stand, even through changing market situations. We're here to do the same for you."
Where's my rally?!?!? Come on, we don't manufacture things, we manufacture debt. Look at Citi, and Merril. That's is the new economy in action.
I couldn't get my funds out of Fidelty if I wanted to - my employer won't let me.
I can't believe "build a bear" (specialty retail) is a listed stock with a market cap of $90m (down from 500m a year ago).
Nice hit on gold, which hedge fund is liquidating this time?
A real gem from the AP.
"Consumer prices were flat in September as retreating costs for gasoline, clothes and new cars helped to offset rising prices for food, medical care and other things."
and other things.
Phew, there it is...
all is normal now
SAC went to cash....
1440 Wall Street
You may have heard it last week..however it bears (no pun intended) repeating. Also this was the firm in which a senior manager made a trader dress up like a woman because he traded like a girl....
There is a lawsuit pending on that one.
Ciao
MS
On the positive side, the Bubble in oil prices has now been erased back to at least 1996 prices...
http://quotes.ino.com/chart/?s=NYMEX_CL.Z08.E&v=dmax
So now we can afford to buy more of what we're not producing! (Take that any way you wish...)
But shouldn't a few trillion in bailout money contribute to production? Seems productive to me...
anonymous writes:
I can't believe "build a bear" (specialty retail) is a listed stock with a market cap of $90m (down from 500m a year ago).
A bear market for bears. Who saw that coming...
I thought GDP was up 3.2 percent at last report according to the authorities.
Strange reversal.
On the negative side, Crude prices are still double what they were through the 2000-2003 period. Or maybe that's a positive - Crude has more room to get cheaper.
What people are forgetting is that, not only did the hurricanes knock out production in places like Houston and Galveston, which are big places, but it also disrupted gasoline supplies throughout the Southeast. And the fact that one huge financial institution started failing every weekend when Ike struck did not help matters. I personally found that I was great at "sticking to a new budget for about two weeks in September and have since relaxed. My guess is that October activity will be weak, but not nearly as weak as September activity.
It is worth remembering that manufacturing/industrial production is only ~20% of our GDP.
Still. Cratering is bad.
yep, kiawah. (banging head on wall to realign neurons).
Seeing jekyll spelled funky threw my brain into an endless loop of e's and a's on Kiawah.
Thanks, anon. Could be a long day for me.
Correction on "1996 prices" - I wish. I meant 2006 prices. Too bad they're not 1936 prices...
@Bilbo re: "Fidelity has 60 years of experience"
Got something very similar here as well. Paper mail.
Fidelity Translated: "We've been here ever since the going got good after the War, but we've never faced a crisis this bad. We're worried enough to send you a note, but we don't want YOU to be worried."
Conclusion: In this market, you can't trust anyone with less than 80 years of market experience. (1928-1942 being the critical period, eh?)
Oh wait... No such people. Damn. Can't trust anyone!
It is worth remembering that manufacturing/industrial production is only ~20% of our GDP.
The number needs to be readjusted. If consumer spending was 70%, but is taking a massive hit, that 20% is bigger now. And if the current account is going to start trending back to zero, manufacturing and production might end up being the biggest part of our much smaller economy.
Gold below $800. Is it demand destruction from industrial uses (on topic)? Industrial users might also be selling their raw material into the trading market rather than use it to make products that may not sell. Of course mentioned above somebody big might need cash. We won't be able to tell until/if real gold deliveries resume. That would tell me manufacturers were liquidating raw material inventory confirming the manufacturing output declines.
"safe_as_apartments writes:
It is worth remembering that manufacturing/industrial production is only ~20% of our GDP."
That's reassuring only until you recall that the other 80% is CDS.
(I know, not quite.)
@safe_as_apartments: "It is worth remembering that manufacturing/industrial production is only ~20% of our GDP."
Except that it's the 20% at the bottom of the pyramid scheme. The rest of the economy is just re-spending the tangible wealth from the industrial production.
And except that it's the part that we need to grow to become less dependent on oil dictatorships and asian creditors...
i think this move in gold must be one of the largest in the shortest space of time on record? $50 in about 15 minutes.
Somebody done blowed up reeeeeal good...
@Rob Dawg - The jewelry industry has to be getting killed right now. No more MEW, no more stock options = demand destruction. Meanwhile, gold in inventory purchased at bubble prices, and financing costs skyrocketing... Would be an interesting thesis if I had time to trade on it...
Is it too early to start calling president Obama, Barak Hoover?
Somebody done blowed up reeeeeal good...
Popeye?
Rob Dawg:
I think it's hedge fund redemption for gold on this one. I check out gold prices in other currencies and it's at all time high's in some of them.
If COMEX does not get it's act right, trading might sometime in the future shift to another market which more reflects the paper and physical price.
Thanks CR. Fantastic blog.
2. I just bought some gold..
A titanic market battle the next couple of days between the forces of forced hedgie unwinds vs. option market makers desperately trying to rally closer to the max pain points...
Comrade Peronista writes:
2. I just bought some gold..
Sure looks like a good deal now.. till the next fund disintegrates and has to liquidate.
There is virtually no industrial use for Gold. Plating on electronics?
No - this move is either a fundamental move based on currency movements, inflation/deflation expectations, a reduction in fear - or a technical move (my guess) caused by forced position unwinds on margin calls and redemptions to hedge funds.
There is still a disconnect between the physical and paper market. My dealer (one of the largest in the country) just imposed limits on how many 1KG bars they will sell (up to 10), and have almost no 1oz coins left for sale.
It should be fascinating to watch the Comex prices as some people opt to take delivery.
Comrade Peronista writes:
How? For delivery?
"Conclusion: In this market, you can't trust anyone with less than 80 years of market experience. (1928-1942 being the critical period, eh?)"
Trust Lehman, they've been around for 150 years. Oh, wait....
India's economy slowing has the implications we are seeing in both manufacturing and glod. While it is likely we saw a position liquidation don't discount the possibility that it could be the result of an industrial consumer canceling physical orders be it jewelry or electronics, etc.
It should be fascinating to watch the Comex prices as some people opt to take delivery.
Am waiting (and hoping) someone will take advantage of this arbitrage to set prices straight.
the indexes are loco. They whipsaw so fast it must be program trading driven. We've reached some level where chaos is starting to be the dominant theme.
% output alone on factories????? Can not locate.
Industrial Production: Cliff Diving, Write Downs: Citi $4.4 Billion, Merrill $9.5 Billion,Weekly Unemployment Claims Up,NY Times: House Prices Far From Bottom........
Futures UP!!
Priceless.
Watched the Dow go from +60 to -30 to +50 in a few seconds. Ow.
Just my guess, but I think stock prices have near termed bottomed (near term=one month). Everybody knows things are bad, and that (I'm guessing) is reflected in stock prices. I think people have priced in a recession, the next decision point is how deep the recession will be. Just my guess.
anonymous writes:
the indexes are loco. They whipsaw so fast it must be program trading driven. We've reached some level where chaos is starting to be the dominant theme.
It's not magic. Hedge funds are collapsing.
Rob Dawg:
Price movements in gold are mostly due to investor demand(speculation). In India, their Diwali festival is near and the physical buying may help a bit but i doubt it unless it falls to maybe 600.
But in most other(and richer countries) investors are buying up the physical in droves.
if hedge funds are collapsing (and I don't think so - most are locked down, no redemptions, they can wait longer than this) then the market underlying must be strong to absorb that much selling.
whoa philly fed factory index -37.5 vs 3.8 in sept!
Anon writes:
Watched the Dow go from +60 to -30 to +50 in a few seconds. Ow.
Problem with this paper market is that it can swing either way. Didn't it just go up about 100 a few weeks back.
Pure gambling.
Mostly a lurker, learner here with an observation--as the shit morphed from real estate to the stock market, so did this blog. When/if the gloom and doom reaches the streets, and crime goes way up, will this become a criminal law site? An agricultural site? An emigration how to site?
"oct drop in philly factory index is largest ever".
The market is absolutely insane. I have to drive to the office now (only 10 minutes or so before I am at my desk) and by the time I get there it may have jumped 500 points in either direction. Weee!
Peter-san:
Who is your dealer for PM?
I'm hoping for coverage of the latest innovations in barter myself.
the indexes are loco. They whipsaw so fast it must be program trading driven. We've reached some level where chaos is starting to be the dominant theme.
I'm quite certain that this implies we'll finish deeply in red.
Mel: it is still ultimately an economic and financial analysis site, but the comments will shift to whatever suits the participants at the moment.
if hedge funds are collapsing (and I don't think so - most are locked down, no redemptions, they can wait longer than this)
They may be locked down for investor withdrawals, but when Mr. Margin calls, you can't really tell him "we're not allowing cash to leave the fund right now".
Philly Fed index falls unexpectedly to -37.5 percent in October
MW writes:
Peter-san:
Who is your dealer for PM?
Post an e-mail address. Am not going to slam my dealer - they are already having enough trouble answering the phone.
"if hedge funds are collapsing (and I don't think so - most are locked down, no redemptions, they can wait longer than this) then the market underlying must be strong to absorb that much selling."
Classic case on seeing what you want to see. These markets are institutionally driven.....they have not even begun to sell....when they do watch out. Someone will trump the others when the desire for self-preservation kicks in and break from the pack. This event (going "off-message") will be because they no longer aspire to join the ranks of an ever shrinking club/cartel, namely Hank's boys.
Ciao
MS
The Philly drop was driven by an orders drop (though the Philly headline index is not a composite of components). Anecdotal reports suggest firms stopped placing orders when they ran into credit troubles.
So while the big splat in IP is weather related, the big splat in Philly seems credit related. So IP may bounce in November, but not enough to make up the October slide by a long shot.
Eric has that right. Comment of the morning.
Margin Call of Cthulhu is cracking the whip.
Some OT news :
U.S. Industrial Production Fell 2.8%, Most Since 1974
U.S. Industrial Production Fell 2.8%, Most Since 1974 (Update2) - Bloomberg.com
Oh boy, Mel.
'I just bought some gold'
Ha, I didn't even know about that fall. I bought some physical gold on way home from work. Live in asia.
Someone will trump the others when the desire for self-preservation kicks in and break from the pack.
Exactly correct.
Rule #1: Don't panic
Rule #2: If you're going to panic, panic first.
If it's down that much here, I wonder how much it's down in China. A LOT more I hope.
oops sorry , the same article.
UBS has been nationalized by the swiss? How can they do that- assets of UBS: GDP of Switzerland is approximately 4.8
Petersan:
Just give me a location in the Country, City and State, I know most of them.
I want to see if they do in fact of kilo bars.
I found a few yesterday that I bought, from someone I have purchased from for many years.
Mostly a lurker, learner here with an observation--as the shit morphed from real estate to the stock market, so did this blog. When/if the gloom and doom reaches the streets, and crime goes way up, will this become a criminal law site? An agricultural site? An emigration how to site?
Best comment in last (lost?)decade!!
You win.
You smell that Rabbit?
...
Fear.
"This is the start of a new bull market."
-- CNBC 10.13.08
Serious question to those with more experience:
Is it normal for the averages (e.g., the Dow) to jump, literally, 25 or 30 points in one second? My Ameritrade ticker updates about every second, and the averages are moving from red to green and back to red in chunks of 25 points.
This cannot be normal, is it?
Simple question: which hedge funds are levered and thus vulnerable to margin calls, and if so, what is the typical leverage ratio of a typical hedge fund? It isn't obvious to me that every hedge fund has to run on margin. You can do a lot with a billion dollars of other peoples money without leveraging it.
This cannot be normal, is it?
Been said before, these are not normal times.
C. Doofus: I have the same strange gap in XLF, SKF.
That was a helluva sell, whatever it was.
Switzerland to take on $60 billion of UBS assets.Credit Suisse raising money without Swiss government help
By Steve Goldstein, MarketWatch
Last update: 7:46 a.m. EDT Oct. 16, 2008
LONDON (MarketWatch) -- The Swiss government on Thursday became the first to take troubled assets off a bank balance sheet, reaching a deal to absorb up to $60 billion in mostly mortgage-related assets from UBS.
satan writes:
UBS has been nationalized by the swiss? How can they do that- assets of UBS: GDP of Switzerland is approximately 4.8
They got help from Paulson at US taxpayer's expense (not joking)
MW - Wilmington DE
The entire physical market has disconnected form the Paper COMEX and LME market.
This is very dangerous as there is no trust any longer in the futures.
I am placing a a few mini contracts for physical delivery and I am anxious to see what happens.
If I can sell physical in the open market today at 40%-50% premiums to spot I am all over it.
I have already located a refiner and plan to refine the product as well.
Oh boy, Mel.
'I just bought some gold'
Ha, I didn't even know about that fall. I bought some physical gold on way home from work. Live in asia.
Petersan:
Thank you. I know who it is.
They are very good folks.
I have never bought from them but have heard good things about them.
Thanks again.
MW:
Do let us know how it turns out. Even a 30% gross profit would be immense.
Yes I know that but how are they going to handle their MBS, SIV,CDS exposure and what about level 3 assets (mark-model) assets?
Anyone how thinks hedge funds are on "lockdown" might want to read this article in today's FT:
FT.com / Financials - US hedge funds suffer heavy withdrawals
An emigration how to site?
Mel | 10.16.08 - 10:15 am | #
Come back at midnight for some great squirrel recipies.
Anybody see this? Calculated Risk is number ONE
The Mess That Greenspan Made: Realigning the econo-blogosphere
It isn't obvious to me that every hedge fund has to run on margin. You can do a lot with a billion dollars of other peoples money without leveraging it.
Not really.
Many hedge funds (I worked for one for 13 years) have strategies that produce returns that aren't really all that impressive, on unlevered money. For example, our basic stock trading strategies returned about 5%.
The way you get the really impressive 20% and up numbers everyone loves is by levering that 5% up. (We did 4x).
The problem, of course, is that if your historically stable (sharpe ratio = 3) strategy suddenly jags down, and you lose 25%..... you're wiped out.
Will the Boomers stampede out of stocks again today?
Even better
CR - Now endorsed by the 2008 Economic Nobel Prize Winner
Anybody see this? Calculated Risk is number ONE
http:// themessthatgreenspanmade....logosphere.html
rockysan99 | Homepage | 10.16.08 - 10:26 am | #
russia finances are imploding (reserves diminishing at unsustainable rate, battle to defend rouble).
I don't imagine the oligarchs being particularly selfless with their fortunes if they are asked to help save the motherland.
Dave writes:
"Just my guess, but I think stock prices have near termed bottomed (near term=one month). Everybody knows things are bad, and that (I'm guessing) is reflected in stock prices. I think people have priced in a recession, the next decision point is how deep the recession will be. Just my guess."
I wish you were right, but there is no driver for any recovery. Home prices still have far to fall in many areas. Jobs continue to disappear. Many households are cash-strapped, and they feel far less wealthy due to large losses in home values and stock prices. Euro zone is in recession, so they don't need our goods. This market is still just figuring out how bad it will be.
The only thing I can say for sure, is "hold on, it is going to be a wild ride". Still think the downside risks far outweigh the upside.
"A fundraiser for a major hedge fund said the period “between now and December 1 is a sort of death march” for the industry.
The chief executive of a leading alternative investment manager said he expected the hedge fund industry to shrink by 50 per cent in coming months – with half the decline coming from withdrawals and half coming from investment losses."
FT.com / Financials - US hedge funds suffer heavy withdrawals
I will.
I am told that I can expect great intimidation to not take delivery, or take a settlement in cash. I have been calling on a few friends to try an organize a group to begin placing multiple orders for delivery.
From what I have found, only 2%-3% of the futures contracts result in physical delivery, which is astounding to me.
I am told that Soros, broke the back of the gold market in the 80's doing the same thing when he placed a billion dollar order and insisted on delivery.
And the equity market for Gold miners seems even further disconnected.
GFI is getting almost as cheap as calls on GLD at the market for November expiry.
Once whatever we are witnessing finishes, I expect physical prices to fall some, paper prices to surge, and Gold equities to scream.
Of course, if Gold (paper and physical) both fall, many of the miners will have negative margins for each oz of Gold, and the equities will get reamed ala AIG.
Sorry about that double post. Tomorrow buying cigarettes and whiskey.
Petersan:
I think you might see large private equity groups taking these small miners private and going vertical. Meaning they would refine their own product and cut out the middle.
This is what happened in oil when things disconnected. Exploration took on refining outfits and became totally vertical through to retail stations.
Only in the past 2 years have you seen these larger companies oil companies divest of their retailing arms.
I can see the market hitting a 7 handle today easily
MW-
very interesting take on the jr. miners vs. exploration/refiners.
thanks!
With all the leveraging done over the past 10 years,(consumers, company, gov't, banks etc.), a big giant hedge fund exploding before our eyes. It won't go down without a fight, however.
most hedge funds suck. they just used leverage in a rising market to produce outsized gains. many have lost 20-30% this yr, and redemption orders are submitted. A lot will be liquidated over next 2 months, cause everyone expects market to trade even lower , and funds have proven they aint market neutral.
Very bad news for the dollar :
EU Pushes for Overhaul of Postwar Financial System
EU Pushes for Overhaul of Postwar Financial System (Update2) - Bloomberg.com
Oct. 16 (Bloomberg) -- European Union leaders pressed for an overhaul of the global financial system to prevent a repeat of the credit crunch that sparked the biggest stock-market selloff since the Great Depression.
EU leaders called for a global summit as soon as next month to rewrite the 1944 Bretton Woods accord that paved the way for Europe's post-World War II reconstruction and set up the institutions that oversee the world economy today.
Analysts react to Philly Fed survey: "The Philly Fed drop is shocking and we're going to see stocks dive. All the sub-gauges are equally horrendous and paint a bleak pictures of the future."
Can somebody explain to me what a 7 handle is? I've heard 8 handles and 9 handles thrown around lately too.
Much appreciated!
Ministry of Truth writes:
I can see the market hitting a 7 handle today easily
I'm no longer watching handles - I'm watching volume.
I think the days of the USD as the world's reserve currency are numbered.
I don't think that EU has any real power to get its way. They may have delusions of power, but they have only a fraction of the real power they had in 1944 (yes 1944.. not a typo).
OhBoy writes:
Very bad news for the dollar :
EU Pushes for Overhaul of Postwar Financial System
Comrade Gavshire Hathaway writes:
Can somebody explain to me what a 7 handle is?
It's the first number. In this case it's a reference to the DOW going to 7,???
Just doubled down on my SPY put position.
now own 70 Mar 60 puts and 20 Mar 80 puts.
"7 handle" a Dow that begins in 7.
ie. 7988, 7550, 7000, etc.
Thanks guys!
And the widely accepted and backed replacement without onerous restrictions is......??
MW writes:
I think the days of the USD as the world's reserve currency are numbered.
don't handles also suggest a market support point that is tested and held up, at least temporarily (hence the moniker)?
@ Comrade Gavshire Hathaway, "Can somebody explain to me what a 7 handle is?"
Does this help?
Gav...here's a post I put up for you a few threads back:
MS writes:
Gavshire-
You mentioned yesterday about going long GooG calls but then changed your mind because you felt guidance would be terrible.....GOOG doesn't give forward forecasts. That is the one thing that kept me away from it from the start...sort of "trust us...now give us your money".
Don't play that way...never have...never will.
Ciao
MS
MS | 10.16.08 - 10:04 am | #
Hell if I know the proper terminology, "handle" just sounds cool.
I think the hedge funds have no recourse here. The Margin calls are coming in fast and furious.
If you are leveraged 25 to 1 or higher ( have heard of some at 60 to 1), and your position falls by 20%+ you are in real trouble.
Portfolios are being seized all over and liquidated by the lending brokerage.
Can somebody explain to me what a 7 handle is?
The pump don't work cause the vandals took the handles -BD.
Where did my rally go?!?!
JoGa writes:
don't handles also suggest a market support point that is tested and held up, at least temporarily (hence the moniker)?
Support and resistance points are the subject of "technical analysis". I'm not familiar with "handles" being used in that context. Here's a pretty good source: $INDU - SharpCharts Workbench : StockCharts.com
for some hedgies....5% killed them...
Imagine the furious phone calls today...
"effe you.....no EFFE YOU"
I think the left them unregulated because they knew they needed a sacrificial lamb as a counter.
Ciao
MS
Dr. Doom update:
Another Roubini first! Dr. Doom inverts curve of Godwin's law. Amazing.
" Average rates on fixed-rate mortgages shot up this week, according to Freddie Mac's survey released Thursday.
The 30-year fixed-rate mortgage averaged 6.46% nationally for the week ending Oct. 16, up more than half a percentage point from last week's 5.94% average. This was the largest weekly increase since the week ending April 17, 1987, when the mortgage rate went up 0.84 percentage point, according to Freddie Mac. The mortgage averaged 6.40% a year ago.
"
Can somebody explain to me what a 7 handle is?
Maybe they mean the VIX?
OT - FHA mortgage rate for the 30yr fixed jumped 50 basis points from last Friday to today. WOW, so much for the first time buyer if this keeps up.
But all of the other alternatives suck even more.
Yen has been a funding currency for the rest of the world and is clearly not a vibrant economy, nor is there great faith in the seperation of their fiscal/political and monetary policies.
The Euro has people questioning whether the currency can withstand this crisis, as you need to get Germans/Spaniards/Irish and Greeks all on the same page and willing to bail out each other.
The notion that China would be an economic super power larger than the US is as quaint as the decoupling theory... and a managed exchange rate currency isn't going to be in the running to be the new reserve currency anyway.
And Gold or other PM backed fixed exchange rates will prevent countries from managing their competitive currency devaluations, so I don't see either policy makers nor politicians going along with it.
I think people are starting to realize that even though we are putting money in the banks, they are dead anyways. Thier models are broken and there is no way they could pay all this money back. Right now this is money sustaining people's job's on wall street.
for some hedgies....5% killed them...
At this rate, i won't put it past the Treasury to bail out the hedgies.
Satan:
There are many theories floating around out there.
I have spoken to friends in London and Hong Kong, and there is something afoot but no one has clear details yet.
Take it at face value:
This was from Jim Willie:
JIM WILLIEÂ…
I got a great source of info who is involved in the current "Post-US World" planning, execution, positioning utterly frightening / jw
"some incredibly nasty "S" coming the USDollar is to be killed off, along with the USTreasury Bond it is to follow a plan, already agreed upon numerous global forces concluded and decided to kill off the US entirely since they could not separate the innocent from the crime syndicates they want to surgically cut off the Wall St guys, big bankers, arms dealers, Dept Treasury, a few global bank centers (IMF, WB) and more but they could not determine a method to do so, while sparing the US population
SO THEY DECIDED TO KILL OFF THE US
a new global currency has been agreed upon, a basket
it will be based upon the euro, ruble, yen, dinar notice the dollar and psterling are not included, therefore to become Third World Nations the common factor is that all four come from export surplus nations the dinar will be gold-backed and bring a sudden end to the Petro-Dollar the ruble is expected before long to also be gold-backed, but smaller in scope after Europe is forced to purchase all energy products from Russia in rubles, big changes word has come to me that a global basket will SOON displace the USDollar that will immediately kick the US into the Third Wold
the Canadian Dollar will survive ok since demanded to purchase commodities
the Chinese will want to keep it down somewhat, in order to render cheap their commodity bill
gold will be over 2000 by January, silver over 25
the paper gold and paper silver prices are now meaningless
the COMEX is setting up for a metals default
look for defaults in oil, gold, silver, and USTBonds before too many months
absolutely frightening nasty "S" is coming
Regarding hedge funds. I know a couple of guys with a fund. They are basically done. Most of their money has been locked up since the Lehman fiasco. Clients are submitting withdrawal orders, but you can't get blood from a stone.
OPM.
Hedge funds are a sham.
Check out oil, we broke below $70 today
GB@IB.1 - Brent Crude Oil ICE
13 Nov 2008Last/Bid\t70
Ask\t0.000
Net Change\t-2.230
Last Close\t0.000
Prev. Settlement\t72.580
$\tUSD
Date\t16 Oct 2008 10:34
High\t72.160
Low\t68.840
Last Close Date\t16 Oct 2008
Settle Date\t14 Oct 2008
Exchange\tGBIF
I'd call that (badly written) thing "S" myself.
Comrade Serf Mike writes:
I think people are starting to realize that even though we are putting money in the banks, they are dead anyways. Thier models are broken and there is no way they could pay all this money back. Right now this is money sustaining people's job's on wall street.
I think you have to draw a distinction between traditional banks and "the shadow banking system". It is the latter that is collapsing, and the former that is being saved. It's the "fake" money that is the subject of this run on the bank.
My real hope going forward is that the fed finally routs an end to inflation forever. Not likely, but very necessary. Money supply should NEVER exceed the underlying growth rate.
Without inflation, wall street would be 75% smaller. And most Americans would be much richer.
Inflation is a sham.
Petersan:
I don't think it is a question of who goes along with it anymore.
The level of discontent and genuine contempt for the US in Europe and Asia is unbelievable.
I think the velocity by which these changes could occur might shock all of us.
You might want to check out the conditions under which his family left iran. I can see why he is so touchy about that subject..
Shnaps writes:
Dr. Doom update:
Another Roubini first! Dr. Doom inverts curve of Godwin's law. Amazing.
Shnaps | Homepage | 10.16.08 - 10:48 am | #
What an ox-gore session. Glad my ox is happily chewing on grass in my backyard.
State Treasurer Bill Lockyer yesterday said he's increasing the sale by $500 million to $4.5 billion and lowering the potential yield range, which remained a half-percentage point above what the state paid last year. The decision came after individual investors ordered $3.9 billion of notes and before institutions such as money market funds place orders today.
absolutely frightening nasty "S" is coming
MW | 10.16.08 - 10:50 am | #
You gotta have a tin-foil hat warning before posting comments like that.
Yep.. that is what I have always said..
Peter-san writes:
But all of the other alternatives suck even more.
I think the only way to bring this old carcass back to life would be to do the following:
1) drop ff rate to -.5, pay you to borrow.
2) new mortgage plan, 0% down, 1% rate, and a fica score of 100, or a pulse.
Just bought some GLD calls. Gotta figure the dollar is toast. Good buying opportunity.
The best option for a new international currency is s weighed currency basket (USD+ Euro+ Yen+ Reminbi+ some other important currencies)
Re: Bretton Woods, it's obviously not in the US interest to lose our status as reserve currency for the world. At the same time, this credit bubble couldn't have grown as big as it did under a framework like Bretton Woods. The massive current account deficits we've been running would have long since caused a healthy recession in the US and inflation in China which would have righted the international trade ship. So if we're not gonna have something like Bretton Woods, then the US needs to find some way to impose discipline on its own system without it.
Sucks To Be In The Dow
Sucks To Be In Gold
Sucks To Be In Oil
Sucks To Be In Euro/Pounds
Good To Be In The Dollar?
Can someone please explain this to me, and whether I should be out of foreign currencies & PM's?
Look friends - IT IS VERY CLEAR TO EVERYBODY THAT NASTY "S" IS COMING -
If you don't know what you are doing - get the freak out of the way of it. If you want to play, then pay attention to when and how.
Most disagreements about the market turn on time frames - not merits.
I can haz nice CR graphs?
Peter-san, thanks. Much appreciate your views on the "alternative reserve currency.
but the prospects for the buck is throwing uncommonly huge questions into every choice to be made.
We're now at 82.62, basis NYBOT DX. You're anonymous. Take a stab, short, med, long.
TIA
here comes the next wave... -150 points
I can see that scenario unfolding. Treasury can't keep flooding the market with "products" and still think that the chinese are going to play ball. A basket of currencies is a little hard to imagine though.....I say they just tank all Fiat money and just return to the BW standard. Easiest way to accomplish the same thing and you don't have many gov't's with the ability to influence it by either hoarding or printing. I think they want to get away from that...sort of the problem that the US is doing.
Ciao
MS
Yes, I am aware of that. The best hope is still a weighed currency basket rather than one currency or we will go down a similar road in the very near future. No one nation should have control over the reserve currency and it should not be linked to gold or any PM.
MW writes:
Petersan:
I don't think it is a question of who goes along with it anymore.
The level of discontent and genuine contempt for the US in Europe and Asia is unbelievable.
Dummy:
Funny enough, I used to work for a credit card processor that used such credit requirements for allowing a business to use credit cards.
The model worked because the fraud department I ran watched like a hawk, and stepped in at the first sign of trouble--we kept our fraud losses to around 1 basis point of transaction volume.
Dummy,
Adding on; when we were bought out, the new fraud department didn't understand the fraud/credit model, and their losses jumped by a factor of 20+ within a month.
the dollar will survive fine, because the euro may fall apart. the problems there are not uniform and ecb has no ability to tax to fund the bailout. It will be a shining example of why countries must have their own currencies.
My take-
1] The end of western europe as a region of any significance- bad demographics, decreased consumption, innovation hindering environment, still living in the past, stratified society, poor integration of immigrants.
2] The beginning of the end of Australia, NZ and Canada as white dominated societies. While these countries might survive in their present form, they will have to change a lot.They will have to diversify beyond their current economic base, allow innovation and foster integration- otherwise they are screwed. Then again they do have a lot of idiots who live in the 1900s.
In my experience with canucks, only white canadians whose ancestors came to canada before WW2 (canucks) have such uncritical belief in their "superiority".
Almost everyone who came to canada post WW2, especially since the 1960s has a rather dim view of canada and canucks. This dim view of canada is shared by many immigrants irrespective of color or language. Some of worst critics of canucks are brits who moved to canada in the 1960s-and 1970s.
3] The US will probably do better than any western country for one reason- willingness to change. The one trend that has always manifested throughout US history has been a willingness to give up old ideas that are no longer workable. Often this requires a bad event to manifest itself (Civil War, WW1, DG1, WW2, Civil Rights Movement) but things do change for the better. Well most of the time.. at least.
One example- for all the history of poor treatment of non-white people, we today have many rich people, CEOs, well compensated innovators and yes.. kashkari- who are non-white. Compare that to any other country.
4] China is the big unknown. It could either realize the fallacy of neo-mercantilism and encourage it's own citizens to consume. It could also slip back into it's nationalistic shell- and get civil unrest/ posturing/ revolutions etc. Who knows??
5] Other Asian countries (excluding japan)- They have got their s**t together. Should do OK in the medium term. Long term, who knows?? - No one can consistently predict the future beyond 10-15 years.
6] Japan- If they do not become less xenophobic, they are f**ked. Their demographic profile is atrocious. If they get over their xenophobia, they could make it through this storm and end up better than they are now.
7] India- Lots of potential, but the society is too feminised and respectful of old idiots. Once they get over that and realize that they are in it together- they have a bright future. They could also destroy themselves through excessive infighting and mercantile attitudes.
8] Africa- If they get their s**t together and rearrange their boundaries in the way they see fit, things could improve. Peace+ need for more consumers might make it a very good place for growth. Who knows??
9] Middle East- Bright future if they become much less religious. Otherwise they are gonna get nuked one of these days. I feel the latter option is more likely.
Wow, I go get a bowl of Cheerios and the tinfoil futures in the comments section skyrockets.
Look, normally I'm polite when I disagree but anyone who thinks a unified world currency can ignore/exclude a quarter of the world economy is serious tinfoil material. Anybody who thinks a world currency involving a radical Islamist nation and a communist military nation and an emerging oligarchy as member nations is even crazier.
dryfly,
This runs counter to what you've been saying in the past. Is this mostly a Boeing thing or is your business slowing?
Now loser canuck imposter!!!... get a life. I will not say this again. Because the next step will be action.. and you do not want that.
The only other thing I can add to the currency thing is that if you travel to other countries make sure you have looney's and buy a few 'Leafs hats.
Ciao
MS
ow cue 50 point rebound
Anyway back to my thesis about currencies.. the USD is sadly the best of the worst
DOW in freefall - 336
" Cuomo Seeks Recovery of Bonuses at AIG "
nice.
but, I foresee larger bonuses for law firms.
Get a new nickname Roubini.
Dr Marc Faber is Dr Doom.
Marc Faber - Wikipedia, the free encyclopedia
kashkari- who are non-white.
He's white, but adopts the other names and features to gain prestige and stature.
Prediction: We'll see the circuit breakers kick in on the NYSE today
Shall we breach 7,500 today? I am worried about the S&P 500 though..
Altair writes:
DOW in freefall - 336
Altair | 10.16.08 - 11:07 am | #
So when is the Fed going to do the next rate cut to try and stem the tide?
this market is in a huge hurry to retest the cnbc bottom.
MSy,and don't forget to end all of your sentences with "Eh".
Gasoline inventories up. Crude plummeting!
Well, he would not get that job in any other western country.
Haha writes:
kashkari- who are non-white.
Crude up 5.6m barrels , gasoline up 7m.
anonymous writes:
this market is in a huge hurry to retest the cnbc bottom.
Speaking of bottoms, how is Erin looking today?
MS writes:
The only other thing I can add to the currency thing is that if you travel to other countries make sure you have looney's
I am SO jealous of the Canadians for having come up with the term "looney's". It's just so much more fitting for our dollar rather than theirs.
opec cut in
3....2....
Tom-
I'll be practicing that for my trip to france in January although I speak enough francais to at least not draw attention to myself.
Oh and no shorts or blue jeans....
Ciao
MS
prediction... next drop in 15 minutes...
Down to 8k by 3pm
4pm... flip a coin ( 0, -800 )
opec cut in
Don't worry. It'll just be a "paper cut."
That is one bottom at CNBC I would like to tap..
Speaking of bottoms, how is Erin looking today?
Ministry of Truth | Homepage | 10.16.08 - 11:10 am | #
lucifer writes:
Well, he would not get that job in any other western country.
Most shyster jobs are not available in other countries.
I've been waiting for this:
404 | MiamiHerald.com
Let the cascading walk-away waterfalls begin.
You guys have a great rest of the week...off to the ALMS race at Laguna in a few.
Ciao
MS
Right on target Elliott wave principle - Wikipedia, the free encyclopedia
popeye writes:
I think you have to draw a distinction between traditional banks and "the shadow banking system". It is the latter that is collapsing, and the former that is being saved. It's the "fake" money that is the subject of this run on the bank.
popeye | 10.16.08 - 10:52 am | #
Could someone construct or suggest an "indicator" capable of showing the progress of this process? Please?
I don't see how you go to a basket of currencies successfully -- if you are a foreign holder -- without exiting the dollar first to minimize the damage. That's just not happening at all in either currencies or treasuries. For the moment, that just sounds like more gloom and doom...
I am not so sure- UBS, RBS, Barclays, Hypo, Deutsche bank, Credit-suisse, etc are headquartered in other countries.
_
Most shyster jobs are not available in other countries.
Haha | 10.16.08 - 11:12 am | #
where's PPT when we need them???
Anyway, remember that there's NO recession outside your heads. We're going to rally dudes!! Oh wait..
All of the negative movement in the markets remind me of a great quote by The House Speaker in front of the cameras when the bailout bill was apssed and the next day we went up 700 points and she introduced Barney Frank as "Miestro"..
All looks silly now, makes for a good campaign commercial for the McCain camp...
Becky was extremely perky this AM, but I imagine Erin is petulant right about now.
the PPT are doing blow??
The dollar will remain the predominant reserve currency -not because the fundamentals demand it but because of the sheer weight of the world's dollar reserves. The Asians have an interest in the status quo.
Speaking of bottoms, how is Erin looking today?
I suspect Erin's a top, actually.
lucifer writes:
I am not so sure- UBS, RBS, Barclays, Hypo, Deutsche bank, Credit-suisse, etc are headquartered in other countries.
Ah, so they are the cause for all this mess. I see your logic.
She just requires a good spanking..
anonymous writes:
Becky was extremely perky this AM, but I imagine Erin is petulant right about now.
anonymous | 10.16.08 - 11:15 am | #
So when will S&P cross 850..
Oil below 70!!!!!!!
Vix is above 80 now.
"Let the cascading walk-away waterfalls begin."
damondidit | 10.16.08 - 11:12 am | #
How bad is it when you easily overhear multiple converstions in the break room at work about this very subject??? Rob Dawg has harped on this since the beginning. When people who work for large stable companies start saying "Fuck It" we are in real trouble. We are close around here...
Chris
VIX at 77 and climbing.
lucifer,
They've made enough money riding it down from $147.27 to $70, surely they have enough resources to walk it to $50 without using up their cash
i dont know how you guys can get into new option positions with the vix so high..
apart from the bad bid/ask spreads, you can be very right about the move in the underlying, and still lose due to sinking vol.. anything near the strike is exorbitant and far away -- well, that's like hoping to be right twice over.
Oil below 70!!!!!!!
What happens when OPEC cuts production and prices keep falling anyway?
so when will oil break 60? you think the UBS bailout/ up coming government oversight had anything to do with it?
GS did 'predict' that oil would be 70.
I suspect we hit a circuit breaker today...
What happens when OPEC cuts production and prices keep falling anyway?
What happens when they say they're going to cut production, but they don't? And prices fall anyway?
footsie sees dow and sinks into despair. Now down 6.37% when it was only down 2% when US market opened..
Doesn't this drop to $70 / barrel of oil how much the speculative markets were pushing up the cost of oil?
GS was predicting $200 / barrel at the beginning of the year, are forcasting $50 now...
EvilHenryPaulson,
Yep, they (large banks) have, but not enough to fill the SIV, MBS, CDS hole.. Enough for xmas bonuses.. though
OPEC is impotent
As prices drop, countries like Iran need to sell more to stay stabilized.
But many oil producing countries- Russia, Venezuela, Iran are screwed..
GS was predicting $200 / barrel at the beginning of the year, are forcasting $50 now...
And that's why they get the big bucks.
virgile writes:
The dollar will remain the predominant reserve currency -not because the fundamentals demand it but because of the sheer weight of the world's dollar reserves. The Asians have an interest in the status quo.
My default opinion is things will change in a way that they stay the same, but certain people who argue for dollar strength on here fall back to a combination of outright nationalism/racism to predict a future that suits their interests. Normally those same people would not even bring themselves to question the dollar so that is a big step.
Worst comes to worse, the US is poised for a second gilded age where the GDP stays up there but the gini coefficient spikes
Yes, that is sadly true!
And that's why they get the big bucks.
asl hearts lenin | 10.16.08 - 11:25 am | #
Thanks to CR, popeye, etc., who search for the constructive.
Attacked by a bear, you look for a tree. It is rational, not a sign of some kind of weakness to be despised.
It is a component of leadership too, needed now.
GS was predicting $200 / barrel at the beginning of the year, are forcasting $50 now...
Am sorry i thought it was 70, do you have a link that says 50?
I need to read that, incredible what those guys say..
*******NEW POST UP*********
But many oil producing countries- Russia, Venezuela, Iran are screwed..
I've been saying for years that Chavez would be ousted in a coup once the global economy cooled down.
Cheap Oil Thread...
Wow, people must have been unimpressed by the dabate last night. Now they know there is no hope when the plan being espoused by the 'conservative' entails supporting high home prices with government intervention by handing out a free pass to the most egregious borrowers in the whole damned debacle.
Worst comes to worse, the US is poised for a second gilded age where the GDP stays up there but the gini coefficient spikes
That's what we just had. It's ending now.
From the Miami Herald article:
Rather than default and ruin their credit, Hardin said people who can make their payments are better off hanging on, since, as with other investments, they will probably come out ahead in the long run. Additionally, many borrowers put no money down, making their eventual return potentially more handsome than others who did.
''If you are upside down now and hold for 15 years, you'll make a return that is competitive. There is almost no scenario where if you held for seven to eight years you would still be under water,'' Hardin said.
What an effin joke.
The dollar may be the world's reserve currency, but the US government will have to control it much better.
Chavez WAS ousted in a coup that we sadly didn't back.
Heh.
Average spot price of oil for:
2002 - $26.18
2003 - $31.08
2004 - $41.51
2005 - $56.64
2006 - $66.05
2007 - $72.34
2008 ytd to end September - $113.31.
Convincing the world that $70 oil is "painful" to OPEC producers - priceless!
Nobody writes:
Oil below 70!!!!!!!
What happens when OPEC cuts production and prices keep falling anyway?
Nobody | Homepage | 10.16.08 - 11:21 am | #
The MidEast producers start crapping because the terrorists they have been financing are going to come looking for their missing paychecks.
Chavez WAS ousted in a coup that we sadly didn't back.
unit472
Wrong, we did and it failed. Methinks our South American strategy is in tatters given the past 6 years.
and how is ken fisher handling this enironment?
Presumably some oil and gas production will cease as prices decline. That is why it is not in our long term interest to have very low oil prices.
$75-100 per barrel/$3 per gallon seems reasonable. It encourages producing more oil and alternative energy sources, more fuel efficient vehicles etc.
I've been in favor of putting a floating tariff on imported oil to keep our domestic price in this range
rather than going through the boom bust cycle we had in the 1980's.
I see India invading Pakistan in the name of anti-terrorism. India is a country with more people than the United States, and they all are smarter and harder working. They will have no reason to tolerate the Pakistainis any longer. One has a space program, the other is bankrupt.
With the ISI hurting America in Afghanistan, India and America will ally to colonize the backwards tribespeople of Pakistan. This will help America and the dollar long term by providing a counterweight to China in the medium term.
Chavez WAS ousted in a coup that we sadly didn't back.
unit472 | 10.16.08 - 11:27 am | #
You did back it. That was partly why it failed. The USA doesn't have the sway it used to and the South Americans appear to be sick of your meddling. If Chavez gets ousted it'll have to be from an internally grown and organic coup.
The oil swings have more to do with the insane inelasticity of oil. A 5% drop in oil demand (or increase in supply) halves the price. A worldwide depression could easily drop it from 140 to 35 just on the fundamentals of a 10% cut in demand.
The Chinese were hoarding bigtime up to the Olympics, too. Now they're cutting back purchases to cut their inventory. There's a reason things turned around right around the Olympics.
I see India invading Pakistan in the name of anti-terrorism. India is a country with more people than the United States, and they all are smarter and harder working. They will have no reason to tolerate the Pakistainis any longer.
satan | 10.16.08 - 11:34 am | #
The Pakistanis have Nukes. India isn't going to invade anyone. Put your war porn back in your pants.
With oil at $50 Chavez will be organically removed as you put it Peregrination.
Actually I heard the Chinese were burning diesel in lieu of coal for electricity in the run up to the games to reduce the smog over Beijing thus the super high diesel prices in the spring and summer.
This is another reason to stabilize the price of oil via a floating tariff on oil imports. You could use the revenue during low price periods to build a stockpile that would be released when prices began to soar.
EvilHenryPaulson writes:
Worst comes to worse, the US is poised for a second gilded age where the GDP stays up there but the gini coefficient spikes
With Obama in office? There may be "worse" to come, but it won't include a gini increase.
Satan makes a fair point that the instability in South Asia is more India's problem than ours. That Pakistan has nukes though is a global
problem as we have seen via Dr. A.Q.
Khan's proliferation efforts.
At some point India may well have to make a tough choice as it did in 1971 and break Pakistan up into further non nuclear pieces.
Now that I am no longer considered bats**t crazy just crazy for my "it's different this time" because the new recent generation of buyers has no moral anchor to their credit/debt obligations we can move on up the fod chain. From REOs to MOAs:
http://exurbannation.blogspot.com/2008/04/forget-reos-weve-got-moas.html
MOA stands for Municipal Owned Adandoned.
Seems those clever lenders have another trick up their sleeve. Rather than take on the obligations of actual ownership they merely foreclose in the loan but do not take possession of the property. Recall from your extensive UberNerd™ education by Tanta and CR at Calculated Risk that lenders do not foreclose on people or property but loans.
With oil at $50 Chavez will be organically removed as you put it Peregrination.
w | 10.16.08 - 11:37 am | #
Quite possibly. None of my business or concern - as long as it's the locals doing the removing.
At some point India may well have to make a tough choice as it did in 1971 and break Pakistan up into further non nuclear pieces.
unit472 | 10.16.08 - 11:44 am | #
Once the nuclear genie is out of the bottle you can't put it back. I doubt very much that any country with nuclear weapons is going to be attacked by anyone. The fallout (no pun intended) is just too large. Complete instability and madmen in charge though can turn situations bad pretty quickly. I ws concerned for a while that the USAs idiot in chief might use nukes in iraq. Thankfully he wasn't quite as stupid as he looks.
Weeell, back in 2002, when the US-backed coup failed to unseat Chavez, the average spot oil price for the year was a magnificent $26.18 - just on the high end of the OPEC price-target of $22-28 per barrel.
Back in 2006 Chavez stated quite plainly that OPEC would be happy with a $50 per barrel oil price ( 2006 average oil price was $66.64 ).
Wrong, we did and it failed. Methinks our South American strategy is in tatters given the past 6 years.
What a hubris-laden move that was. Our foreign policy consists of one rule: We don't need friends with oil, only puppet regimes with oil. In the end the coup strengthened Chavez's position, because nothing solidifies power like giving a paranoid cult leader proof to hold up to his followers that they really must all fall in line behind his rhetoric or everyone will be sorry.
Bush respects democratically elected leaders. I know because he always says he does.
I wouldn't call it moving up the food
chain from REO to MOA. This is what has Cleveland, amongst other cities, upset in that the banks do not want back housing in low income areas. It is essentially worthless by the time it is defaulted on.
It's like HUD property. You can get it for nothing if you are willing or crazy enough to live in it but sell it? Only when the NINJA loan system was up and running.
Back in 2006 Chavez stated quite plainly that OPEC would be happy with a $50 per barrel oil price ( 2006 average oil price was $66.64 ).
The only problem is that he's spent the last several years squandering all of the country's oil revenues rather than investing them in infrastructure improvement.
Er guys, the coup leaders had Chavez in their custody. They released him, instead of executing him, when it was apparent they would not have the backing of the USG.
Then why the heck in the days before the coup did Bush call Pedro Carmona on the phone and urge him to oust Chevez?
I mean, I know the guy is a two-timer on words vs. actions, but really.
I wasn't privy to any such phone call. Were you?
Look, normally I'm polite when I disagree but anyone who thinks a unified world currency can ignore/exclude a quarter of the world economy is serious tinfoil material.
Rob Dawg: yes, a sudden, new, reserve currency would seem implausible. But you have to pause just a moment, and think about how we are seen by the rest of the world. There is deep distrust of the present Inside-the-Beltway political order.
We might think that 19 Arabs in a cave pulled off 9/11, but almost nobody else in the world does. They see fingerprints of an inside job all over the place. We might think that it is okay to use lies to gin up a war in Iraq, in which hundreds of thousands are killed. The rest of the world does not. They see a regime willing to commit mass murder fighting an immoral wars (then not win it). We might think that it is okay for the Israelis, and Zionist Jews, to direct our foreign policy. The rest of the world does not. They see that the present leadership in Washington, when it comes to Israel, is little more than a gaggle of male prostitutes.
We may think that the present regime in Washington is legitimate. The rest of the world does not. We have lost legitimacy -- and this is a big deal.
Yah, not good, but not unexpected eh?
Re: The Philly Fed diffusion index fell to negative 37.5 in October from positive 3.8 in September. Readings below zero indicate contraction. The decline was much larger than expected.
Look, normally I'm polite when I disagree but anyone who thinks a unified world currency can ignore/exclude a quarter of the world economy is serious tinfoil material.
Rob Dowg, yes, a sudden, new, reserve currency would seem implausible. But you have to pause just a moment, and think about how we are seen by the rest of the world. There is deep distrust out there of the present Washington political order.
We might think that 19 Arabs in a cave pulled off 9/11, but almost nobody else in the world does. They see fingerprints of an inside job all over the place. We might think that it is okay to use lies to gin up a war in Iraq, in which hundreds of thousands are killed. The rest of the world does not. They see a dangerious regime, willing to commit even mass murder. We might think that it is okay for the Israelis, and Zionist Jews, to direct our foreign policy. The rest of the world does not. They see that the present leadership in Washington, when it comes to Israel, is little more than a gaggle of male prostitutes.
We may think that the present regime in Washington is legitimate. The rest of the world does not. We have lost legitimacy in their eyes -- and this is a big deal.
Oops, sorry. I didn't mean to post the same thing twice. Haven't quite got the hang of halosca yet.
Unit472
They didn't have a lot of choice - the OAS closed ranks with Chavez - democratically elected and consitutionally secure in his position - and demanded his release, the "loyalist" military/police made it clear that they would not follow their orders, and the counter-coup demonstrations were huge.
One thing that I'm pretty sure of is that Carmona and his buddies didn't fancy the prospect of being necklaced if they tried to tough it out - they really had very little support that was prepared to actually bleed/kill for the cause.
I can't find the transcript, which sucks. It was on TV at the time, when, as things were falling apart, Carmona was complaining about the U.S. backing off their support and turning on him. I remember the comment well because I really expected/hoped it would derail Bush's authority for meaningless war for regime change, given how stellarly incompetent they clearly were at it.
Otto Reich and other administration officials met with Carmona at the white house in the year leading up to the coup, that's been admitted to, and Reich was on the phone with him the day of the coup, "pleading with him" to not suspend the supreme court, the parliament and the constitution.
The other little trick I remember from those events was the administration announcing to congress ahead of schedule and erroneously that Chavez had resigned. Ba ha ha. Ah, and we're still stuck with Bush and they're still stuck with Chavez.
Guardian article, if you care to read the Brits take on it