I'm all for getting the CP market going again, but I fear that the Fed will get stuck buying the worst of the CP market, and we will see what happens if/when a few companies go belly up...
Charles J Gervasi writes:
How much money does the Fed have on hand to use to purchase commercial paper if decides to do so?
no limit.
the boj did this - took cp as collateral. banks gave them cp and borrowed against it at 0. coprorations were able to issue cp to the banks, they got funding, banks made a spread. cp had to be above a certain rating.
the plan revived the cp mkt in japan at the time.
If this month's Visa bill is in the paper and Paulson lights his cigar with it, I'll be happy. I mean if Visa's only record of the bill is in Paulson's hands ...
So, will anything these guys are coming up with actually work (beyond some short-term bounce)? Someone watching with great interest but little actual knowledge to evaluate it all...
Well it's about time the international community stepped up to help contain this crisis to America's shores. We might really be in trouble if some European banks began to approach room temperature.
That nice Cambell lady on my teevee said that it is all the fault of the Clinton administration that passed the commodities something or other bill in the dark of night in december of 2000 when everyone was 'trying to get out of town" and that spawned these CDS thingies that are terrorists in the financial world.
In need of bail-out sorted by most urgent
1. USA
2. Italy (maybe should have enacted some kind of reform during the boom years)
3. Britain (Money's tight and capital is fleeing for safety)
4. Germany (DB is so large and so levered with so much L3 assets... will be a financial nuclear explosion)
5. France (Agricole and Natixis wouldn't be the first things ever nationalized, the rest have good deposits + capital)
6. Canada (economy will enter recession again but banks are well capitalized for foreseeable future)
7. Japan (Japan won't cut its rate, it is ahead of the US by about 20 years)
* Russia (heard they might just do G7)
CR,
Yes this would test the powers of the FED, but the question is who would oppose this and sue the FED in federal court? Who would have standing, what would be the substantive issue on what legal grounds? And would it be reversed in time to matter?
I think the long-term reaction of people to this is going to be: "if they can do it, so can we." Look for massive consumer borrowing and deliberate default, even by those able to pay.
Are you wondering why no one warned yu about this crisi ahead of time? Are you wondering why no one with any credibility has been there throughout to get you through this mess? Well you can blame your American media propaganda machine. These clueless lying idiot bozos like Jim Cramer, Kudlow and all of the rest of the morons who discuss anything on the economy and markets are just as guilty as Wall Street in this crisis because they fooled you all the entire time. They never allowed credible people to even challenge the idiots they call experts. All of the networks are guilty. Even Calculated Risk is guilty after ignoring my requests to post some guidance and warnings on its site several months ago.
And now Cramer goes on NBC and scares investors telling them to sell everything after several months of calling bottoms. Do like I am - call the SEC and demand he and these other shills and crooks be sent to prison. If enough people call they will be forced to investigate these crooks.
It's all about control and other agendas. If you don't see that then you are clueless. Don't let these media bastard lying assholes get away with this. Demand they resign. Demand people with credibility and no agendas deliver the truth and guidance instead of these bozos. As long as the media continues to ban me, you people will be stuck with these liars and crooks. My advice is to do the opposite as they say.
Let's put it this way, we're looking at a probability of an economic recession on the order of the great depression that is far too high, and non zero. Is it 5% 10%, 50%? I dont know, but I suspect it is higher than we know, and my take on it is that, given our current administration, what it likely means is that the bailout will be much bigger than we expect, because there is no way they let the financial system lock up. Depression only comes if they lose control of events, or a credit freeze cant be unfrozen. (Although we could still perhaps spiral down a very long drain to get there...) I think they have the stock market under control...they will PPT it like today to manage any big downturn, and let it go down as far as it needs to go, but will not let a -30% day occur. But even if it keeps going down slowly, it's a big problem. We've got a bunch of seniors who will NEVER retire. I mean, just this year we're looking at 30% of their meager savings gone. If it hits 50%, what do these people do? And when a ton of broke folks enter the labor force? How's that going to work? But that's an aside of sorts.
But you have to ask yourself why Bernanke in particular was chosen to head the Fed back in early 2006. I think they knew very well that they were likely going to have to employ all the unusual tactics he had written about to support the financial system. I think that when he took over, the problem was already there... house prices were already falling, and there was nothing that could be done other than talk nicely and hope. Someone at some point must have told them how this could unravel, once they walked them through how the CDS market has been set up. Clearly, some people knew. When did Bernanke know? If you were about to head up the Fed, dont you think you'd have asked around to figure out what the heck was going on there? If he took that job and DIDNT do the due diligence on the state of the US financial system, he is incompetent. I think they knew the time bomb was ticking. Problem is, what could they have done then if they knew? Nothing. Have you heard anyone say, here is what we should have done in 2006? Nope. I dont think there was an answer, just like now, I dont think there IS much of an answer, except a very expensive whack a mole approach. So, this is and always has been a mop up job, and Ben was the man with enough chutzpah and the academic record to try to pull it off.
I just worry that we are facing a broken financial system, that is going to require a continued massive deleveraging and asset deflation. That they cant even put a number on how big these counterparty issues are is quite scary. I worry that the Paulson plan does not have enough $ in it to make a market that can legitimize the values so that stuff trades and people have enough confidence that they will lend. But even if that happens, people will be skittish...how will they know how much of the junk has been bought up by taxpayers if they dont know how much there is? Weve got at least a couple months ahead where the economy is likely to just crap out regarding investment, and job losses could get quite ugly. So weve got to get some confidence quickly that this plan is going to keep credit flowing enough. It is surely going to be costlier though, and that in and of itself is going to hurt. So, after that first $250 bil goes poof, we better see some results. Because if you keep lighting money with a match, and no heat is produced, that is going to be very bad for confidence.
Of course, the worry about continued amounts of taxpayer money being spent is that it adds up. IMO, the $700 billion figure was made up and it wasnt an accident what the number was. It has to be big enough to produce confidence, but not so big as to destroy the credibility of the US government and debase the dollar. That the dollar is going up now is likely only temporary. Once they see how much money is needed to fix this mess, then the 2nd round problem comes. And that is, what do the Chinese think about all this? Will they keep buying treasuries if we keep printing money like it has no value? What happens to rates to keep them interested? do we crash the dollar? It's a pretty ugly situation.
I am, like I said before, praying that I am wrong and hoping that this Paulson plan works better than I expect. But I dont have a lot of confidence that these guys really know what they are doing, only because the problem is in a way beyond their comprehension in its magnitude. I think they have to take some action, because no action is clearly not an option. But that does not mean that action produces much of a result. They clearly dont want to go down without a fight. That would be negligence. Is the Paulson plan the best plan? Who knows. They all look like crapshoots. Of course we chose the one that is tilted in favor of the status quo.
But take a silly military analogy - what if you are a group of 100 soliders facing a column of tanks? You'll shoot your bullets until they are gone and then you are smashed to bits. Unless of course you hit that one tank right between the turret, it blows up, and manages to destroy all the others. Now, if that is all you have to fight with, well, sucks for you, but you take that chance. So, that's sort of where we are. General Hank Paulson makes the decision, and tells us the strategy he has will work, and the chances of that tank shot above are much higher than we think they are. We grumble but hope he is right. But if it's really that there is a better plan that the infantry thought up, but General Paulson said it's my way or the highway, well, that's not too good. And that could happen if the infantry's solution was to march the colonel out front to surrender. And what is surrender in this case? Well, it's byebye to all the colonels buddies. He has to go to the tanks and tell them the info they want. In this case, it means the banks and all his buddies in them take the brunt of the pain. But that would be death without honor for him. Nope, it's cannon fodder time. The war is lost, but how do you want it written about in the history books?
Where does all the money come from to buy this crap?
Anonymous | 10.06.08 - 9:49 pm |
Governments can issue more money without the inflationary effects so long as financial network is delevering, because it is replacing less than is vanishing. Of course the problem down the road like Japan has is that you have a bunch of debt and no room for a new financial system to rise up
Oh come off of it, no one is interested in Canada. The world's (second) most boring headline the London Times' reporters came up with was "Worthwhile Canadian Initiative"
Did you mean to post under the handle of 'satan' that has been popping up lately?
I don't blame kudlow or cramer or the bizarre guy ranting in the park with the full winter coat on and snorkel-accoutrement. Really I don't. It's entertainment. Get's people to watch commercials about buying crap they don't need. o.k.?
Remember, we're a consumer society, for about 3 more months.
Anonymous writes:
Where does all the money come from to buy this crap?
from a greenspan interview re. social security.
RYAN: "Do you believe that personal retirement accounts can help us achieve solvency for the system and make those future retiree benefits more secure?"
GREENSPAN: "Well, I wouldn't say that the pay-as-you-go benefits are insecure, in the sense that there's nothing to prevent the federal government from creating as much money as it wants and paying it to
somebody. The question is, how do you set up a system which assures that the real assets are created which those benefits are employed to purchase.
the govt creates the money it needs. it can be inflationary ....
wake up early, invest in anything and make a ton of money, then sell at the end of the day, dow goes up 450 tomorrow just because it always does after a day like today
"Even Calculated Risk is guilty after ignoring my requests to post some guidance and warnings on its site several months ago."
As my redneck buddy would say, "That dog won't hunt."
Not too long ago, there were a few places on the internet where one could gather that something fishy was in the air. There are quite a few of us here now who used Calculated Risk to figure out how we were being lied to, what other data was available, and what it all might mean independent of corporate oversight.
To say that this site was anything like the shills is dishonest, misinformed, or just a desperate attempt to be noticed.
Looks like the fires are getting out of control. On a global level. Bernanke and Paulson and their counterparts in the G8 will run out of ammo soon. Wonder what the news are next week this time around?
lere writes:
wake up early, invest in anything and make a ton of money, then sell at the end of the day, dow goes up 450 tomorrow just because it always does after a day like today
OMG! I don't know who you are but thank you! I was just about to post this. Tomorrow seems very likely to be a trend day - one where the 4x leverage of a day-trading brokerage account pays off huge if you buy and lever up early, and if you don't f* up by using no stop. Gap and go! Look at the NQ futures up up up!
The reason I ask is absolutely no one but that one username responds to anything about Canada. I think a moose may have once bitten your sister and that's why any mention rubs you the wrong way.
If you have some information to add, or would like to correct something, please do go ahead.
I think the long-term reaction of people to this is going to be: "if they can do it, so can we." Look for massive consumer borrowing and deliberate default, even by those able to pay.
Funny, I was just thinking exactly that. Tempting thought. But I believe in karma.
Where the info and anlaysis breaks down is the purpose to which MEW is put. The assumption is always on consumption and non-productive purposes. However, some, given lag effects, could be to previously-deemed ok ROI ventures, like home reno or expansion, which have now been undone by property asset price collapse. Net result is the same - more debt for no greater value.
But I propose an even more worrying substitution effect in the casino: MEW at historic low rates used to shore up credit card, auto loan, student loan, and other repayment minima to defray the day of reckoning. I have searched for this data and cannot find it. That is, MEW is the trust fund to keep from triggering universal default in a range of other household balance sheet credit classes. If anyone thinks this is remotely plausible, have a go at filling in the charts.
Why do I think this is possible? Because I did something similar myself, and it was doomed - only a very fortunate job change altered the deathspiral.
If there's any validity to my hunch, then the stock of the problem turns rapidly to a flow problem in the near term, with resets all over the place, and household meltdown.
CC
Comrade Counterpointer | 10.06.08 - 9:55 pm | #
here's one for you. japan inflation linked bonds (JBI16 (10 yr)) just traded at a break even inflation rate of -100 basis points ie. minus 1%. tey were trading in the +40 bp range in June. they price off core cpi.
I think a moose may have once bitten your sister and that's why any mention rubs you the wrong way.
No, your devoted anti-satanic rhetoric is welcome and appreciated. In reference to the moose - one of my favorite movies - a classic. With a bigger budget, it could have won an Oscar or two.
- Direct lending to the business sector from the Fed via extension of the PDCF and TSLF to the non financial corporate sector. This could include Fed purchases of commercial paper from corporations and other forms of financing of the short term liabilities of the Administration to small businesses secured in appropriate ways. Given the collapse of the corporate CP market and the banking system reluctance to provide loans to the corporate sector (credits lines are being shut down) the only alternative to the Fed becoming directly the biggest emergency bank for the corporate sector would be to force the banking system to maintain its exposure to the corporate sector, possibly in exchange for further Fed provision of liquidity to the banking system. The former option may be better than the latter to deal with the looming illiquidity of the corporate sector.
nlere writes:
wake up early, invest in anything and make a ton of money, then sell at the end of the day, dow goes up 450 tomorrow just because it always does after a day like today
escariot writes:
That nice Cambell lady on my teevee said that it is all the fault of the Clinton administration that passed the commodities something or other bill in the dark of night in december of 2000 when everyone was 'trying to get out of town" and that spawned these CDS thingies that are terrorists in the financial world.
thank god we know who to blame!
escariot | 10.06.08 - 9:48 pm | #
That would be The Commodity Futures Modernization Act of 2000, aka The Enron Loophole.
Much of it was apparently authored by Enron's legal team. Greenspan testified for it but it died in committee. Phil Gramm brought it back from the dead and tacked it on to a huge appropriations bill. Clinton signed it on Dec 21, 2000, but may not have even known it was in there.
This law pretty much eliminated the possibility of regulating CDS and allowed offshore oil trading platforms to be unmolested by US regulations. Basically allowed Enron to corner the energy markets in the western US and allowed swaps to remain private and off any recognized exchange.
Off-topic, but CR you may be right about China. I'm giving them a 60% chance to command-economy their way out, similar to our exhortations to shop post 9-11, except with Chinese made Kalashnikovs pointed at the middle-class. Note saving rate may sustain this hypothesis.
Summarised here what China needs to do and if it doesn't will crash with the rest of us:
Unless current expansionary monetary and fiscal policies are directed at skills development, an expanded intellectual property rights enforcement bureaucracy and research and development capacity, China may be running headlong into a great economic brick wall.
Ahh Physicists, you know when Wall Street hired those guys...let's see should I write a risk management program for global financial markets, go to the star trek convention ,play dungeon and dragons or pretend to get laid in the halo deck.
Ziggurat writes:
Tragic, etc. but also shows how people are now looking at EVERYTHING through the lens of the economy -- and I'm thinking media...
A turning point.
I agree. Bring back the gold standard. And sack Larry Kudlow.
"Where does all the money come from to buy this crap?"
It is time. I will not hide it any longer. The money is coming from me. I have saved up 8,293,838,862 ounces of gold, and am donating them to the US Treasury.
Mike Stathis, are you a troll or are you really that full of yourself to think that you are the only voice of reason in this crisis?
My word, even if you had a perfect roadmap on how to get through this mess I'd completely ignore you. You need to learn a little something called 'bedside manner' and stop making the false assumption that any of us care about your insipid drivel.
From two very senior sources one incredibly senior source that he went to the gym after Lehman was announced as going under. He was on a treadmill with a heart monitor on. Someone was in the corner, pumping iron and he walked over and he knocked him out cold. And frankly after having watched this, Id have done the same too.
city girl writes:
Isn't buying commercial paper one of the things Nouriel Roubini recommends?
I like the idea a lot.
Roubini was early but now that people are figuring it out, they want to do stuff. Like actually say we have a crisis. Do stuff that they wouldn't a month ago, etc.
When O when will G8 start realizing that it's a crisis of confidence? Liquidity will not fix this problem, only by purging the system of bad players, either by bankruptcy or indictment, will order be restored.
Miranda writes:
So, will anything these guys are coming up with actually work (beyond some short-term bounce)? Someone watching with great interest but little actual knowledge to evaluate it all...
Miranda | 10.06.08 - 9:46 pm | #
Miranda the short answer is NOOOOOO!
For 25 years solid, the US has lived on debt and that debt is now coming home to roost.
You see, pundits argue whether it is confidence, or liquidity, or solvency, or the weather, the time of year, etc.
The problem is, imho, is that until every company, goobermint org, and commercial/investment bank comes clean with the "real" books, nothing but depression is in the cards.
People are finally getting it. It is still slow, but the slombering American Idol J6P is finally figuring out that debt is no way to run a $14 Trillion economy.
Furthermore, for those of us who have been paying attention, the more than 1 quadrillion, yes, quadrillion in derivatives, is going to really leave a mark as this whole thing unwinds.
We can argue all we want, but I think I will be buying another 10-20 cans of soup/chili, etc. on the way home.
Even for me, the uber-perma-bear today got a little scary. At some point this will give way and you better have a plan because apparently the goobs in goobermint don't. Nothing they do seems to work.
We will all be on our own, with just family, friends, neighbors, community, church, etc. to help us, IF THAT!
Sorry for the doom, but this debt monster is gonna leave a serious mark.
satan writes:
If canadian banks are well capitalized then why hasn't hell frozen over?
It's only October. Give us a couple of months.
In all honesty, Canadian banks are well capitalized, because our housing bubble has just started to deflate. Another year or so will be the true indicator over how well they remain capitalized.
Clinton signed it on Dec 21, 2000, but may not have even known it was in there.
Clinton knew it was there and so did Rubin who pushed Clinton to sign it, which he did over the Christmas holidays.
In 1998, Brooksly Born, the then head of the CFTC was raising red flags over this saying it was going to lead to a massive taxpayer bailout of financial institutions that had become to "big to fail"
She was shouted down by Gramm, Leach and Rubin. Rubin pushed Clinton into firing her, which he did.
Barrons magazine is my contra-indicator. It really goes out of its way to tell you what not to do by writing convincing editorials opposite to what the market will do
This week "Let's get credit flowing again", means at least one more bad week. Dow down 200 pts tomorrow, which will keep the correlation to FTSE tight
On a more serious note, the Fed has to get it's s**t together and start directly lending to business and even people. Otherwise we might end up with GD2.
Here's a little secret: all the governments together cannot 'save' the world economy. Fundamental economic events are exactly that: fundamental. Governments can't stop the tides, earthquakes, glaciers. They can't make summer out of winter and they can't stop credit correction and debt unwinding.
Ziggurat writes:
Man kills himself, family over financial.....
This is what frightens me about our collapse. In the GD, people entered it living very differently than we do today.
Instead of trying to scare the hell out of everybody, it would be nice if the MSM would start breaking down the American Dream and explaining what a fantasy it was. Too many think it was real and will cling, scratch and claw to retain it. That's where we will come unglued.
Poverty doesn't have to mean we kill each other.
But poverty is the arch enemy of the American Dream.
The violence and government response will be the worst part of it all.
ope the market are still heading lower tomorrow . Crammer is looking out for his life .After Fuld had his beating . Cramerica is mad ... Boooyah... lol
"But you have to ask yourself why Bernanke in particular was chosen to head the Fed back in early 2006."
I've seen this sttement made before and I think the sentiment it expresses is exactly backward. Bernanke was not chosen because he had expertise in events that were about to unfold. To the contrary, once he was chosen the events, lo and behold, looked to him just like he wanted to see them. If your only tool is a hammer...
He is like every other general fighting the last war and for exactly the same reason: the hard lessons taught by that war are the only ones they know.
I think you understood why I am skeptical about people who say canuck banks will remain ok. Citi, wachovia, wamu were also ok, as long as the housing pozi scheme was running smoothly. Now wachovia is a punchline on a skit on SNL.
But seriously, universal default, or my preferred term cross-conditional default, is frankly pernicious and will affect household balance sheets in vastly negative ways over the next few years. The focus on mortgages is totally myopic, the key fact must be the simplest one: how much income enters a household, and how much is committed to debt service over time relative to basic needs (and their probable rising cost)?
Add to that the questions of what are the new imposts on families recently, now, and imminent; where are the probable sources of exogenous shock; is there elasticity in the quality of spending, not just the quantity; and in the light of the foregoing is the poor fkr going for thermobaric IMPLODE?!??
I'm beginning to think this thing won't turn around until they raise rates. Keeping it simple, why take my cold hard cash out of deep storage for ZIRP?
"The focus on mortgages is totally myopic, the key fact must be the simplest one: how much income enters a household, and how much is committed to debt service over time relative to basic needs"
The Fed & FDIC agree. That's why there's been such a focused effort to get mortgage principal reduced. Just keep those consumers on some infinite payment terms on reduced principal and it'll settle down. Long shot IMO.
CREDIT DEFAULT SCAM. Insurance without reserves is an obvious scam.
Not insurance, it's a swap. Phil Gramm saw to that. It's my understanding that it was the naked CDS's that caused this problem not the agreements between lenders and third parties.
Trillions of dollars in CDS's exist between uninvolved parties betting on the success or failure of corporations and their abilities to meet obligations
The Fed is not treading water, or air. The fact is - no one knows what we are treading. We have never been to this place before. Think of it as an economic " terra incognita" with the cartoonish legend - here be dragons.
If the Fed wants to help the commercial paper market, they should allow prime money market funds to discount the non-financial company commercial paper in their portfolios at their amortized cost. This would make their portfolios liquid and eliminate the need for the money market funds to puke out the paper to meet redemptions. It would also by-pass the big banks that got us into this mess and get funds directly to the commercial paper issuers. These non-financial commercial paper issuers are larger companies, who still actual make things. Smaller companies would still be borrowing from their local or regional banks.
Occurs post-global slowdown as the US wallows in the shambles of their financial system the rest of the world says "fuck them, we didn't like them much anyway" and begins a new world order
I think you understood why I am skeptical about people who say canuck banks will remain ok. Citi, wachovia, wamu were also ok, as long as the housing pozi scheme was running smoothly. Now wachovia is a punchline on a skit on SNL.
I know all the arguments in support of the Canadian banks; lending standards tighter, reserve requirements higher, etc etc, but what is not often said is that there really are only 5 substantial banks in Canada and they are, let's face it, tiny compared to their International relatives. There was undoubtably huge run-ups in the housing market of a number of Canadian regions and some, like Calgary, are now starting to collapse. The point is that even though they started out on a better foot, their sheer tiny size makes any outcome uncertain in terms of capitalization and liquidity. And I haven't even touched on ABCP or any of those shenanigans.
I can't believe I'm in agreement with Satan. My mother would have kittens.
"But you have to ask yourself why Bernanke in particular was chosen to head the Fed back in early 2006."
Until now, I was comfortable with B's understanding of the 20's and 30's, and felt that he was a good man for the job at hand.
Tonight I was on the phone with someone I respect, and expressed that. He said he felt that was not so, and summarized his position with an Eric Hoffer quote. I asked him to email me the quote, which I just received. Here it is:
"In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists."
Tonight, I ain't so sure about Dr. Bernanke's ability to run with the ball as well as he is going to have to.
No, we have never been here before. The concept of a middle class as we understand it today came into being after WW2. The economy of the west started becoming consumer driven after WW1. We never travelled or experienced the world or communicated like we do now. Never before in human history! If you think that these factors do not affect the progress and eventual outcome of this crisis in a very meaningful way, you are no better than those wallstreeters who believed that they could use mathematical risk minimization models based on past performance.
Have you heard the news of the BofA settlement with State Attorneys General over Countrywide mortgages? They will reduce interest rates to match payments to 32% of borrower income in affected states and mortgages.
The Fed is not treading water, or air. The fact is - no one knows what we are treading. We have never been to this place before. Think of it as an economic " terra incognita" with the cartoonish legend - here be dragons.
I was kidding about the fund, but not about who will go after and hunt down BFNYC and other Crooks after the US has been Greater Depression for few years.
I see lot of parallels between Germany before WW I and America of recent years.
I can't believe I'm in agreement with Satan. My mother would have kittens.
Damn, I have to agree on that one too. The ABCP issue with Canadian banks is a bit of a quagmire. Giggidy! The big 5 banks are holding a ton of bank-sponsored ABCP in money market funds. If these puppies were to blow up (ie. in a recession), there would be hell to pay. Thus, my move out of money market funds and into T-Bill funds.
After all the shock and awe, after all the unthinkable innovations in the marketplace, after all the sinister special interest step asides...if God himself doesn't drop feet down, and give us the what what, or some unimaginable extraterrestrial event not occur, I will be decidely underwhelmed. Rapture-smampture, just a little insight, just a little higher order comeuppance, just the slightest of visions. Anything to regain the faith in our species, and the ultimate destiny of the planet. Otherwise, grim nose smashing, grim land stripping, grim life and death. There HAS to be something more wonderful.
"the stock market staged a monster recovery immediately before the close"
Yes, that was very exciting and fun, but that added-synthetic volatility did nothing to add value or gain confidence, i.e, it would have ben better to see the market stay down versus having people think there is going to be more fun casino action on a day-to-day basis. When I look at future value, I sure don't look at this type of lotto noise -- and as they say, a day does not make a trend; trends take months to establish, and that is how old fashioned confidence is built, not minute by minute by minute in an environment of panic. Call it the PPT or wall street, but what ever happened -- it took away another level of trust and added more risk!
Comrade Counterpointer writes:
Jas - holy hanuman! No monkeying around, yr 10k check comment is prima facie conspiracy to commit a violent act with malice aforethought.
Careful, dude.
CC
Comrade Counterpointer | 10.06.08 - 10:38 pm | #
indeed, rule of law please. and may i just say, best batman zowie, EVER CC - "holy hanuman!"
If there are lessons from 1873, they are different from those of 1929. Most important, when banks fall on Wall Street, they stop all the traffic on Main Street for a very long time. The protracted reconstruction of banks in the United States and Europe created widespread unemployment. Unions (previously illegal in much of the world) flourished but were then destroyed by corporate institutions that learned to operate on the edge of the law. In Europe, politicians found their scapegoats in Jews, on the fringes of the economy. (Americans, on the other hand, mostly blamed themselves; many began to embrace what would later be called fundamentalist religion.)
I have been expecting to see "illegal aliens" the target of our scapegoating when this thing gets to altitude. I suspect that's what those mysterious KBR camps were built for. The xenophobic groundwork started in the media not too long ago.
When Travis wants to pick fruit and Kaitlyn wants to clean hotel rooms, our country is going to take a heinous turn against migrant workers.
I have been expecting to see "illegal aliens" the target of our scapegoating when this thing gets to altitude. I suspect that's what those mysterious KBR camps were built for. The xenophobic groundwork started in the media not too long ago.
Agreed, that was a fascinating itulip article.
My concern is much more for trade protectionism than labour, but either way we'd all be well and truly screwed.
I have some interest in Canada, and there are Canadians who post here, with and without popcorn. No doubt there are few others with some interests in Canada, too, so don't think that your contributions related to the frozen north are not appreciated.
Satan and his Yield Curve speak only for themselves.
The wealth that even a poor person in a western country enjoys today makes pharohs and emperors of yore look poor. They may have had more money, but they did not have wealth.
If you think that 3 generations of living in this environment has not changed the mind and perception of it's inhabitants, you are nuts..
We have a lot of insolvent institutions. The banks are hoarding money and investors are taking their cue from the banks. The Fed is pouring all its resources into treating the symptoms of the problem, which is kind of like taking Immodium for the flu.
The federal government has little that it can do with the CDS market - this market is basically experiencing the tragedy of the commons. The banks probably could devise a solution that allows them to net out of their obligations to each other versus letting the CDS market function like dominoes, but they won't because the reality is some of them will survive and some won't, and the ones that will survive will get something off the backs of taxpayers and that is better than nothing.
The only thing the government can meaningfully impact is the way this is absorbed by US citizens. They can apply these resources to essentially refinancing the debts people carry. But they won't do that on as large a scale as the funds they are willing to throw at the financial sector. No matter what they do, they are creating a moral hazard.
In the meantime they will treat the symptoms and hope the fear subsides in spite of what provoked it. I am all for stability in the CP market and credit markets in general, believe me - I'd like to have a job next year - but the Fed cannot prop everything up forever.
Not sure who Mike Shedlock is, but he obviously knows little about CDS. That article is simply crocked.
A CDS is simply a par put contingent upon the occurrence of certain credit events. They are really not all that complex and this whole 'tangled weave of unknown insurers' argument is overblown. Some people are just looking for an easy boogie man to blame.
I have some interest in Canada, and there are Canadians who post here, with and without popcorn. No doubt there are few others with some interests in Canada, too, so don't think that your contributions related to the frozen north are not appreciated.
Satan and his Yield Curve speak only for themselves.
I am up in the chilly north myself, and in amongst my ravenous consumption of poutine I do like to pay attention to the financial scene when I can.
I appreciate all discussions on all things cold and commodity-based, and I personally enjoy the fruitful discussions between satan and EvilHenryPaulson, no matter what the outcome. It is only through hearty debate that we learn, in my opinion.
Hey Dryfly,
Just got my new soapstone/iron wood stove. That sucker took an appliance dolly and 4 guys to get it installed. Waiting for a cold snap to fire it up. Looks waaay cool. It's from Woodstock soapstone in NH.
I don't plan on using ANY electricity to heat the cabin this winter. But is Texas afterall.
"There is approximately $1 trillion in swaps bet on the success or failure of GM when the entire market cap of GM is a mere $15 billion."
Take about 10% up front with a 2% fee. Maybe about $120B in your pocket. Give a few million to politicians to bail out GM so the bets never have to pay off. See the scam here?
$10K Soapstone masonry heater IN TEXAS. Dumbass. Texans burn money. Fiat money, but money nevertheless. When they run out, they poke a hole in the ground and burn sweet crude.
A CDS is simply a par put contingent upon the occurrence of certain credit events. They are really not all that complex and this whole 'tangled weave of unknown insurers' argument is overblown. Some people are just looking for an easy boogie man to blame.
I was simply refering to the size of the CDS market as represented by the chart. Disclosure: I am not a Mishbot.
A CDS is simply a par put contingent upon the occurrence of certain credit events. They are really not all that complex and this whole 'tangled weave of unknown insurers' argument is overblown. Some people are just looking for an easy boogie man to blame.
So...netting out these contracts would be a fairly straightforward task then? Even ones that were verbal, or had limited documentation? I think a certain treasury secretary would be keen on speaking with you.
Of course CDS are simple; so are MBS and most of the other acronyms, for that matter. It's the extent they were speculated that was the problem, no?
Wealth without personal empowerment is empty, meaningless. You of all people (are you a person?) should know this.
I seriously doubt any pharaoh, king, whatever from days of yore would trade his clout for even middle class existence.
This is what the wealthy know. Doesn't matter what the absolute standards are. What matters are what the relative standards are. One has clout, or one hasn't clout. That's what matters.
Why@ ZIRP writes:
What I want to know is why I keep nodding my head in agreement whenever the pot head posts something.
Why@ ZIRP | 10.06.08 - 10:25 pm
It didn't look that way on my read through the thread, but perhaps some strong statements made early on clouded my later reading. Always possible I missed something.
Why is a no money down (less than 3%) 40 year amortization mortagage in Canada not considered subprime. Especially when over 90% of Vancouver properties since 2005 were bought with such mortgages.
It didn't look that way on my read through the thread, but perhaps some strong statements made early on clouded my later reading. Always possible I missed something.
Wish I had a soapstone heater here in Anvik, AK. Lucky, the husky that heats the bottom of the sleeping bag before being booted, just doesn't give that long, warm, humid heat...lessen she pees when I puts me cold feets on 'er. Just not the same tho.
I have no stake in Canadian banks or otherwise, I only took issue with him(/them) because he tried to paint me as a shill. The pragmatic truth is that they will get hurt (I expect price declines of 50% in some big markets, and a hurting economy. Unlike the US south, or Europe, most construction is done by Canadians who will become persistently unemployed).
I however also think they will fare better than their colleagues globally because they will have had at least 1 year's clear warning before things go sour, they dished a lot off to investors and the government has not forced them to take any ABCP back yet as an example, mortgages are recourse so the borrower will be bearing a bigger portion of the burden, anecdotally people borrowed from Asia/USA due to attractive mortgage structures, and the big 5 Canadian banks will have gone into their writedowns among the best capitalized.
I think the notion Canadians are more frugal borrowers, or the banks had stricter standards, or any other soft-'fact' is a load of crap. It's not clear how many of the mortgages the banks retained, but it is also likely due to other fundamental differences mentioned above that banks will bear the same proportion of the unrealized losses.
The bigger risk to Canadian banks in my opinion are their strategies/exposure to the global deleveraging. CIBC for example put a little too much faith in monoline insurers and Canadian banks are creditors of interbank lending which is an important part of their income.
The administration and state Controller John Chiang will issue official revenue numbers in coming days.
Chiang said the news will be bad. He said California is suffering from soaring unemployment and the evaporation of wealth caused by the stock market's downward spiral. He called on lawmakers to return to Sacramento quickly.
Why is a no money down (less than 3%) 40 year amortization mortagage in Canada not considered subprime. Especially when over 90% of Vancouver properties since 2005 were bought with such mortgages.
It's relative to the rest of the world which will be doing the same thing. So the dollar will only devalue relative to other currencies which will also be devaluing. This is why Peter Schiff's argument is all wet. Just add a zero to the end of every asset and everybody has equity again.
Jas/Satan -there is something new under the sun, a gamebreaker of such ferocious intensity that no one wants to recognise it: speed.
I'll be vastly generalisn but:
All previous bank runs and panics derived from rumour vs confidence, holdings vs effective communications in response. All previous corrections derived from bubble plus shock and correction. Result, lose shirt.
But you've got to accept surely that it's a different game when trading room sentiment gets punched into algos and colossal volumes of computerized public and dark pool trades, ref the PPT meme here, that we've entered a very different environment regarding the velocity of information and the velocity of trades?
Is velocity a critical factor? I think so. The only difference between a flu outbreak and pandemic is velocity. The only difference between a dirty bomb emission and small MT deontation is velocity. That is, of effects.
I'm really saying that the nature of information velocity which had Keynes reading the numbers on the train to work before trying to work a bit of arbitrage or assess a vulnerability, is little faster these days, more wider spread, and more widely analyzed and disseminated. Like by CR.
Speed matters. Content matters. Quality and transparency matter. Can they all work together or do they hobble each other? Not bad questions to ask these days.
Yer still here after all that consorting with the DARK LORD stuff earlier today? I thought he promised -666, which when delivered you had to give up some great eternal and spiritual gift. What's up with all this ho-hum day-to-day stuff now?
Libor Fixings `a Flimsy Theoretical Construct': Chart of Day
The ICAP index is based on an anonymous daily survey of banks, with participants asked each morning to estimate the cost of funding for one- and three-month dollar loans to a representative bank. The results are published every day after 10 a.m. New York time.
The BBA asks 16 member banks, only three based in the U.S., how much it would cost to borrow from each other for 15 different periods in several currencies. It then calculates averages and publishes the results every day after 11:30 a.m. in London. Libor is used to calculate rates on $360 trillion of financial products ranging from company bonds and derivatives to U.S. mortgages.
Pardon my using CR as a soapbox, but I've come to the conclusion that the Fed cannot (and I mean that literally, as in lacks the capacity) hold down interest rates to their current levels and must let them rise. I think the current attempt to hold them below market-clearing levels is the real reason behind the total collapse of the credit markets. It's not appropriate to post all my reasoning here, but I've got a <a href=http://faireconomist.blogspot.com/2008/10/raise-fed-funds-rate-old-world-order.html">blog post up and I hope people take a look at it, comment, and spread the idea around.
"60 Minutes is a contra-indicator, I'll now call a bottom, the biggest idiots in the world are now aware of the crisis.."
What about all the smallest idiots, like my friend whose broker talked him out of selling for two Mondays in a row? Millions of small investors may add up to more than a few big ones.
Consider the demographics (close to retirement), and a rush to cash must follow.
I'm looking forward to the yard sale, just as are the recipients of Fed largesse, I suspect.
Whassu map? Like a tiny siesta between 12:30 an 12:45 pm before the sqeeters ur grizz getcha? Dogsled, meybe Skidoo, long rifle, an lazy but vigilant character'll keep ya here. Moosefat hangs long and plenty, over me fire.
Does having some oil/gas Canroys in portfolio, and onec having been romantically involved with a lady residing in the 'Peg make me an "honorary" Canuck?
satan,
You do not know that of which you write. Most common (not since 2005, around 2007) mortgage would have been 40yr mortgage (even if fixed, rate resets every 5 yrs usually) with the 20% down payment contributed by family, from resale of old place.
However more than 10% of purchases are done in cash. Drug money, retirement from elsewhere in Canada.
More than 10% (closer to 30% in 'investment' condos) were overseas mortgages.
I enjoy new information, but you're just muddying the waters for many people with your emotional estimates.
I visited western Ontario last summer for a nephew's wedding. It reminded me of Ohio before the state lost its pride. The nephew has moved from Ohio to Canuckistan.
I went back to Ohio
But my city was gone
There was no train station
There was no downtown
South Howard had disappeared
All my favorite places
My city had been pulled down
Reduced to parking spaces
A, o, way to go Ohio
Well I went back to Ohio
But my family was gone
I stood on the back porch
There was nobody home
I was stunned and amazed
My childhood memories
Slowly swirled past
Like the wind through the trees
A, o, oh way to go Ohio
I went back to Ohio
But my pretty countryside
Had been paved down the middle
By a government that had no pride
The farms of Ohio
Had been replaced by shopping malls And muzak filled the air
From Seneca to Cuyahoga Falls
Said, a, o, oh way to go Ohio
Bill Gross is a complete Magician:
Gross uses the example of a McDonald's drive-thru to illustrate the problems in the intrabank market.
"At one window you order and pay, at the other - 20 feet ahead - you pick up your lunch. What if you thought that after paying at the first window, your 1000 calorie sandwich might not be waiting for you a few seconds later. You might not pay; business as usual might not take place. That is what is happening in the credit markets," he said.
The helicopter is why, out of nowhere, the Reserve Balances and the Adjusted Monetary Base jumped by $75 billion or so in the past two weeks. And the helicopter is why these amounts have jumped and will jump by another $75 billion or more by next week. As you consider the situation, please realize that up until this September, the Monetary Base had barely changed since the beginning of the credit crisis last year. That proves more than anything that the helicopter was grounded until now.
Indeed, all the credit facilities created by the Fed from the Term Auction Facility to the Term Securities Lending Facility to the Primary Dealer Credit Facility to the Bear Stearns Maiden Lane facility and to the AIG credit facility have had no actual effect on the Monetary Base or money supply. This is because the credit facilities are essentially just swaps of assets, not money creation. The banks simply obtained assets they could sell (Treasury securities) in exchange for assets they could not sell (loans, MBS, CDO, etc.) This is the reason some observers are confused about why the Federal Reserve has not been inflating money supply in the face of a credit crisis that has deepened every month since last August.
So why exactly has Bens famous helicopter not flown, much less made money drops, until the past two weeks? There are several reasons. For one, even Mr. Bernanke recognizes the inflationary implications of a helicopter drop and he was willing to use it only as a last resort. But there is a more fundamental reason. You see, the helicopter didnt have a stable fuel supply. What fuel there was in the form of Open Market operations or purchases of bank assets was simply too unstable and would probably cause the helicopter to crash. Furthermore, it turns out the Fed cannot monetize bank assets effectively without assistance from the U.S. Treasury Department. See the Appendix to this essay for a detailed explanation.
oldtrader writes:
CSC, et al.
Does having some oil/gas Canroys in portfolio, and onec having been romantically involved with a lady residing in the 'Peg make me an "honorary" Canuck?
Harper will be re-elected. Canroys are in for a reckoning. Please be advised. If you were not aware of the Canroy thingy, your honorary status is revoked. Otherwise, sure...why not.
"Week 1. US bail-out.
Week 2. World bail-out.
Week 3. (something bigger than world) bail-out)."
The frozen frog people of Titan appeal to the US Treasury for assistance (slugs of solidly frozen ethane, which they consume like popsicles). They promise to repay 'soon.
The middle class ceased to be useful when it became a rigid "class" and not a workspace for upward and downward mobility - a workspace the poor were welcome to enter.
When you get parked in the "middle class" and breed two or three generations of middle-class children -- with middle-class parents, what you have is a stagnant bourgeoisie, not a "middle class." And the poor are not welcome to enter. And the rich are never controlled. That is a sure signal that the system is not working for a "healthy middle class."
It makes me grit my teeth to hear candidates blathering about "doing things for the middle class." The middle class shouldn't be parked there for generation after generation. How about doing something for the poor? The middle class ought to be able to take care of themselves and either shape up (move up) or ship out (move down).
The 20somethings of today are firmly bourgeois. They question authority very little. The way they lionize corporations that provide them with their kewl toys makes me ill. They know nothing of upward or downward mobility in a class sense. In fact, I think - in general, although there are always exceptions - they're one of the most unimpressive generations this nation has ever produced. They are currently play-acting at revolution with all this Obama nonsense. They're in for a severe wake-up call.
Maybe they can be developed into something, but there isn't much to work with. They're 2nd and 3rd generation bourgeois... like when you make a Xerox of a Xerox of a Xerox copy, the quality of the image just degrades.
The talk about goons got me thinking about where various organizations such as the mafia,mafiya,cali and medellin cartels,al-qaeda and fatah put their money? and when their broker gives bad advice is hoocodanode a sufficient response these are people who have (had) a lot of $ and they play rough...
s_puttnick
I think California has a deficit/financing crisis, the debt seem to be OK by sovereign nation standards http://www.treasurer.ca.gov/publications/2007dar.pdf
Neat report from the treasurer of California. New York is in much bigger trouble
INCOMING ASTEROID: A small, newly-discovered asteroid named 2008 TC3 is approaching Earth and chances are better than 99.8% that it will hit. Steve Chesley of NASA's Jet Propulsion Laboratory estimates that atmospheric entry will occur on Oct 7th at 0246 UTC over northern Sudan following an eastward track that carries it over the Red Sea. Measuring only a few meters across, the space rock poses no threat to people or structures on the ground. It will, however, create a spectacular fireball, releasing about a kiloton of TNT in energy as it disintegrates and explodes in the atmosphere. Asteroids of this size hit Earth every few months, but this is the first time one has been discovered before it hit. [ephemeris] [3D orbit]
I'm tryin' to tell yah that Canucks is fine so far as Canucks go, but iffen yah want to know where the real mens reside, yah gotsta go to the Yukon/Kuskokwim/Klondike. Those thet failed to climb the Chilkoot, well they plain gave up, and stayed in ol' Kanada. But the brave and hearty, we're here in Alyeska. What relevance? Well, we ran hard for gold and furs here when the ground was hard, and made a fine home. Learnt how to make due with nothing or less. You lower niners are gonna have some hard times, learn like the homesteaders, learn like the 'croppers. If'n not, well research scientists, lofty physicians, wall streeters of all sorts, top hat CEOs, yer in fer a rude awakenin'. Some here'r gonna learn livin' off the land the hard way...or their bones'll be scattered from Virginnie Beach to Virginnie City.
Update, that Californian treasurer report I read a few days ago and just linked to has a new edition -- released Oct 1, 2008. All about municipal debt crisis and current problems
theyieldcurve;
"If you were not aware of the Canroy thingy, your honorary status is revoked." Having been "in" since before the "Halloween Massacre" of a couple of years ago, am FULLY aware, LOL.
BB will try every trick in his bag to prevent any onset of a depression. BB and Roubini finally converge on policy actions. The Europeans better get their acts together or risk catastrophe. Increasingly, they appear to be the weakest link because of members' self-interests.
aleister perdurabo writes:
INCOMING ASTEROID: ... Measuring only a few meters across, the space rock poses no threat to people or structures on the ground.
I've come to the conclusion that the Fed cannot (and I mean that literally, as in lacks the capacity) hold down interest rates to their current levels and must let them rise.
Yes, I completely agree, especially at the long end. And that's just going to compound the crap out of the current problem as house prices are going to get killed.
October 6, 2008 - LOS ANGELES - An unemployed man with an advanced finance degree who was despondent over his own financial problems shot and killed his wife, three children, mother-in-law and then himself in an upscale home in a gated community, police said Monday. Officers found the bodies Monday morning after the wife failed to show up at a neighbor's home to go to work, Deputy Chief Michel Moore said. The deaths occurred sometime after Saturday evening.
mean while in other news
October 6, 2008 - WASHINGTON (Reuters) - Lehman Brothers Inc. Chairman and Chief Executive Richard Fuld received compensation valued at $22.1 million in 2007, a year in which the company weathered the subprime mortgage collapse better than its rivals. Apart from his 2007 compensation, Fuld realized about $40.3 million from exercising stock options and $26.5 million from vesting stock awards.
Considering that the New York economy is linked to the financial services sector to a large extent, job losses on Wall Street would result in the metropolitan unemployment rate going up to 11%. If this worst case outcome materializes, negative net absorption of office space would result in a vacancy rate in the high teens, similar to levels seen in the early 1990s. And rent losses would continue through 2011.
oldtrader writes:
theyieldcurve;
"If you were not aware of the Canroy thingy, your honorary status is revoked." Having been "in" since before the "Halloween Massacre" of a couple of years ago, am FULLY aware, LOL.
Excellent, you are definitely "IN". How about those Senators.
I was at a conference arguing Peter Schiff on this exact point. He thought the USA would decouple from the rest of the world. His whole investing strategy was investing in foreign stocks that paid a dividend. He said not to worry if the price went up or down because it was all about the cashflow. He is clearly an economist and not an investor.
Satan - "subprime" is independent of term length. Also, there is a lot of misinformed crap at the website you mentioned - keeping a critical mind while perusing there is - well - critical.
Mr. Cloudy Day writes:
Satan - "subprime" is independent of term length. Also, there is a lot of misinformed crap at the website you mentioned - keeping a critical mind while perusing there is - well - critical.
Greg Mankiw posted a link to someone else who said that deregulation played no role in the crisis. Below that is another post linking to someone who argues McCain should not be taking a hit politically because Presidents have little impact on the economy. After that is one trying to spin the flat-lining treasuries into a positive development -- he/they are so far behind the curve that someone here will have a book published on the causes, timeline, and solutions to this weakness in the system before he realizes that drowning CP with short term treasuries is not a positive development
"In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists."
Sounds deep to me. But I don't hear a lot in this venue or elsewhere about goals. What are you alive for? Pharaohs have been mentioned, but they must have yearned for something besides status, or they wouldn't have had those elaborate tombs built. The wealthiest people in history may be alive now, but when they die they'll be just as dead (or not) as any pauper in potter's field.
The Pope talks sense, but he must be a hypocrite or an air head out of touch with reality. Otherwise, he'd be Bill Gross and not the Pope, eh?
Currently Smoking Cannabis, thank you for the recommendation on the dehydrator. That sounds like exactly what I need. There is a specialty kitchen shop that sells canning stuff, juicers, etc. near me and according to their ad they carry the American Harvest brand.
Many southeast Asian countries sun dry cooked root crops, nuts and fruit products. Next month, for instance, mango, pineapple and banana will flow into and glut the market.
Mango and pineapple prices will tumble because so many of these fruits land in the Central Market at the same time. Imagine if there were a thriving mini-industry which could extend the life of these nutritious food items so that people could have them practically all year long!
Traditional methods of preserving food--kept in dry conditions--extends the life of these products by a few weeks at the most. Sun drying of fruits, nuts and certain root crops is already practised in the case of peanuts and ngali nuts but much more work along this line must be explored.
"Privet Pav,
Don't laugh at Titan. Right now, T. Bone Pickens is trying to find and engineering solution for a pipeline!"
Privet, paren. There's a bit of a problem about boosting the gas through a pipe tens of millions of miles long. But a much bigger problem is what happens when the Titanians apply to join OPEC.
Kona 11:08 - this is fascinating. I can't get the boombergerama chart to go back past mid-July. It's not clear what the RH numerator is. $b ponied? Is this the spend side index to BNY Mellon buy side?? at least in part?
Send it to Brad Setser at CFR, he'll figure it out.
Ministry of Truth - "decoupling" is the tactical equivalent of "the fundamentals are strong". Fairy tale. Wishful thinking. As the limeys say "BOLLOCKS". (Always loved that).
If there is anything I am hopeful about, it is that this question will be addressed in earnest, by people who have never considered it beyond accumulation or status, across America. It is like pulling the thread on a sweater, and the results of a widespread reevaluation of life's deeper meanings leaves me feeling that, should I live through the transition, the world will be a much better place. It is just too bad that it will be delivered in this manner.
Pavel: FWIW, I do believe there is already a spiritual revival spreading like wildfire across the globe. I have wondered for years if it would reach critical mass before we destroy ourselves.
The biggest unreported news for the next week will be the results of Monday's $150bn TAF auction.
Notification Tues Oct 7, Settlement Thurs Oct 9
Maturity Jan 2, min bid was 1.39%, max $15bn per bidder
That should boost something like Wells Fargo that is positive cash flow, smaller so that $15bn means a lot more, will begin to provide relief from the roll-over squeeze.
European banks (minus HSBC, or is technically Asian) will have the hardest time at New Years because they all have to borrow significant amounts of deposits from other banks that won't want any trouble. If the ECB is going to act, it needs to deal with this asap
Pavel: FWIW, I do believe there is already a spiritual revival spreading like wildfire across the globe. I have wondered for years if it would reach critical mass before we destroy ourselves
Don't worry about the Titanians. I have already filed for mineral rights in the East District of Texas...AKA expediscious review!!!
Actually, they are starting to shut in gas. $7 gas is a deal breaker. Exxon is withdrawing from the DFW shale. Eh, a good no sunspot COLD winter may boost gas back up a bit.
T. Bone is a really nice guy and a typical Texas promoter. You love to hate him but he is one shrewed cookie...Texans are risk takers. Wouldn't have it any other way.
"If there is anything I am hopeful about, it is that this question will be addressed in earnest, by people who have never considered it beyond accumulation or status, across America."
Humanity has always been a fragile enterprise. But now this little creature with the big brain has acquired more power (including economic power) than it can comfortably handle. It suffers most seriously from an illusion of control. Yet it understands, on a half-conscious level, that comprehensive control is an illusion. That understanding is the basis of panics. Humanity is faking it.
Apologies if you guys were all over this when it came out, but this Rep. Brad Sherman Youtube where he says they were told privately that not passing the Paulson bailout would lead to martial law in this country has scared me.
I mean, it's one thing when posters here talk about the threat of martial law. When a Congressman says it was predicted, it sorta takes things to a new level.
It suffers most seriously from an illusion of control. Yet it understands, on a half-conscious level, that comprehensive control is an illusion. That understanding is the basis of panics. Humanity is faking it.
Yes, but in the process of being unmasked, the fantasy of control (or certainty, or predictability) will be revealed. At some point, my hope is that there will be a 'letting go,' though I would rather it would have come about by a certain kind of maturity being realized. Instead, we will cling to our ephemeral world until it sweeps us away. And, when we find ourselves lacking any control and yet strangely fulfilled, we can be at peace that things are fine as they are. No 'elsewhere' or 'otherwise' is required.
And maybe then we can get busy realizing our human potential.
"Pavel: FWIW, I do believe there is already a spiritual revival spreading like wildfire across the globe. I have wondered for years if it would reach critical mass before we destroy ourselves."
We just squeaked through the Cold War. I saw some of that. We need to get serious. Even Kissinger sees that, and he should know. But this economic crisis is potentially destabilizing. We must get a grip, and not only for economic reasons.
"Dadnabit! I'm goin to fix this trouble.I'll get ridof all money and use Talents like in the BIBLE.Everybodies got Talents.I can play the flute".........1st Dude Todd Palin "FUCKIN A"
"Yes, but in the process of being unmasked, the fantasy of control (or certainty, or predictability) will be revealed. At some point, my hope is that there will be a 'letting go,' though I would rather it would have come about by a certain kind of maturity being realized. Instead, we will cling to our ephemeral world until it sweeps us away. And, when we find ourselves lacking any control and yet strangely fulfilled, we can be at peace that things are fine as they are. No 'elsewhere' or 'otherwise' is required."
I can't say what I think here because it would be outrageously off topic.
There are some very bright, very interesting people on CR. That has been helpful for me, and I'm grateful and appreciative.
R Buckminster Fuller:
"...We have pointed out that the geologist Francois de Chardenedes wrote for me a scenario of the technology of nature's producing petroleum which disclosed that the amount of energy employed by nature as heat and pressure for the amount of time required to produce each gallon of petroleum, if paid for at the rate at which the public utilities now charge retail customers for electricity, must cost over a million dollars a gallon. Combine that information with the discovery that approximately 60 percent of the employed in U.S. America are working at tasks that are not producing any life support. Jobs of inspectors-of-inspectors; jobs with insurance companies that induce people to bet that their house is going to be destroyed by fire while the insurance company bets that it isn't. All these are negative preoccupations...jobs with the underwriting of insurance underwriters by other insurance underwriters -- people checking up on one another in all the different departments of the Treasury, the Internal Revenue, FBI, CIA, and in counterespionage. About 60 percent of all human activity in America is not producing any physical life protection, life support, or development accommodation, which physical life support alone constitutes real wealth.
"The majority of Americans reach their jobs by automobile, probably averaging four gallons a day -- thereby, each is spending four million real cosmic-physical-Universe dollars a day without producing any physical Universe life-support wealth accredited in the energy-time -- metabolic -- accounting system eternally governing regenerative Universe. Humans are designed to learn how to survive only through trial-and-error-won knowledge. Long-known errors are, however, no longer cosmically tolerated. The 350 trillion cosmic dollars a day wasted by the 60 percent of no-wealth-producing human job-holders in the U.S.A., together with the $19 quadrillion a day wasted by the no-wealth-producing human job-holders in all other automobiles-to-work countries, also can no longer be cosmically tolerated.
"Today we have computers that enable us to answer some very big questions if all the relevant data is fed into the computer and all the questions are properly asked. As for instance, "Which would cost society the least: to carry on as at present, trying politically to create more no-wealth-producing jobs, or paying everybody handsome fellowships to stay at home and save all those million-dollar-each gallons of petroleum?" Stated evermore succinctly, the big question will be: "Which costs more -- paying all present job-holders a billionaire's lifelong $400,000-a-day fellowship to stay at home, or having them each spend $4 million a day to commute to work?" Every computer will declare it to be much less expensive to pay people not to go to work. The same computers will also quickly reveal that there is no way in which each and every human could each day spend $400,000 staying at the most expensive hotels and doing equally expensive things; they could rarely spend 4000 of the 1980-deflated dollars a day, which is only 1 percent of a billionaire's daily income." 404 Not Found
CSC and Pavel - c'mon, this is Rousseau / Gauguin nonsense.
It is more than ever apparent that all the detailed recorded history and our myths, legends, shibboleths, holy books, hadith, and sutras, and post Enlightenment theories, efforts and new received wisdom are only a thin layer of slime over the deep sea of the paleolithic.
The apparent irruptions are not random, they're inevitable. This is why we should focus on containing this tendency, through constitutions, laws, appropriate regs and rules, commercial and criminal law.
If Wall St has paleolithic tendencies then an Apolline response is required.
isn't clear from his weasel language who told who anything about martial law
Perhaps not but I can give a first-hand impression from two weeks ago. I drove along the I-405 freeway in Seattle around midnight and came up behind a convoy of about ten humvees and strykers.
Not surprising. The surprising part was when I realized that the gun hatches were open and manned and that I was staring down the barrel of a M-60 in the hands of a guy in night vision googles.
I attended a book signing by Naomi Wolf this weekend and I'm... unsure of what to make of it all.
The Crash has been fairly predictable. It wouldn't be hard for fairly intelligent men to take advantage of the situation and even justify it to themselves as necessary action.
How much money does the Fed have on hand to use to purchase commercial paper if decides to do so?
Super Duper International SIV!
Well that's it then; the crisis is finally over.
Ugh...
I'm all for getting the CP market going again, but I fear that the Fed will get stuck buying the worst of the CP market, and we will see what happens if/when a few companies go belly up...
Week 1. US bail-out.
Week 2. World bail-out.
Week 3. (something bigger than world) bail-out).
What did Bill Gross say again earlier today?
Bailout 2.0. Coming soon to a Congress near you.
Charles J Gervasi writes:
How much money does the Fed have on hand to use to purchase commercial paper if decides to do so?
no limit.
the boj did this - took cp as collateral. banks gave them cp and borrowed against it at 0. coprorations were able to issue cp to the banks, they got funding, banks made a spread. cp had to be above a certain rating.
the plan revived the cp mkt in japan at the time.
The G8 is useless.
Comrade Bagholders,
Galactic bailout.
CP bail out is nuts.
We've just entered the Twighlight Zone.
Nostrovia,
good luck with that....gonna need it.
I'm soooo glad this is all about confidence.
Ciao
MS
If this month's Visa bill is in the paper and Paulson lights his cigar with it, I'll be happy. I mean if Visa's only record of the bill is in Paulson's hands ...
So, will anything these guys are coming up with actually work (beyond some short-term bounce)? Someone watching with great interest but little actual knowledge to evaluate it all...
The Fed is moving heaven and earth to keep this sucker from failing.
Interesting thing is, it has done absolutely nothing (to date) to keep things from falling apart.
Well it's about time the international community stepped up to help contain this crisis to America's shores. We might really be in trouble if some European banks began to approach room temperature.
That nice Cambell lady on my teevee said that it is all the fault of the Clinton administration that passed the commodities something or other bill in the dark of night in december of 2000 when everyone was 'trying to get out of town" and that spawned these CDS thingies that are terrorists in the financial world.
thank god we know who to blame!
Its the last step....and it will FAIL
FOllow cramer.. SELL And HOARD
Christ does Bill Gross have any dignity? Begging the government to constantly bail him out.
In need of bail-out sorted by most urgent
1. USA
2. Italy (maybe should have enacted some kind of reform during the boom years)
3. Britain (Money's tight and capital is fleeing for safety)
4. Germany (DB is so large and so levered with so much L3 assets... will be a financial nuclear explosion)
5. France (Agricole and Natixis wouldn't be the first things ever nationalized, the rest have good deposits + capital)
6. Canada (economy will enter recession again but banks are well capitalized for foreseeable future)
7. Japan (Japan won't cut its rate, it is ahead of the US by about 20 years)
* Russia (heard they might just do G7)
Where does all the money come from to buy this crap?
Why doesn't the Fed open up a retail bank and avoid middlemen?
Next the FED is going to sell put options and use the premium to pay their employees
The Fed is moving heaven and earth to keep this sucker from failing.
Just wait 'till after the election...
CR,
Yes this would test the powers of the FED, but the question is who would oppose this and sue the FED in federal court? Who would have standing, what would be the substantive issue on what legal grounds? And would it be reversed in time to matter?
Anyway, great posts. Keep it up.
/We need a bigger plunger.
I think the long-term reaction of people to this is going to be: "if they can do it, so can we." Look for massive consumer borrowing and deliberate default, even by those able to pay.
So, will anything these guys are coming up with actually work (beyond some short-term bounce)?
There is no policy in the world which could palliate the pain associated with the correction of global imbalances on this scale.
The only viable option is to provide government aid to those affected by it.
Are you wondering why no one warned yu about this crisi ahead of time? Are you wondering why no one with any credibility has been there throughout to get you through this mess? Well you can blame your American media propaganda machine. These clueless lying idiot bozos like Jim Cramer, Kudlow and all of the rest of the morons who discuss anything on the economy and markets are just as guilty as Wall Street in this crisis because they fooled you all the entire time. They never allowed credible people to even challenge the idiots they call experts. All of the networks are guilty. Even Calculated Risk is guilty after ignoring my requests to post some guidance and warnings on its site several months ago.
And now Cramer goes on NBC and scares investors telling them to sell everything after several months of calling bottoms. Do like I am - call the SEC and demand he and these other shills and crooks be sent to prison. If enough people call they will be forced to investigate these crooks.
It's all about control and other agendas. If you don't see that then you are clueless. Don't let these media bastard lying assholes get away with this. Demand they resign. Demand people with credibility and no agendas deliver the truth and guidance instead of these bozos. As long as the media continues to ban me, you people will be stuck with these liars and crooks. My advice is to do the opposite as they say.
Yup, another mole to whack.
Let's put it this way, we're looking at a probability of an economic recession on the order of the great depression that is far too high, and non zero. Is it 5% 10%, 50%? I dont know, but I suspect it is higher than we know, and my take on it is that, given our current administration, what it likely means is that the bailout will be much bigger than we expect, because there is no way they let the financial system lock up. Depression only comes if they lose control of events, or a credit freeze cant be unfrozen. (Although we could still perhaps spiral down a very long drain to get there...) I think they have the stock market under control...they will PPT it like today to manage any big downturn, and let it go down as far as it needs to go, but will not let a -30% day occur. But even if it keeps going down slowly, it's a big problem. We've got a bunch of seniors who will NEVER retire. I mean, just this year we're looking at 30% of their meager savings gone. If it hits 50%, what do these people do? And when a ton of broke folks enter the labor force? How's that going to work? But that's an aside of sorts.
But you have to ask yourself why Bernanke in particular was chosen to head the Fed back in early 2006. I think they knew very well that they were likely going to have to employ all the unusual tactics he had written about to support the financial system. I think that when he took over, the problem was already there... house prices were already falling, and there was nothing that could be done other than talk nicely and hope. Someone at some point must have told them how this could unravel, once they walked them through how the CDS market has been set up. Clearly, some people knew. When did Bernanke know? If you were about to head up the Fed, dont you think you'd have asked around to figure out what the heck was going on there? If he took that job and DIDNT do the due diligence on the state of the US financial system, he is incompetent. I think they knew the time bomb was ticking. Problem is, what could they have done then if they knew? Nothing. Have you heard anyone say, here is what we should have done in 2006? Nope. I dont think there was an answer, just like now, I dont think there IS much of an answer, except a very expensive whack a mole approach. So, this is and always has been a mop up job, and Ben was the man with enough chutzpah and the academic record to try to pull it off.
I just worry that we are facing a broken financial system, that is going to require a continued massive deleveraging and asset deflation. That they cant even put a number on how big these counterparty issues are is quite scary. I worry that the Paulson plan does not have enough $ in it to make a market that can legitimize the values so that stuff trades and people have enough confidence that they will lend. But even if that happens, people will be skittish...how will they know how much of the junk has been bought up by taxpayers if they dont know how much there is? Weve got at least a couple months ahead where the economy is likely to just crap out regarding investment, and job losses could get quite ugly. So weve got to get some confidence quickly that this plan is going to keep credit flowing enough. It is surely going to be costlier though, and that in and of itself is going to hurt. So, after that first $250 bil goes poof, we better see some results. Because if you keep lighting money with a match, and no heat is produced, that is going to be very bad for confidence.
Of course, the worry about continued amounts of taxpayer money being spent is that it adds up. IMO, the $700 billion figure was made up and it wasnt an accident what the number was. It has to be big enough to produce confidence, but not so big as to destroy the credibility of the US government and debase the dollar. That the dollar is going up now is likely only temporary. Once they see how much money is needed to fix this mess, then the 2nd round problem comes. And that is, what do the Chinese think about all this? Will they keep buying treasuries if we keep printing money like it has no value? What happens to rates to keep them interested? do we crash the dollar? It's a pretty ugly situation.
I am, like I said before, praying that I am wrong and hoping that this Paulson plan works better than I expect. But I dont have a lot of confidence that these guys really know what they are doing, only because the problem is in a way beyond their comprehension in its magnitude. I think they have to take some action, because no action is clearly not an option. But that does not mean that action produces much of a result. They clearly dont want to go down without a fight. That would be negligence. Is the Paulson plan the best plan? Who knows. They all look like crapshoots. Of course we chose the one that is tilted in favor of the status quo.
But take a silly military analogy - what if you are a group of 100 soliders facing a column of tanks? You'll shoot your bullets until they are gone and then you are smashed to bits. Unless of course you hit that one tank right between the turret, it blows up, and manages to destroy all the others. Now, if that is all you have to fight with, well, sucks for you, but you take that chance. So, that's sort of where we are. General Hank Paulson makes the decision, and tells us the strategy he has will work, and the chances of that tank shot above are much higher than we think they are. We grumble but hope he is right. But if it's really that there is a better plan that the infantry thought up, but General Paulson said it's my way or the highway, well, that's not too good. And that could happen if the infantry's solution was to march the colonel out front to surrender. And what is surrender in this case? Well, it's byebye to all the colonels buddies. He has to go to the tanks and tell them the info they want. In this case, it means the banks and all his buddies in them take the brunt of the pain. But that would be death without honor for him. Nope, it's cannon fodder time. The war is lost, but how do you want it written about in the history books?
EvilHenryPaulson writes:
Finally - some facts.
Where does all the money come from to buy this crap?
Anonymous | 10.06.08 - 9:49 pm |
Governments can issue more money without the inflationary effects so long as financial network is delevering, because it is replacing less than is vanishing. Of course the problem down the road like Japan has is that you have a bunch of debt and no room for a new financial system to rise up
Finally - some facts.
theyieldcurve | 10.06.08 - 9:51 pm |
Oh come off of it, no one is interested in Canada. The world's (second) most boring headline the London Times' reporters came up with was "Worthwhile Canadian Initiative"
Did you mean to post under the handle of 'satan' that has been popping up lately?
Among steps under consideration would be funding a special purpose vehicle as opposed to outright purchase of commercial paper
Ah, good, a second chance to call this proposal STUPID.
Dawg,
Not a super duper international SIV. But we will give them a super duper case of SIF.
OT,
Got my homeowners renewal in the mail today. Up 15.8% YoY with no change in coverage.
Called my agent and he said the company experienced higher payouts last year which I know is not true.
Yea, they have losses just not P & C payouts.
Question arises, Am I being insured with an insurance company or a hedge fund in drag?
Mike Stathis,
I don't blame kudlow or cramer or the bizarre guy ranting in the park with the full winter coat on and snorkel-accoutrement. Really I don't. It's entertainment. Get's people to watch commercials about buying crap they don't need. o.k.?
Remember, we're a consumer society, for about 3 more months.
Anonymous writes:
Where does all the money come from to buy this crap?
from a greenspan interview re. social security.
RYAN: "Do you believe that personal retirement accounts can help us achieve solvency for the system and make those future retiree benefits more secure?"
GREENSPAN: "Well, I wouldn't say that the pay-as-you-go benefits are insecure, in the sense that there's nothing to prevent the federal government from creating as much money as it wants and paying it to
somebody. The question is, how do you set up a system which assures that the real assets are created which those benefits are employed to purchase.
the govt creates the money it needs. it can be inflationary ....
wake up early, invest in anything and make a ton of money, then sell at the end of the day, dow goes up 450 tomorrow just because it always does after a day like today
Like Thuper Duper ratings ala Big Gay Al?
Night all.....
Ciao
MS
ok,
now i'm scared...
what was the argument about the in-ability to shut down banks/market for a week or so?
"Even Calculated Risk is guilty after ignoring my requests to post some guidance and warnings on its site several months ago."
As my redneck buddy would say, "That dog won't hunt."
Not too long ago, there were a few places on the internet where one could gather that something fishy was in the air. There are quite a few of us here now who used Calculated Risk to figure out how we were being lied to, what other data was available, and what it all might mean independent of corporate oversight.
To say that this site was anything like the shills is dishonest, misinformed, or just a desperate attempt to be noticed.
Did you mean to post under the handle of 'satan' that has been popping up lately?
At the risk of sounding pedantic...I am entertained.
Martians may come in and buy all the bad paper, let us off the hook.
Men in Black
Looks like the fires are getting out of control. On a global level. Bernanke and Paulson and their counterparts in the G8 will run out of ammo soon. Wonder what the news are next week this time around?
--
Wealthy and Powerful of America Unite! (Gross, Buffett, Goldchain Silverknife, Morgan Stanley, B of A, JP Morgan Chase, etc, etc.).
Political Gangsters and Crooks of the World Unite!!
Against whom? The rest of us.
Democracy = Domination of Money -- Spengler.
Jas
lere writes:
wake up early, invest in anything and make a ton of money, then sell at the end of the day, dow goes up 450 tomorrow just because it always does after a day like today
OMG! I don't know who you are but thank you! I was just about to post this. Tomorrow seems very likely to be a trend day - one where the 4x leverage of a day-trading brokerage account pays off huge if you buy and lever up early, and if you don't f* up by using no stop. Gap and go! Look at the NQ futures up up up!
theyieldcurve | 10.06.08 - 9:56 pm |
The reason I ask is absolutely no one but that one username responds to anything about Canada. I think a moose may have once bitten your sister and that's why any mention rubs you the wrong way.
If you have some information to add, or would like to correct something, please do go ahead.
Didn't Congress just reload the Fed with $700 billion more dollars in ammo?
Will the Fed ever be maxed out?
SIV Positive!
I think the long-term reaction of people to this is going to be: "if they can do it, so can we." Look for massive consumer borrowing and deliberate default, even by those able to pay.
Funny, I was just thinking exactly that. Tempting thought. But I believe in karma.
I got the solution, add a zero to every asset and salary-problem solved.
Current Problem
3000 mortgage
2500 Salary
Solution
3000 mortgage
25,000 Salary
See all gone, no more deleveraging
--
France has a President supported by America's Neo-CONs. Rich of the American Empire.
Jas
Perhaps I should read Timing the Trade... posted this last and never to be seen last post. Try again, then I'll rip the G7:
Comrade Counterpointer writes:
Suitably gothic thread music:
YouTube -
? v=PSCPL0e7498
Where the info and anlaysis breaks down is the purpose to which MEW is put. The assumption is always on consumption and non-productive purposes. However, some, given lag effects, could be to previously-deemed ok ROI ventures, like home reno or expansion, which have now been undone by property asset price collapse. Net result is the same - more debt for no greater value.
But I propose an even more worrying substitution effect in the casino: MEW at historic low rates used to shore up credit card, auto loan, student loan, and other repayment minima to defray the day of reckoning. I have searched for this data and cannot find it. That is, MEW is the trust fund to keep from triggering universal default in a range of other household balance sheet credit classes. If anyone thinks this is remotely plausible, have a go at filling in the charts.
Why do I think this is possible? Because I did something similar myself, and it was doomed - only a very fortunate job change altered the deathspiral.
If there's any validity to my hunch, then the stock of the problem turns rapidly to a flow problem in the near term, with resets all over the place, and household meltdown.
CC
Comrade Counterpointer | 10.06.08 - 9:55 pm | #
here's one for you. japan inflation linked bonds (JBI16 (10 yr)) just traded at a break even inflation rate of -100 basis points ie. minus 1%. tey were trading in the +40 bp range in June. they price off core cpi.
Jas,
Yes, a Spenglarian winter.
He had a good quote about Nazi's. "Led by those who could not find work. Followed by those who did not want to work."
I think a moose may have once bitten your sister and that's why any mention rubs you the wrong way.
No, your devoted anti-satanic rhetoric is welcome and appreciated. In reference to the moose - one of my favorite movies - a classic. With a bigger budget, it could have won an Oscar or two.
CC,
yes.
I may have missed the thread/post, but is there a compelling argument why this won't end in a depression?
Modern Global Financial System = The ultimate Rube Goldberg Contraptio
Isn't buying commercial paper one of the things Nouriel Roubini recommends?
RGE - Financial and Corporate System is in Cardiac Arrest: The Risk of the Mother of All Bank Runs
- Direct lending to the business sector from the Fed via extension of the PDCF and TSLF to the non financial corporate sector. This could include Fed purchases of commercial paper from corporations and other forms of financing of the short term liabilities of the Administration to small businesses secured in appropriate ways. Given the collapse of the corporate CP market and the banking system reluctance to provide loans to the corporate sector (credits lines are being shut down) the only alternative to the Fed becoming directly the biggest emergency bank for the corporate sector would be to force the banking system to maintain its exposure to the corporate sector, possibly in exchange for further Fed provision of liquidity to the banking system. The former option may be better than the latter to deal with the looming illiquidity of the corporate sector.
They need to make a computer simulation of all this.
nlere writes:
wake up early, invest in anything and make a ton of money, then sell at the end of the day, dow goes up 450 tomorrow just because it always does after a day like today
who's got the $$?
escariot writes:
That nice Cambell lady on my teevee said that it is all the fault of the Clinton administration that passed the commodities something or other bill in the dark of night in december of 2000 when everyone was 'trying to get out of town" and that spawned these CDS thingies that are terrorists in the financial world.
thank god we know who to blame!
escariot | 10.06.08 - 9:48 pm | #
That would be The Commodity Futures Modernization Act of 2000, aka The Enron Loophole.
Much of it was apparently authored by Enron's legal team. Greenspan testified for it but it died in committee. Phil Gramm brought it back from the dead and tacked it on to a huge appropriations bill. Clinton signed it on Dec 21, 2000, but may not have even known it was in there.
This law pretty much eliminated the possibility of regulating CDS and allowed offshore oil trading platforms to be unmolested by US regulations. Basically allowed Enron to corner the energy markets in the western US and allowed swaps to remain private and off any recognized exchange.
sombody watched 60 minutes.
where's the conjure clock?
If someone hasn't already posted this.....
Man kills himself, family over financial.....
L.A. man kills family, himself over financial woes
| Reuters
Tragic, etc. but also shows how people are now looking at EVERYTHING through the lens of the economy -- and I'm thinking media...
A turning point
Off-topic, but CR you may be right about China. I'm giving them a 60% chance to command-economy their way out, similar to our exhortations to shop post 9-11, except with Chinese made Kalashnikovs pointed at the middle-class. Note saving rate may sustain this hypothesis.
But here's a nice article if you didn't see it Far Eastern Economic Review | The Great Crash of China
Summarised here what China needs to do and if it doesn't will crash with the rest of us:
Unless current expansionary monetary and fiscal policies are directed at skills development, an expanded intellectual property rights enforcement bureaucracy and research and development capacity, China may be running headlong into a great economic brick wall.
Ahh Physicists, you know when Wall Street hired those guys...let's see should I write a risk management program for global financial markets, go to the star trek convention ,play dungeon and dragons or pretend to get laid in the halo deck.
I think I'll play a nice game of chess.
Have a nice night.
Ziggurat writes:
Tragic, etc. but also shows how people are now looking at EVERYTHING through the lens of the economy -- and I'm thinking media...
A turning point.
I agree. Bring back the gold standard. And sack Larry Kudlow.
Goodnight all. CR, again, thanks.
The Three Stooges do brain surgery.
"Where does all the money come from to buy this crap?"
It is time. I will not hide it any longer. The money is coming from me. I have saved up 8,293,838,862 ounces of gold, and am donating them to the US Treasury.
Cracker
60 Minutes is a contra-indicator, I'll now call a bottom, the biggest idiots in the world are now aware of the crisis..
Woo-Hoo time to buy
Mike Stathis, are you a troll or are you really that full of yourself to think that you are the only voice of reason in this crisis?
My word, even if you had a perfect roadmap on how to get through this mess I'd completely ignore you. You need to learn a little something called 'bedside manner' and stop making the false assumption that any of us care about your insipid drivel.
I have $1.29 in my pocket and they can have if will save CP. Oh Sure
jo6pac
The race to the bottom continues.
sue..so noted and recorded.ty
Just read a delicious Buffett witicism about complex financial instruments: "Beware of geeks bearing formulas." Knows his Virgil, apparently.
Breitbart.tv » CNBC Confirms Lehman CEO Punched at Gym
CNBC CONFIRMS LEHMAN CEO PUNCHED OUT AT GYM
(Jas! Did you do this dude?)
From two very senior sources one incredibly senior source that he went to the gym after Lehman was announced as going under. He was on a treadmill with a heart monitor on. Someone was in the corner, pumping iron and he walked over and he knocked him out cold. And frankly after having watched this, Id have done the same too.
Give this dead cat one more kick and all that is going to be left of that poor sucker is the fur.
city girl writes:
Isn't buying commercial paper one of the things Nouriel Roubini recommends?
I like the idea a lot.
Roubini was early but now that people are figuring it out, they want to do stuff. Like actually say we have a crisis. Do stuff that they wouldn't a month ago, etc.
If canadian banks are well capitalized then why hasn't hell frozen over?
Seriously, look up "hubris"!!
FFDIC writes:
Breitbart.tv » CNBC Confirms Lehman CEO Punched at Gym
CNBC CONFIRMS LEHMAN CEO PUNCHED OUT AT GYM
Old news. Get with the program...
sue:
play D&D, 1st edition.
When O when will G8 start realizing that it's a crisis of confidence? Liquidity will not fix this problem, only by purging the system of bad players, either by bankruptcy or indictment, will order be restored.
--
More actions politicians take more they reveal the severity of the problem.
Interventionists like Fed and Paulson are a bunch of I-didn't-see-it-coming ignoramuses.
American People are screwed.
Jas
Miranda writes:
So, will anything these guys are coming up with actually work (beyond some short-term bounce)? Someone watching with great interest but little actual knowledge to evaluate it all...
Miranda | 10.06.08 - 9:46 pm | #
Miranda the short answer is NOOOOOO!
For 25 years solid, the US has lived on debt and that debt is now coming home to roost.
You see, pundits argue whether it is confidence, or liquidity, or solvency, or the weather, the time of year, etc.
The problem is, imho, is that until every company, goobermint org, and commercial/investment bank comes clean with the "real" books, nothing but depression is in the cards.
People are finally getting it. It is still slow, but the slombering American Idol J6P is finally figuring out that debt is no way to run a $14 Trillion economy.
Furthermore, for those of us who have been paying attention, the more than 1 quadrillion, yes, quadrillion in derivatives, is going to really leave a mark as this whole thing unwinds.
We can argue all we want, but I think I will be buying another 10-20 cans of soup/chili, etc. on the way home.
Even for me, the uber-perma-bear today got a little scary. At some point this will give way and you better have a plan because apparently the goobs in goobermint don't. Nothing they do seems to work.
We will all be on our own, with just family, friends, neighbors, community, church, etc. to help us, IF THAT!
Sorry for the doom, but this debt monster is gonna leave a serious mark.
satan writes:
If canadian banks are well capitalized then why hasn't hell frozen over?
It's only October. Give us a couple of months.
In all honesty, Canadian banks are well capitalized, because our housing bubble has just started to deflate. Another year or so will be the true indicator over how well they remain capitalized.
Clinton signed it on Dec 21, 2000, but may not have even known it was in there.
Clinton knew it was there and so did Rubin who pushed Clinton to sign it, which he did over the Christmas holidays.
In 1998, Brooksly Born, the then head of the CFTC was raising red flags over this saying it was going to lead to a massive taxpayer bailout of financial institutions that had become to "big to fail"
She was shouted down by Gramm, Leach and Rubin. Rubin pushed Clinton into firing her, which he did.
Liquidity will not fix this problem, only by purging the system of bad players, either by bankruptcy or indictment, will order be restored.
Indictment would be welcome. Bring on the indictment! And a bit of bankruptcy...
Barrons magazine is my contra-indicator. It really goes out of its way to tell you what not to do by writing convincing editorials opposite to what the market will do
This week "Let's get credit flowing again", means at least one more bad week. Dow down 200 pts tomorrow, which will keep the correlation to FTSE tight
--
Ross,
Good one (quote by Spengler).
Jas
On a more serious note, the Fed has to get it's s**t together and start directly lending to business and even people. Otherwise we might end up with GD2.
France giving up on the capitalism experiment: "We surrender! We surrender!"
Here's a little secret: all the governments together cannot 'save' the world economy. Fundamental economic events are exactly that: fundamental. Governments can't stop the tides, earthquakes, glaciers. They can't make summer out of winter and they can't stop credit correction and debt unwinding.
Do you think any financial CEOs or other crooks will be murdered?
That would just cause the rich in this country to re-trench, and further try to control our politicians.
Ziggurat writes:
Man kills himself, family over financial.....
This is what frightens me about our collapse. In the GD, people entered it living very differently than we do today.
Instead of trying to scare the hell out of everybody, it would be nice if the MSM would start breaking down the American Dream and explaining what a fantasy it was. Too many think it was real and will cling, scratch and claw to retain it. That's where we will come unglued.
Poverty doesn't have to mean we kill each other.
But poverty is the arch enemy of the American Dream.
The violence and government response will be the worst part of it all.
France giving up on the capitalism experiment: "We surrender! We surrender!"
Vive le Quebec libre?
@Currently Smoking Cannabis (10:22)
Great insight. Very true.
You see, pundits argue whether it is confidence, or liquidity, or solvency, or the weather, the time of year, etc...
Mercury is in retrograde.
ope the market are still heading lower tomorrow . Crammer is looking out for his life .After Fuld had his beating . Cramerica is mad ... Boooyah... lol
What I want to know is why I keep nodding my head in agreement whenever the pot head posts something.
The only viable option is to provide government aid to those affected by it.
Nobody | Homepage | 10.06.08 - 9:51 pm | #
Three hots and a cot...
Mercury is in retrograde.
And Venus and Mars are alright, tonight.
Jas Jain writes:
More actions politicians take more they reveal the severity of the problem.
They aren't hiding it anymore.
Maybe they now know as much or more then you.
You should pat yourself on the back (again) and find something that isn't now OBVIOUS and is also TRUE.
"But you have to ask yourself why Bernanke in particular was chosen to head the Fed back in early 2006."
I've seen this sttement made before and I think the sentiment it expresses is exactly backward. Bernanke was not chosen because he had expertise in events that were about to unfold. To the contrary, once he was chosen the events, lo and behold, looked to him just like he wanted to see them. If your only tool is a hammer...
He is like every other general fighting the last war and for exactly the same reason: the hard lessons taught by that war are the only ones they know.
--
"(Jas! Did you do this dude?)"
FFCIC,
Quiet please. Shhhh...
Let us raise a fund and hire some goons to punch out BFNYC. I will gladly write a $10K check to scare Crooks and make them feel insecure.
My forecast is that German-style Nazis (not associating themselves with Nazis in any way) will take of BFNYC. Interesting times ahead.
Jas
What I want to know is why I keep nodding my head in agreement whenever the pot head posts something.
Talk to the smoke, the smoke will answer. The smoke doesn't lie
I'm sure Bernanke has a 35 year old pastry chef offering his advice on how to deal with the situation.
Seriously, I do not know what scares me more. The fact that this is happening or the realization that our Federal Reserve is treading water.
dryfly, CCC and WPA all over again ?
Comrade Goldberg,
I think you understood why I am skeptical about people who say canuck banks will remain ok. Citi, wachovia, wamu were also ok, as long as the housing pozi scheme was running smoothly. Now wachovia is a punchline on a skit on SNL.
blackhat: glad you liked the music...!
But seriously, universal default, or my preferred term cross-conditional default, is frankly pernicious and will affect household balance sheets in vastly negative ways over the next few years. The focus on mortgages is totally myopic, the key fact must be the simplest one: how much income enters a household, and how much is committed to debt service over time relative to basic needs (and their probable rising cost)?
Add to that the questions of what are the new imposts on families recently, now, and imminent; where are the probable sources of exogenous shock; is there elasticity in the quality of spending, not just the quantity; and in the light of the foregoing is the poor fkr going for thermobaric IMPLODE?!??
CC
"where's the conjure clock?"
Several hours into doom's day?
gotta twitch outa futures.
Markets can't go straight south every day, but without shorts they sure looked like they might around noon today.
One other little thing with markets....
When EVERYONE knows it, then you can't make any money on it.
This may not be a bottom, but it is a turning point of some sort.
Local minima
CREDIT DEFAULT SCAM. Insurance without reserves is an obvious scam. Its time to jail the scamsters and declare Force Majeure on this garbage.
I'm buying all the way down.
Insurance without reserves is an obvious scam. Its time to jail the scamsters and declare Force Majeure on this garbage.
One of the little known tidbits is that the Feds do not regulate insurance companies. For the most part, insurance solvency is a state issue.
I'm beginning to think this thing won't turn around until they raise rates. Keeping it simple, why take my cold hard cash out of deep storage for ZIRP?
"The focus on mortgages is totally myopic, the key fact must be the simplest one: how much income enters a household, and how much is committed to debt service over time relative to basic needs"
The Fed & FDIC agree. That's why there's been such a focused effort to get mortgage principal reduced. Just keep those consumers on some infinite payment terms on reduced principal and it'll settle down. Long shot IMO.
Well...this doesn't instill confidence:
Europe's Crisis Response Is `Meaningless' Guarantee (Update1) - Bloomberg.com
CREDIT DEFAULT SCAM. Insurance without reserves is an obvious scam.
Not insurance, it's a swap. Phil Gramm saw to that. It's my understanding that it was the naked CDS's that caused this problem not the agreements between lenders and third parties.
Trillions of dollars in CDS's exist between uninvolved parties betting on the success or failure of corporations and their abilities to meet obligations
--
Whatever happened to decoupling?
Jas
Bondgirl,
The Fed is not treading water, or air. The fact is - no one knows what we are treading. We have never been to this place before. Think of it as an economic " terra incognita" with the cartoonish legend - here be dragons.
Actually, this doesn't sound like that bad an idea. Private banks aren't doing their job, so let's just have the Fed take over lending activities.
Maybe the private banks can move into advertising or somewhere where they won't hurt themselves (and us)...
Are you sure? No, I'm SIV positive!
"The Fed & FDIC agree. That's why there's been such a focused effort to get mortgage principal reduced."
Well, the Fed and Treasury are, in fact, INCREASING the indebedness of American households.
I'm a Dem, nominally, but would love to see a house cleaning of the all Barney Frank/Chucky Schumer types. Yeah, wishful thinking.
And someone please jail Rubin.
For a better idea of the true size of the CDS "shadow market":
Safe Haven | Shadows of the CDS Market
Interesting point made over at iTulip: we have been here before. Not in 1929, but in 1873.
The Real Great Depression - iTulip.com
It is "insurance" without capital.
Or regulation.
Not reserves, but that is a technicality.
The vacuousness of this was obvious when Lehman was selling CDS's on US Treasury Debt.
No?
--
"We have never been to this place before. Think of it as an economic " terra incognita""
satan,
History doesn't repeat but it rhymes. We have been there with changes in the form over time.
Forms change but the essence remains the same!
Jas
If the Fed wants to help the commercial paper market, they should allow prime money market funds to discount the non-financial company commercial paper in their portfolios at their amortized cost. This would make their portfolios liquid and eliminate the need for the money market funds to puke out the paper to meet redemptions. It would also by-pass the big banks that got us into this mess and get funds directly to the commercial paper issuers. These non-financial commercial paper issuers are larger companies, who still actual make things. Smaller companies would still be borrowing from their local or regional banks.
Whatever happened to decoupling
Occurs post-global slowdown as the US wallows in the shambles of their financial system the rest of the world says "fuck them, we didn't like them much anyway" and begins a new world order
Jas - holy hanuman! No monkeying around, yr 10k check comment is prima facie conspiracy to commit a violent act with malice aforethought.
Careful, dude.
CC
Anonymous writes:
Whatever happened to decoupling
Ask Peter Schiff.
Peter Schiff-sucks to be him when you get the story half right..
sue writes:
Peter Schiff-sucks to be him when you get the story half right..
In spades...
Jas... "we" haven't been there, only our ancestors or any posters here 80 and older.
This will be painfully new to most of us.
I think you understood why I am skeptical about people who say canuck banks will remain ok. Citi, wachovia, wamu were also ok, as long as the housing pozi scheme was running smoothly. Now wachovia is a punchline on a skit on SNL.
I know all the arguments in support of the Canadian banks; lending standards tighter, reserve requirements higher, etc etc, but what is not often said is that there really are only 5 substantial banks in Canada and they are, let's face it, tiny compared to their International relatives. There was undoubtably huge run-ups in the housing market of a number of Canadian regions and some, like Calgary, are now starting to collapse. The point is that even though they started out on a better foot, their sheer tiny size makes any outcome uncertain in terms of capitalization and liquidity. And I haven't even touched on ABCP or any of those shenanigans.
I can't believe I'm in agreement with Satan. My mother would have kittens.
What I want to know is why I keep nodding my head in agreement whenever the pot head posts something.
Why@ ZIRP | 10.06.08 - 10:25 pm | #
We're all potheads now.
"But you have to ask yourself why Bernanke in particular was chosen to head the Fed back in early 2006."
Until now, I was comfortable with B's understanding of the 20's and 30's, and felt that he was a good man for the job at hand.
Tonight I was on the phone with someone I respect, and expressed that. He said he felt that was not so, and summarized his position with an Eric Hoffer quote. I asked him to email me the quote, which I just received. Here it is:
"In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists."
Tonight, I ain't so sure about Dr. Bernanke's ability to run with the ball as well as he is going to have to.
Awaiting another Trump bankruptcy sometime soon.
There is approximately $1 trillion in swaps bet on the success or failure of GM when the entire market cap of GM is a mere $15 billion.
Ha! That's one company, only one. We are toast
No, we have never been here before. The concept of a middle class as we understand it today came into being after WW2. The economy of the west started becoming consumer driven after WW1. We never travelled or experienced the world or communicated like we do now. Never before in human history! If you think that these factors do not affect the progress and eventual outcome of this crisis in a very meaningful way, you are no better than those wallstreeters who believed that they could use mathematical risk minimization models based on past performance.
bearly,
Have you heard the news of the BofA settlement with State Attorneys General over Countrywide mortgages? They will reduce interest rates to match payments to 32% of borrower income in affected states and mortgages.
who does Decoupling leave out?
Japan, Germany, Italy, Spain, France, UK the US...
thats the G-rubicon,
let me know how the G8 goes down.....
Ziggurat writes:
"One other little thing with markets....
When EVERYONE knows it, then you can't make any money on it.
This may not be a bottom, but it is a turning point of some sort."
Seb, is that you?
satan writes:
Bondgirl,
The Fed is not treading water, or air. The fact is - no one knows what we are treading. We have never been to this place before. Think of it as an economic " terra incognita" with the cartoonish legend - here be dragons.
satan | 10.06.08 - 10:33 pm | #
Do you really believe this?
Anon,
The market cap of GM is about $8 bilio
"In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists."
Beautiful. Conservatives vs. liberals
Anyone expecting a bounce tomorrow is half a day late. We had the bounce this afternoon. Tomorrow's another down day. October is a down month.
I'm whooped. Been burying mason jars all day.
--
Comrade Counterpointer,
I was kidding about the fund, but not about who will go after and hunt down BFNYC and other Crooks after the US has been Greater Depression for few years.
I see lot of parallels between Germany before WW I and America of recent years.
Jas
I can't believe I'm in agreement with Satan. My mother would have kittens.
Damn, I have to agree on that one too. The ABCP issue with Canadian banks is a bit of a quagmire. Giggidy! The big 5 banks are holding a ton of bank-sponsored ABCP in money market funds. If these puppies were to blow up (ie. in a recession), there would be hell to pay. Thus, my move out of money market funds and into T-Bill funds.
Let the TED spread be your guide...
Jas,
You just wait for the Santa Claus Rally.
After all the shock and awe, after all the unthinkable innovations in the marketplace, after all the sinister special interest step asides...if God himself doesn't drop feet down, and give us the what what, or some unimaginable extraterrestrial event not occur, I will be decidely underwhelmed. Rapture-smampture, just a little insight, just a little higher order comeuppance, just the slightest of visions. Anything to regain the faith in our species, and the ultimate destiny of the planet. Otherwise, grim nose smashing, grim land stripping, grim life and death. There HAS to be something more wonderful.
"the stock market staged a monster recovery immediately before the close"
Yes, that was very exciting and fun, but that added-synthetic volatility did nothing to add value or gain confidence, i.e, it would have ben better to see the market stay down versus having people think there is going to be more fun casino action on a day-to-day basis. When I look at future value, I sure don't look at this type of lotto noise -- and as they say, a day does not make a trend; trends take months to establish, and that is how old fashioned confidence is built, not minute by minute by minute in an environment of panic. Call it the PPT or wall street, but what ever happened -- it took away another level of trust and added more risk!
I see lot of parallels between Germany before WW I and America of recent years.
But George Bush was elected before, not after, the hyper-inflation in America
What Geoff said....if only I could remember....
RayOnTheFarm writes:
dryfly, CCC and WPA all over again ?
RayOnTheFarm | Homepage | 10.06.08 - 10:27 pm | #
If the financial smoke and mirrors don't work - what else is there?
Comrade Counterpointer writes:
Jas - holy hanuman! No monkeying around, yr 10k check comment is prima facie conspiracy to commit a violent act with malice aforethought.
Careful, dude.
CC
Comrade Counterpointer | 10.06.08 - 10:38 pm | #
indeed, rule of law please. and may i just say, best batman zowie, EVER CC - "holy hanuman!"
The iTulip article is fantastic.
If there are lessons from 1873, they are different from those of 1929. Most important, when banks fall on Wall Street, they stop all the traffic on Main Street for a very long time. The protracted reconstruction of banks in the United States and Europe created widespread unemployment. Unions (previously illegal in much of the world) flourished but were then destroyed by corporate institutions that learned to operate on the edge of the law. In Europe, politicians found their scapegoats in Jews, on the fringes of the economy. (Americans, on the other hand, mostly blamed themselves; many began to embrace what would later be called fundamentalist religion.)
I have been expecting to see "illegal aliens" the target of our scapegoating when this thing gets to altitude. I suspect that's what those mysterious KBR camps were built for. The xenophobic groundwork started in the media not too long ago.
When Travis wants to pick fruit and Kaitlyn wants to clean hotel rooms, our country is going to take a heinous turn against migrant workers.
--
Satan,
There was always a middle class and its size (%) grew in subsequent growth periods.
There is nothing new under the sun. (Proverbs?)
Jas
Anon,
The market cap of GM is about $8 bilion
Taken from this provided link. Article dated Feb of this year when GM Market cap was 15B
Safe Haven | Shadows of the CDS Market
Johnny Lee thanks for the hope.
Planning for the worst.
The US National Debt has just grown too large for the National Debt Clock.
YouTube - U.s. National Debt Grows To Large For National Debt Clock
Wowzers.
--
Sue,
I have been thru many a rallies. I have gotten to love them to load up.
Bring it on!
Jas
Trump has survived bankruptcy before...how can one with so much money continue to sport such a hideous hairdo?
I have been expecting to see "illegal aliens" the target of our scapegoating when this thing gets to altitude. I suspect that's what those mysterious KBR camps were built for. The xenophobic groundwork started in the media not too long ago.
Agreed, that was a fascinating itulip article.
My concern is much more for trade protectionism than labour, but either way we'd all be well and truly screwed.
--
Good night, everyone.
May tomorrow be a good day.
Jas
Commercial paper
Commercial paper - Wikipedia, the free encyclopedia
Defaults
September 15, 2008: Lehman Brothers
This caused two money funds to break the buck, and led to Fed intervention in money market funds.
Evil Henry P.
I have some interest in Canada, and there are Canadians who post here, with and without popcorn. No doubt there are few others with some interests in Canada, too, so don't think that your contributions related to the frozen north are not appreciated.
Satan and his Yield Curve speak only for themselves.
But George Bush was elected before, not after, the hyper-inflation in America.
And the Weimar republic hyperinflation occured after WW-1. What's your point?
How does Jas define a "good day"?
(Shudder)
Jas,
The wealth that even a poor person in a western country enjoys today makes pharohs and emperors of yore look poor. They may have had more money, but they did not have wealth.
If you think that 3 generations of living in this environment has not changed the mind and perception of it's inhabitants, you are nuts..
We have a lot of insolvent institutions. The banks are hoarding money and investors are taking their cue from the banks. The Fed is pouring all its resources into treating the symptoms of the problem, which is kind of like taking Immodium for the flu.
The federal government has little that it can do with the CDS market - this market is basically experiencing the tragedy of the commons. The banks probably could devise a solution that allows them to net out of their obligations to each other versus letting the CDS market function like dominoes, but they won't because the reality is some of them will survive and some won't, and the ones that will survive will get something off the backs of taxpayers and that is better than nothing.
The only thing the government can meaningfully impact is the way this is absorbed by US citizens. They can apply these resources to essentially refinancing the debts people carry. But they won't do that on as large a scale as the funds they are willing to throw at the financial sector. No matter what they do, they are creating a moral hazard.
In the meantime they will treat the symptoms and hope the fear subsides in spite of what provoked it. I am all for stability in the CP market and credit markets in general, believe me - I'd like to have a job next year - but the Fed cannot prop everything up forever.
theyieldcurve writes:
For a better idea of the true size of the CDS "shadow market":
404 Not Found
9497.htm
Not sure who Mike Shedlock is, but he obviously knows little about CDS. That article is simply crocked.
A CDS is simply a par put contingent upon the occurrence of certain credit events. They are really not all that complex and this whole 'tangled weave of unknown insurers' argument is overblown. Some people are just looking for an easy boogie man to blame.
It's always darkest before dawn.
Bet you didn't know the Chevy Volt is the next Boeing Dreamliner. The new American way - over promise and under deliver.
If you look at GM/GMAC debt the swap levels are probably more appropriate and not that out of line.
I have some interest in Canada, and there are Canadians who post here, with and without popcorn. No doubt there are few others with some interests in Canada, too, so don't think that your contributions related to the frozen north are not appreciated.
Satan and his Yield Curve speak only for themselves.
I am up in the chilly north myself, and in amongst my ravenous consumption of poutine I do like to pay attention to the financial scene when I can.
I appreciate all discussions on all things cold and commodity-based, and I personally enjoy the fruitful discussions between satan and EvilHenryPaulson, no matter what the outcome. It is only through hearty debate that we learn, in my opinion.
Satan and his Yield Curve speak only for themselves.
Wow! You clearly haven't been paying attention. FYI, EvilHenryPaulson and I are on the same page. Please do your due diligence.
Hey Dryfly,
Just got my new soapstone/iron wood stove. That sucker took an appliance dolly and 4 guys to get it installed. Waiting for a cold snap to fire it up. Looks waaay cool. It's from Woodstock soapstone in NH.
I don't plan on using ANY electricity to heat the cabin this winter. But is Texas afterall.
"There is approximately $1 trillion in swaps bet on the success or failure of GM when the entire market cap of GM is a mere $15 billion."
Take about 10% up front with a 2% fee. Maybe about $120B in your pocket. Give a few million to politicians to bail out GM so the bets never have to pay off. See the scam here?
Steel and metals are being destroyed in all the markets, why?
$10K Soapstone masonry heater IN TEXAS. Dumbass. Texans burn money. Fiat money, but money nevertheless. When they run out, they poke a hole in the ground and burn sweet crude.
A CDS is simply a par put contingent upon the occurrence of certain credit events. They are really not all that complex and this whole 'tangled weave of unknown insurers' argument is overblown. Some people are just looking for an easy boogie man to blame.
I was simply refering to the size of the CDS market as represented by the chart. Disclosure: I am not a Mishbot.
"Steel and metals are being destroyed in all the markets, why?"
Not used in bread lines.
A CDS is simply a par put contingent upon the occurrence of certain credit events. They are really not all that complex and this whole 'tangled weave of unknown insurers' argument is overblown. Some people are just looking for an easy boogie man to blame.
So...netting out these contracts would be a fairly straightforward task then? Even ones that were verbal, or had limited documentation? I think a certain treasury secretary would be keen on speaking with you.
Of course CDS are simple; so are MBS and most of the other acronyms, for that matter. It's the extent they were speculated that was the problem, no?
Mel writes:
Why doesn't the Fed open up a retail bank and avoid middlemen?
Mel | 10.06.08 - 9:50 pm | #
Mel Mel Mel...
give it time
first some very important people have to get a chance to cash out their positions
then the gov will nationalize...
when all that is left is a stinking burned out carcass
satan:
Wealth without personal empowerment is empty, meaningless. You of all people (are you a person?) should know this.
I seriously doubt any pharaoh, king, whatever from days of yore would trade his clout for even middle class existence.
This is what the wealthy know. Doesn't matter what the absolute standards are. What matters are what the relative standards are. One has clout, or one hasn't clout. That's what matters.
Purchase of unsecured credit by Central Bank will lead to de facto demonetization. Bye-bye dollar. It was nice to get to know you.
A fitting end for Helicopter Ben.
USA is dead.
Why@ ZIRP writes:
What I want to know is why I keep nodding my head in agreement whenever the pot head posts something.
Why@ ZIRP | 10.06.08 - 10:25 pm
Contact high?
Jonny Lee,
You got the wrong stove, brother. 10K for a stupid stove is only for Californianos.
Yield Curve
It didn't look that way on my read through the thread, but perhaps some strong statements made early on clouded my later reading. Always possible I missed something.
Why is a no money down (less than 3%) 40 year amortization mortagage in Canada not considered subprime. Especially when over 90% of Vancouver properties since 2005 were bought with such mortgages.
it is subprime, satan, it is.
All will be revealed.
Plantagenet writes:
"Steel and metals are being destroyed in all the markets, why?"
Not used in bread lines.
Plantagenet | 10.06.08 - 11:00 pm | #
The price of wheat will tell you much more than the price of steel.
It didn't look that way on my read through the thread, but perhaps some strong statements made early on clouded my later reading. Always possible I missed something.
I'll give you the benefit of the doubt. Cheers!
Wish I had a soapstone heater here in Anvik, AK. Lucky, the husky that heats the bottom of the sleeping bag before being booted, just doesn't give that long, warm, humid heat...lessen she pees when I puts me cold feets on 'er. Just not the same tho.
@ joe shmoe
I have no stake in Canadian banks or otherwise, I only took issue with him(/them) because he tried to paint me as a shill. The pragmatic truth is that they will get hurt (I expect price declines of 50% in some big markets, and a hurting economy. Unlike the US south, or Europe, most construction is done by Canadians who will become persistently unemployed).
I however also think they will fare better than their colleagues globally because they will have had at least 1 year's clear warning before things go sour, they dished a lot off to investors and the government has not forced them to take any ABCP back yet as an example, mortgages are recourse so the borrower will be bearing a bigger portion of the burden, anecdotally people borrowed from Asia/USA due to attractive mortgage structures, and the big 5 Canadian banks will have gone into their writedowns among the best capitalized.
I think the notion Canadians are more frugal borrowers, or the banks had stricter standards, or any other soft-'fact' is a load of crap. It's not clear how many of the mortgages the banks retained, but it is also likely due to other fundamental differences mentioned above that banks will bear the same proportion of the unrealized losses.
The bigger risk to Canadian banks in my opinion are their strategies/exposure to the global deleveraging. CIBC for example put a little too much faith in monoline insurers and Canadian banks are creditors of interbank lending which is an important part of their income.
CA budget still a shambles.
The administration and state Controller John Chiang will issue official revenue numbers in coming days.
Chiang said the news will be bad. He said California is suffering from soaring unemployment and the evaporation of wealth caused by the stock market's downward spiral. He called on lawmakers to return to Sacramento quickly.
Why is a no money down (less than 3%) 40 year amortization mortagage in Canada not considered subprime. Especially when over 90% of Vancouver properties since 2005 were bought with such mortgages.
Link? Or are you just spouting hot air?
BSR,
It's relative to the rest of the world which will be doing the same thing. So the dollar will only devalue relative to other currencies which will also be devaluing. This is why Peter Schiff's argument is all wet. Just add a zero to the end of every asset and everybody has equity again.
Jas/Satan -there is something new under the sun, a gamebreaker of such ferocious intensity that no one wants to recognise it: speed.
I'll be vastly generalisn but:
All previous bank runs and panics derived from rumour vs confidence, holdings vs effective communications in response. All previous corrections derived from bubble plus shock and correction. Result, lose shirt.
But you've got to accept surely that it's a different game when trading room sentiment gets punched into algos and colossal volumes of computerized public and dark pool trades, ref the PPT meme here, that we've entered a very different environment regarding the velocity of information and the velocity of trades?
Is velocity a critical factor? I think so. The only difference between a flu outbreak and pandemic is velocity. The only difference between a dirty bomb emission and small MT deontation is velocity. That is, of effects.
I'm really saying that the nature of information velocity which had Keynes reading the numbers on the train to work before trying to work a bit of arbitrage or assess a vulnerability, is little faster these days, more wider spread, and more widely analyzed and disseminated. Like by CR.
Speed matters. Content matters. Quality and transparency matter. Can they all work together or do they hobble each other? Not bad questions to ask these days.
CC
Any of you folks ever seen this here index before?
Bloomberg.com:
Personal Finance
Johnny Lee,
Lots of 3 dog nights in AK?
I used to live in AK til I learned to read a map!
Jus kiddin...
Oh, and CA is roundabout the 10th largest economy in the world.
Lawyer Liz,
Yer still here after all that consorting with the DARK LORD stuff earlier today? I thought he promised -666, which when delivered you had to give up some great eternal and spiritual gift. What's up with all this ho-hum day-to-day stuff now?
'Fraid to go to sleep now, right?
Libor Fixings `a Flimsy Theoretical Construct': Chart of Day
The ICAP index is based on an anonymous daily survey of banks, with participants asked each morning to estimate the cost of funding for one- and three-month dollar loans to a representative bank. The results are published every day after 10 a.m. New York time.
The BBA asks 16 member banks, only three based in the U.S., how much it would cost to borrow from each other for 15 different periods in several currencies. It then calculates averages and publishes the results every day after 11:30 a.m. in London. Libor is used to calculate rates on $360 trillion of financial products ranging from company bonds and derivatives to U.S. mortgages.
Pardon my using CR as a soapbox, but I've come to the conclusion that the Fed cannot (and I mean that literally, as in lacks the capacity) hold down interest rates to their current levels and must let them rise. I think the current attempt to hold them below market-clearing levels is the real reason behind the total collapse of the credit markets. It's not appropriate to post all my reasoning here, but I've got a <a href=http://faireconomist.blogspot.com/2008/10/raise-fed-funds-rate-old-world-order.html">blog post up and I hope people take a look at it, comment, and spread the idea around.
Huge Rally in Equity expected tomorrow.
Asia not hit that hard. Europe not expected to be hit hard either.
Look for CDS clearinghouse to come through and possible coordinated cuts.
I am the Great Beast 666!
"60 Minutes is a contra-indicator, I'll now call a bottom, the biggest idiots in the world are now aware of the crisis.."
What about all the smallest idiots, like my friend whose broker talked him out of selling for two Mondays in a row? Millions of small investors may add up to more than a few big ones.
Consider the demographics (close to retirement), and a rush to cash must follow.
I'm looking forward to the yard sale, just as are the recipients of Fed largesse, I suspect.
Whassu map? Like a tiny siesta between 12:30 an 12:45 pm before the sqeeters ur grizz getcha? Dogsled, meybe Skidoo, long rifle, an lazy but vigilant character'll keep ya here. Moosefat hangs long and plenty, over me fire.
CSC, et al.
Does having some oil/gas Canroys in portfolio, and onec having been romantically involved with a lady residing in the 'Peg make me an "honorary" Canuck?
What fair economist said. Raising interest rates may save us.
I don't havta do anything because it didn't end off 666.
But tomorrow is another day.
Yeah, I'm afraid to go to sleep, but I'm gonna try.
I am mostly a hohum person.
I think we die a death of a thousand cuts, not a black xxxxday.
Nitey nite.
satan,
You do not know that of which you write. Most common (not since 2005, around 2007) mortgage would have been 40yr mortgage (even if fixed, rate resets every 5 yrs usually) with the 20% down payment contributed by family, from resale of old place.
However more than 10% of purchases are done in cash. Drug money, retirement from elsewhere in Canada.
More than 10% (closer to 30% in 'investment' condos) were overseas mortgages.
I enjoy new information, but you're just muddying the waters for many people with your emotional estimates.
I visited western Ontario last summer for a nephew's wedding. It reminded me of Ohio before the state lost its pride. The nephew has moved from Ohio to Canuckistan.
YouTube -
I went back to Ohio
But my city was gone
There was no train station
There was no downtown
South Howard had disappeared
All my favorite places
My city had been pulled down
Reduced to parking spaces
A, o, way to go Ohio
Well I went back to Ohio
But my family was gone
I stood on the back porch
There was nobody home
I was stunned and amazed
My childhood memories
Slowly swirled past
Like the wind through the trees
A, o, oh way to go Ohio
I went back to Ohio
But my pretty countryside
Had been paved down the middle
By a government that had no pride
The farms of Ohio
Had been replaced by shopping malls And muzak filled the air
From Seneca to Cuyahoga Falls
Said, a, o, oh way to go Ohio
Bill Gross is a complete Magician:
Gross uses the example of a McDonald's drive-thru to illustrate the problems in the intrabank market.
"At one window you order and pay, at the other - 20 feet ahead - you pick up your lunch. What if you thought that after paying at the first window, your 1000 calorie sandwich might not be waiting for you a few seconds later. You might not pay; business as usual might not take place. That is what is happening in the credit markets," he said.
PIMCO's Gross Says Fed Must Act as Clearing House and Buy Commercial Paper
Helicopter in Action
By: Tom Szabo
The helicopter is why, out of nowhere, the Reserve Balances and the Adjusted Monetary Base jumped by $75 billion or so in the past two weeks. And the helicopter is why these amounts have jumped and will jump by another $75 billion or more by next week. As you consider the situation, please realize that up until this September, the Monetary Base had barely changed since the beginning of the credit crisis last year. That proves more than anything that the helicopter was grounded until now.
Indeed, all the credit facilities created by the Fed from the Term Auction Facility to the Term Securities Lending Facility to the Primary Dealer Credit Facility to the Bear Stearns Maiden Lane facility and to the AIG credit facility have had no actual effect on the Monetary Base or money supply. This is because the credit facilities are essentially just swaps of assets, not money creation. The banks simply obtained assets they could sell (Treasury securities) in exchange for assets they could not sell (loans, MBS, CDO, etc.) This is the reason some observers are confused about why the Federal Reserve has not been inflating money supply in the face of a credit crisis that has deepened every month since last August.
So why exactly has Bens famous helicopter not flown, much less made money drops, until the past two weeks? There are several reasons. For one, even Mr. Bernanke recognizes the inflationary implications of a helicopter drop and he was willing to use it only as a last resort. But there is a more fundamental reason. You see, the helicopter didnt have a stable fuel supply. What fuel there was in the form of Open Market operations or purchases of bank assets was simply too unstable and would probably cause the helicopter to crash. Furthermore, it turns out the Fed cannot monetize bank assets effectively without assistance from the U.S. Treasury Department. See the Appendix to this essay for a detailed explanation.
The Fed is Bankrupt: Update on the Helicopter - The Secret Death of the Fed
Hii yieldcurve,
Look up the archives on vancouvercondo.info
oldtrader writes:
CSC, et al.
Does having some oil/gas Canroys in portfolio, and onec having been romantically involved with a lady residing in the 'Peg make me an "honorary" Canuck?
Harper will be re-elected. Canroys are in for a reckoning. Please be advised. If you were not aware of the Canroy thingy, your honorary status is revoked. Otherwise, sure...why not.
"Week 1. US bail-out.
Week 2. World bail-out.
Week 3. (something bigger than world) bail-out)."
The frozen frog people of Titan appeal to the US Treasury for assistance (slugs of solidly frozen ethane, which they consume like popsicles). They promise to repay 'soon.
The middle class ceased to be useful when it became a rigid "class" and not a workspace for upward and downward mobility - a workspace the poor were welcome to enter.
When you get parked in the "middle class" and breed two or three generations of middle-class children -- with middle-class parents, what you have is a stagnant bourgeoisie, not a "middle class." And the poor are not welcome to enter. And the rich are never controlled. That is a sure signal that the system is not working for a "healthy middle class."
It makes me grit my teeth to hear candidates blathering about "doing things for the middle class." The middle class shouldn't be parked there for generation after generation. How about doing something for the poor? The middle class ought to be able to take care of themselves and either shape up (move up) or ship out (move down).
The 20somethings of today are firmly bourgeois. They question authority very little. The way they lionize corporations that provide them with their kewl toys makes me ill. They know nothing of upward or downward mobility in a class sense. In fact, I think - in general, although there are always exceptions - they're one of the most unimpressive generations this nation has ever produced. They are currently play-acting at revolution with all this Obama nonsense. They're in for a severe wake-up call.
Maybe they can be developed into something, but there isn't much to work with. They're 2nd and 3rd generation bourgeois... like when you make a Xerox of a Xerox of a Xerox copy, the quality of the image just degrades.
Counterpoint and Austin Tex. Thanks. Speed, and the speed of learning.
oldtrader: I am a Californian. I've never had a mullet and I've only seen snow fall one time in my life. I wouldn't dare speak for the Canadians.
Vancouver does have some world-class cannabis, though. Blunt Bros is surreal to an American.
satan writes:
Hii yieldcurve,
Look up the archives on vancouvercondo.info
Riiiiiiiiiiiiiiight. Give your head a shake...
Newsflash writes:
Huge Rally in Equity expected tomorrow.
You and I know it! Lever up all day and sell at the close!
Those figures are not mine. They come from an interview of a prominent mortage broker in Vancouver.
The talk about goons got me thinking about where various organizations such as the mafia,mafiya,cali and medellin cartels,al-qaeda and fatah put their money? and when their broker gives bad advice is hoocodanode a sufficient response these are people who have (had) a lot of $ and they play rough...
s_puttnick
I think California has a deficit/financing crisis, the debt seem to be OK by sovereign nation standards
http://www.treasurer.ca.gov/publications/2007dar.pdf
Neat report from the treasurer of California. New York is in much bigger trouble
Privet Pav,
Don't laugh at Titan. Right now, T. Bone Pickens is trying to find and engineering solution for a pipeline!
and yes speed and attitudes + global power balance is very different from any other times in history.
INCOMING ASTEROID: A small, newly-discovered asteroid named 2008 TC3 is approaching Earth and chances are better than 99.8% that it will hit. Steve Chesley of NASA's Jet Propulsion Laboratory estimates that atmospheric entry will occur on Oct 7th at 0246 UTC over northern Sudan following an eastward track that carries it over the Red Sea. Measuring only a few meters across, the space rock poses no threat to people or structures on the ground. It will, however, create a spectacular fireball, releasing about a kiloton of TNT in energy as it disintegrates and explodes in the atmosphere. Asteroids of this size hit Earth every few months, but this is the first time one has been discovered before it hit. [ephemeris] [3D orbit]
SpaceWeather.com -- News and information about meteor showers, solar flares, auroras, and near-Earth asteroids
Have the conservative econobloggers added anything useful about the meltdown? I suppose I should take a gander.
I'm tryin' to tell yah that Canucks is fine so far as Canucks go, but iffen yah want to know where the real mens reside, yah gotsta go to the Yukon/Kuskokwim/Klondike. Those thet failed to climb the Chilkoot, well they plain gave up, and stayed in ol' Kanada. But the brave and hearty, we're here in Alyeska. What relevance? Well, we ran hard for gold and furs here when the ground was hard, and made a fine home. Learnt how to make due with nothing or less. You lower niners are gonna have some hard times, learn like the homesteaders, learn like the 'croppers. If'n not, well research scientists, lofty physicians, wall streeters of all sorts, top hat CEOs, yer in fer a rude awakenin'. Some here'r gonna learn livin' off the land the hard way...or their bones'll be scattered from Virginnie Beach to Virginnie City.
I think California has a deficit/financing crisis, the debt seem to be OK by sovereign nation standards
yeah California would be OK -- if we also weren't on the hook for the lion's share of the Fed debt too.
Update, that Californian treasurer report I read a few days ago and just linked to has a new edition -- released Oct 1, 2008. All about municipal debt crisis and current problems
http://www.treasurer.ca.gov/publications/2008dar.pdf
theyieldcurve;
"If you were not aware of the Canroy thingy, your honorary status is revoked." Having been "in" since before the "Halloween Massacre" of a couple of years ago, am FULLY aware, LOL.
BB will try every trick in his bag to prevent any onset of a depression. BB and Roubini finally converge on policy actions. The Europeans better get their acts together or risk catastrophe. Increasingly, they appear to be the weakest link because of members' self-interests.
aleister perdurabo writes:
INCOMING ASTEROID: ... Measuring only a few meters across, the space rock poses no threat to people or structures on the ground.
Relax. It's a small pecker...
I've come to the conclusion that the Fed cannot (and I mean that literally, as in lacks the capacity) hold down interest rates to their current levels and must let them rise.
Yes, I completely agree, especially at the long end. And that's just going to compound the crap out of the current problem as house prices are going to get killed.
In honor of the end of the American Dream,
YouTube - "The American Dream" ~ Miss Saigon
October 6, 2008 - LOS ANGELES - An unemployed man with an advanced finance degree who was despondent over his own financial problems shot and killed his wife, three children, mother-in-law and then himself in an upscale home in a gated community, police said Monday. Officers found the bodies Monday morning after the wife failed to show up at a neighbor's home to go to work, Deputy Chief Michel Moore said. The deaths occurred sometime after Saturday evening.
mean while in other news
October 6, 2008 - WASHINGTON (Reuters) - Lehman Brothers Inc. Chairman and Chief Executive Richard Fuld received compensation valued at $22.1 million in 2007, a year in which the company weathered the subprime mortgage collapse better than its rivals. Apart from his 2007 compensation, Fuld realized about $40.3 million from exercising stock options and $26.5 million from vesting stock awards.
Considering that the New York economy is linked to the financial services sector to a large extent, job losses on Wall Street would result in the metropolitan unemployment rate going up to 11%. If this worst case outcome materializes, negative net absorption of office space would result in a vacancy rate in the high teens, similar to levels seen in the early 1990s. And rent losses would continue through 2011.
New York Office Vacancy Likely to Rise to 13%
anonymous | 10.06.08 - 11:15 pm
Thanks for the vote of confidence.
oldtrader writes:
theyieldcurve;
"If you were not aware of the Canroy thingy, your honorary status is revoked." Having been "in" since before the "Halloween Massacre" of a couple of years ago, am FULLY aware, LOL.
Excellent, you are definitely "IN". How about those Senators.
Jas Jain writes:
Whatever happened to decoupling?
I was at a conference arguing Peter Schiff on this exact point. He thought the USA would decouple from the rest of the world. His whole investing strategy was investing in foreign stocks that paid a dividend. He said not to worry if the price went up or down because it was all about the cashflow. He is clearly an economist and not an investor.
Satan - "subprime" is independent of term length. Also, there is a lot of misinformed crap at the website you mentioned - keeping a critical mind while perusing there is - well - critical.
Mr. Cloudy Day writes:
Satan - "subprime" is independent of term length. Also, there is a lot of misinformed crap at the website you mentioned - keeping a critical mind while perusing there is - well - critical.
Go figure...
PeakVT | 10.06.08 - 11:22 pm |
Greg Mankiw posted a link to someone else who said that deregulation played no role in the crisis. Below that is another post linking to someone who argues McCain should not be taking a hit politically because Presidents have little impact on the economy. After that is one trying to spin the flat-lining treasuries into a positive development -- he/they are so far behind the curve that someone here will have a book published on the causes, timeline, and solutions to this weakness in the system before he realizes that drowning CP with short term treasuries is not a positive development
theyieldcurve,
Sorry, outside of my "sphere of compentence"
"In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists."
Sounds deep to me. But I don't hear a lot in this venue or elsewhere about goals. What are you alive for? Pharaohs have been mentioned, but they must have yearned for something besides status, or they wouldn't have had those elaborate tombs built. The wealthiest people in history may be alive now, but when they die they'll be just as dead (or not) as any pauper in potter's field.
The Pope talks sense, but he must be a hypocrite or an air head out of touch with reality. Otherwise, he'd be Bill Gross and not the Pope, eh?
oldtrader writes:
theyieldcurve
Sorry, outside of my "sphere of compentence"
No problem. Ottawa's NHL hockey team. Dates back to 1883. With a bit of a stretch on the back-burner...
Ottawa Senators - Wikipedia, the free encyclopedia
Oh yeah - in case it isn't obvious - this bit of yours...
Especially when over 90% of Vancouver properties since 2005 were bought with such mortgages.
...is complete bunk.
oldtrader, from the Peg???
In da alley u call me sweethart, in da bar you tell me fuckoff.....
Oh, what the hell, your in.
Currently Smoking Cannabis, thank you for the recommendation on the dehydrator. That sounds like exactly what I need. There is a specialty kitchen shop that sells canning stuff, juicers, etc. near me and according to their ad they carry the American Harvest brand.
Many southeast Asian countries sun dry cooked root crops, nuts and fruit products. Next month, for instance, mango, pineapple and banana will flow into and glut the market.
Mango and pineapple prices will tumble because so many of these fruits land in the Central Market at the same time. Imagine if there were a thriving mini-industry which could extend the life of these nutritious food items so that people could have them practically all year long!
Traditional methods of preserving food--kept in dry conditions--extends the life of these products by a few weeks at the most. Sun drying of fruits, nuts and certain root crops is already practised in the case of peanuts and ngali nuts but much more work along this line must be explored.
solomonstarnews.com - Invest in our strength...Food Security Economy!
theyieldcurve,
Sounds like the Chicago Cubs, LOL.
yes, and that is my point. How can condos be bought by people when their annual income is 1/8th to 1/12th the price of the condo?
@Canadian watching with Popcorn
I thinks we gots the same girlfriend.
"Privet Pav,
Don't laugh at Titan. Right now, T. Bone Pickens is trying to find and engineering solution for a pipeline!"
Privet, paren. There's a bit of a problem about boosting the gas through a pipe tens of millions of miles long. But a much bigger problem is what happens when the Titanians apply to join OPEC.
Canadian watching with popcorn
ROFLMAO!!!!...thanks, G
Kona 11:08 - this is fascinating. I can't get the boombergerama chart to go back past mid-July. It's not clear what the RH numerator is. $b ponied? Is this the spend side index to BNY Mellon buy side?? at least in part?
Send it to Brad Setser at CFR, he'll figure it out.
Ministry of Truth - "decoupling" is the tactical equivalent of "the fundamentals are strong". Fairy tale. Wishful thinking. As the limeys say "BOLLOCKS". (Always loved that).
CC
Pavel Chichikov writes: "What are you alive for?"
If there is anything I am hopeful about, it is that this question will be addressed in earnest, by people who have never considered it beyond accumulation or status, across America. It is like pulling the thread on a sweater, and the results of a widespread reevaluation of life's deeper meanings leaves me feeling that, should I live through the transition, the world will be a much better place. It is just too bad that it will be delivered in this manner.
Mr. Cloudy Day,
You have to be more optimistic. You are not trying hard enough. Turn the cognitive dissonance generator up.. way up.
Whereismyretirement: I bought mine on Amazon and received in just a few days. They also had a few to choose from. Good luck, they're totally awesome.
Australia cuts rate from 7 to 6. Main index erases decline, now up 1%
Satan is scary
make him go away
Pavel: FWIW, I do believe there is already a spiritual revival spreading like wildfire across the globe. I have wondered for years if it would reach critical mass before we destroy ourselves.
The biggest unreported news for the next week will be the results of Monday's $150bn TAF auction.
Notification Tues Oct 7, Settlement Thurs Oct 9
Maturity Jan 2, min bid was 1.39%, max $15bn per bidder
That should boost something like Wells Fargo that is positive cash flow, smaller so that $15bn means a lot more, will begin to provide relief from the roll-over squeeze.
European banks (minus HSBC, or is technically Asian) will have the hardest time at New Years because they all have to borrow significant amounts of deposits from other banks that won't want any trouble. If the ECB is going to act, it needs to deal with this asap
Pavel: FWIW, I do believe there is already a spiritual revival spreading like wildfire across the globe. I have wondered for years if it would reach critical mass before we destroy ourselves
Red Diesel - International Cannagraphic Magazine Forums
Greg Mankiw posted
I moved him below my hack-mendoza line a while back. Now it looks like his blog is just plain boring.
Privet Pav,
Don't worry about the Titanians. I have already filed for mineral rights in the East District of Texas...AKA expediscious review!!!
Actually, they are starting to shut in gas. $7 gas is a deal breaker. Exxon is withdrawing from the DFW shale. Eh, a good no sunspot COLD winter may boost gas back up a bit.
T. Bone is a really nice guy and a typical Texas promoter. You love to hate him but he is one shrewed cookie...Texans are risk takers. Wouldn't have it any other way.
Mother of God...look at the trichromes on the trimmings. The shake would even be dank.
Ross,
Saw that, myself..."gas @ $7=dealbreaker". I keep wondering when/if LNG gains traction here in the States.
CSC, stop bragging. You're driving me wild.
"If there is anything I am hopeful about, it is that this question will be addressed in earnest, by people who have never considered it beyond accumulation or status, across America."
Humanity has always been a fragile enterprise. But now this little creature with the big brain has acquired more power (including economic power) than it can comfortably handle. It suffers most seriously from an illusion of control. Yet it understands, on a half-conscious level, that comprehensive control is an illusion. That understanding is the basis of panics. Humanity is faking it.
"The shake would even be dank"--
Yeah, I loves the country line dancin' too.
Top post on the Beckner-Posner prominently features ... the slippery slope fallacy. Ho-hum.
Hey old trader,
Yea, we need export licenses for LNG. It is a politically charged issue. EXPORT ENERGY? That won't play with Congress Critters.
Oh well. Maybe nat gas for transport fuel ain't so screwy after all.
Apologies if you guys were all over this when it came out, but this Rep. Brad Sherman Youtube where he says they were told privately that not passing the Paulson bailout would lead to martial law in this country has scared me.
YouTube - Rep. Brad Sherman Martial Law
I mean, it's one thing when posters here talk about the threat of martial law. When a Congressman says it was predicted, it sorta takes things to a new level.
It suffers most seriously from an illusion of control. Yet it understands, on a half-conscious level, that comprehensive control is an illusion. That understanding is the basis of panics. Humanity is faking it.
Yes, but in the process of being unmasked, the fantasy of control (or certainty, or predictability) will be revealed. At some point, my hope is that there will be a 'letting go,' though I would rather it would have come about by a certain kind of maturity being realized. Instead, we will cling to our ephemeral world until it sweeps us away. And, when we find ourselves lacking any control and yet strangely fulfilled, we can be at peace that things are fine as they are. No 'elsewhere' or 'otherwise' is required.
And maybe then we can get busy realizing our human potential.
"Pavel: FWIW, I do believe there is already a spiritual revival spreading like wildfire across the globe. I have wondered for years if it would reach critical mass before we destroy ourselves."
We just squeaked through the Cold War. I saw some of that. We need to get serious. Even Kissinger sees that, and he should know. But this economic crisis is potentially destabilizing. We must get a grip, and not only for economic reasons.
Privet Pav,
"illusion of control'. Spoken by a true man with a Russian Soul!!!! Urha!
My favorite character was the 'Master'. Bukgakov was a freaking GENIOUS!!! So, who is his heir?
You can never learn less, you can only learn more.
R. Buckminster Fuller
Better invite China, or the China will F*k their G8s all over Manhattan.
"What did Bill Gross say again earlier today?"
Not sure, but if the market drops another 5% I'll bet he goes falsetto.
For whatever it's worth:
First 100 items to disappear in a national emergency:
The Bacon Report: Top 100 Items to Disappear First During a National Emergency
"Dadnabit! I'm goin to fix this trouble.I'll get ridof all money and use Talents like in the BIBLE.Everybodies got Talents.I can play the flute".........1st Dude Todd Palin "FUCKIN A"
Builder Bob writes:
For whatever it's worth:
First 100 items to disappear in a national emergency:
Blogger: Page not found during.html
Mmmm...bacon.
"Yes, but in the process of being unmasked, the fantasy of control (or certainty, or predictability) will be revealed. At some point, my hope is that there will be a 'letting go,' though I would rather it would have come about by a certain kind of maturity being realized. Instead, we will cling to our ephemeral world until it sweeps us away. And, when we find ourselves lacking any control and yet strangely fulfilled, we can be at peace that things are fine as they are. No 'elsewhere' or 'otherwise' is required."
I can't say what I think here because it would be outrageously off topic.
There are some very bright, very interesting people on CR. That has been helpful for me, and I'm grateful and appreciative.
Builder Bob,
Number one is perdy Texas woemen...
"There ain't enough Indians in the world to defeat the 7th Cav."
Pavel: I enjoy your posts very much. And you're right. We should smoke out sometime though.
"Apologies if you guys were all over this when it came out, but this Rep. Brad Sherman "
It isn't clear from his weasel language who told who anything about martial law.
R Buckminster Fuller:
"...We have pointed out that the geologist Francois de Chardenedes wrote for me a scenario of the technology of nature's producing petroleum which disclosed that the amount of energy employed by nature as heat and pressure for the amount of time required to produce each gallon of petroleum, if paid for at the rate at which the public utilities now charge retail customers for electricity, must cost over a million dollars a gallon. Combine that information with the discovery that approximately 60 percent of the employed in U.S. America are working at tasks that are not producing any life support. Jobs of inspectors-of-inspectors; jobs with insurance companies that induce people to bet that their house is going to be destroyed by fire while the insurance company bets that it isn't. All these are negative preoccupations...jobs with the underwriting of insurance underwriters by other insurance underwriters -- people checking up on one another in all the different departments of the Treasury, the Internal Revenue, FBI, CIA, and in counterespionage. About 60 percent of all human activity in America is not producing any physical life protection, life support, or development accommodation, which physical life support alone constitutes real wealth.
"The majority of Americans reach their jobs by automobile, probably averaging four gallons a day -- thereby, each is spending four million real cosmic-physical-Universe dollars a day without producing any physical Universe life-support wealth accredited in the energy-time -- metabolic -- accounting system eternally governing regenerative Universe. Humans are designed to learn how to survive only through trial-and-error-won knowledge. Long-known errors are, however, no longer cosmically tolerated. The 350 trillion cosmic dollars a day wasted by the 60 percent of no-wealth-producing human job-holders in the U.S.A., together with the $19 quadrillion a day wasted by the no-wealth-producing human job-holders in all other automobiles-to-work countries, also can no longer be cosmically tolerated.
"Today we have computers that enable us to answer some very big questions if all the relevant data is fed into the computer and all the questions are properly asked. As for instance, "Which would cost society the least: to carry on as at present, trying politically to create more no-wealth-producing jobs, or paying everybody handsome fellowships to stay at home and save all those million-dollar-each gallons of petroleum?" Stated evermore succinctly, the big question will be: "Which costs more -- paying all present job-holders a billionaire's lifelong $400,000-a-day fellowship to stay at home, or having them each spend $4 million a day to commute to work?" Every computer will declare it to be much less expensive to pay people not to go to work. The same computers will also quickly reveal that there is no way in which each and every human could each day spend $400,000 staying at the most expensive hotels and doing equally expensive things; they could rarely spend 4000 of the 1980-deflated dollars a day, which is only 1 percent of a billionaire's daily income."
404 Not Found
Privet Pav,
The community does not understand you the way you think they do. Yet most of your posts are indeed universal. Keep up the good thoughts...
But don't go Tolstoy on us. He spoke of Christ but meant Marx. Hate social reformers...
CSC and Pavel - c'mon, this is Rousseau / Gauguin nonsense.
It is more than ever apparent that all the detailed recorded history and our myths, legends, shibboleths, holy books, hadith, and sutras, and post Enlightenment theories, efforts and new received wisdom are only a thin layer of slime over the deep sea of the paleolithic.
The apparent irruptions are not random, they're inevitable. This is why we should focus on containing this tendency, through constitutions, laws, appropriate regs and rules, commercial and criminal law.
If Wall St has paleolithic tendencies then an Apolline response is required.
CC
isn't clear from his weasel language who told who anything about martial law
Perhaps not but I can give a first-hand impression from two weeks ago. I drove along the I-405 freeway in Seattle around midnight and came up behind a convoy of about ten humvees and strykers.
Not surprising. The surprising part was when I realized that the gun hatches were open and manned and that I was staring down the barrel of a M-60 in the hands of a guy in night vision googles.
I attended a book signing by Naomi Wolf this weekend and I'm... unsure of what to make of it all.
The Crash has been fairly predictable. It wouldn't be hard for fairly intelligent men to take advantage of the situation and even justify it to themselves as necessary action.
Nikkei followed DOW under 10k, falling 5% already today.
"My favorite character was the 'Master'. Bu[l]gakov was a freaking GENIOUS!!! So, who is his heir?"
I once asked my Moscow landlord: "Why is this country in such deep trouble?"
His explanation was that all the best people had either emigrated or been killed. Only they - and I think he included himself - were left.
Mandelshtam, the poet killed on Stalin's orders, now has a crater on the moon named after him, most likely by Russian astronomers.
That rose of tribute in the entrance way of Bulgakov's flat is so - sad, life weary, hopeful.
We can learn from that.