If you look at the ISM data over the past few months, they have shown remarkable stability while everything around them was in turmoil. Now, ISM shows that there was a sudden slowing in September. Well, maybe there was a sudden slowing in September, but I'm guessing ISM simply wasn't getting realistic results in the past few months. European PM indices were falling steadily. Consumer demand in the US has been slowing steadily. Somehow, export demand just managed to offset all that for 4 months to produce nearly flat results in the ISM? Seems pretty silly to me. Factory activity was already slowing. ISM finally got the slowing worked into its data.
Dave, I think we've been in a recession since early this year (or even Decemeber 2007).
As far as unemployment, I'm less confident now than I was earlier this year. I felt the unemployment rate would stay under 8% in this cycle, but the risks have increased for an even higher unemployment rate.
"This is even a bigger story than the credit crisis."
Doesn't seem to be for Paulson. Maybe the focuse should shift and we should have proposals in Congress for things like infrastructure construction, alternate energy development... re-sourcing jobs back into the US. Better than dumping the money out for past losses.
i think this bailout gets denied again, possible even tnte in the senate..my guess is one does finnaly pass in about 3 weeks, when the dow is at 8500 and the size of the bailout will be double in size..1.5 trillio
the true deflation began in july when cmmdties crashed. we are so soft and overpirvileged that we couldnt handle 8 weeks of defaltion? are we that pathetic? that a 700 bln dollar bailout plan had to be rushed into existence because 8 weeks of deflation was so dreadful? this is what makes me think a much bigger bailout will come in a few weeks..we cannot tolerate the thought of further stock mkt weakness, or of recession..this is a problem...
CR...given the economy HAS slowed, dramatically, and the credit crisis, and the bailout doing nothing but stopping the bleeding....what would you do to stimulate and turn things the other way?
bottom dweller, no doubt this will pass...but what will that do other than pull bad debt off the sheets? it's not going to convince banks to make the same mistakes again and lend to folks who can't repay, both residential and commercial
Interesting. I have talked to a handful of small business types, and the consensus seems to be that in the last 3-5 weeks depending on what they sell, orders, visits, and calls just fell off the proverbial cliff.
A couple of them, whom I have kown for years, do not even want to talk about anymore. They are pinning hopes of surviving on renewal of a contract or in one case refiancing their house to get money to cover the shortfall.
"...the big story is how sharply the economy is slowing. This is even a bigger story than the credit crisis."
The slowing is the credit crisis. If it weren't fore the impact of credit on the real economy, the expression "credit crisis" would have no meaning. What we are seeing is the lagged impact of earlier credit problems, along with the sudden lock-up in money markets. Money markets can have a very immediate effect on real activity, in the extreme. This is the extreme.
The implication of the lag in the impact of financial activity on real activity is that there is a fairly long period of bad news from the real sector still to come.
Bailout of health care insurance companies is next. Declining insurance pools force companies to raise premiums on the pool balance which causes more employers to exit the pool and so on and so forth.
The problem is 4-5 Trillion, at a mimimum, and they have to date just forgot to mention that fact. If the bailout passes, we will simply be digging a deeper hole for the economy. With the reduced GDP from the grinding to a halt of Main Street, it shouldn't take more than 15 years to pay off the bailout debt being pondered.
Unless I'm mistaken, customer satisfaction after the current sell job is going to become an issue, particularly when negative news continues to pile up unabated.
i apologize if this was brought up in a previous thread, but is this at all believable?:
"Last week, House and Senate offices were bombarded with calls from opponents who viewed the bill as a Wall Street boondoggle. That call pattern shifted sharply after Monday's vote, aides to lawmakers in both parties said. "It's completely in the other direction now," said Michael Steel, a spokesman for House Minority Leader John A. Boehner (R-Ohio)."
I've been waiting for you to admit your doubt. Come to the dark side..
The slowing economy will reaffirm Taleb's theories that simple statistics (normal distributions especially) don't tell all the story .. we're all Black Swans over here.
i would like also for some to explain to me how people think such bailouts and emergnecy lending (trillions now)are without consequence. its not possible to engage in such wanton fiscal policy without a consequence...why dont the senate, when with the opportunity, ask bernanke about the downside of such emergency bailouts and lending? the downside is, of course, the global reserve currency..and its rallying like a son of a gun now..its strength comes from massive dollar funding needs engendered by the deleveraging/deflation at work right now. it cannot last...its made of paper. its issuer is bankrupt and is at war on two fronts. they are too easy to make when things get rough. and things are getting rough...
anon writes:
i apologize if this was brought up in a previous thread, but is this at all believable?:
"Last week, House and Senate offices were bombarded with calls from opponents who viewed the bill as a Wall Street boondoggle. That call pattern shifted sharply after Monday's vote, aides to lawmakers in both parties said. "It's completely in the other direction now," said Michael Steel, a spokesman for House Minority Leader John A. Boehner (R-Ohio)."
anon | 10.01.08 - 10:55 am
Is there any way to audit their constituent opinions?
Should you really trust them if what they can't be verified?
Doesn't seem to be for Paulson. Maybe the focuse should shift and we should have proposals in Congress for things like infrastructure construction, alternate energy development... re-sourcing jobs back into the US. Better than dumping the money out for past losses.
wally | 10.01.08 - 10:44 am | #
Doesn't seem to be for Paulson. Maybe the focuse should shift and we should have proposals in Congress for things like infrastructure construction, alternate energy development... re-sourcing jobs back into the US. Better than dumping the money out for past losses.
wally
wally, way to progressive thinking. Go to europe with those ideas. Because here we like doing the same thing over and over again and expect different results...
burnside writes: goose, Once again, the proposal is for a $700B revolving account. Its price tag can be anything you care to imagine, just as it is structured today.
CR noted a few days ago that the $700B would not revolve, as he had earlier feared. This means then that our exposure is limited to {ahem} a mere $700B.
Did that change in the version that the House voted down? Has it changed in the Senate bill? I haven't seen anything indicating that, but I haven't plowed through a 110 page bill either. If you're claiming the fund will revolve, I would appreciate a link.
My daughter last night told me that her High School History teacher told the class her husband had lost his retirement when Wachovia was sold/FDIC'ed.
I am not sure how this could be. Probably his retirement was a pension from the bank? Yet, even she realized it was a big deal. That, and her follow on question was "How long will he take to get a new one?" Well, since he is probably in his 60's I told her "never."
This couple will not be buying anything other than basics now. With current demographics, these kinds of stories will cast a serious pall over consuming.
It would be interesting to see if the decline in orders were due to the fall in the Eurozone economies - CR do you know of any way to see if the change in demand for manufacturing was from one region/country or another??
I say this because I feel that the demand for goods from China and India probably hasn't tapered of yet.
I think Chindia will fall and then perk up again when their respective governments replace private consumption with government consumption. China certainly can't risk the social unrest that would result from a recession in its own economy.
CR, your strategy of using multiple threads with high-nerd, low-political, content to drive away the riffraff appears to be working!
Graphs appear to be protective against r*cists the way garlic is against vampires... (or was that SLV bullets?? Oh, never mind... but things are better with the coming of the dawn today!)
Here is a strange observation. I was at the mall on Saturday and it was packed with shoppers and shopping bags. People were buying things left and right. Last time I saw it like this was years ago. Two weeks ago the mall was dead.
Not too surprising. I went to a Toyota dealership to look at a mini-van as we need a little more space. The two times that I visited there was little customer traffic. Toyota was running special leasing financing deals on the cars (work out to around 1% a year) and this was the second month of the specials. As I tested the cars, I chatted up the sales person and found out that sales were slow and that the NOVA / DV market was considered a hot market where other markets shipped their products. Also, the sales person let me know that two hybrid Highlanders came in and were available even though there was suppose to be a waiting list for them. No suprise to see the ISM and automobile numbers plung.
Well at last we seem to be getting to the real truth of the matter. While the bailout is certainly a Wall Street handout, it seems that contries all around the world are demanding the US take back the toxic crap they pumped out over the past few years. Europe, China, Japan, you name them are ready in line when the bailout passes to give back their purchases to the Treasury. So now we the taxpayer are not just bailing Wall Street, but Hong Kong Street, London Street, and Tokyo Road. While I am really angry now, I am also certain $700 Billion is a waste of time. Try 3 Trillion to start.
"CR noted a few days ago that the $700B would not revolve, as he had earlier feared. This means then that our exposure is limited to {ahem} a mere $700B."
CR was incorrect. He was quoting Paulson's testimony that they didn't INTEND to churn the money. There's nothing preventing it. Expect it to churn.
I missed CR's take on revolving nature of acct. and of course respect that entirely.
This needs to be clarified, if it isn't already. I'm glad to go looking - in fact, will go looking - but will cheerfully accept results from anyone who has done so already.
It really bothers me how little play the ban on short selling is getting. I think the damage being done is greatly underestimated. What happens when people cant trust the market? They pull their money out. There is no law that says people have to invest in the stock market. The more the market is manipulated and controlled, the less people will want to participate. The more people pull out, the more it will drop. Yes, even if it is just the would-be shorts that are leaving.
If they do not not overturn this ban ASAP, it will cause a crash. And the blame will fall elsewhere...
Traffic in my area has dropped to scary levels. My commute which used to take an hour now only takes me about 35 minutes. That's only 5 minutes longer than the no traffic time.
I don't remember, sorry, but Misean is right there saying that's wrong, so who knows. Maybe if I have some spare time I'll dig into the bill and try to figure it out.
Misean - fair enough, but on that point, what Paulson intends to do and what the bill authorizes are two different things.
It just occured to me, yes - I am slow. Home equity drove big purchases. So, the numbers for manufacturing would drop, and fast, if HELOCs were no longer being handed out.
Retail and discretionary items that could be charged will have legs, albeit limping, until that wall is hit for the greatest number.
I too am getting reports from businesses in my area that demand disappeared in last few weeks. I went to Costco on Monday afternoon and there were very few people in the store. Never saw that before. It has been slowing down for several months but is clearly in crisis now. I really don't think the bailout will help. They should be thinking about job programs and basic relief type spending.
Ministry of Truth writes:
"Here is a strange observation. I was at the mall on Saturday and it was packed with shoppers and shopping bags. People were buying things left and right. Last time I saw it like this was years ago. Two weeks ago the mall was dead."
Maybe not so strange. I noticed the same thing this weekend when I dropped the teens off to see a movie. A few weeks prior the mall was almost dead - great parking all around. I went home & said to the Mr. "I thought the economy was suppose to be slowing?" Absolutely odd...and I live just south of Wash DC.
The elephant waiting in the room next door is the public sector pension plans. They are significantly underfunded while financial models that justify solvency are overly aggressive.
The Rocky Mountain News did a series on Colorado's PERA a few years ago. I wonder what an update would look like?
considering how easily BB and HP found holes/interpretations in the pre-existing laws and regulations, I don't doubt the contents of the new bill are just a formality.
They just need Congress to vote yes to something - anything - that spends money, and then Hank will do with that money whatever the hell he pleases.
Impact on unemployment (just thought of this after reading CR's post above) - the real threat here is that if the recession hits as hard as is being thought and is as long as is being feared then those jobs that vanish - manufacturing - run a real risk of staying gone for good. What I am talking about here is permanent job destruction as a result of a permanent contraction of the US manufacturing base.
If China and India open up their huge domestic wallets and spend on themselves, there is a risk that they will also create some of their own manufacturing capabilities instead of continuing to use ours. Why?
Deflation will cause the USD to rise (as it is right now in fact) and thus make our goods more expensive. Should this occur then our ability to get out of the recession will become that much harder and the recession that much longer.
CNBC continues to WHINE and WHINE about how people just don't get it at all that it's not a bailout of Wall Street at all, but rather philanthropy for Main Street.
Market Focus
Wednesday: Assuming a new banking failure doesn't seize the credit market, economic data may take center stage. The ISM manufacturing report has so far held steady and a surprise on the upside could ease talk of immediate recession.
really don't think the bailout will help. They should be thinking about job programs and basic relief type spending.
Hanging by a thread | Homepage | 10.01.08 - 11:13 am | #
D's link above suggests the bailout is because foreign governments put a gun to our head and said you guys started this you fix it. Of course if they pulled the trigger our lifestyle would change mighty fast.
So now we the taxpayer are not just bailing Wall Street, but Hong Kong Street, London Street, and Tokyo Road.
Exactly. The bailout only makes sense if we start buying assets held by foreign banks as well. Their crappy assets are no better than ours and effect the overall markets. So the non-moneyed Americans can feel extra special knowing it's not just Wall Street but exchanges around the world.
Although it galls me no end that the only reason CR blogged about the ISM data today is because it was poor in September (he's been completely uninterested in it in previous months when it was benign or showing economic expansion), even I have to admit that this doesn't look good for my "no recession" position.
WSJ reports "The Senate financial market rescue bill would temporarily allow the FDIC to borrow unlimited amounts of money from the Treasury Department in connection with the larger government deposit coverage that would extend until the end of next year."
Predictable.
Fire up the printing press.
Anyone else wondering when the capital controls will be put in place?
Sebastian writes:
Although it galls me no end that the only reason CR blogged about the ISM data today is because it was poor in September (he's been completely uninterested in it in previous months when it was benign or showing economic expansion), even I have to admit that this doesn't look good for my "no recession" position.
i'm trying to do a loan right now for a business owner who owns her commercial prop, valued at 6 million plus outright. she wants a million to expand her business. not only have i not been able to get her the loan, the rate and terms of the one place that is considering it are higher than you would probably think. and, she has perfect credit and reasonable debt service
Sebastian writes:
Although it galls me no end that the only reason CR blogged about the ISM data today is because it was poor in September (he's been completely uninterested in it in previous months when it was benign or showing economic expansion), even I have to admit that this doesn't look good for my "no recession" position.
i'm trying to do a loan right now for a business owner who owns her commercial prop, valued at 6 million plus outright. she wants a million to expand her business. not only have i not been able to get her the loan, the rate and terms of the one place that is considering it are higher than you would probably think. and, she has perfect credit and reasonable debt service
Oh well, where is it in the Constitution that people are entitled to cheap credit?
Deep in the bowels of some non-descript garage in the Valley four bright guys are pulling all-nighters working on the concept - "no handout".
Deep in the bowels of DC and NY thousands of well-lit guys are pulling half-days working on the concept - "a garage's price must never come down..."
Note the incredible economic disparity of the efforts. This is not to the advantage of the Enemy.
In the words of Nathaniel Greene:
"We fight, get beat, rise, and fight again."
Cornwallis kicked Greene all the way across the Carolinas, fought Greene to a draw at Guilford Court House, and hung himself thereby.
The last week has cost the Enemy his credibility, his legitimacy, and his health, all to pursue a plan fated to disaster. Now he will sacrifice more legitimacy and credibility to seize his aims by brute force of bribes.
If they are forced to win two more such victories, we will triumph over them utterly. Do not despair; even if we are defeated in this engagement, it is merely one moment in the history of the Republic. The enemy bleeds from manifold wounds, inflicted by his own hands in the pursuit of we biting vermin.
Take the raw brutality of their efforts and the illegitimacy of their tactics and use them as a weapon in the next battle. We know there must be a next battle, and so we can prepare for it even while the enemy portrays himself as savior and victor, and rob the Enemy of yet more legitimacy and authority in the next engagement.
Thus, even by a sequence of defeats can we produce victory. Fight on, fellow Citizens. Our cause will triumph, for it is built on truth and reason, as the Enemy builds his case on falsehood and fear.
Here's an alternate plan to help Main Street not Wall Street.
1) Take the initial $350B being discussed and distribute $100M to 3,500 regional banks.
2) Regional banks will use money to recapitalize but can't leverage the funds.
3) Money is used to provide $35K (non-taxable) grants per new employee to companies providing "productive jobs" that produce "products". Service companies not eligible.
4) Program can generate 10M new jobs.
5) Money basically stays in the bank as grant employees open checking accounts and the money is internally transferred.
6) Multiplier effect generates 2 other jobs from the one direct grant employee.
7) The 2 new jobs generate taxable income of $70K and $14K in federal income tax per year.
8) At that rate the Jobs Trust Fund could be replenished in 2 1/2 years.
9) The fund could become a revolving fund to continue to generate new jobs.
The plan results would be as follows:
1) Generates up to 30M new jobs.
2) Focuses investment on "productive Jobs"
3) Recapitalizes regional banks.
4) Trickle up effect helps bigger banks.
5) Money is returned to the fund from FIT.
6) Gets the money to where it's really needed.
7) May increase wage rates due to shortage of workers.
8) Restores manufacturing base and increases exports.
9) A fair plan that benefits everyone.
In Portland, Oregon, my grocery store is still busy, but the WAMU shop inside the store is dead quiet, with one of those "we're wearing FDIC protection" signs. Haven't seen much difference in traffic, but people are dumping their RVs, boats, cars, trailers, etc. I'm seeing more motorcycles, scooters, and bikes.
So beyond physical bullion (in which I will hold only a small percentage of my net worth), which offshore banks are going to survive and should money be parked in?
At the moment, all I've got is offshore.hsbc.com - and I would appreciate any meaningful feedback on relatively safe offshore banks that US passport holders can still open accounts in (i.e. not UBS/CS).
McCain and Obama are senators, too. While you're e-mailing the senators from your state, remember to send the presidential candidates a little love letter, too. They've both announced they will be in Washington this evening for the vote.
Traffic dropped precipitously in august and has stayed that way.
Last week had a rep for a vendor stop in. Sales were way off for them. Had cut their workforce 25%. Mentionned that he had heard another one of my vendors (Buffet owned) was down 30% in sales.
In august the governor of virginia was forecasting a deficit of $1 billion. Last week he upped that to $2.0 - $2.9 billion and said he asked all departments to prepare for budget cuts ranging (IIRC) from 5% to 15%.
If people are reduced to buying just the "basics", in terms of foodstuffs, will that result in a drop-off of "value-added" foodstuffs, thus keeping the price of basics low? I apologise in advance if this is a dumb question.
CathyG,
Fat chance Obama or McCain flip on this bill. Both of them have said they are for a bailout, we need a bailout, etc. etc... working for bailout, if I am President I'll make sure we get a bailout.
Its completely baffling to me. Are we the only tin foil colander hat wearing Americans? Or is main street as ticked about this as we are and everyone else is trying to fool them into thinking a bailout is good.
I swear this has chapped my rear more than the whole immigration deal... even though the politicans are doing the same thing.
"credit card debt is already risk adjusted...hence the rates in the twenties"
Yeah, maybe...but the usurious interest rates have forced a lot of lumpens to make only minimum payments, hence their principal is mostly untouched, so the defaults will be huge.
And even with "bankruptcy reform," Chapter 7's are going to go thru the roof in this economic climate.
i'm trying to do a loan right now for a business owner who owns her commercial prop, valued at 6 million plus outright. she wants a million to expand her business. not only have i not been able to get her the loan, the rate and terms of the one place that is considering it are higher than you would probably think. and, she has perfect credit and reasonable debt service
Why is she trying to expand her business in a contracting market? Sounds like a high-risk loan.
Paulsons impressive interest conflicts
The actions of Treasury Secretary Paulson since the first outbreak of the Financial Tsunami in August of 2007 have been directed with one apparent guiding aimto save the obscene gains of his Wall Street and banking cronies. In the process he has taken steps which suggest more than a mild possible conflict of interest. Paulson, who had been chairman of Goldman Sachs from the time of the 1999 Glass-Steagall repeal to his appointment in 2006 as Treasury head, had been one of the most involved Wall Street players in the new securitization revolution of Greenspan. Under Paulson, according to City of London financial sources familiar with it, Goldman Sachs drove the securitization revolution with an endless rollout of new products. As one London banker put it in an off-record remark to this author, Paulsons really the guilty one in this securitization mess but no one brings it up because of the extraordinary influence Goldmans seems to have, a bit like the Knights Templar order of old. Naming Goldman chairman Henry Paulson to head the Government agency now responsible for cleaning up the mess left by Wall Street greed and stupidity was tantamount to putting the wolf in charge of guarding the hen house as some see it.
Paulson showed where his interests lay. He is by law is the chairman of something called the President's Working Group on Financial Markets, the Governments financial crisis management group that also includes Fed Chairman Bernanke, the Securities & Exchange Commission head, and the head of the Commodity Futures Exchange Commission (CFTC). That is the reason Paulson, the ex-Wall Street Goldman Sachs banker, is always the person announcing new emergency decisions since last August.
Two weeks ago, for example, Paulson announced the Government would make an unprecedented $85 billion nationalization rescue of an insurance group, AIG. True AIG is the worlds largest insurer and has a huge global involvement in financial markets.
AIGs former Chairman, Hank Greenberga close friend of Henry Kissinger, a former Director of the New York Fed, former Vice Chairman of the elite New York Council on Foreign Relations and of David Rockefellers select Trilateral Commission, Trustee Emeritus of Rockefeller Universitywas for more than forty years Chairman of AIG. His AIG career ended in March 2005 when AIG's board forced Greenberg to resign from his post as Chairman and CEO under the shadow of criticism and legal action for cooking the books, in a prosecution brought by Eliot Spitzer, then Attorney General of New York State.[1]
In mid September, in between other dramatic failures including Lehman Bros., and the bailout of Fannie Mae and Freddie Mac, Paulson announced that the US Treasury, as agent for the United States Government, was to bailout the troubled AIG with a staggering $85 billion. The announcement came a day after Paulson announced the Government would let the 150-year old investment bank, Lehman Brothers, fail without Government aid. Why AIG and not Lehman?
What has since emerged are details of a meeting at the New York Federal Reserve bank chaired by Paulson, to discuss the risk of letting AIG fail. There was only one active Wall Street banker present at the meetingLloyd Blankfein, chairman of Paulsons old firm, Goldman Sachs.
Blankfein later claimed he was present at the fateful meeting not to protect his firms interests but to safeguard the entire financial system. His claim was put in doubt when it later emerged that Blankfeins Goldman Sachs was AIGs largest trading partner and stood to lose $20 billion in a bankruptcy of AIG. [2] Were Goldman Sachs to go down with AIG, Secretary Paulson would have reportedly lost $700 billion in Goldman Sachs stock options he had, an interesting fact.
That is a tiny glimpse into the man who crafted the largest bailout in US or world financial history some days ago, the failed TARPTroubled Asset Relief Programa proposed $700 billion financial stabilization scheme which, in Paulsons original version would have allowed him or his Treasury successor to use $700 billion, with no oversight or accountability, to buy bad or worthless assets from financial institutions he deems worthy of help.
Are we the only tin foil colander hat wearing Americans? Or is main street as ticked about this as we are and everyone else is trying to fool them into thinking a bailout is good.
YLSP, the answers are no and yes. The msm have their orders, and the politicians will be dancing as fast as they can with those who brung them, rather than with the American people. And the reports of massive calling in favor of the bailout is so far unsubstantiated by any actual congresscritter.
Although it galls me no end that the only reason CR blogged about the ISM data today is because it was poor in September (he's been completely uninterested in it in previous months when it was benign or showing economic expansion), even I have to admit that this doesn't look good for my "no recession" position.
As per your story re Wachovia, I would suspect two things.
First, that he might have been a Wachovia employee with an outsize amount of corporate stock in his retirement plan.
Second, that he kept an unduly large amount of funds in his money market there.
Knew a bunch of people at the old MCI who lost a ton when Worldcom went belly up since they had an exceptionally large amount of retirement money in company stock.
Dave, I think we've been in a recession since early this year (or even Decemeber 2007).
As far as unemployment, I'm less confident now than I was earlier this year. I felt the unemployment rate would stay under 8% in this cycle, but the risks have increased for an even higher unemployment rate.
I'll stick with my current forecast for now.
Best to all.
Calculated Risk | Homepage | 10.01.08 - 10:43 am | #
I also thing we will stay below 8%, but mostly due to demographic factors. Many of the boomers will "retire early". I expect the employment to population ratio to fall below 60% from its current 62.1%. Was well above 64% when W took the helm. A level of 60% would put us back to mid 1980's levels (when women were still in thr process of joining the workforce).
Recession in virginia.
black dog | 10.01.08 - 11:35 am | #
The counties also. Some, where the burbs grew the fastest will really hurt. Any residences who don't flee their 1000 homes subdivisions will love the drop in servies. Police and fire were already stretched pretty thin. So much for a decent school system
Here is a strange observation. I was at the mall on Saturday and it was packed with shoppers and shopping bags. People were buying things left and right. Last time I saw it like this was years ago. Two weeks ago the mall was dead.
Ministry of Truth
It's the retail price cuts, MoT. I took my elderly neighbor to JC Penney's on Sunday. She purchased 3 pairs of lady's slacks for less than ten dollars. They were discounted down to $3.29 a pair. Original prices were $46, $40 and $29. Not even covering cost, I would imagine.
[Quote] i'm trying to do a loan right now for a business owner who owns her commercial prop, valued at 6 million plus outright. she wants a million to expand her business. not only have i not been able to get her the loan, the rate and terms of the one place that is considering it are higher than you would probably think. and, she has perfect credit and reasonable debt service
Why is she trying to expand her business in a contracting market? Sounds like a high-risk loan. [/Quote]
I like how Sec. 103 has been restructured to "protect interest of taxpayers" as #1... opposed to the draft written by lobbyists where it was #3. That doesn't make me feel better at all.
Also, "protect American jobs, savings, and retirement security". Our retirement is a right now?!?! Since when has the government been interested in protecting savings?
Yeah there's no way I'm parsing through the new bill right now... just some things leaped out of me. So we went from a 3 page bill to a 451 page bill? Ridiculous!
Homedad43, is there any news that Wachovia is breaking the buck on money market funds? I would find that truly shocking, given that the merger terms even left some value in WB common stock.
Like I said, enjoy the circus. More bread will be coming later, perhaps a little moldy, but it will be coming.
Bottom Dweller | 10.01.08 - 10:58 am | #
Could the past ISM reports have been juiced up to provide fairy-tale feel-good vibes and now that is no longer useful ? Now it's better to send SHOCK VALUE info to representatives so the bailout passes ?
I am with wally. If there's a need to do something no more stupid rebates or bank bailouts. Make the 700B an investment and blow it on infrastructure and alternative energy builds. It will rattle around the economy rather than feeding the insatiable black hole of financial voodoo economics...
YLSP writes:
. . .
Also, "protect American jobs, savings, and retirement security". Our retirement is a right now?!?! Since when has the government been interested in protecting savings?
When it is the public sector pension plans that are significantly underfunded.
I'm in fundraising for a university, and I sit next to the telephone outreach program, where student callers shake down alums and others for donations.
They're getting donations, but figures are down. A lot of "it's the economy." The students are trained to take three "no's" before capitulating, falling a lower level of suggested giving each time. And this usually works on repeat givers. But that means that people who've been good for $200 in the past are giving $75 this year.
Management is cracking the whip and bearing down to try to keep the numbers up no matter what, and staff burnout is looming. But there's an old adage about urination and the direction of wind that applies here.
ova writes:
"Any residences who don't flee their 1000 homes subdivisions will love the drop in services. "
Well, fleeing is out of the question right now, but I can tell you, the number of foreclosed/vacant/ abandoned homes in my neighborhood will help offset the strain.
I might have to cut an extra yard or two, but at least the schools won't be overcrowded.
Lone Ranger - good plan. Keep it out there. Assets are depreciating because Main Street can't afford them anymore.
Rebuilding the real economy is the fundamental solution. Every single dime of what remains of this nation's savings and credit should be re-allocated toward the wealth-building activities you set out.
CR, I think you are right that the real economy is the "big story". But it's been the big story all along, and the fundamental aspect of the big story is that the world's savings were invested in bubble-building.
That capital should have been allocated to the structural repositioning of the real economy to cope with globalization and the concomitant re-pricing of energy and raw materials.
"LOL....I actually was trying to think of something that would do well in this economy and that was one of the only things I could think of."
Anonymous | 10.01.08 - 11:47 am | #
If you have a good rep of not fucking people,independant auto and truck repair places are buried in work.
My brother figures he will easily double his income from 3 years ago...
August retail sales were ok. September was the same until last week. I have never seen such a dramatic decline. If this week is the same expect terrible Sept comp store sales number.
Vendors should prepare for another round of holiday order cancelations and rethink spring 09 production.
To the Chinese...you better get your production on the water ASAP. Order cancellations are coming. Post CNY will be ugly over there.
""Hundreds of billions of dollars are going to bail out FOREIGN INVESTORS. They know it, they demanded it, and the bill has been carefully written to make sure that can happen." - Brad Sherman , D-California"
Sebastian,
It is worth asking why you were so wrong on this whole crisis. You have been consistently optimistic throughout, maintaining the "economy is fundamentally sound" stance that would make a Kudlow proud.
The bears have been early, but right. If you had listened to the doom & gloom bears and sold out of every position and moved to gold 2 years ago, you would be way ahead today. Heck, I sold my house in silicon valley nearly 4 years ago, and that same house is on sale at a price that is only 10% more than what I sold for (and it still not moving!). So yes, I was way too early as a bear, but I have had 4 years of peace of mind!
What was it that made the bears think something was fundamentally wrong with the economy. What did your models miss?
Folks:
If you skip to the bottom as I sometimes do, go back and read these:
Tadeusz Kościuszko @ 11:29 am
praetorian @ 11:32 am
Lone Ranger @ 11:30 am
and girlbear @ 11:38 am
You'll be glad you did.
Since the problem is that the foreigners and the banks are seeing a decline in the value of the bundled mortgages because the mortgages are going bad, then it would seem the best way to treat the disease not the symptom would be to rescue the mortgages not the banks. i.e. Main Street not Wall Street, the City of London, Tokyo Road, etc.
I suggest we set up a well funded federal office to which foundering mortgagors could appeal for help staying current and thus giving value to the mortgages and thus to the MBSs. The feds already have people's tax returns so they would have a good start on determining if an applicant is trying to game the system. They could and should eliminate second homes, liar loans, and investor/flippers who didn't flip fast enough
Nah, it's just bottoming.
I read headline as:
MSM manufactures plunges in indices.
How do you spell Bush?
H-O-O-V-E-R
CR: given the latest data, any revisions to your recession and unemployment outlook? Thanks.
Nemo, the big story is how sharply the economy is slowing. This is even a bigger story than the credit crisis.
The slowdown accelerated BEFORE the latest wave of credit problems started in September. It can only be getting worse right now.
I think the Q3 GDP numbers will be UGLY (to be released on Oct 30th).
Best Wishes.
If you look at the ISM data over the past few months, they have shown remarkable stability while everything around them was in turmoil. Now, ISM shows that there was a sudden slowing in September. Well, maybe there was a sudden slowing in September, but I'm guessing ISM simply wasn't getting realistic results in the past few months. European PM indices were falling steadily. Consumer demand in the US has been slowing steadily. Somehow, export demand just managed to offset all that for 4 months to produce nearly flat results in the ISM? Seems pretty silly to me. Factory activity was already slowing. ISM finally got the slowing worked into its data.
CR - Traffic is still pretty bad this quarter. That's my primary indicator of economic activity
Dave, I think we've been in a recession since early this year (or even Decemeber 2007).
As far as unemployment, I'm less confident now than I was earlier this year. I felt the unemployment rate would stay under 8% in this cycle, but the risks have increased for an even higher unemployment rate.
I'll stick with my current forecast for now.
Best to all.
"This is even a bigger story than the credit crisis."
Doesn't seem to be for Paulson. Maybe the focuse should shift and we should have proposals in Congress for things like infrastructure construction, alternate energy development... re-sourcing jobs back into the US. Better than dumping the money out for past losses.
i think this bailout gets denied again, possible even tnte in the senate..my guess is one does finnaly pass in about 3 weeks, when the dow is at 8500 and the size of the bailout will be double in size..1.5 trillio
the true deflation began in july when cmmdties crashed. we are so soft and overpirvileged that we couldnt handle 8 weeks of defaltion? are we that pathetic? that a 700 bln dollar bailout plan had to be rushed into existence because 8 weeks of deflation was so dreadful? this is what makes me think a much bigger bailout will come in a few weeks..we cannot tolerate the thought of further stock mkt weakness, or of recession..this is a problem...
We got our bread (the HOR rejection) now just sit back and watch to circus. The bill will pass...
Nah, Bush is Coolidge. The next president gets to be Hoover.
I wish Seb was right about us not being in recession.
goose,
Once again, the proposal is for a $700B revolving account. Its price tag can be anything you care to imagine, just as it is structured today.
retail sales fell off a cliff last week...even more than most would assume.
CR...given the economy HAS slowed, dramatically, and the credit crisis, and the bailout doing nothing but stopping the bleeding....what would you do to stimulate and turn things the other way?
From the article:
Economists said the ISM index was near recessionary levels.
Good thing we're only near those levels.
bottom dweller, no doubt this will pass...but what will that do other than pull bad debt off the sheets? it's not going to convince banks to make the same mistakes again and lend to folks who can't repay, both residential and commercial
Interesting. I have talked to a handful of small business types, and the consensus seems to be that in the last 3-5 weeks depending on what they sell, orders, visits, and calls just fell off the proverbial cliff.
A couple of them, whom I have kown for years, do not even want to talk about anymore. They are pinning hopes of surviving on renewal of a contract or in one case refiancing their house to get money to cover the shortfall.
"...the big story is how sharply the economy is slowing. This is even a bigger story than the credit crisis."
The slowing is the credit crisis. If it weren't fore the impact of credit on the real economy, the expression "credit crisis" would have no meaning. What we are seeing is the lagged impact of earlier credit problems, along with the sudden lock-up in money markets. Money markets can have a very immediate effect on real activity, in the extreme. This is the extreme.
The implication of the lag in the impact of financial activity on real activity is that there is a fairly long period of bad news from the real sector still to come.
Bailout of health care insurance companies is next. Declining insurance pools force companies to raise premiums on the pool balance which causes more employers to exit the pool and so on and so forth.
The problem is 4-5 Trillion, at a mimimum, and they have to date just forgot to mention that fact. If the bailout passes, we will simply be digging a deeper hole for the economy. With the reduced GDP from the grinding to a halt of Main Street, it shouldn't take more than 15 years to pay off the bailout debt being pondered.
YouTube - **FLASH** The REAL REASON For The Bailout (Hint: FOREIGNERS)
Anon, I agree.
Unless I'm mistaken, customer satisfaction after the current sell job is going to become an issue, particularly when negative news continues to pile up unabated.
Sebastian, are you paying attention????
i apologize if this was brought up in a previous thread, but is this at all believable?:
"Last week, House and Senate offices were bombarded with calls from opponents who viewed the bill as a Wall Street boondoggle. That call pattern shifted sharply after Monday's vote, aides to lawmakers in both parties said. "It's completely in the other direction now," said Michael Steel, a spokesman for House Minority Leader John A. Boehner (R-Ohio)."
I'll stick with my current forecast for now. CR
I've been waiting for you to admit your doubt. Come to the dark side..
The slowing economy will reaffirm Taleb's theories that simple statistics (normal distributions especially) don't tell all the story .. we're all Black Swans over here.
Eight percent U-1, here we come.
i would like also for some to explain to me how people think such bailouts and emergnecy lending (trillions now)are without consequence. its not possible to engage in such wanton fiscal policy without a consequence...why dont the senate, when with the opportunity, ask bernanke about the downside of such emergency bailouts and lending? the downside is, of course, the global reserve currency..and its rallying like a son of a gun now..its strength comes from massive dollar funding needs engendered by the deleveraging/deflation at work right now. it cannot last...its made of paper. its issuer is bankrupt and is at war on two fronts. they are too easy to make when things get rough. and things are getting rough...
When you call a senator make sure you have a zipcode to give them for thier state if they ask.
anon writes:
i apologize if this was brought up in a previous thread, but is this at all believable?:
"Last week, House and Senate offices were bombarded with calls from opponents who viewed the bill as a Wall Street boondoggle. That call pattern shifted sharply after Monday's vote, aides to lawmakers in both parties said. "It's completely in the other direction now," said Michael Steel, a spokesman for House Minority Leader John A. Boehner (R-Ohio)."
anon | 10.01.08 - 10:55 am
Is there any way to audit their constituent opinions?
Should you really trust them if what they can't be verified?
Doesn't seem to be for Paulson. Maybe the focuse should shift and we should have proposals in Congress for things like infrastructure construction, alternate energy development... re-sourcing jobs back into the US. Better than dumping the money out for past losses.
wally | 10.01.08 - 10:44 am | #
DING DING DING DING DING!!!!!!!!!
Doesn't seem to be for Paulson. Maybe the focuse should shift and we should have proposals in Congress for things like infrastructure construction, alternate energy development... re-sourcing jobs back into the US. Better than dumping the money out for past losses.
wally
wally, way to progressive thinking. Go to europe with those ideas. Because here we like doing the same thing over and over again and expect different results...
......
CR, can we get a graph of max # of Visitors per day for the last year or two? Maybe you could show it along with the Dow.
Like I said, enjoy the circus. More bread will be coming later, perhaps a little moldy, but it will be coming.
Comrades,
I've had more salesmen coming to the door to get my IT equipment/consulting needs business than ever in my 13 years here. Amazing.
Nostrovia,
I think we've been in a recession since 2000/2001. I am no better off than I was 4 nor 8 years ago.
burnside writes:
goose, Once again, the proposal is for a $700B revolving account. Its price tag can be anything you care to imagine, just as it is structured today.
CR noted a few days ago that the $700B would not revolve, as he had earlier feared. This means then that our exposure is limited to {ahem} a mere $700B.
Did that change in the version that the House voted down? Has it changed in the Senate bill? I haven't seen anything indicating that, but I haven't plowed through a 110 page bill either. If you're claiming the fund will revolve, I would appreciate a link.
Misean - I too am bombarded with IT job offers.
Then again, I am in a very niche market - kinda like SAP infrastructure.
Already posted once but ...
My daughter last night told me that her High School History teacher told the class her husband had lost his retirement when Wachovia was sold/FDIC'ed.
I am not sure how this could be. Probably his retirement was a pension from the bank? Yet, even she realized it was a big deal. That, and her follow on question was "How long will he take to get a new one?" Well, since he is probably in his 60's I told her "never."
This couple will not be buying anything other than basics now. With current demographics, these kinds of stories will cast a serious pall over consuming.
Those 'lags' will get you every time!
It would be interesting to see if the decline in orders were due to the fall in the Eurozone economies - CR do you know of any way to see if the change in demand for manufacturing was from one region/country or another??
I say this because I feel that the demand for goods from China and India probably hasn't tapered of yet.
I think Chindia will fall and then perk up again when their respective governments replace private consumption with government consumption. China certainly can't risk the social unrest that would result from a recession in its own economy.
All the best.
Gainas writes:
CR, can we get a graph of max # of Visitors per day for the last year or two? Maybe you could show it along with the Dow.
Gainas, you're referring to the "CR Volatility Index," which is helpfully tracked here:
It's still updating
CR, your strategy of using multiple threads with high-nerd, low-political, content to drive away the riffraff appears to be working!
Graphs appear to be protective against r*cists the way garlic is against vampires... (or was that SLV bullets?? Oh, never mind... but things are better with the coming of the dawn today!)
I watched a one hour special on health care last night on PBS.
It just re-inforced 10-fold why I hate this bailout.
If they have 700B to give to Wall St., they have 100B to not treat people like animals.
Or in reality, they have no money for anything because they've spent it all.
Oops, CRVIX is here too:
Calculated Risk: Visitors Online
(equal opportunity, fairness doctrine, whatever)
DCRogers, LOL!
....
Here is a strange observation. I was at the mall on Saturday and it was packed with shoppers and shopping bags. People were buying things left and right. Last time I saw it like this was years ago. Two weeks ago the mall was dead.
Not too surprising. I went to a Toyota dealership to look at a mini-van as we need a little more space. The two times that I visited there was little customer traffic. Toyota was running special leasing financing deals on the cars (work out to around 1% a year) and this was the second month of the specials. As I tested the cars, I chatted up the sales person and found out that sales were slow and that the NOVA / DV market was considered a hot market where other markets shipped their products. Also, the sales person let me know that two hybrid Highlanders came in and were available even though there was suppose to be a waiting list for them. No suprise to see the ISM and automobile numbers plung.
Well at last we seem to be getting to the real truth of the matter. While the bailout is certainly a Wall Street handout, it seems that contries all around the world are demanding the US take back the toxic crap they pumped out over the past few years. Europe, China, Japan, you name them are ready in line when the bailout passes to give back their purchases to the Treasury. So now we the taxpayer are not just bailing Wall Street, but Hong Kong Street, London Street, and Tokyo Road. While I am really angry now, I am also certain $700 Billion is a waste of time. Try 3 Trillion to start.
Comrade Margin Call of Cthulhu,
"CR noted a few days ago that the $700B would not revolve, as he had earlier feared. This means then that our exposure is limited to {ahem} a mere $700B."
CR was incorrect. He was quoting Paulson's testimony that they didn't INTEND to churn the money. There's nothing preventing it. Expect it to churn.
Comrade Gary had a good take on INTEND.
Nostrovia,
Cthulhu,
I missed CR's take on revolving nature of acct. and of course respect that entirely.
This needs to be clarified, if it isn't already. I'm glad to go looking - in fact, will go looking - but will cheerfully accept results from anyone who has done so already.
Where's the CR comment, if you happen to know?
It really bothers me how little play the ban on short selling is getting. I think the damage being done is greatly underestimated. What happens when people cant trust the market? They pull their money out. There is no law that says people have to invest in the stock market. The more the market is manipulated and controlled, the less people will want to participate. The more people pull out, the more it will drop. Yes, even if it is just the would-be shorts that are leaving.
If they do not not overturn this ban ASAP, it will cause a crash. And the blame will fall elsewhere...
CR was incorrect. He was quoting Paulson's testimony that they didn't INTEND to churn the money. There's nothing preventing it. Expect it to churn.
Comrade Misean
I totally missed that.. And that totally ruined my morning...
I'm back in Jas's camp!
Time to write more letters...
.....
Interesting Times:
Traffic in my area has dropped to scary levels. My commute which used to take an hour now only takes me about 35 minutes. That's only 5 minutes longer than the no traffic time.
Burnside,
I don't remember, sorry, but Misean is right there saying that's wrong, so who knows. Maybe if I have some spare time I'll dig into the bill and try to figure it out.
Misean - fair enough, but on that point, what Paulson intends to do and what the bill authorizes are two different things.
It just occured to me, yes - I am slow. Home equity drove big purchases. So, the numbers for manufacturing would drop, and fast, if HELOCs were no longer being handed out.
Retail and discretionary items that could be charged will have legs, albeit limping, until that wall is hit for the greatest number.
I too am getting reports from businesses in my area that demand disappeared in last few weeks. I went to Costco on Monday afternoon and there were very few people in the store. Never saw that before. It has been slowing down for several months but is clearly in crisis now. I really don't think the bailout will help. They should be thinking about job programs and basic relief type spending.
Ministry of Truth writes:
"Here is a strange observation. I was at the mall on Saturday and it was packed with shoppers and shopping bags. People were buying things left and right. Last time I saw it like this was years ago. Two weeks ago the mall was dead."
Maybe not so strange. I noticed the same thing this weekend when I dropped the teens off to see a movie. A few weeks prior the mall was almost dead - great parking all around. I went home & said to the Mr. "I thought the economy was suppose to be slowing?" Absolutely odd...and I live just south of Wash DC.
The elephant waiting in the room next door is the public sector pension plans. They are significantly underfunded while financial models that justify solvency are overly aggressive.
The Rocky Mountain News did a series on Colorado's PERA a few years ago. I wonder what an update would look like?
D.C. congressoan phone lines were "all circuits busy " . I had to call the Senators' local offices to give them my message .
Minitrue
End of month = money in the bank account.
considering how easily BB and HP found holes/interpretations in the pre-existing laws and regulations, I don't doubt the contents of the new bill are just a formality.
They just need Congress to vote yes to something - anything - that spends money, and then Hank will do with that money whatever the hell he pleases.
I wrote my Congressman and Senators a few times.
My question to all three was: when do the criminal investigations begin?
I never heard back.
Impact on unemployment (just thought of this after reading CR's post above) - the real threat here is that if the recession hits as hard as is being thought and is as long as is being feared then those jobs that vanish - manufacturing - run a real risk of staying gone for good. What I am talking about here is permanent job destruction as a result of a permanent contraction of the US manufacturing base.
If China and India open up their huge domestic wallets and spend on themselves, there is a risk that they will also create some of their own manufacturing capabilities instead of continuing to use ours. Why?
Deflation will cause the USD to rise (as it is right now in fact) and thus make our goods more expensive. Should this occur then our ability to get out of the recession will become that much harder and the recession that much longer.
All the best.
Credit card debt crashing...Duhh!!!
Credit Card debt is next big story..
Bad credit-card debt could be next shot to rip through economy - MarketWatch
CNBC continues to WHINE and WHINE about how people just don't get it at all that it's not a bailout of Wall Street at all, but rather philanthropy for Main Street.
These people are intolerable.
from bloomberg:
Bloomberg.com:
Economic Calendar
Market Focus
Wednesday: Assuming a new banking failure doesn't seize the credit market, economic data may take center stage. The ISM manufacturing report has so far held steady and a surprise on the upside could ease talk of immediate recession.
really don't think the bailout will help. They should be thinking about job programs and basic relief type spending.
Hanging by a thread | Homepage | 10.01.08 - 11:13 am | #
D's link above suggests the bailout is because foreign governments put a gun to our head and said you guys started this you fix it. Of course if they pulled the trigger our lifestyle would change mighty fast.
YouTube
- **FLASH** The REAL REASON For The Bailout (Hint: FOREIGNERS)
Hey CR -
Is there an exact time today when the national debt hits $10 trillion?
I have my party hat and horn ready.
So now we the taxpayer are not just bailing Wall Street, but Hong Kong Street, London Street, and Tokyo Road.
Exactly. The bailout only makes sense if we start buying assets held by foreign banks as well. Their crappy assets are no better than ours and effect the overall markets. So the non-moneyed Americans can feel extra special knowing it's not just Wall Street but exchanges around the world.
riardaddy writes:
After the Revolution
Breaking: Senate will allow FDIC to increase borrowing for 30B to unlimited.
Although it galls me no end that the only reason CR blogged about the ISM data today is because it was poor in September (he's been completely uninterested in it in previous months when it was benign or showing economic expansion), even I have to admit that this doesn't look good for my "no recession" position.
Sebastian
wsj just announced the fdic can borrow an unlimited amount from the treasury, temporarily, per the new bill
We will burn through $700B pretty fast - like by tomorrow.
Seriously though, I wonder who gets help first and when the money actually goes out?
That may be an interesting side show.
Wow, CNBC is really doing the full-court press. Interviewing "small business owners" who are "suffering from the credit crunch".
It is kind of sick.
has anyone published a face value number of all assets...let alone what the real value may be
WSJ reports "The Senate financial market rescue bill would temporarily allow the FDIC to borrow unlimited amounts of money from the Treasury Department in connection with the larger government deposit coverage that would extend until the end of next year."
Predictable.
Fire up the printing press.
Anyone else wondering when the capital controls will be put in place?
That may be an interesting side show.
To me, that's the MAIN EVENT.
Sebastian writes:
Although it galls me no end that the only reason CR blogged about the ISM data today is because it was poor in September (he's been completely uninterested in it in previous months when it was benign or showing economic expansion), even I have to admit that this doesn't look good for my "no recession" position.
C A P I T U L A T I O N!
Awwwww, poor people that can't borrow money.
eyeroll
Nemo - CNBC should interview them 2 weeks after the bill passes to see what (if anything) has changed.
How much do you want to bet we never hear from those small business owners on CNBC again ?
After the Revolution
Nah, they'll be burned at the stake during the revolution.
ot poor people...small business owners can't get loans...no growth, no jobs, no business equal shitty economy
Anonymous writes:
wsj just announced the fdic can borrow an unlimited amount from the treasury, temporarily, per the new bill
Ireland plan looks good.
c&c,
Oh oh, does that mean the bottom is in?
Seb,
Kudos to you for being honest....Now if we could get congress to see that all is not good in the heartland not wall street...
I'll take slow sustained growth over growth on the back of unsustainable debt.
Perhaps the deeper issue here is that people are relying too much on debt and need to do a better job saving.
i'm trying to do a loan right now for a business owner who owns her commercial prop, valued at 6 million plus outright. she wants a million to expand her business. not only have i not been able to get her the loan, the rate and terms of the one place that is considering it are higher than you would probably think. and, she has perfect credit and reasonable debt service
Credit card debt crashing...Duhh!!!
Credit Card debt is next big story..
oops, there goes Citibank
CNBC is about to trot out a realtor in support of the bailout bill.
That, my friends, is whoring you can believe in.
Perhaps the deeper issue here is that people are relying too much on debt and need to do a better job saving.
Ummm, YEAH.
Capital controlz are a certainty.
credit card debt is already risk adjusted...hence the rates in the twenties
Sebastian writes:
Although it galls me no end that the only reason CR blogged about the ISM data today is because it was poor in September (he's been completely uninterested in it in previous months when it was benign or showing economic expansion), even I have to admit that this doesn't look good for my "no recession" position.
LOL...time to buy!
i'm trying to do a loan right now for a business owner who owns her commercial prop, valued at 6 million plus outright. she wants a million to expand her business. not only have i not been able to get her the loan, the rate and terms of the one place that is considering it are higher than you would probably think. and, she has perfect credit and reasonable debt service
Oh well, where is it in the Constitution that people are entitled to cheap credit?
She gets the market rate, like everyone else.
I'm too busy watching the financial news to go shopping, sorry. ;^)
PeakVT writes:
CNBC is about to trot out a realtor in support of the bailout bill.
That, my friends, is whoring you can believe in.
lol
"Some body got a rope?"
Its either us or them! (American citizen or the financial services industry)
Brought forward from 2 threads back:
Free Lunch:
Deep in the bowels of some non-descript garage in the Valley four bright guys are pulling all-nighters working on the concept - "no handout".
Deep in the bowels of DC and NY thousands of well-lit guys are pulling half-days working on the concept - "a garage's price must never come down..."
Note the incredible economic disparity of the efforts. This is not to the advantage of the Enemy.
In the words of Nathaniel Greene:
"We fight, get beat, rise, and fight again."
Cornwallis kicked Greene all the way across the Carolinas, fought Greene to a draw at Guilford Court House, and hung himself thereby.
The last week has cost the Enemy his credibility, his legitimacy, and his health, all to pursue a plan fated to disaster. Now he will sacrifice more legitimacy and credibility to seize his aims by brute force of bribes.
If they are forced to win two more such victories, we will triumph over them utterly. Do not despair; even if we are defeated in this engagement, it is merely one moment in the history of the Republic. The enemy bleeds from manifold wounds, inflicted by his own hands in the pursuit of we biting vermin.
Take the raw brutality of their efforts and the illegitimacy of their tactics and use them as a weapon in the next battle. We know there must be a next battle, and so we can prepare for it even while the enemy portrays himself as savior and victor, and rob the Enemy of yet more legitimacy and authority in the next engagement.
Thus, even by a sequence of defeats can we produce victory. Fight on, fellow Citizens. Our cause will triumph, for it is built on truth and reason, as the Enemy builds his case on falsehood and fear.
the "realtor" is the ceo of remax...Margaret Kelly is arguing that credit is too tight, versus too loose...well duh
Anon, you'd better close.
Those rates and terms won't be easing any time soon.
Glad to hear someone's business will support expansion. How sure is she of that?
Sebastian - bravo. However I doubt that CR has anything against you personally.
All the best.
Anon,
So we are now back to the mid 90's underwriting...It worked then...need to ring out the excess..
If they would nationalize health care, small business could add anywhere from 1-10 jobs depending on size easily..
This bailout won't help any small business, jobs, people, commercial property etc....
Here's an alternate plan to help Main Street not Wall Street.
1) Take the initial $350B being discussed and distribute $100M to 3,500 regional banks.
2) Regional banks will use money to recapitalize but can't leverage the funds.
3) Money is used to provide $35K (non-taxable) grants per new employee to companies providing "productive jobs" that produce "products". Service companies not eligible.
4) Program can generate 10M new jobs.
5) Money basically stays in the bank as grant employees open checking accounts and the money is internally transferred.
6) Multiplier effect generates 2 other jobs from the one direct grant employee.
7) The 2 new jobs generate taxable income of $70K and $14K in federal income tax per year.
8) At that rate the Jobs Trust Fund could be replenished in 2 1/2 years.
9) The fund could become a revolving fund to continue to generate new jobs.
The plan results would be as follows:
1) Generates up to 30M new jobs.
2) Focuses investment on "productive Jobs"
3) Recapitalizes regional banks.
4) Trickle up effect helps bigger banks.
5) Money is returned to the fund from FIT.
6) Gets the money to where it's really needed.
7) May increase wage rates due to shortage of workers.
8) Restores manufacturing base and increases exports.
9) A fair plan that benefits everyone.
Lone Ranger
ABC news did a quick story about a guy whose business is making_furniture_out_of_airplane_parts.
He was complaining about tight credit.
Charlie Gibson was appalled by this.
In Portland, Oregon, my grocery store is still busy, but the WAMU shop inside the store is dead quiet, with one of those "we're wearing FDIC protection" signs. Haven't seen much difference in traffic, but people are dumping their RVs, boats, cars, trailers, etc. I'm seeing more motorcycles, scooters, and bikes.
This is the same MSM that went along for the WMD and mushroom cloud bull! What do you expect?
Fewer jobs lost in August than predicted:
Fewer Job Losses Reported in August - Economix Blog - NYTimes.com
So beyond physical bullion (in which I will hold only a small percentage of my net worth), which offshore banks are going to survive and should money be parked in?
At the moment, all I've got is offshore.hsbc.com - and I would appreciate any meaningful feedback on relatively safe offshore banks that US passport holders can still open accounts in (i.e. not UBS/CS).
Ok, I'm turning off CNBC.
This is nauseating.
For the spittle-flecked conservatives in the hizzy, here's the latest spengler:
Asia Times Online :: Asian news and current affairs
Well worth a read.
Sebastian: you're the man now, dog!
Cheers,
prat
My take on the fair-value rules:
Bakersfield Bubble
REMEMBER EVERYONE -
McCain and Obama are senators, too. While you're e-mailing the senators from your state, remember to send the presidential candidates a little love letter, too. They've both announced they will be in Washington this evening for the vote.
Retail here (central va).
Traffic dropped precipitously in august and has stayed that way.
Last week had a rep for a vendor stop in. Sales were way off for them. Had cut their workforce 25%. Mentionned that he had heard another one of my vendors (Buffet owned) was down 30% in sales.
In august the governor of virginia was forecasting a deficit of $1 billion. Last week he upped that to $2.0 - $2.9 billion and said he asked all departments to prepare for budget cuts ranging (IIRC) from 5% to 15%.
Recession in virginia.
If people are reduced to buying just the "basics", in terms of foodstuffs, will that result in a drop-off of "value-added" foodstuffs, thus keeping the price of basics low? I apologise in advance if this is a dumb question.
CathyG,
Fat chance Obama or McCain flip on this bill. Both of them have said they are for a bailout, we need a bailout, etc. etc... working for bailout, if I am President I'll make sure we get a bailout.
Its completely baffling to me. Are we the only tin foil colander hat wearing Americans? Or is main street as ticked about this as we are and everyone else is trying to fool them into thinking a bailout is good.
I swear this has chapped my rear more than the whole immigration deal... even though the politicans are doing the same thing.
"credit card debt is already risk adjusted...hence the rates in the twenties"
Yeah, maybe...but the usurious interest rates have forced a lot of lumpens to make only minimum payments, hence their principal is mostly untouched, so the defaults will be huge.
And even with "bankruptcy reform," Chapter 7's are going to go thru the roof in this economic climate.
The country is insolvent. Period.
i'm trying to do a loan right now for a business owner who owns her commercial prop, valued at 6 million plus outright. she wants a million to expand her business. not only have i not been able to get her the loan, the rate and terms of the one place that is considering it are higher than you would probably think. and, she has perfect credit and reasonable debt service
Why is she trying to expand her business in a contracting market? Sounds like a high-risk loan.
beyond physical bullion (in which I will hold only a small percentage of my net worth)
That may end up being all your net worth.
Every time I see a 115lb woman in a Yukon Denali I weep for our future. The humanity. We are about 6 months from a financial Katrina, bailout or no.
Paulsons impressive interest conflicts
The actions of Treasury Secretary Paulson since the first outbreak of the Financial Tsunami in August of 2007 have been directed with one apparent guiding aimto save the obscene gains of his Wall Street and banking cronies. In the process he has taken steps which suggest more than a mild possible conflict of interest. Paulson, who had been chairman of Goldman Sachs from the time of the 1999 Glass-Steagall repeal to his appointment in 2006 as Treasury head, had been one of the most involved Wall Street players in the new securitization revolution of Greenspan. Under Paulson, according to City of London financial sources familiar with it, Goldman Sachs drove the securitization revolution with an endless rollout of new products. As one London banker put it in an off-record remark to this author, Paulsons really the guilty one in this securitization mess but no one brings it up because of the extraordinary influence Goldmans seems to have, a bit like the Knights Templar order of old. Naming Goldman chairman Henry Paulson to head the Government agency now responsible for cleaning up the mess left by Wall Street greed and stupidity was tantamount to putting the wolf in charge of guarding the hen house as some see it.
Paulson showed where his interests lay. He is by law is the chairman of something called the President's Working Group on Financial Markets, the Governments financial crisis management group that also includes Fed Chairman Bernanke, the Securities & Exchange Commission head, and the head of the Commodity Futures Exchange Commission (CFTC). That is the reason Paulson, the ex-Wall Street Goldman Sachs banker, is always the person announcing new emergency decisions since last August.
Two weeks ago, for example, Paulson announced the Government would make an unprecedented $85 billion nationalization rescue of an insurance group, AIG. True AIG is the worlds largest insurer and has a huge global involvement in financial markets.
AIGs former Chairman, Hank Greenberga close friend of Henry Kissinger, a former Director of the New York Fed, former Vice Chairman of the elite New York Council on Foreign Relations and of David Rockefellers select Trilateral Commission, Trustee Emeritus of Rockefeller Universitywas for more than forty years Chairman of AIG. His AIG career ended in March 2005 when AIG's board forced Greenberg to resign from his post as Chairman and CEO under the shadow of criticism and legal action for cooking the books, in a prosecution brought by Eliot Spitzer, then Attorney General of New York State.[1]
In mid September, in between other dramatic failures including Lehman Bros., and the bailout of Fannie Mae and Freddie Mac, Paulson announced that the US Treasury, as agent for the United States Government, was to bailout the troubled AIG with a staggering $85 billion. The announcement came a day after Paulson announced the Government would let the 150-year old investment bank, Lehman Brothers, fail without Government aid. Why AIG and not Lehman?
What has since emerged are details of a meeting at the New York Federal Reserve bank chaired by Paulson, to discuss the risk of letting AIG fail. There was only one active Wall Street banker present at the meetingLloyd Blankfein, chairman of Paulsons old firm, Goldman Sachs.
Blankfein later claimed he was present at the fateful meeting not to protect his firms interests but to safeguard the entire financial system. His claim was put in doubt when it later emerged that Blankfeins Goldman Sachs was AIGs largest trading partner and stood to lose $20 billion in a bankruptcy of AIG. [2] Were Goldman Sachs to go down with AIG, Secretary Paulson would have reportedly lost $700 billion in Goldman Sachs stock options he had, an interesting fact.
That is a tiny glimpse into the man who crafted the largest bailout in US or world financial history some days ago, the failed TARPTroubled Asset Relief Programa proposed $700 billion financial stabilization scheme which, in Paulsons original version would have allowed him or his Treasury successor to use $700 billion, with no oversight or accountability, to buy bad or worthless assets from financial institutions he deems worthy of help.
The country is insolvent. Period.
The country is not insolvent. Credit is insolvent.
I'm not sure where this credit crunch is happening, but in my mail today I received solicitations from the blood suckers at Citi and Chase.
They're offering credit cards at 1.99 and 0 percent respectively with $150 of gift cards and 3% back on purchases.
Somewhere over the rainbow, interest rates are high - but not at Citi or Chase!!
Are we the only tin foil colander hat wearing Americans? Or is main street as ticked about this as we are and everyone else is trying to fool them into thinking a bailout is good.
YLSP, the answers are no and yes. The msm have their orders, and the politicians will be dancing as fast as they can with those who brung them, rather than with the American people. And the reports of massive calling in favor of the bailout is so far unsubstantiated by any actual congresscritter.
http://dealbreaker.com/images/thumbs/Bailoutbill.pdf
Supposedly a copy of the new bill here, but not currently loading for me.
Although it galls me no end that the only reason CR blogged about the ISM data today is because it was poor in September (he's been completely uninterested in it in previous months when it was benign or showing economic expansion), even I have to admit that this doesn't look good for my "no recession" position.
Kudos Seb.
Welcome to the dark side!
Don't worry, be happy---
America's financier caste will live to fleece another day.
Nova:
As per your story re Wachovia, I would suspect two things.
First, that he might have been a Wachovia employee with an outsize amount of corporate stock in his retirement plan.
Second, that he kept an unduly large amount of funds in his money market there.
Knew a bunch of people at the old MCI who lost a ton when Worldcom went belly up since they had an exceptionally large amount of retirement money in company stock.
Yep, it's come to Jesus.
Dave, I think we've been in a recession since early this year (or even Decemeber 2007).
As far as unemployment, I'm less confident now than I was earlier this year. I felt the unemployment rate would stay under 8% in this cycle, but the risks have increased for an even higher unemployment rate.
I'll stick with my current forecast for now.
Best to all.
Calculated Risk | Homepage | 10.01.08 - 10:43 am | #
I also thing we will stay below 8%, but mostly due to demographic factors. Many of the boomers will "retire early". I expect the employment to population ratio to fall below 60% from its current 62.1%. Was well above 64% when W took the helm. A level of 60% would put us back to mid 1980's levels (when women were still in thr process of joining the workforce).
@GD
It's 451 pages.
Link worked for me.
And fortunately, I can't watch the Senate vote tonight due to other kid activities.
Son wants to do something so I paid ahead for a year with a 5% discount.
I for one like Sebastian. His contra points are always fair and well though through; he raises good questions and stimulates good discussion.
Supposedly a copy of the new bill here, but not currently loading for me.
I did get it to download
Scooby writes:
snip
And even with "bankruptcy reform," Chapter 7's are going to go thru the roof in this economic climate.
The country is insolvent. Period.
Yup, Over indebtedness. The only way out in BK by the rules. That's the only way the world will accept.
Those are our rules/laws and every investor knew it prior to investment.
If we change the rules, they will bail out on us!
OT, a little bit: Fidelity Investments argument for the bailout bill.
No surprises here... a big public financial company loves the idea of a big injection of public funds.
Congress Making Progress On Revised Bailout Plan
Senate Approval Predicted; House May Vote Friday - Politics and Government * US * News * Story - CNBC.com
Anyone else has any illusions on the coming passage of the bill?
Recession in virginia.
black dog | 10.01.08 - 11:35 am | #
The counties also. Some, where the burbs grew the fastest will really hurt. Any residences who don't flee their 1000 homes subdivisions will love the drop in servies. Police and fire were already stretched pretty thin. So much for a decent school system
Here is a strange observation. I was at the mall on Saturday and it was packed with shoppers and shopping bags. People were buying things left and right. Last time I saw it like this was years ago. Two weeks ago the mall was dead.
Ministry of Truth
It's the retail price cuts, MoT. I took my elderly neighbor to JC Penney's on Sunday. She purchased 3 pairs of lady's slacks for less than ten dollars. They were discounted down to $3.29 a pair. Original prices were $46, $40 and $29. Not even covering cost, I would imagine.
[Quote] i'm trying to do a loan right now for a business owner who owns her commercial prop, valued at 6 million plus outright. she wants a million to expand her business. not only have i not been able to get her the loan, the rate and terms of the one place that is considering it are higher than you would probably think. and, she has perfect credit and reasonable debt service
Why is she trying to expand her business in a contracting market? Sounds like a high-risk loan. [/Quote]
Maybe she manufactures safes?
Re: GD
I've got it. It's 451 page pdf file.
I like how Sec. 103 has been restructured to "protect interest of taxpayers" as #1... opposed to the draft written by lobbyists where it was #3. That doesn't make me feel better at all.
Also, "protect American jobs, savings, and retirement security". Our retirement is a right now?!?! Since when has the government been interested in protecting savings?
Yeah there's no way I'm parsing through the new bill right now... just some things leaped out of me. So we went from a 3 page bill to a 451 page bill? Ridiculous!
Supposedly a copy of the new bill here, but not currently loading for me.
Mine says 451 pages???
HIG and MetLife sinking fast...can't blame the short sellers for companies with crappy management
OT
Homedad43, is there any news that Wachovia is breaking the buck on money market funds? I would find that truly shocking, given that the merger terms even left some value in WB common stock.
Like I said, enjoy the circus. More bread will be coming later, perhaps a little moldy, but it will be coming.
Bottom Dweller | 10.01.08 - 10:58 am | #
Yeah, St. Elmo's Fire for all
Maybe she manufactures safes?
LOL....I actually was trying to think of something that would do well in this economy and that was one of the only things I could think of.
Maybe she manufactures safes?
...beat me to it.
Check out page 160. Just bought a few far out of the money options on coal companies.
Added $250M for coal gasification tax credits.
So we went from a 3 page bill to a 451 page bill? Ridiculous!
Lawyers must have gotten a hold of it.
ew thread peeps.
Could the past ISM reports have been juiced up to provide fairy-tale feel-good vibes and now that is no longer useful ? Now it's better to send SHOCK VALUE info to representatives so the bailout passes ?
I am with wally. If there's a need to do something no more stupid rebates or bank bailouts. Make the 700B an investment and blow it on infrastructure and alternative energy builds. It will rattle around the economy rather than feeding the insatiable black hole of financial voodoo economics...
Comrades,
Quit praising Seb. He's full of shite. He states CR NEVER reports ISM and only did so because it's bad.
Wrong OH SEBASTIAN.
ISM - Google Search
F*Tard.
Nostrovia,
Why can't we shoot public servants when they fail to serve the public?
This has something in it about medical necessity.
Do you think this is the add on to the other Senate bill?
YLSP writes:
. . .
Also, "protect American jobs, savings, and retirement security". Our retirement is a right now?!?! Since when has the government been interested in protecting savings?
When it is the public sector pension plans that are significantly underfunded.
I'm in fundraising for a university, and I sit next to the telephone outreach program, where student callers shake down alums and others for donations.
They're getting donations, but figures are down. A lot of "it's the economy." The students are trained to take three "no's" before capitulating, falling a lower level of suggested giving each time. And this usually works on repeat givers. But that means that people who've been good for $200 in the past are giving $75 this year.
Management is cracking the whip and bearing down to try to keep the numbers up no matter what, and staff burnout is looming. But there's an old adage about urination and the direction of wind that applies here.
ova writes:
"Any residences who don't flee their 1000 homes subdivisions will love the drop in services. "
Well, fleeing is out of the question right now, but I can tell you, the number of foreclosed/vacant/ abandoned homes in my neighborhood will help offset the strain.
I might have to cut an extra yard or two, but at least the schools won't be overcrowded.
Lone Ranger - good plan. Keep it out there. Assets are depreciating because Main Street can't afford them anymore.
Rebuilding the real economy is the fundamental solution. Every single dime of what remains of this nation's savings and credit should be re-allocated toward the wealth-building activities you set out.
CR, I think you are right that the real economy is the "big story". But it's been the big story all along, and the fundamental aspect of the big story is that the world's savings were invested in bubble-building.
That capital should have been allocated to the structural repositioning of the real economy to cope with globalization and the concomitant re-pricing of energy and raw materials.
"LOL....I actually was trying to think of something that would do well in this economy and that was one of the only things I could think of."
Anonymous | 10.01.08 - 11:47 am | #
If you have a good rep of not fucking people,independant auto and truck repair places are buried in work.
My brother figures he will easily double his income from 3 years ago...
Chris
Vote in the CNN.com - Breaking News, U.S., World, Weather, Entertainment & Video News bailout poll on right side of page .
Sebastian is irrelevant. We're teetering on the edge of financial meltdown and he only comments on whether or not we're in recession.
Laughable.
I vote for the Lone Ranger Plan.
Maybe I'm thinking too "big picture" but, will consumers ever realize how they (we) have been programmed to our own demise?
Spending = Saving!
Debt = Wealth!
New loan = Free Money!
More stuff = Social Status!
Real work = is for little people.
This whole nation needs to be bitch slapped by reality. And it looks like it's coming soon to a face near you.
Black dog,
August retail sales were ok. September was the same until last week. I have never seen such a dramatic decline. If this week is the same expect terrible Sept comp store sales number.
Vendors should prepare for another round of holiday order cancelations and rethink spring 09 production.
To the Chinese...you better get your production on the water ASAP. Order cancellations are coming. Post CNY will be ugly over there.
The bailout is actually only the first 100 or so pages. There are other initiatives and amendments on mental health, energy policy, etc. attached.
You know how these things work. Everyone puts their own pet projects on something that can't/won't be voted against.
Called bundling. It's been used to by corporations for years to push unwanted crap on taxpayers.
""Hundreds of billions of dollars are going to bail out FOREIGN INVESTORS. They know it, they demanded it, and the bill has been carefully written to make sure that can happen." - Brad Sherman , D-California"
Misean, thanks.
I might have to cut an extra yard or two, but at least the schools won't be overcrowded.
this is real, folks | 10.01.08 - 11:53 am | #
Yeah but the classrooms will be more crowded than ever as they lay off teachers.
Sebastian,
It is worth asking why you were so wrong on this whole crisis. You have been consistently optimistic throughout, maintaining the "economy is fundamentally sound" stance that would make a Kudlow proud.
The bears have been early, but right. If you had listened to the doom & gloom bears and sold out of every position and moved to gold 2 years ago, you would be way ahead today. Heck, I sold my house in silicon valley nearly 4 years ago, and that same house is on sale at a price that is only 10% more than what I sold for (and it still not moving!). So yes, I was way too early as a bear, but I have had 4 years of peace of mind!
What was it that made the bears think something was fundamentally wrong with the economy. What did your models miss?
It is worth reflecting on these questions.
Seb--I fell out of my chair when I read your post. When even the Great Seb turns negative, I guess this means the economy must really be tanking.
Folks:
If you skip to the bottom as I sometimes do, go back and read these:
Tadeusz Kościuszko @ 11:29 am
praetorian @ 11:32 am
Lone Ranger @ 11:30 am
and girlbear @ 11:38 am
You'll be glad you did.
Since the problem is that the foreigners and the banks are seeing a decline in the value of the bundled mortgages because the mortgages are going bad, then it would seem the best way to treat the disease not the symptom would be to rescue the mortgages not the banks. i.e. Main Street not Wall Street, the City of London, Tokyo Road, etc.
I suggest we set up a well funded federal office to which foundering mortgagors could appeal for help staying current and thus giving value to the mortgages and thus to the MBSs. The feds already have people's tax returns so they would have a good start on determining if an applicant is trying to game the system. They could and should eliminate second homes, liar loans, and investor/flippers who didn't flip fast enough
Hahahha Just put a bid on a house at 50% of loan value.
Not a dime more will be offered.
HAHAHA! Patience pays.