Troubled US carmakers General Motors and Ford Motor have been given a potentially devastating vote of no confidence by three big European credit insurers, which have removed cover from their suppliers.
The withdrawal of credit insurance which covered suppliers against the risk of the car companies failing has previously hastened the demise of a string of European companies, with suppliers to retailers and construction companies finding cover increasingly hard to come by.
One of the most under-appreciated aspects of this economic crisis has been the role which China and certain other Asian countries played in inflating the credit bubble. To a large extent, these fraudlent financial products like CDOs and SIVs which Wall Street developed were just ways to market excess money which the Asian countries were knowingly creating. How?
Richard Duncan, author of "The Dollar Crisis" - one of the real prophets of this economic crisis - has a great article in this month's Far Eastern Economic Review. As he did in his book, Duncan points out the huge role played by Asian central banks in knowingly inflating the trade/credit bubble. Here's how it worked and probably still is working:
When a Chinese factory would sell its products to an American business they would be paid in dollars. Now, if they just converted those dollars to yuan in the open currency markets, then the yuan would have appreciated, the dollar would have depreciated and it would have tended to reduce the US trade deficit by making Chinese goods more expensive. But the Chinese didn't want that, so their central bank PRINTED MONEY - yes, they outright printed it - bought the dollars from their local exporters and then they used the dollars to buy our treasury bonds, Fannie/Freddie debt, etc.
Now, Duncan point out that getting rid of the Bretton Woods system makes these trade/credit bubbles more likely since the dollar is not tied in any manner to the gold or any other "real" standard. But China took an already unstable system and made it far worse by printing money to buy dollars and keep the yuan artificially weak.
So it rings very hollow to me to hear China complaining about the dollar as reserve currency and how we need a new Bretton Woods. The world probably does need it (though it's in the US interests to keep the dollar as reserve currency), but China shares a great deal of the responsibility for letting things get as bad as they are. China is like a drug wholesaler who has been shipping heroin (this is a metaphor) to the US in huge quantities for years and now when the system collapses they scream "you're a filthy drug addict- I can't believe it!"
China shares a great deal of the responsibility for letting things get as bad as they are.
True, but the US never should have been able to run up the trade deficits it did in the first place.
It was probably an inevitable result of allowing one country the right to print without limit quantities of the fiat reserve currency.
The US should have wound down its military occupation of the planet back in the 60's, when the writing on the wall said that it couldn't keep up a rising standard of living and still be an empire.
The US under Johnson and Nixon, advised by Cold Warriors like the Dulles brothers, refused to give up the empire.
We are now experiencing the consequences of that fateful choice.
Don't be too angry with China... when the Great Karmic Unwind happens, the Yuan appreciates, and the Dollar depreciates; and during a sinking world economy, demand for their goods will collapse.
Nothing like a few hundreds of millions of underemployed, poorly-paid, unmarried, environmentally-poisoned workers stewing in your cities to keep a gov't focused on the struggle to remain legitimate!
Perhaps they'll toss some missiles at Taiwan to rally the folks? Show of hands -- how many here think we'll REALLY care enough to send troops to fight them off if they tried?
Anyone seen HSBC's new ad campaign? Environmentalists, protest, arrest, family bonding. I'm really not sure what to make of it except it is a sign of change.
I'm thinking mostly correlation because housing-related materials are mostly domestically-produced and low value. People invest in homes at the same time the feel able to buy more non-essential or luxury goods.
"The good news is the trade deficit will decline sharply over the next few months (because of the decline in oil prices)"
The bad news is, of course, that this only means the nominal trade deficit declines, while the real trade deficit and therefore the drag/add on/to real GDP is unaffected by price changes.
Dollar hegemony has been a means to extract rents. Period. That said, US policy was dogmatic ideology in the name of free trade whilst ignoring those very rules in a form of benign neglect. There was too much to do building the house of cards knowledge economy. Those plasmas and cheap China goods were merely a convenient palliative. When China turned the US bankers away and the rest of the world balked at the overt US high margin land the model unwound.
It is the US who continued this course in deference to the self interested internationalists (do gooders on the left and corporatists on the right found a common ideology in globalization).
The real tell on US dollar hegemony is not China, but the petro states. Expect Saudi to be back front and center in the cross hairs of US diplomacy. Cheney was in the Kingdom months ago leaning on them not to break the pegs.
The architect here is the United States. Were there willing conspirators for sure. China was front and center. But the US engineered this cespool and the "great minds" were quick to get up on the box for the past few decades lecture everyone else on the right path. More for less, but only the US of A. That sums up the entire model.
The US is entirely responsible for this fiasco and the sleezy "engineers" down on wall street who are even worse up close.
"It's very sad when you see a moving van coming in the middle of the night because people are embarrassed that they're in foreclosure," said Toni Dalrymple, a Mountain House resident who paid $800,000 for her family's house in 2006. As of July, their home was worth $359,000, she said.
There are no abandoned mills or factories, no boarded up storefronts, no drug dealers on street corners. The spanking new streets of this 5-year-old planned community are full of good-looking homes with nice cars in front.
Yet this unincorporated town of fewer than 8,000 up to its eyeballs in debt has become the poster child for America's growing economic crisis.
Though the paint has barely dried on the homes the first batch was sold by Trimark Communities LLC in 2003 nearly 90 percent are "under water," with homeowners owing far more on their homes than they are now worth.
"The good news is the trade deficit will decline sharply over the next few months (because of the decline in oil prices), and residential investment might bottom sometime in the next few quarters."
CR, where do you see the residential investment coming from after the next few quarters?
Despite the troubled forecast, Eric Teed-Bose, director of development for Trimark, Mountain House's master-developer, defends the housing project.
"We're really on track. We're grateful we got as much of Mountain House built as we did before the current correction occurred," Teed-Bose said Friday. "Mountain House continues to grow. There are still homes being built and people want to live there. The values are resetting."
Republicans are TRAITORS writes:
I'm addicted to the video of the day. Watched it 4 times now. Can we tar and feather Ben "ass clown" Stein.
I hope Ben Stein and Arthur Laffer lost everything .... and I hope they took those FOX News Trolls with them. Ben Stein had a stupid TV show other wise he is a complete dolt.
Peter has been right on. I await the day gold and silver skyrocket, it just sucks right now waiting and waiting
City workers axed in jobs bloodbath - Telegraph
Thousands of City workers axed in jobs bloodbath
JP Morgan, the US investment bank, is drawing up plans to axe thousands of jobs across its worldwide operations, The Sunday Telegraph can reveal.
"These people say the overall size of the cuts that Pandit will announce during a highly anticipated town hall meeting could add up to close to 40,000 depending on the number of asset sales, such as spinning off businesses the firm could pull off in addition to additional planned layoffs."
We went to a discount clothing store yesterday. I almost fell over. They were having a 12 hour sale. The prices were, well very low.
Then we went to pick up my daughter at the mall. The wife and I wandered for a bit. The stores we were in had turned into discount stores, and the discount store was selling close to Goodwill prices.
These people say the overall size of the cuts that Pandit will announce during a highly anticipated town hall meeting could add up to close to 40,000 depending on the number of asset sales, such as spinning off businesses the firm could pull off in addition to additional planned layoffs.
Citi is probably down in value 60%+ in the last five years, so where is the value in cutting less than 10% of the workforce? If they all failed to produce results, why keep any of them?
Sam Dimond, I tried to buy physical gold last week... Kitco,None.... Blanchard.two months out, I am thinking of the Perth Mint and having it fabricated and shipped.
Cheney was in the Kingdom months ago leaning on them not to break the pegs.
You break the pegs, we break your legs. Anyone who has broken the pegs is gone--Saddam for ex, and this is at the heart of why Iran is being threatened. Venezuela as well. The deal is, we buy you goo, you take our dollars AND you convert into treasuries.
All this noise about nuclear weapons is the false flag.
Although the Dollar has strengthen considerably against the Euro since Sept., the Dollar has weaken against Asian currency. The U.S. does more trade with Asian markets that with European markets. Thus I don't foresee a large increase in the trade deficit in Oct and Nov due to currency related factors.
Had to dust off my Mervyn's gift card yesterday before it is worthless. While leaving, I looked across the shopping area and saw a vacant stand alone, I think it used to be a tile/carpet store and next to that was a Downey Spending and Loan. Cashed all my circuit city gift cards in 2 weeks ago before they went away. People are just now getting laid off and all the inflation in the world isn't going to help.
The Cheneys also had between $10 million and $25 million in American Century International Bond. The fund buys mainly high-quality foreign bonds (predominantly in Europe) and rarely hedges against possible increases in the value of the dollar. Indeed, its prospectus limits dollar exposure to 25% of assets and the fund currently has only 6% of assets in dollars, according to an American Century spokesman.
And when one goes off, will it set off the others?
Bob Dobbs | Homepage | 11.16.08 - 5:09 pm
Potentially. The cascade effect and all that. Who knows which one will be the thrigger? Probably an obscure event that cause the more obvious next one, then...crack up boom.
...The estimates for the deficit next year are close to $1 trillion. But if the trade deficit is only $500 billion, that means that the appetite of foreigners for US debt will be less than half what is needed to finance the deficit. Where does the difference come from? US citizens and corporations, primarily banks, are going to have to buy the difference or the Fed will have to monetize a portion. Or rates on longer-term debt could go high enough to entice foreigners to buy US debt."
I'm thinking mostly correlation because housing-related materials are mostly domestically-produced and low value. People invest in homes at the same time the feel able to buy more non-essential or luxury goods.
Or am I reading this data wrong?
PeakVT
I'm wondering about the same thing. I think we really need data about the composition of exports and imports and to what countries are attributed to get at that answer about correlation/causation. I do know that we import a lot of lumber from Canada and they are hurting big time from the housing bust. Oh yeah and furnishings and fixtures... more and more is imported, and with time on the chart you can see the undulations becoming wider. One other thing-immigrant labor. IF that becomes a substantial input in the building of a house and most of the money goes back to Mexico, it is the same as importing that input.
PeakVT, to add one more thing... When we build a house here in the US we don't export anything, the house stays right here. There only would be a demand for imported building materials, fixtures, furnishings, and any immigrant labor used (exported dollars only). If you reduce RI you can only reduce imports, so trade deficit would have to be reduced, all else equal.
Doc at the Radar Station - good observations. Thanks.
UDN and Monetizing for the win!
What if other nations decide to monetize? The Fed isn't the only CB that has fired up the helicopters. USO seems to move in correlation with USD. Wouldn't that be a better choice since oil is, you know, actual stuff?
I am an exporter. Business has been slowing since May 2008. It has fallen off a cliff since September. I listened to the head of the recycled materials industry (say scrap metals) 2 weeks ago at a conference in Chicago say in 2 weeks in Sept the Scrap metal price went from $500/ton to $100/ton. He had never seen such a decline in 40 years. Ocean charter rates have declined enormously due to the lack of materials orders from developing countries(read china).
In my business (grain/seed) buyers have seen market corrections and they are all long high priced inventory in a negative consumption market and where credit is evaporated, not to mention a dollar rally that has crushed their buying ability.
I am hoping for a modest recover after Chinese New Years (Feb 09) as food inventories are finally getting depleted in Asia. But without the liquidity of the 2004-2007 period, and with sluggish economies the buying will continue hand to mouth.
Hogging 1st
Thank you, Mortgage Pig!
You know who I feel bad for now? Nemo's monkey. Got a feeling his position is going to be outsourced pretty soon.
Jerry said: "Got a feeling his position is going to be outsourced pretty soon."
I wonder if you cook a monkey like you would squirrel....
OT: European Insurers quit covering Ford, GM suppliers
Troubled US carmakers General Motors and Ford Motor have been given a potentially devastating vote of no confidence by three big European credit insurers, which have removed cover from their suppliers.
The withdrawal of credit insurance which covered suppliers against the risk of the car companies failing has previously hastened the demise of a string of European companies, with suppliers to retailers and construction companies finding cover increasingly hard to come by.
I guess the hope is that the dollars flowing in to fund the trade gap will be going to T-bonds rather than agency debt.
If that's the case, it would seem the global trade imbalance could actually worsen.
But the assumption of a rebounding trade deficit would require a rebounding of foreign appetite for US debt.
What if that demand doesn't rebound? Then imports will need to fall even faster, hitting export economies and demand for our exports, which will...
One of the most under-appreciated aspects of this economic crisis has been the role which China and certain other Asian countries played in inflating the credit bubble. To a large extent, these fraudlent financial products like CDOs and SIVs which Wall Street developed were just ways to market excess money which the Asian countries were knowingly creating. How?
Richard Duncan, author of "The Dollar Crisis" - one of the real prophets of this economic crisis - has a great article in this month's Far Eastern Economic Review. As he did in his book, Duncan points out the huge role played by Asian central banks in knowingly inflating the trade/credit bubble. Here's how it worked and probably still is working:
When a Chinese factory would sell its products to an American business they would be paid in dollars. Now, if they just converted those dollars to yuan in the open currency markets, then the yuan would have appreciated, the dollar would have depreciated and it would have tended to reduce the US trade deficit by making Chinese goods more expensive. But the Chinese didn't want that, so their central bank PRINTED MONEY - yes, they outright printed it - bought the dollars from their local exporters and then they used the dollars to buy our treasury bonds, Fannie/Freddie debt, etc.
Now, Duncan point out that getting rid of the Bretton Woods system makes these trade/credit bubbles more likely since the dollar is not tied in any manner to the gold or any other "real" standard. But China took an already unstable system and made it far worse by printing money to buy dollars and keep the yuan artificially weak.
So it rings very hollow to me to hear China complaining about the dollar as reserve currency and how we need a new Bretton Woods. The world probably does need it (though it's in the US interests to keep the dollar as reserve currency), but China shares a great deal of the responsibility for letting things get as bad as they are. China is like a drug wholesaler who has been shipping heroin (this is a metaphor) to the US in huge quantities for years and now when the system collapses they scream "you're a filthy drug addict- I can't believe it!"
Everyone must take a haircut in the giant workout. But nobody forced the debtor to become a junkie. Why the outrage over China printing yuan?
That's what sovereigns do.
I sure wish Tanta was here to write about Gretchen's latest piece.
Altair - laser-guided. The fix was in by '99.
Thread music:
YouTube - Einstürzende Neubauten - Letztes Biest (am Himmel)
CC
Bank Failures Take Holiday | One Year Later | Financial Articles & Investing News | TheStreet.com
Bank Failures Take Holiday
China shares a great deal of the responsibility for letting things get as bad as they are.
True, but the US never should have been able to run up the trade deficits it did in the first place.
It was probably an inevitable result of allowing one country the right to print without limit quantities of the fiat reserve currency.
The US should have wound down its military occupation of the planet back in the 60's, when the writing on the wall said that it couldn't keep up a rising standard of living and still be an empire.
The US under Johnson and Nixon, advised by Cold Warriors like the Dulles brothers, refused to give up the empire.
We are now experiencing the consequences of that fateful choice.
I'm addicted to the video of the day. Watched it 4 times now. Can we tar and feather Ben "ass clown" Stein.
Don't be too angry with China... when the Great Karmic Unwind happens, the Yuan appreciates, and the Dollar depreciates; and during a sinking world economy, demand for their goods will collapse.
Nothing like a few hundreds of millions of underemployed, poorly-paid, unmarried, environmentally-poisoned workers stewing in your cities to keep a gov't focused on the struggle to remain legitimate!
Perhaps they'll toss some missiles at Taiwan to rally the folks? Show of hands -- how many here think we'll REALLY care enough to send troops to fight them off if they tried?
Anyone seen HSBC's new ad campaign? Environmentalists, protest, arrest, family bonding. I'm really not sure what to make of it except it is a sign of change.
YouTube - HSBC: Lumberjack
Cause or correlation?
I'm thinking mostly correlation because housing-related materials are mostly domestically-produced and low value. People invest in homes at the same time the feel able to buy more non-essential or luxury goods.
Or am I reading this data wrong?
CR:
"The good news is the trade deficit will decline sharply over the next few months (because of the decline in oil prices)"
The bad news is, of course, that this only means the nominal trade deficit declines, while the real trade deficit and therefore the drag/add on/to real GDP is unaffected by price changes.
Altair
Dollar hegemony has been a means to extract rents. Period. That said, US policy was dogmatic ideology in the name of free trade whilst ignoring those very rules in a form of benign neglect. There was too much to do building the house of cards knowledge economy. Those plasmas and cheap China goods were merely a convenient palliative. When China turned the US bankers away and the rest of the world balked at the overt US high margin land the model unwound.
It is the US who continued this course in deference to the self interested internationalists (do gooders on the left and corporatists on the right found a common ideology in globalization).
The real tell on US dollar hegemony is not China, but the petro states. Expect Saudi to be back front and center in the cross hairs of US diplomacy. Cheney was in the Kingdom months ago leaning on them not to break the pegs.
The architect here is the United States. Were there willing conspirators for sure. China was front and center. But the US engineered this cespool and the "great minds" were quick to get up on the box for the past few decades lecture everyone else on the right path. More for less, but only the US of A. That sums up the entire model.
The US is entirely responsible for this fiasco and the sleezy "engineers" down on wall street who are even worse up close.
Mountain House is treading water
From peak to the pits: Mountain House is treading water - San Jose Mercury News
"It's very sad when you see a moving van coming in the middle of the night because people are embarrassed that they're in foreclosure," said Toni Dalrymple, a Mountain House resident who paid $800,000 for her family's house in 2006. As of July, their home was worth $359,000, she said.
There are no abandoned mills or factories, no boarded up storefronts, no drug dealers on street corners. The spanking new streets of this 5-year-old planned community are full of good-looking homes with nice cars in front.
Yet this unincorporated town of fewer than 8,000 up to its eyeballs in debt has become the poster child for America's growing economic crisis.
Though the paint has barely dried on the homes the first batch was sold by Trimark Communities LLC in 2003 nearly 90 percent are "under water," with homeowners owing far more on their homes than they are now worth.
"The good news is the trade deficit will decline sharply over the next few months (because of the decline in oil prices), and residential investment might bottom sometime in the next few quarters."
CR, where do you see the residential investment coming from after the next few quarters?
Worth noting:
Despite the troubled forecast, Eric Teed-Bose, director of development for Trimark, Mountain House's master-developer, defends the housing project.
"We're really on track. We're grateful we got as much of Mountain House built as we did before the current correction occurred," Teed-Bose said Friday. "Mountain House continues to grow. There are still homes being built and people want to live there. The values are resetting."
UB,
WTF are you doing here on a Sunday afternoon, this is unlike you, I think...
Republicans are TRAITORS writes:
I'm addicted to the video of the day. Watched it 4 times now. Can we tar and feather Ben "ass clown" Stein.
I hope Ben Stein and Arthur Laffer lost everything .... and I hope they took those FOX News Trolls with them. Ben Stein had a stupid TV show other wise he is a complete dolt.
Peter has been right on. I await the day gold and silver skyrocket, it just sucks right now waiting and waiting
"paid $800,000 for her family's house in 2006. As of July, their home was worth $359,000, she said."
Oof, that must sting a little. Of course to afford that much house you should be pulling in 250K minimum. I suspect they were not.
City workers axed in jobs bloodbath - Telegraph
Thousands of City workers axed in jobs bloodbath
JP Morgan, the US investment bank, is drawing up plans to axe thousands of jobs across its worldwide operations, The Sunday Telegraph can reveal.
Blackhalo,
Yah, that is the problem, we had wages not going up and people buying at 5 times what they could afford!
Citigroup Plans to Cut 10% of Its Global Workforce: Source - Financials * US * News * Story - CNBC.com
Monday Job Cuts Speech Major Test For Citi's Pandit
"These people say the overall size of the cuts that Pandit will announce during a highly anticipated town hall meeting could add up to close to 40,000 depending on the number of asset sales, such as spinning off businesses the firm could pull off in addition to additional planned layoffs."
Citigroup, should slash about about 200,000 jobs!
They have 374,000 employees that have helped to steal and burn $100's of billions! Fire all these banker scum!
Exports, Imports, and oh no!
We went to a discount clothing store yesterday. I almost fell over. They were having a 12 hour sale. The prices were, well very low.
Then we went to pick up my daughter at the mall. The wife and I wandered for a bit. The stores we were in had turned into discount stores, and the discount store was selling close to Goodwill prices.
FFDIC writes:
Citigroup Plans to Cut 10% of Its Global Workforce: Source - Financials * US * News * Story - CNBC.com
Monday Job Cuts Speech Major Test For Citi's Pandit
I loved how Larry Kudlow sees this as "very bullish"....Larry put down the crack pipe it is time to be sober again.
Crewman,
don't value your gold and silver at spot, value it at it's going market price, 15% to 40% higher than spot. Spot is a lie.
These people say the overall size of the cuts that Pandit will announce during a highly anticipated town hall meeting could add up to close to 40,000 depending on the number of asset sales, such as spinning off businesses the firm could pull off in addition to additional planned layoffs.
Citi is probably down in value 60%+ in the last five years, so where is the value in cutting less than 10% of the workforce? If they all failed to produce results, why keep any of them?
Sam Dimond, I tried to buy physical gold last week... Kitco,None.... Blanchard.two months out, I am thinking of the Perth Mint and having it fabricated and shipped.
Cheney was in the Kingdom months ago leaning on them not to break the pegs.
You break the pegs, we break your legs. Anyone who has broken the pegs is gone--Saddam for ex, and this is at the heart of why Iran is being threatened. Venezuela as well. The deal is, we buy you goo, you take our dollars AND you convert into treasuries.
All this noise about nuclear weapons is the false flag.
Although the Dollar has strengthen considerably against the Euro since Sept., the Dollar has weaken against Asian currency. The U.S. does more trade with Asian markets that with European markets. Thus I don't foresee a large increase in the trade deficit in Oct and Nov due to currency related factors.
Had to dust off my Mervyn's gift card yesterday before it is worthless. While leaving, I looked across the shopping area and saw a vacant stand alone, I think it used to be a tile/carpet store and next to that was a Downey Spending and Loan. Cashed all my circuit city gift cards in 2 weeks ago before they went away. People are just now getting laid off and all the inflation in the world isn't going to help.
Iceberg dead ahead.
Cheney put $25 milion into Euro Bonds last year.
Too bad so sad.
Cheney put $25 milion into Euro Bonds last year.
Too bad so sad.
Crewman | 11.16.08 - 4:38 pm
You can't get away with saying that without documentation. I'm calling you on it.
Hi Konookie: We're all ashed in over here. I guess we should take a drive up the coast or something.
Is this the part where the economic GPWS system is basically yelling at the stupid pilots,
"WARNING, TERRAIN! PULL UP! SINKRATE! WINDSHEAR! DON'T SINK! FLYING JESUS AT ELEVEN O'CLOCK! BIIIG BADABUM SOON! HELLO THERE IDIOTS! WARNING..."
and then finally:
"FINE! DON'T PULL UP! LET'S CRASH AND BURN! I AM 500 G RATED! FCK THIS SHT"
Sorry Volker it is true and it makes me happy
Kiplingers
The Cheneys also had between $10 million and $25 million in American Century International Bond. The fund buys mainly high-quality foreign bonds (predominantly in Europe) and rarely hedges against possible increases in the value of the dollar. Indeed, its prospectus limits dollar exposure to 25% of assets and the fund currently has only 6% of assets in dollars, according to an American Century spokesman.
Volker,
Quick search pulled up this link:
Cheneys betting on bad news? - MSN Money
Poor Dick didn't figure on hedge funds liquidating and repatriating and pushing the dollar up.
Environmentalists, protest, arrest, family bonding. I'm really not sure what to make of it except it is a sign of change.
That ad is bizarre, and seems to say, "C'mon guys, politics don't really matter!"
Okay, that's better.
"Poor Dick didn't figure on hedge funds liquidating and repatriating and pushing the dollar up."
Me neither.
Hey, wait a minute, are you crewman too?
OT - Obesity in the US
Trooper sought blood results after Woods crash | National News | Comcast.net
A ticking time bomb for US health care.
Blackhalo,
From a couple of threads back - you took a position in UDN?
"UDN?"
Yes after the pullback.
"A ticking time bomb for US health care.
Hawley Smoot | 11.16.08 - 5:00 pm | # "
Another one? Just how many ticking time bombs are out there right now? And when one goes off, will it set off the others?
And when one goes off, will it set off the others?
Bob Dobbs | Homepage | 11.16.08 - 5:09 pm
Potentially. The cascade effect and all that. Who knows which one will be the thrigger? Probably an obscure event that cause the more obvious next one, then...crack up boom.
"Why Is the Dollar Rising?
...The estimates for the deficit next year are close to $1 trillion. But if the trade deficit is only $500 billion, that means that the appetite of foreigners for US debt will be less than half what is needed to finance the deficit. Where does the difference come from? US citizens and corporations, primarily banks, are going to have to buy the difference or the Fed will have to monetize a portion. Or rates on longer-term debt could go high enough to entice foreigners to buy US debt."
UDN and Monetizing for the win!
Forgot the link
The Economy Gets a Margin Call | The Big Picture
I agree with the poster up thread about the hedge fund repatriation as the primary cause.
Cause or correlation?
I'm thinking mostly correlation because housing-related materials are mostly domestically-produced and low value. People invest in homes at the same time the feel able to buy more non-essential or luxury goods.
Or am I reading this data wrong?
PeakVT
I'm wondering about the same thing. I think we really need data about the composition of exports and imports and to what countries are attributed to get at that answer about correlation/causation. I do know that we import a lot of lumber from Canada and they are hurting big time from the housing bust. Oh yeah and furnishings and fixtures... more and more is imported, and with time on the chart you can see the undulations becoming wider. One other thing-immigrant labor. IF that becomes a substantial input in the building of a house and most of the money goes back to Mexico, it is the same as importing that input.
"A ticking time bomb for US health care."
And yet another item that will probably end up being paid for by the taxpayers dime.
PeakVT, to add one more thing... When we build a house here in the US we don't export anything, the house stays right here. There only would be a demand for imported building materials, fixtures, furnishings, and any immigrant labor used (exported dollars only). If you reduce RI you can only reduce imports, so trade deficit would have to be reduced, all else equal.
Blackhalo writes:
Forgot the link
Nothing found for Blog 200 -a-margin-call
I agree with the poster up thread about the hedge fund repatriation as the primary cause
Repatriation of funds ends, bond market and dollar collapses.... game over
Blackhalo,
Would that be UDN and TBT then?
Doc at the Radar Station - good observations. Thanks.
UDN and Monetizing for the win!
What if other nations decide to monetize? The Fed isn't the only CB that has fired up the helicopters. USO seems to move in correlation with USD. Wouldn't that be a better choice since oil is, you know, actual stuff?
"What if other nations decide to monetize?"
Commodities index fund.
Hey CR - that first chart, the series look almost pornographic... like Real Net Exports and Real Residential Investment are in a 'lovers embrace'.
Ya I know, Rorschach would suggest it says more about me than 'causation' but still...
FRED | 11.16.08 - 3:59 pm | #
excellent !
GDP has been over-stated for at least 8 years, so that factor may create more bias.
Monitization and high inflation - probably the only way out of this situation we're in. Could we see a coordinated monitization of national debt?
Pheeeww!
Still way too much coming in and way too little going out. Americans are still not broke enuogh. They are still buying waaaaay too much crap.
I am an exporter. Business has been slowing since May 2008. It has fallen off a cliff since September. I listened to the head of the recycled materials industry (say scrap metals) 2 weeks ago at a conference in Chicago say in 2 weeks in Sept the Scrap metal price went from $500/ton to $100/ton. He had never seen such a decline in 40 years. Ocean charter rates have declined enormously due to the lack of materials orders from developing countries(read china).
In my business (grain/seed) buyers have seen market corrections and they are all long high priced inventory in a negative consumption market and where credit is evaporated, not to mention a dollar rally that has crushed their buying ability.
I am hoping for a modest recover after Chinese New Years (Feb 09) as food inventories are finally getting depleted in Asia. But without the liquidity of the 2004-2007 period, and with sluggish economies the buying will continue hand to mouth.