We think the economy could be worse than the capital- markets crisis
Yeah, only the companies affected by the "capital-markets crisis" will receive government funds. Those companies that participate in the "economy" will get nothing. Only bankers and their buddies are too big to fail.
Mr Thain was most optimistic about the forthcoming combination of his company with Bank of America. The deal would give Merrill Lynchs wealth management advisers access to BofAs huge pool of wealthy individuals, he said.
NEW YORK (AP) The odds of landing a part-time job at department store operator Bealls Outlet Stores Inc. this holiday season are slimmer than getting into Harvard: It's one out of every 45.
Don't think the chances are any better at 7-Eleven. One California store received more than 100 applicants in a week and a half for jobs that pay $8.50 per hour and the retailer doesn't even usually hire holiday workers
I got a call from a retired friend today. She is 68. After retiring a few years ago she concentrated full time on a company she had started a few years before retirement.
It is all over. She called because she has to find a job. The loan she was counting on was turned down. I gave her what I knew and didn't tell her what I thought.
I fear Obama may be a bit early for that. Personally I think the most important difference between Hoover and FDR was timing.
Remember FDR came in after 3 years of economic contraction and debt clearing. I don't think the economy will be nearly as far along when Obama takes office.
IIRC even Krugman was talking about this thing lasting until 2011.
Maybe this thing will start to clear up by the time Mr. O is looking at running for a second term, but reading history hasn't made me optimistic about one man's ability to stop a financial and economic tsunami.
NEW YORK (Reuters) - The economy faces a slump deeper than the Great Depression and a growing deficit threatens the credit of the United States itself, former Goldman Sachs chairman John Whitehead, said at the Reuters Global Finance Summit on Wednesday.
Whitehead, 86, told Reuters the prospect of worsening consumer credit woes combined with an overtaxed federal government make him fear that the current slump is far from over.
"I think it would be worse than the depression," Whitehead said. "We're talking about reducing the credit of the United States of America, which is the backbone of the economic system." Whitehead encountered plenty of crises during his 38 years at the investment banking firm and was a young boy during the 1930s.
Whitehead warned the country's financial strength is at risk due to the sweeping demand for tax relief and a long list of major government spending plans.
"I see nothing but large increases in the deficit, all of which are serving to decrease the credit standing of America," said Whitehead, who served as chairman of the Lower Manhattan Development Corp after the World Trade Center was destroyed during the September 11, 2001 attacks.
Whitehead, who helped make Goldman a top-tier Wall Street firm and led its international expansion, left in 1984 to become a deputy secretary of state under Ronald Reagan.
He warned Reuters that the country's record deficit is poised to balloon as the public calls on government for more support.
"Before I go to sleep at night, I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of U.S. government bonds," he told Reuters. "Eventually U.S. government bonds would no longer be the triple-A credit that they've always been."
Will Goldman Get a Do-Over?
By Alex Dumortier, CFA
November 12, 2008
Comment (
Its a cruel twist of irony that the shrewdest operator among (former) broker-dealers -- Goldman Sachs (NYSE: GS) -- now appears to be short of options. Thats the message the market is sending by giving the shares nearly a 20% haircut this month. Goldmans stock is now trading barely above the closing price the day it went public in May 1999, despite the fact that diluted earnings-per-share have better than tripled in the interim.
I hate to sound like a broken record... But is Los Angeles protected by some sort of forcefield? Little "middle class" houses are still north of a million dollars, malls, restaurants and clubs are hopping, even during the daytime, and SUV's and luxury cars still clog the streets.
The same news we all see here is available to all, movie studios are slowing down, Financial jobs are going away, RE sales are slowing down, retail is slowing down, but nothing seems to change. The forcefield of denial seems to be working very well here...
Interesting that you do not get as much analysis here from the frequent posters. Perhaps because it has all been said. Now, just spectators watching the crash.
Tyrion is a favorite for me too but I'm especially fond of Arya. You have to love the little scrapper >; )
Jon = Obama works for me
A possible Tyrion is Roubiani. He is often correct, which everyone seems surprised at, but never gets credit for it. His siblings treat him badly. When he does make the right call, he is ridiculed. Sounds about right
"
The same news we all see here is available to all, movie studios are slowing down, Financial jobs are going away, RE sales are slowing down, retail is slowing down, but nothing seems to change. The forcefield of denial seems to be working very well here..."
Vehicle traffic is down during commute. It's noticeable.
I think in 6 months most of BIL, SIL, and sisters, are all out of work and panicking. This is going to cut one George of a swath through the working class.
big fun, distributed two bundles of the special edition NYTimes in my NYT black apron throughout the city. we had four vans filled with pallets in NYC alone!
one favorite was when my team mate and i passed them out in front of the NYTimes building, hee hee.
good stuff.
maybe a little slow to load, heavy traffic, our lawyers are beating up on their lawyers so far -
When I went to Fred Segal last Friday afternoon, the parking lot and the store was empty. Even my wife commented.
I do think it is beginning to hit LA but just like SF, I think the two are about a year behind places like San Diego.
Next year will be the big "surprise" for both LA and SF when most realize "we are different -- our house prices etc. won't go down" is just a bunch of wishful BS.
The same news we all see here is available to all, movie studios are slowing down, Financial jobs are going away, RE sales are slowing down, retail is slowing down, but nothing seems to change. The forcefield of denial seems to be working very well here...
Don't forget--even when the Great Depression was at its deepest depth, you could catch the A Train to Harlem and dance the night away with people decked out in their glad rags.
JBR writes:
I hate to sound like a broken record... But is Los Angeles protected by some sort of forcefield? Little "middle class" houses are still north of a million dollars, malls, restaurants and clubs are hopping, even during the daytime, and SUV's and luxury cars still clog the streets.
I know what ya mean. I still cant afford a decent house in Ventura. Seems ridiculous.
Did US politicians really cause the incredible real estate bubbles in Europe or the stock bubbles all around the world?
Or is some more elemental force at work here?
U.S. politicians are largely responsible by not checking securitization. No other country had securitization even remotely approaching U.S. levels. This was pure greed and in essence fraud and no regulator stepped in to prevent it (SEC???)! And this s*it was sold all around the world and inflated balance sheets everywhere leading to bubbles everywhere.
Note this paragraph from that excellent link posted yesterday:
The funny thing, looking back on it, is how long it took for even someone who predicted the disaster to grasp its root causes. They were learning about this on the fly, shorting the bonds and then trying to figure out what they had done. Eisman knew subprime lenders could be scumbags. What he underestimated was the total unabashed complicity of the upper class of American capitalism. For instance, he knew that the big Wall Street investment banks took huge piles of loans that in and of themselves might be rated BBB, threw them into a trust, carved the trust into tranches, and wound up with 60 percent of the new total being rated AAA.
But he couldnt figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. I didnt understand how they were turning all this garbage into gold, he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. We always asked the same question, says Eisman. Where are the rating agencies in all of this? And Id always get the same reaction. It was a smirk. He called Standard & Poors and asked what would happen to default rates if real estate prices fell. The man at S&P couldnt say; its model for home prices had no ability to accept a negative number. They were just assuming home prices would keep going up, Eisman says.
...
Thats when Eisman finally got it. Here hed been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There werent enough Americans with shitty credit taking out loans to satisfy investors appetite for the end product. The firms used Eismans bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesnt create a second Peyton Manning to inflate the leagues stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. They werent satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldnt afford, Eisman says. They were creating them out of whole cloth. One hundred times over! Thats why the losses are so much greater than the loans. But thats when I realized they needed us to keep the machine running. I was like, This is allowed? ...
Denial is the same here in NO VA but the way this is picking up speed - Spring will bring the great awakening that it is going to effect people up close and personal.
When the internet infrastructure crashes, where can we all meet to discuss important economic topics? I'm thinking that if it all goes down, we meet in Boulder, Colorado, just like in Stephen King's The Stand. On Pearl Street. In front of Illegal Petes. 11AM March 30th, 2009. Of course, Illegal Pete's will be out of business by then, so it should be the place fka Illegal Petes. I'll bring the hacky sack.
Not to me. Obama is sham (Rezko). He's just another politician on the take from the two party system. And both Banana Republicans and Democrats are are essentially the same.
Look at Obama's chief of staff - Rahm Emanuel. Emanuel was on the Board of Freddie Mac in 2000 & 2001. In 2001, he received > $200K in compensation from Freddie. Emanuel presided over Freddie's fraud and did nothing.
Another Obama inner circle guy is Ronald Rubin. Rubin was largely responsible for pushing through the repeal of Glass Steagle under Clinton.
@nova
Good point about the lack of analysis by the regulars lately, I've noticed it too (not that I've ever written anything terribly useful myself).
It reminds me of a plaque they have on the top of Mt. Washington in NH. There's a railroad running straight up the mountain, with the cars at a steep angle to make it work. Some decades ago, a couple of kids made a cart to run on the tracks to take a ride down. They both died, as their speed quickly became just too much to control or stop. I'm not sure if the regulars on this borad feel like they are on the cart or watching the cart. It just all seems so inevitable now; there doesn't seem much else to say.
"U.S. politicians are largely responsible by not checking securitization. No other country had securitization even remotely approaching U.S. levels. This was pure greed and in essence fraud and no regulator stepped in to prevent it (SEC???)! And this s*it was sold all around the world and inflated balance sheets everywhere leading to bubbles everywhere."
And the Basel II accord allowed European Banks to count properly insured AAA securities against tier 1 capital.
Gee I guess AIG insured AAA rated tranches that get downgraded to BBB don't really count towards tier 1 capital anymore?
Sorry, the US created the shit and the rest of the world willingly put the bread around it.
I would like to caution everybody against reading into these gloom and doom predictions the idea that commodities are going to crash.
You are watching the gradual destruction of people's faith in financial assets, financial gurus, and paper money.
Money is being destroyed in enormous quantity every day. But a lot more is being created and huge liquidity has freed up among sophisticated investors bailing out of hedge funds and derivatives.
You will soon have the world's most conservative and traditional investors, who have always favored hard assets, competing for scarce physical commodities against the new high finance jet setters, or what's left of them.
Physical commodities could get squeezed quickly from here, forcing paper shorts to cover. Prices could go up fast. Commodities and PMs are the best protection against financial collapse.
American motorists pumped an average of 8.898 million barrels per day in the week that ended November 7, down 1.3 percent from the previous week, MasterCard said in its weekly SpendingPulse report.
Demand for the fuel remained 4.2 percent below year-ago levels, as the U.S. economy continued to slow down.
The four-week moving average for gasoline demand was also lower, down 5.3 percent from a year ago.
National average prices slid another 24 cents -- or 9.4 percent -- to $2.32 per gallon, about where it was in late February 2007.
A Reuters poll showed energy analysts believe that the Energy Information Administration will report gasoline stocks rose 300,000 barrels.
MasterCard Advisors estimates retail gasoline demand based on aggregate sales activity in the MasterCard payments system coupled with estimates for all other payment forms. MasterCard Advisors is a unit of MasterCard Inc.
Mr. Partridge-Hicks, working in London, and Mr. Sossidis, based in New York, were looking for a better way for Citigroup clients -- pension funds and banks -- to profit from the nascent market for securities backed by assets such as commercial mortgages and credit-card receivables.
The two bankers hatched the idea of setting up a fund that would issue short-term commercial paper and medium-term notes to investors, then use the money to buy higher-yielding assets, typically longer-term ones. The bank would profit by collecting fees for operating the fund. The fund's assets would belong to its investors, so they would stay off the bank's balance sheet. SIVs had an advantage over conduits, a similar structure that was already gaining popularity: They didn't require banks to cover fully the fund's debts if the commercial-paper market dried up.
In 1988 and 1989, Messrs. Sossidis and Partridge-Hicks launched the first two such structures for Citigroup, called Alpha Finance Corp. and Beta Finance Corp. Both attracted investors, garnered high credit ratings and generated hefty profits for the bank. In 1993, the two men left Citigroup to form Gordian Knot.
Elvis writes:
When the internet infrastructure crashes, where can we all meet to discuss important economic topics? I'm thinking that if it all goes down, we meet in Boulder, Colorado, just like in Stephen King's The Stand. On Pearl Street. In front of Illegal Petes. 11AM March 30th, 2009. Of course, Illegal Pete's will be out of business by then, so it should be the place fka Illegal Petes. I'll bring the hacky sack.
Dude. I am no lover of either political party but the Neo-cons blackballing Carter is one of the most historic con jobs in history.
"Are you better off now than you were four years ago," Is a slap in the face of Carter and Volker making the hard choices to fix the fuck-ups of those who came before them.
Know this: The shitstorm we are about the weather is the direct result of Reaganomics deviating from the balanced budget, fiscal responsibility, common sense and short term pain, that Carter was trying to pull off.
It is my opinion that the policies that the boomers voted for back then are what they get to live with now.
JBR
When we saw the photon torpedos hitting the Palo Alto force field and starting hairline cracks we sold the house. Now we are digging in at the Sierra cabin for the duration. That's where the extra food and guns are.
Good Luck To You All
That's very interesting. I was wondering why the Malls and WalMart seemed so jammed back in October. I think there was some kind of panic buying last month before the election. Since that time, it's gotten a LOT quieter. Hmmm.
No waiiiiiis!!!
these guys are geniuses
We think the economy could be worse than the capital- markets crisis
Yeah, only the companies affected by the "capital-markets crisis" will receive government funds. Those companies that participate in the "economy" will get nothing. Only bankers and their buddies are too big to fail.
How long ago was it that these guys were assuring us that it was all contained?
Bush = Hoover
Obama = FDR
SELLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
Mr Thain was most optimistic about the forthcoming combination of his company with Bank of America. The deal would give Merrill Lynchs wealth management advisers access to BofAs huge pool of wealthy individuals, he said.
So they can invest in what?
MER puts?
Thain is such a weenie. He thinks financial services will be saved, but everything else is going to tank.
Lack of perspective maybe?
They're kidding.
'musta missed GM was up 7% at the close.
Greg2 writes:
Bush = Hoover
Obama = FDR
Or, Bush = Nixon
Obama = Carter
We'll know in a year or two
Bush = Taft
Obama = JFK
Times are really tough out there:
NEW YORK (AP) The odds of landing a part-time job at department store operator Bealls Outlet Stores Inc. this holiday season are slimmer than getting into Harvard: It's one out of every 45.
Don't think the chances are any better at 7-Eleven. One California store received more than 100 applicants in a week and a half for jobs that pay $8.50 per hour and the retailer doesn't even usually hire holiday workers
Bush=Coolidge
Obama=Hoover
They're being optimistic again, methinks.
Goldman Sachs shares trading at the same value when they went public..
whocoodhadnode!!
I got a call from a retired friend today. She is 68. After retiring a few years ago she concentrated full time on a company she had started a few years before retirement.
It is all over. She called because she has to find a job. The loan she was counting on was turned down. I gave her what I knew and didn't tell her what I thought.
Bush = faakface
Obama = unknown factor!
......
Translation of Dimon and Thain:
"We'll scare 'em into the shadows and then Paulson will show 'em his bailout gun and asks if they want to live or die"
We think the economy could be worse than the capital- markets crisis
Is Dimon a moron or an asshole? So hard to tell these days....
Bush = Hoover
Obama = FDR
I fear Obama may be a bit early for that. Personally I think the most important difference between Hoover and FDR was timing.
Remember FDR came in after 3 years of economic contraction and debt clearing. I don't think the economy will be nearly as far along when Obama takes office.
IIRC even Krugman was talking about this thing lasting until 2011.
Maybe this thing will start to clear up by the time Mr. O is looking at running for a second term, but reading history hasn't made me optimistic about one man's ability to stop a financial and economic tsunami.
los dos...
ot mutually exclusive
//Is Dimon a moron or an asshole? So hard to tell these days....
PeakVT | 11.12.08 - 4:41 pm | # //
Bush = Village Idiot
Obama = Unknow
How about a moronic asshole?
Oh, and the friend I mentioned. She financed the biz with HELOC's.
It can always get worse!!!
Whitehead sees slump worse than Depression
NEW YORK (Reuters) - The economy faces a slump deeper than the Great Depression and a growing deficit threatens the credit of the United States itself, former Goldman Sachs chairman John Whitehead, said at the Reuters Global Finance Summit on Wednesday.
Whitehead, 86, told Reuters the prospect of worsening consumer credit woes combined with an overtaxed federal government make him fear that the current slump is far from over.
"I think it would be worse than the depression," Whitehead said. "We're talking about reducing the credit of the United States of America, which is the backbone of the economic system." Whitehead encountered plenty of crises during his 38 years at the investment banking firm and was a young boy during the 1930s.
Whitehead warned the country's financial strength is at risk due to the sweeping demand for tax relief and a long list of major government spending plans.
"I see nothing but large increases in the deficit, all of which are serving to decrease the credit standing of America," said Whitehead, who served as chairman of the Lower Manhattan Development Corp after the World Trade Center was destroyed during the September 11, 2001 attacks.
Whitehead, who helped make Goldman a top-tier Wall Street firm and led its international expansion, left in 1984 to become a deputy secretary of state under Ronald Reagan.
He warned Reuters that the country's record deficit is poised to balloon as the public calls on government for more support.
"Before I go to sleep at night, I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of U.S. government bonds," he told Reuters. "Eventually U.S. government bonds would no longer be the triple-A credit that they've always been."
Will Goldman Get a Do-Over?
By Alex Dumortier, CFA
November 12, 2008
Comment (
Its a cruel twist of irony that the shrewdest operator among (former) broker-dealers -- Goldman Sachs (NYSE: GS) -- now appears to be short of options. Thats the message the market is sending by giving the shares nearly a 20% haircut this month. Goldmans stock is now trading barely above the closing price the day it went public in May 1999, despite the fact that diluted earnings-per-share have better than tripled in the interim.
Will Goldman Get a Do-Over? (GS)
but reading history hasn't made me optimistic about one man's ability to stop a financial and economic tsunami.
ac
What about CR singlehandedly starting this hole sh*tshow?
Actually there might have been a few other bloggers responsible for it...
Bush=Coolidge
Obama=Hoover
Clinton=Coolidge
Bush=Herbert Nixon
Obama=Hoover
Bush = Romulus Augustulus (last Emperor of Rome)
Obama = some guy in the Middle Ages whose name we don't know because nobody was keeping any records anymore
just what we need, guy finally looking on the bright side of things
c&c nice post!
What about CR singlehandedly starting this hole sh*tshow?
That's right - him and Buffet and Krugman and Schiff scaring an otherwise sound financial into total collapse.
Shame, shame, shame.
I hate to sound like a broken record... But is Los Angeles protected by some sort of forcefield? Little "middle class" houses are still north of a million dollars, malls, restaurants and clubs are hopping, even during the daytime, and SUV's and luxury cars still clog the streets.
The same news we all see here is available to all, movie studios are slowing down, Financial jobs are going away, RE sales are slowing down, retail is slowing down, but nothing seems to change. The forcefield of denial seems to be working very well here...
Yeah, it started with that CR guy, didn't it. Let's get him!
Interesting that you do not get as much analysis here from the frequent posters. Perhaps because it has all been said. Now, just spectators watching the crash.
Tyrion is a favorite for me too but I'm especially fond of Arya. You have to love the little scrapper >; )
Jon = Obama works for me
A possible Tyrion is Roubiani. He is often correct, which everyone seems surprised at, but never gets credit for it. His siblings treat him badly. When he does make the right call, he is ridiculed. Sounds about right
I think i'm going to apply for a treasury position at change.gov
JBR,
"
The same news we all see here is available to all, movie studios are slowing down, Financial jobs are going away, RE sales are slowing down, retail is slowing down, but nothing seems to change. The forcefield of denial seems to be working very well here..."
Vehicle traffic is down during commute. It's noticeable.
Nostrovia,
I think in 6 months most of BIL, SIL, and sisters, are all out of work and panicking. This is going to cut one George of a swath through the working class.
I will miss CNBC when it goes off the air.
J Jain is still buying bonds?
quick report from today's secret action-
big fun, distributed two bundles of the special edition NYTimes in my NYT black apron throughout the city. we had four vans filled with pallets in NYC alone!
one favorite was when my team mate and i passed them out in front of the NYTimes building, hee hee.
good stuff.
maybe a little slow to load, heavy traffic, our lawyers are beating up on their lawyers so far -
The New York Times - Breaking News, World News & Multimedia
video -
The New York Times - Breaking News, World News & Multimedia
JBR
When I went to Fred Segal last Friday afternoon, the parking lot and the store was empty. Even my wife commented.
I do think it is beginning to hit LA but just like SF, I think the two are about a year behind places like San Diego.
Next year will be the big "surprise" for both LA and SF when most realize "we are different -- our house prices etc. won't go down" is just a bunch of wishful BS.
The same news we all see here is available to all, movie studios are slowing down, Financial jobs are going away, RE sales are slowing down, retail is slowing down, but nothing seems to change. The forcefield of denial seems to be working very well here...
Don't forget--even when the Great Depression was at its deepest depth, you could catch the A Train to Harlem and dance the night away with people decked out in their glad rags.
So long as we're having fun with the president = stuff:
Bush = Carter
America is hostage, but we don't know if that will end.
Obama = Reagan, but....it isn't 1980, so it's going to be interesting.
JBR writes:
I hate to sound like a broken record... But is Los Angeles protected by some sort of forcefield? Little "middle class" houses are still north of a million dollars, malls, restaurants and clubs are hopping, even during the daytime, and SUV's and luxury cars still clog the streets.
I know what ya mean. I still cant afford a decent house in Ventura. Seems ridiculous.
Don't worry the Oracle know as the "Stock Market" has all this priced in. It's forward looking; nothing to worry about, go back to work.
My, aren't we all cheery today?
Does CR still think that we are in for a mild to moderate recession?
Is all the depression talk, which I started to talk about over a year ago, a sign that maybe we are not too far from a bottom?
Naaahhhh.
How is Tanta feeling. Can we have a Tanta update?
they're not going to let the good times roll anymore?
Bush = Bush
Obama = Bush
ac,
(from last thread)
Did US politicians really cause the incredible real estate bubbles in Europe or the stock bubbles all around the world?
Or is some more elemental force at work here?
U.S. politicians are largely responsible by not checking securitization. No other country had securitization even remotely approaching U.S. levels. This was pure greed and in essence fraud and no regulator stepped in to prevent it (SEC???)! And this s*it was sold all around the world and inflated balance sheets everywhere leading to bubbles everywhere.
Note this paragraph from that excellent link posted yesterday:
The End by Michael Lewis
The End Of Wall Streets Boom - News Markets - Portfolio.com
The funny thing, looking back on it, is how long it took for even someone who predicted the disaster to grasp its root causes. They were learning about this on the fly, shorting the bonds and then trying to figure out what they had done. Eisman knew subprime lenders could be scumbags. What he underestimated was the total unabashed complicity of the upper class of American capitalism. For instance, he knew that the big Wall Street investment banks took huge piles of loans that in and of themselves might be rated BBB, threw them into a trust, carved the trust into tranches, and wound up with 60 percent of the new total being rated AAA.
But he couldnt figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. I didnt understand how they were turning all this garbage into gold, he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. We always asked the same question, says Eisman. Where are the rating agencies in all of this? And Id always get the same reaction. It was a smirk. He called Standard & Poors and asked what would happen to default rates if real estate prices fell. The man at S&P couldnt say; its model for home prices had no ability to accept a negative number. They were just assuming home prices would keep going up, Eisman says.
...
Thats when Eisman finally got it. Here hed been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There werent enough Americans with shitty credit taking out loans to satisfy investors appetite for the end product. The firms used Eismans bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesnt create a second Peyton Manning to inflate the leagues stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. They werent satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldnt afford, Eisman says. They were creating them out of whole cloth. One hundred times over! Thats why the losses are so much greater than the loans. But thats when I realized they needed us to keep the machine running. I was like, This is allowed? ...
Denial is the same here in NO VA but the way this is picking up speed - Spring will bring the great awakening that it is going to effect people up close and personal.
When the internet infrastructure crashes, where can we all meet to discuss important economic topics? I'm thinking that if it all goes down, we meet in Boulder, Colorado, just like in Stephen King's The Stand. On Pearl Street. In front of Illegal Petes. 11AM March 30th, 2009. Of course, Illegal Pete's will be out of business by then, so it should be the place fka Illegal Petes. I'll bring the hacky sack.
Obama = Unknown
Not to me. Obama is sham (Rezko). He's just another politician on the take from the two party system. And both Banana Republicans and Democrats are are essentially the same.
Look at Obama's chief of staff - Rahm Emanuel. Emanuel was on the Board of Freddie Mac in 2000 & 2001. In 2001, he received > $200K in compensation from Freddie. Emanuel presided over Freddie's fraud and did nothing.
Another Obama inner circle guy is Ronald Rubin. Rubin was largely responsible for pushing through the repeal of Glass Steagle under Clinton.
Doesn't look like change to me.
@nova
Good point about the lack of analysis by the regulars lately, I've noticed it too (not that I've ever written anything terribly useful myself).
It reminds me of a plaque they have on the top of Mt. Washington in NH. There's a railroad running straight up the mountain, with the cars at a steep angle to make it work. Some decades ago, a couple of kids made a cart to run on the tracks to take a ride down. They both died, as their speed quickly became just too much to control or stop. I'm not sure if the regulars on this borad feel like they are on the cart or watching the cart. It just all seems so inevitable now; there doesn't seem much else to say.
New scary thread.
"U.S. politicians are largely responsible by not checking securitization. No other country had securitization even remotely approaching U.S. levels. This was pure greed and in essence fraud and no regulator stepped in to prevent it (SEC???)! And this s*it was sold all around the world and inflated balance sheets everywhere leading to bubbles everywhere."
And the Basel II accord allowed European Banks to count properly insured AAA securities against tier 1 capital.
Gee I guess AIG insured AAA rated tranches that get downgraded to BBB don't really count towards tier 1 capital anymore?
Sorry, the US created the shit and the rest of the world willingly put the bread around it.
Great Britain, Germany, Holland, and Switzerland were huge users of securitization.
"It just all seems so inevitable now; there doesn't seem much else to say."
Black market economies are the best place to make money during a Depression. Keep that in mind when the lights go out.
What about CR singlehandedly starting this hole sh*tshow?
Ahhh, the secret sixth stage of Kubler-Ross - BLAME!
Are you ready for a flaming tire, CR?
It just all seems so inevitable now; there doesn't seem much else to say.
Send lawyers, guns, and money | 11.12.08 - 4:55 pm
Yeah, I haven't had much to offer either. I think we are just in freefall perhaps. We know things are going to go splat. It just when.
Kinda of like hanging with your friends a few weeks before leaving for college or the military.
About Denninger's story.
Is it really a big thing? Has this happened before?
Denninger is an alarmist. No denyig this sounds big but can someone with knowledge confirm if this is really breaking Ben's back?
Thanks.
I would like to caution everybody against reading into these gloom and doom predictions the idea that commodities are going to crash.
You are watching the gradual destruction of people's faith in financial assets, financial gurus, and paper money.
Money is being destroyed in enormous quantity every day. But a lot more is being created and huge liquidity has freed up among sophisticated investors bailing out of hedge funds and derivatives.
You will soon have the world's most conservative and traditional investors, who have always favored hard assets, competing for scarce physical commodities against the new high finance jet setters, or what's left of them.
Physical commodities could get squeezed quickly from here, forcing paper shorts to cover. Prices could go up fast. Commodities and PMs are the best protection against financial collapse.
Talk's cheap.
Upping the ante on all of these guys is our pal Dick Fuld, who just lets his actions do the talking....
Dick Fuld just put his art collection up on the block. Now that's how you call a recession.
(as reported by the trashy junky Guardian).
rich,
Hard assets will go up. But, the big question is when? What time frame are you thinking?
Great Britain, Germany, Holland, and Switzerland were huge users of securitization.
Users correct and that's the problem! Creators, not so much. Do you have any other figures?
Jon = Obama works for me
Unfortunately you're off a bit.
Obama = Rob Stark
"Great Britain, Germany, Holland, and Switzerland were huge users of securitization.
Users correct and that's the problem! Creators, not so much. Do you have any other figures?"
The original off-balance sheet SIVs were actually created in Great Britain not the US.
Gasoline demand falls despite price slide: Mastercard
Gasoline demand falls despite price slide: Mastercard
| Reuters
U.S. retail gasoline demand slipped last week despite a fall in the national average price for the fuel, MasterCard Advisors said on Tuesday.
American motorists pumped an average of 8.898 million barrels per day in the week that ended November 7, down 1.3 percent from the previous week, MasterCard said in its weekly SpendingPulse report.
Demand for the fuel remained 4.2 percent below year-ago levels, as the U.S. economy continued to slow down.
The four-week moving average for gasoline demand was also lower, down 5.3 percent from a year ago.
National average prices slid another 24 cents -- or 9.4 percent -- to $2.32 per gallon, about where it was in late February 2007.
A Reuters poll showed energy analysts believe that the Energy Information Administration will report gasoline stocks rose 300,000 barrels.
MasterCard Advisors estimates retail gasoline demand based on aggregate sales activity in the MasterCard payments system coupled with estimates for all other payment forms. MasterCard Advisors is a unit of MasterCard Inc.
The original off-balance sheet SIVs were actually created in Great Britain not the US.
Hmmm yes and...
Scoopit - UK SIV's Snarl Global Markets / NZ News
Mr. Partridge-Hicks, working in London, and Mr. Sossidis, based in New York, were looking for a better way for Citigroup clients -- pension funds and banks -- to profit from the nascent market for securities backed by assets such as commercial mortgages and credit-card receivables.
The two bankers hatched the idea of setting up a fund that would issue short-term commercial paper and medium-term notes to investors, then use the money to buy higher-yielding assets, typically longer-term ones. The bank would profit by collecting fees for operating the fund. The fund's assets would belong to its investors, so they would stay off the bank's balance sheet. SIVs had an advantage over conduits, a similar structure that was already gaining popularity: They didn't require banks to cover fully the fund's debts if the commercial-paper market dried up.
In 1988 and 1989, Messrs. Sossidis and Partridge-Hicks launched the first two such structures for Citigroup, called Alpha Finance Corp. and Beta Finance Corp. Both attracted investors, garnered high credit ratings and generated hefty profits for the bank. In 1993, the two men left Citigroup to form Gordian Knot.
Elvis writes:
When the internet infrastructure crashes, where can we all meet to discuss important economic topics? I'm thinking that if it all goes down, we meet in Boulder, Colorado, just like in Stephen King's The Stand. On Pearl Street. In front of Illegal Petes. 11AM March 30th, 2009. Of course, Illegal Pete's will be out of business by then, so it should be the place fka Illegal Petes. I'll bring the hacky sack.
Hemmingford Home, Nebraska.
INTC warns on revenues.
Intel Slashes Revenue Forecast | Technology Update | Financial Articles & Investing News | TheStreet.com
Recoupling is alive and well.
@John Stark
"Greg2 writes:
Bush = Hoover
Obama = FDR
Or, Bush = Nixon
Obama = Carter
We'll know in a year or two"
Dude. I am no lover of either political party but the Neo-cons blackballing Carter is one of the most historic con jobs in history.
"Are you better off now than you were four years ago," Is a slap in the face of Carter and Volker making the hard choices to fix the fuck-ups of those who came before them.
Know this: The shitstorm we are about the weather is the direct result of Reaganomics deviating from the balanced budget, fiscal responsibility, common sense and short term pain, that Carter was trying to pull off.
It is my opinion that the policies that the boomers voted for back then are what they get to live with now.
Excellent point, blackhalo. I fully agree.
JBR
When we saw the photon torpedos hitting the Palo Alto force field and starting hairline cracks we sold the house. Now we are digging in at the Sierra cabin for the duration. That's where the extra food and guns are.
Good Luck To You All
Gasoline demand falls despite price slide: Mastercard
That's very interesting. I was wondering why the Malls and WalMart seemed so jammed back in October. I think there was some kind of panic buying last month before the election. Since that time, it's gotten a LOT quieter. Hmmm.
@rich
"I would like to caution everybody against reading into these gloom and doom predictions the idea that commodities are going to crash."
I do not expect commodities to come out unscathed, but they well fare far better than the Dollar or equities.
Bush = Bush
Obama = Obama