A healthy economy has healthy looking credit markets. The PTB have taken this little fact and turned it on its head. They are hell bent to create, through intervention, the "numbers" that would indicate a healty credit market.
They are attempting to reverse engineer a healthy credit market by controlling the indicators!
At least the dollar is becoming competitive again, at least against the euro - who knows, maybe this trend will continue to the point that dollars will be given away for virtually nothing.
I don't want to be the pall bearer here, but despite progress being made in credit numbers, isn't credit (debt) the whole reason this thing is teetering on the precipice?
Fughhhhhhhhhh!
Forget credit, how about everyone/everywhere starts paying back what they owe.
Debt is not wealth!
Credit used wisely, see a home (when it makes sense) and start a small business that actually sells/makes thingys people want and can use, then I will start believing.
However, banksters getting money at 1% from the fed and still shafting people w/CCs and overpriced homes, isn't going to cut for me.
A while back we had a back-and-forth argument about the likelyhood of walkaways by people who could otherwise "afford" their home.
I argued that many wouldn't walk, as we have become used to being upsidedown on large purchase loans as new car sales indicate.
However, I must add some anectodal evidence that may support your side of the argument.
I have 8 people who directly work for me. I have learned that 4 of them have chosen to stop paying their mortgage in the last months. Two are due to divorces induced by money problems. They were struggling as it was, and with a divorce they have no choice but to bail. Both are allowing their wife and kids to stay in the house until they are kicked out and expect a year or so of free rent and thus an ability to save and pay for the other costs of divorce.
The third was having marriage problems but chose to stay together, stop paying, save aggressively and then buy in about 3 years with a big down payment, a credit history flawed only by the forclosure. (they assume that future lenders will discount this as anomoly).
The 4th has been alone in his house for about a year (bought when married and divorced a year ago). He can afford the payment but it's over 50% of his income and he doesn't see that it's worth it anymore. He will chose the strategy of saving aggressively, living free, waiting for an eviction and expects it to take months to years.
They all site mainstream media articles that you have posted citing the economic reasons to stop paying.
(They have become aware of my interests in housing and have sought advice, noting what their peers are doing and they are feeding off the decisions of others feeling safety in numbers as they are in the good company of multiple defaulters)
Considering that half of all marriages end in divorce, I expenct more of this activity over the years.
Our argument may hinge on the definition of "afford", however there is no doubt that many are proactively deciding to stop paying. It is a premptive move based upon the idea that forclosures will take a long time and that the ability to save a down payment and the forgiveness of a forclosure during the "bubble years" will mean that recovering their financial reputation will be doable.
Wow, I can't tell you how much money I've made since I started investing according to a spam advertiser's advice! This is even better than when that Nigerian man needed help getting that money out of the country!
Bosons sailing through charming quarks, that vibrate on the amino acids making up strands of microbial dna on the hairs on the butts of the fleas stowed away in the frigid clothing of those arranging the deck chairs...
Byzantine_Ruins writes:
Wow, I can't tell you how much money I've made since I started investing according to a spam advertiser's advice! This is even better than when that Nigerian man needed help getting that money out of the country!
Don't forget those nice Columbian parcels you get in the mail, you just have to drop them off at the bus depot...easy money.
I think there are levels to discussions about credit markets.
Level 1 - My paycheck, and what I can buy/charge. Not looking good now, and looking worse over the next year.
Level 2 - Buying a house or 2nd house. At close to %10 interest, 20% down it not going to happen as often.
Also cars. Probably still finance a washing machine.
Level 3 - Small business loans.
Here is the limit of my knowledge. I know there is interbank lending, big company borrowing, muni, state, and fed borrowing etc. What I have learned here is that if the banks don't have it, or they are scared to lend it, then every level collapses.
Like this I suppose...
U.S. Economy: ISM Services Index Slumps to Lowest on Record
By Timothy R. Homan
Nov. 5 (Bloomberg) -- Service industries in the U.S. contracted the most on record in October as credit dried up and consumers reined in spending.
The Institute for Supply Management's non-manufacturing index, which covers almost 90 percent of the economy, fell to 44.4, below economists' forecasts and the worst result since records began in 1997. A private survey indicated that companies axed 157,000 workers last month
Long and short-term I care about Level 3--small business loans.
In my arena, that means federal contracting. You get paid, but if banks don't advance the 90s of salary you need on hand to pay people on those contracts, you're SOL. Even the big-box contractors are seeing stress (commercial paper getting "better" relatively). But the number people the small businesses employ far exceeds the cumulative number that big box contractors can employ. The smaller tend to pay much better as well since they don't have marble coated buildings to pay for along with a dozen useless management support staff per contract to pay for...any case, level 3 goes down, that's the red button to watch being pushed before the mushroom cloud...
homedad43, there are good reasons to question whether these numbers are useful ... and I'm open to other measures. When we see the Fed start to shrink their balance sheet, these numbers will matter more.
Scintilla, scintillating... same root, but one means small now, and only the other barely preserves the original meaning of "spark" in ordinary conversatio
If I could add on thing to my above post.......I believe all mentioned a very large property tax bill they intend on not paying that will be due next month. Most are in the $6-9000 range as impound accounts were so "yesterday" over the last several years.
While a large mortgage payment kinda feels like rent, throwing this kinda money down the rat hole of taxes on a house that you can't see affording long-term is just too hard to do.
I guess we're going to get daily "We've got progress, folks!" updates on the credit crisis, instead of focusing on why the fundamentals are still out of whack and what that means for the future. I've noticed a lot of this on the housing/economics blogs since it became apparent that The Big O was going to run away with the election.
You keep comparing the 3 month T-bill to the fed funds target. Not only is the target relevant only insofar as it is met, it is only relevant insofar as it will be constant for the next 3 months. What you want is the 3 month OIS rate; a gap between that and the t-bill rate indicates a liquidity premium. A gap between 3 month OIS and the fed funds target means that the market expects easier monetary policy before that T-bill matures than what the FOMC is currently claiming.
congratulate you for being topical and sharing a well-articulated view on the relevance of the indexes used to judge the credit-markets and economy as a whole...
They are attempting to reverse engineer a healthy credit market by controlling the indicators
Perception is reality.
The Feds are still operating under the mistaken belief that the "credit crisis" is a function of confidence.
There's a Mass Belief System (MBS) and one of its major tenets is to avoid thinking about debt. Even I am shocked at how pervasive and entrenched it is in popular mindset.
Uncle Billy, Militant writes:
"Here's some scintillating analysis, care of la times:"
Man, and I thought I was bearish about housing! Marty Weiss is saying [paraphrasing] "Sell your properties, they're going down by half, then half again, then half again."
I am waiting on my stimulus check. Used the last one to pay for summer school class for my college age child. Need an even bigger one this year cause he has to take a summer lab. Keep it coming congress............
Magnolia writes:
I am waiting on my stimulus check. Used the last one to pay for summer school class for my college age child. Need an even bigger one this year cause he has to take a summer lab. Keep it coming congress............
I however am not waiting for my pony. The last pony pooped all over my lawn, ate the tires off my car, and mauled the neighbor kid. Had to put the pony down.
Comrade-Dope jg (jg) writes:
"Until the sheeple panic. Could that be Friday, with an 'unexpectedly' ugly October employment report?"
I note that you put 'unexpectedly' in quotes, but how much worse could it be than what is currently expected? Or am I just so bearish that my judgment is impaired? Do the "sheeple" really expect a benign October unemployment report?
"Goldman is said to look like "a [kosher] slaughterhouse" this morning. Apparently LevFin has been hit hard, with the focus, as of now, on VPs and admin. No "big names" have been told to pack up their staplers yet, but they may actually be praying to be given the boot-- we're told "there will basically be no bonuses this year,* especially at senior levels."
According to IRS.gov there were 139,000,000 individual tax returns filed last year.
If we take the national debt of $10,000,000,000,000 and double it to $20,000,000,000,000 we could send each and every tax filer almost $72,000 in stimulus!! Someone get this plan in front of Pelosi and Frank...
sm_l, I take analyst expectations with a grain of salt.
Published expectations are that jobs will fall 186-210K. My jaundiced read of such published expectations is that 'analysts' really expect jobs to fall 150-175, so that they can trumpet a 150-175K fall as 'beat expectations.'
Wow. All I have to say about your anecdotes is that these people will actually help the housing market find the bottom. But not paying the tax bills is going to be very destructive, I bet they are still using the public schools and other services those taxes pay for. We have a whole new class of freeloaders on the system and combined with the likely loss of tax revenue from illegals that went home, it doesn't look good for cities and counties.
I argued that many wouldn't walk, as we have become used to being upsidedown on large purchase loans as new car sales indicate.
Other upside-down loans come after the debtor for the difference. I don't understand why mortgages work differently. My understanding is in most states you could be a millionaire, stop paying your mortgage, and the only thing they can do is take the house and report the nonpayment on your credit report. Ruined credit is a small price to pay for saving tens of thousands of dollars.
I think this sell off is on the expectation of a bad Friday number. Already pricing it in IMO. Of course the market is not closed yet we could go down a lot more.
deb writes:
A healthy economy has healthy looking credit markets. The PTB have taken this little fact and turned it on its head. They are hell bent to create, through intervention, the "numbers" that would indicate a healty credit market.
They are attempting to reverse engineer a healthy credit market by controlling the indicators!
deb | 11.05.08 - 12:28 pm | #
deb - when I was a student pilot, the instructor called this "chasing the numbers". Human behavior is such that we over-compensate trying to reach our goal. In flying, it was over-compensating by trying to reach your given altitude too quickly and not anticipating how fast you would get there. As a new pilot, you don't have the knowledge yet to plan on how to correct your speed, position, etc, in advance for a smooth transition to the assigned value.
The government (Fed/Treasury, etc), however, shouldn't be flying by the seat of their pants as these are seasoned economists (theoretically).
I agree with your comment. Not only are they chasing the numbers, the numbers don't have much meaning any more because they are artificially derived.
If these numbers worsened considerably, how would they correct it?
Wow. All I have to say about your anecdotes is that these people will actually help the housing market find the bottom. But not paying the tax bills is going to be very destructive, I bet they are still using the public schools and other services those taxes pay for. We have a whole new class of freeloaders on the system and combined with the likely loss of tax revenue from illegals that went home, it doesn't look good for cities and counties.
A nation that trains its citizens to get ahead through get-rich-quick schemes and scamming their neighbor is destined to be poor.
Hopefully we don't see the government apply the same sort of thinking to create "quick fix" for the economy.
There is none. Just ways to exchange short-term boosts for long-term poverty.
Calculated Risk writes:
homedad43, there are good reasons to question whether these numbers are useful ... and I'm open to other measures. When we see the Fed start to shrink their balance sheet, these numbers will matter more.
Seriously, I enjoy the numbers they are good mile markers, but waiting for the Fed to shrink their balance sheet?
Maybe this will happen--right after I grow my hair back and get taller.
deb - when I was a student pilot, the instructor called this "chasing the numbers". Human behavior is such that we over-compensate trying to reach our goal. In flying, it was over-compensating by trying to reach your given altitude too quickly and not anticipating how fast you would get there. As a new pilot, you don't have the knowledge yet to plan on how to correct your speed, position, etc, in advance for a smooth transition to the assigned value.
The government (Fed/Treasury, etc), however, shouldn't be flying by the seat of their pants as these are seasoned economists (theoretically).
I agree with your comment. Not only are they chasing the numbers, the numbers don't have much meaning any more because they are artificially derived.
If these numbers worsened considerably, how would they correct it?
Excellent comments, here's another flying related term I think has relevance:
Pilot-induced oscillation occurs when the pilot of an aircraft inadvertently commands an often increasing series of corrections in opposite directions, each an attempt to cover the aircraft's reaction to the previous input with an overcorrection in the opposite direction. As such it is a coupling of the frequency of the pilot's inputs and the aircraft's own frequency.
Wow. All I have to say about your anecdotes is that these people will actually help the housing market find the bottom. But not paying the tax bills is going to be very destructive, I bet they are still using the public schools and other services those taxes pay for. We have a whole new class of freeloaders on the system and combined with the likely loss of tax revenue from illegals that went home, it doesn't look good for cities and counties.
And, film at eleven of mass evictions, some forcible, all sad and full of misery and woe. What of public opinion when this train comes round the bend?
We have a whole new class of freeloaders on the system and combined with the likely loss of tax revenue from illegals that went home
Broad Amnesty program will bring them back. I think they got nervous before the election and the downturn. There is no better place to not work than the US.
there is no doubt that many are proactively deciding to stop paying. It is a premptive move based upon the idea that forclosures will take a long time and that the ability to save a down payment and the forgiveness of a forclosure during the "bubble years" will mean that recovering their financial reputation will be doable.--Average Joe
I know I'm repeating myself, but I don't think financial reputation is that important compared to receiving tens of thousands of dollars of free money. If someone has a house that's, say, $100k upside-down and foreclosure meant they could never borrow money again, the foreclosure would still be a good deal. Would you pay $100k for the right to be in debt? I understand your point is they won't be forbidden from borrowing for long. My point is it's hard to imagine giving up a big chunk of money to preserve my ability to get into debt in the future.
"Goldman is said to look like "a [kosher] slaughterhouse" this morning. Apparently LevFin has been hit hard, with the focus, as of now, on VPs and admin. No "big names" have been told to pack up their staplers yet, but they may actually be praying to be given the boot-- we're told "there will basically be no bonuses this year,* especially at senior levels."
Yaaa...
Zombie Kung Fu Panda | Homepage | 11.05.08 - 1:31 pm | #
Wow. All I have to say about your anecdotes is that these people will actually help the housing market find the bottom. But not paying the tax bills is going to be very destructive, I bet they are still using the public schools and other services those taxes pay for. We have a whole new class of freeloaders on the system and combined with the likely loss of tax revenue from illegals that went home, it doesn't look good for cities and counties.
And, film at eleven of mass evictions, some forcible, all sad and full of misery and woe. What of public opinion when this train comes round the bend?
Now at least let's be clear about who wrote what. Careful with quoting people who are quoting others.
BTW I would argue that managing the economy for the sake of public opinion is the opposite of what leadership is.
["There is no better place to not work than the US."
You obviously haven't been to Canada. There are some things that we Canadians are #1 in.
Pissed Off In California ]
You beat me to the punch. There are plenty of places where being unemployed is rewarded handsomely. The USA may be on that list soon if the Health handout system and more generous welfare programs are put into place, to encourage freeloading and punish work.
"My point is it's hard to imagine giving up a big chunk of money to preserve my ability to get into debt in the future."
This is a good point,
However, many people still believe that the housing market will rebound like the stock market and that their house will give them back that 100k they have lost if they can just stay put.
The move to forclose and buy later isn't to save the large amount in principle, it's to get out of the large monthly and trade it for a future smaller one on a same or similar house.
Again here in the YAY if you are lucky enough to win the GA lottery and have no job you get Free meals, buildings built up to code and new appliances. If you make Min. wage about 10-12 dollars those things are unattainable.
What did Pelosi call him after they reached concensus on Tarp? Frank was "maestro" and Emmanuel was...?
Also, do Pelosi's staffers read CR? I called someone else maestro here on the blog the day before she made that comment. I don't think I've heard someone use that word since I saw the Seinfeld episode years before.
The move to forclose and buy later isn't to save the large amount in principle, it's to get out of the large monthly and trade it for a future smaller one on a same or similar house. --Average Joe That sounds like the thought process of people who don't care about their networth and intend to live month-to-month for the rest of their lives.
I understand the hope of another sudden spike in RE prices happening again (just years after the last bubble) shows concern for networth, but it also shows stupidity, IMHO. Like the dot com bubble, the real estate bubble was a one-time thing. I
I recall a few months back when all of their dealers purchased millions of dollars worth of stock as a vote of confidence...LOL!! Talk about doubling down...
"Emanuel was born in Chicago, Illinois in 1959. His father, the Jerusalem-born Benjamin M. Emanuel, is a pediatrician and was a member of the Irgun, a militant Zionist group that later became part of the Israeli Defense Forces, in the 1940s.[3][4][5] His mother, Martha Smulevitz, worked as an X-ray technician; she was the daughter of a local union organizer,[1] and would herself become a civil rights activist; she was also once the owner of a Chicago-area rock and roll club"
"Speculation has been raised regarding the connection of Emanuel's Congressional election success to convicted former Chicago water department boss Don Tomczak.[21]
The newspaper USA Today reported in late January 2007 that Emanuel failed to disclose that he was an officer of a family charity [22], a violation of law requiring members of Congress to report non-profit leadership roles."
A nation that trains its citizens to get ahead through get-rich-quick schemes and scamming their neighbor is destined to be poor.
ac, I would like to nominate you for site philosopher. You do come out with some good ones. Weren't you the one who first coined the phrase "Debt is not wealth"? That is one of my all time favorites.
"David Matthew Cutler is Dean of the Social Sciences and Otto Eckstein Professor of Applied Economics at Harvard University. He holds a joint appointment in both the economics department and in Harvard's Kennedy School of Government. He joined the Harvard faculty after receiving his Ph.D. in Economics from the Massachusetts Institute of Technology in 1991.
While his work on health economics covers a broad range of subtopics, he is particularly notable for his work on the value of the health care system as a whole. Much of his work argues that the United States has realized good "bang for its buck" by any reasonable measure of the value of a statistical year of life in good health. That is, while health care is extremely expensive, we also place a very high value on documentable health gains. He also argues that we could gain considerably more health for the dollar if reimbursement for care could be tied to the health value of the service instead of the intensity of the service...Cutler's 2003 "Why have Americans become more obese?" discusses rising obesity as an outcome of the revolution in mass food packaging. He includes vacuum packing, improved preservatives, deep freezing, and microwaves as culprits. Consumer prices on items like various frozen foods, soda, and potato chips are increasing at half the rate of fresh fruits and vegetables. This mass preparation makes for lower costs, and more food consumption. Meanwhile, calories expended haven't changed much. Accordingly, Cutler posits that the 20 minute average reduced time of food preparation has resulted in a calorie increase of 100 per day per individual, on average. These extra 100 calories can largely account for a 10-12 lb. weight gain in the American population over the past 20 years."
Non-conventional view of cost/benefit of American health care...not sure I agree but interesting idea.
The USA may be on that list soon if the Health handout system and more generous welfare programs are put into place, to encourage freeloading and punish work.
If you believe that the system will be rigged to encourage people not to work, and yet you yourself are a hard worker, shouldn't you be looking at that as an opportunity as opposed to whining about it?
I've never looked at a guy sitting on his front steps drinking beer at 10AM and thought, "man, that dude is making my life so much harder". I go about my business, work hard and succeed much more often than I fail. Am i being "punished"? Doesn't feel like it to me.
Perhaps you should look at things differently and stop blaming poor dumb people for your problems.
Priceless Quote!! Snow is a beggar, how sad and I hope the new Admin stops this cronyism
"Former Treasury Secretary John Snow, now chairman of Cerberus, joined the call for federal help for automakers today, telling CNBC that the government needs to ensure ``that a vital industry like autos, which is such a big part of the overall economy, doesn't lead us into a deeper and harsher downturn"
I sure someone posted on this already, but while the credit crunch indicators seem to be easing for the big players it doesn't seem to be the case for all industries, particularly those that service the consumer. Expected in a credit revulsion I suppose, but not good.
"Credit Card Bond Sales Plunge to Zero, First Time in 15 Years"
"Nov. 5 (Bloomberg) -- Credit card companies were shut out of the market for bonds backed by customer payments in October for the first time in more than 15 years, as investors shunned the debt amid the global credit freeze. . . ."
ac, I would like to nominate you for site philosopher. You do come out with some good ones. Weren't you the one who first coined the phrase "Debt is not wealth"? That is one of my all time favorites.
I don't think so.
I'd like to think that saying has been around for centuries or millennia.
"If you look at management skills as being execution, as one of the real issues, this guy demonstrated without question the best execution I've ever seen in a political campaign," Welch said.
"Former Treasury Secretary John Snow, now chairman of Cerberus, joined the call for federal help for automakers today, telling CNBC that the government needs to ensure ``that a vital industry like autos, which is such a big part of the overall economy, doesn't lead us into a deeper and harsher downturn"
Let's face it, people with ability to pay their mortgages are going to walk-away in droves. The exodus has commenced, albeit slowly. The only reason we have not seen a locust-like swarm of walkers already is that LIBOR plunged in the second half of '07 and the Fed cuts dropped Prime down to the point where 80/20 ARM resets did not blow the alt-A folks out of the water with massive payment spikes. We would be looking at a completely different landscape right now had LIBOR and the Prime remained elevated.
Morality will be kicked to the curb faster than you can say "ruthless default". Go ahead, say it - "ruthless default". There is no way in this world we live in that the masses are going to suck on being hundreds of thousands of dollars upside down and paying a hefty premium to continue owning over renting or re-purchasing. They are going to join the increasingly popular walkers' club, with a safety-in-numbers philosophy, live for free for many months, then segue into phase two as a renter, then eventually re-purchase down the road after values have completed their cratering.
It is going to be a sight to behold, much like the wildebeast migration on the Serengeti.
Too bad about Michael Crichton. In my opinion, an excellent author unafraid to voice opinions contrary to conventional wisdom. One of his consistent themes, that we should be careful of reckless use of technology, applies in finance and economics as well as in science.
Wow. Will there be a Federal facility for that now too?
A good TARP covers everything. (Seriously, I think the language allows the Treasury to do nearly anything as long as it sends a carrier pigeon to Congress.)
"telling CNBC that the government needs to ensure ``that a vital industry like autos, which is such a big part of the overall economy, doesn't lead us into a deeper and harsher downturn"
Three years too late Mr. Snow. What is it with that three-headed dog? It must be eating IQ points for its meals.
Two guys making the same money start with a net worth of worth of ZERO.
One guy rents an apartment, pays his bills, drives a paid-off $5000 Toyota and saves $1000 a month.
The other guy buys a Hummer and a McMansion.
After a year, the saver has $12000 in savings. Big whoop.
The other guy has all the chicks, has friends who think he's "made it", obviously appears to be the "richer one" and has generally lived a better life.
America has praised the spender and punished/discouraged the saver.
Worrying about "Net Worth" has been a loser, doom-and-gloom, unpatriotic move.
I'm organizing going to start to organize all the Gap employees. Close stores without paying us a severance!? I have been folding sweaters for 10 years!
12th Percentile writes:
If you believe that the system will be rigged to encourage people not to work, and yet you yourself are a hard worker, shouldn't you be looking at that as an opportunity as opposed to whining about it?
What he said. Everyone feels entitled to something. Some people feel entitled to having luxurious lifestyles because they're smart, lucky, or hard working, even when others around them are living in poverty. Others feel entitled to a comfortable lifestyle, even when they contribute nothing to society other than another gaping mouth to feed, because they are human beings.
Which of these offends your delicate sensibilities depends to a large extent on whether you feel like work has instrinsic worth, people have instrinsic worth, both, or neither, and to a lesser extent on whether you are an ant or a grasshopper.
"Two guys making the same money start with a net worth of worth of ZERO.
One guy rents an apartment, pays his bills, drives a paid-off $5000 Toyota and saves $1000 a month.
The other guy buys a Hummer and a McMansion.
After a year, the saver has $12000 in savings. Big whoop.
The other guy has all the chicks, has friends who think he's "made it", obviously appears to be the "richer one" and has generally lived a better life.
America has praised the spender and punished/discouraged the saver."
6 months later the other guy has downgraded to a used Tercel, a double-wide and chicks with no front teeth.
CR is following credit crisis indicators. The failure of Credit Card issuers to secure bond backing is beyond important. And let us be clear. When they say zero sales they mean in fact that the bid prices were suicide numbers. Wow, imagine that. A mark to market and refusal to accept. Exactly the same thing we see with banks and their REO inventory.
Unions have a place but they can be scary. I was working at a unnamed Hospital when the service workers were on Strike. Anyone who crossed the picket line was spit on. Two who crossed the picket line were assaulted and treated for open wounds. I thought these tactics died 30 years ago I was wrong.
Through the first 10 months of 2008, world markets have lost about $16.22 trillion, according to S&P research. Furthermore, the size of the world stock market was estimated at about $60.9 trillion USD at the end of 2007, thus the loss of almost a third of global sharevalue is a wakeup call for global financial systemic failure.
"I thought these tactics died 30 years ago I was wrong.
Tim the casual observer"
Unions are great, if you are the mafia. Otherwise, they played out a long time ago. BTW, full disclosure, I am anti-union, because I believe they have become a farce of themselves.
Zirp: One of the running themes in my rants has been the marriage of really smart people with really bad people, having created the situation we're in now. If Joey Donuts sells meth or extorts money, that's one thing, but if his son Sal goes to Harvard, meets a bunch of nice Wall Street guys, and then sucks the juice out of the entire economy, that's quite another. That's what it feels like anyway.
Don't need organized crime I guess when money makes everyone fall into the same efficient line anyway, but the mind wants to connect all the dots in a way that there are identifiable villains.
no Union Booster but the CEO's etc with their huge compensation packages didn't do themselves any favors. Two forces tugging at each other with everyone else caught in the middle.
6 months later the other guy has downgraded to a used Tercel, a double-wide and chicks with no front teeth.
I prefer to be guy #1.
Except as guy #1 you're paying for guy #2's mortgage and unemployment insurance.
That's the whole moral hazard argument, anyhow.
You're paycheck is guy #2's safety net and his excuse for doing crazy things.
Some people would argue that the solution to this problem is to put people in virtual prisons so they can't engage in risky behavior.
Personally I think there's some merit to the idea of simply not providing the incentives for risky behavior.
Maybe that doesn't apply to unemployment insurance so well. But paying for peoples mortgages or bailing out financial firms may be a different story. Likewise for flooding the financial system with money every time people become risk averse.
By the way, the taxes will get paid sooner or later, the problem is it might be much, much later. In Fla, they sell tax sale certificates, and sooner or later the bank has to redeem them or lose the property. Don't know what happens elsewhere.
Rob Dawg writes: CR is following credit crisis indicators. The failure of Credit Card issuers to secure bond backing is beyond important.
Double-underlined. The central bankers can play The Lending Game with their toy banks all they like and spend as much money as they like manipulating the dashboard readings.
"Michael Crichton was one smart guy. His books were good to read on the beach"
I did like a lot of his early stuff.
I felt that State of Fear should've been a non-fiction essay rather than a bad novel. As it was, it might've been one of the worst novels I've read in recent years. Perhaps I only disliked Naked Lunch a little more.
It's worth owning, but only if you want the footnotes and the cites.
Through the first 10 months of 2008, world markets have lost about $16.22 trillion, according to S&P research. Furthermore, the size of the world stock market was estimated at about $60.9 trillion USD at the end of 2007, thus the loss of almost a third of global sharevalue is a wakeup call for global financial systemic failure.
Of course no value has been lost in reality.
The market is just a scale that measures real value.
And that scale has become a little bit more accurate this year.
The PPT has been somewhat erratic in their timing this week. Either they're having trouble adjusting to DST or they're trying to add a bit of "like a box of chocolates" flavor to their 3-4PM matinee.
Was ANY anti-bailout message sent to Congress? I don't think so. If we had organized the resources of this board we could have defeated a high profile legislator. But we are a nation of individuals, for better or worse.
PeakVT writes:
I'm glad everyone liked that credit card bond link. And I hope the CC industry chokes on its own debt and cuts everyone's limit by 80%.
But that would reduce my ability to stimulate the economy almost into the 5 digit range.
Again. thanks for bringing it up. Byz is right, it cannot be emphasized enough. Everything we've been doing for the last few months has been predicated on infinite appetite for USG debt. FAIL.
"Again. thanks for bringing it up. Byz is right, it cannot be emphasized enough. Everything we've been doing for the last few months has been predicated on infinite appetite for USG debt. FAIL."
It's all about crowd-out of debt. Why lend to consumer financials going into a bad recession when you can get a guaranteed return from the government.
Really? You have a cite from an authoritative source for this silly assertion? Tell you what, go get your ivy league economics phD before spouting your silly nostrums.
Lawyerliz writes:
Did anybody but me catch that in O's acceptamce speech, he said we were in the worst financial crisis in a century?
That means since 1908. That means he thinks we're going into depression. He didn't smile very much, for a winner.
I caught it. But at times, maybe most times people hear what they want. He has some educating for the electorate. He will have to reel out carefully and regularly what this all means. He also said that the solution will be found the '...same way Americans have solved every problem--from the ground up...' or words to that effect. He's anticipating the need, as I 'heard' last night of neighborhoods working together with areas to re-knit communities back to productive units of our society.
This will mean many things that I won't bother listing here. Suffice it to say that I will be meeting with local officials in my town with a specific action plan for how to address what will almost certainly deteriorate into the makings of civil unrest should nothing proactive be done.
And yes, I think he is comparing it to the worst that has happened. And to that, I simply shrug and wonder, why not now, why not me, rather we do this now than leave it to another who won't see the other side of all this for what it is, and that is a better day.
Rob Dawg writes:
PeakVT writes:
"I'm glad everyone liked that credit card bond link. And I hope the CC industry chokes on its own debt and cuts everyone's limit by 80%."
So PeakVT, that would mean the heavily indebted people would be forced into default by 30% interest rates, since they would all be over the limit in an instant. That would put an end the CC companies and their backing banks PDQ. For those of us not in debt, I guess we would then be issued new SS cards with mag stripes, as Uncle Sam would be the only card issuer standing
Rob,
"Everything we've been doing for the last few months has been predicated on infinite appetite for USG debt. FAIL."
At what price? People are flocking to USG debt at essentially -3% interest. So there must be a larger market if the return was at least positive in real terms. No fail yet.
And as for his limited smiling. Yes, he's tired and his close personal friend and Grandmother just died.
But, he also has had a full load of hay dumped onto his splendid splinter of a frame. That would be enough to give the best of those amongst us pause and cause to reflect soberly.
Silver has far less above ground supply than gold. Silver is a byproduct of base metals mining (i.e. copper/sync) which at present is cut back significantly. This might result in silver shortage.
RE writes:
It's all about crowd-out of debt. Why lend to consumer financials going into a bad recession when you can get a guaranteed return from the government.
And then there is international crowding out. Like bunds or gilts at higher interest rates?
And don't forget the Chicomms committing to internal investment.
There's a real possibility of a Treasury issuance failure. There just isn't anyone, even Roubini or Rogers who can tell us what would happen.
Pissed off is also right that crowding will have a negative result.
oneworldcurrency yogi writes:
"Sliver up, glod down.
Please explain, to a PM novice."
Markets are insane? Market actors are insane? Someone was long glod/short silver and got a margin call? Who knows? These markets make no sense to me anymore.
There's a real possibility of a Treasury issuance failure. There just isn't anyone, even Roubini or Rogers who can tell us what would happen.
I'll take a shot at what would happen:
The fed takes the treasuries on its own balance sheet and issues credit directly to the treasury. Bernanke has already said he would keep long term rates low by doing this.
"The fed takes the treasuries on its own balance sheet and issues credit directly to the treasury. Bernanke has already said he would keep long term rates low by doing this."
That's called raw printing. Debt markets don't take too kindly to these sorts of actions when they sniff them out.
The real moral hazard for bailing out the banks and requiring taxpayers to fund it is the ease people are showing in walking away from debt. Add in the MSM touting these occurrences(jingle mail) and cries of "it's just a business decision" the consumer is making and you have disaster.
The problem is they are right to a degree. Our entire system is collapsing and going to the public trough, why shouldn't the taxpayer take advantage as well?
What will be necessary for this to be reversed and stopped is many prosecutions of fraud from the top down. A few show trials of high level executives, caps on executive pay, and tighter restrictions on companies taking public funds would help immensely.
My thought is this has gone too far and the problem is too large. The economy will suffer increased job loss and further bankruptcy in the public and private sector. The court system will be overwhelmed. Legislation will be passed with even more unintended consequence.
I continuously read about people's "neighbors" who have walked away and hurt property values or lived an enviable life fueled by "abuse of debt". Accountability and responsibility is taught primarily through societal norms. The norm is now default. Thank the government for deficit spending, the marketers for making us consumers, the banks for lax lending standards, the education system for not teaching personal finance, and the consumer for consuming.
Remember the entire chain of debt abuse when you decide it's ok to support a new law with draconian measures holding your neighbors responsible. Resist the urge to punish the relatively innocent simply because the people who benefited the most(banks, large conglomerates, wall street...) are untouchable.
Debt as a privilege with very high lending standards is a welcome return of sanity. Greed and displays of wealth engendering shame from society. Business not requiring high quarterly growth to fuel executive pay through stock options and increased share price at all costs. People living simply and in touch with their community and a better understanding of civic duty. The cycle is swinging back into balance. A few years of hardship will be the price. Necessary and welcome. IMO.
read somewhere that 800k ran out of unemployment in oct and 200-300k run out nov and dec.
do they count them as unemployed or do they just though the cracks?
New York City Must Rescind Tax Cut, Reduce Jobs, Bloomberg Says
By Henry Goldman
Nov. 5 (Bloomberg) -- New York City, reeling from financial turmoil on Wall Street, must roll back a property tax cut and reduce its workforce by 3,000 to help shrink a $4 billion budget gap over the next 18 months, Mayor Michael Bloomberg said.
The job cuts, including the firing of 500 workers, and a 7 percent property tax increase starting in January, were included in a budget modification plan Bloomberg presented in City Hall today. The job cuts represent part of an effort to save $1.5 billion to offset projected declines in tax receipts, with the city now facing $3.1 billion less in revenue in fiscal 2010 than last year, the mayor said.
And don't forget the Chicomms committing to internal investment.
There's a real possibility of a Treasury issuance failure. There just isn't anyone, even Roubini or Rogers who can tell us what would happen.
Completely agree. I have been worried about that for quite a while. It is bound to come to the forefront sooner rather than later. Treasury issuance is at huge levels at this point and most demand is only on the short end which competes with rollovers.
As to China. From China financial markets a few days ago:
There are rumors that the MoF has prepared a report saying municipal governments are under liability management difficulties, and passed the report to the State Council. People are guessing that issuance of provincial government debt may be coming soon.
I asked him to track this for me, and the next day he wrote the following:
Normally in the past the most important resources for regional governments are sales of lands (ranging from 40% to 60% of total regional budget as said) and fees (not taxes). But now land sales have sunk with the decline in real estate. This obviously violated the regional budgets.
I am guessing the regional budgets are thought to be facing pressures both from declining income and expanding expenditures as a part of fiscal expansion. The rumors was first quoted by China Security Journals yesterday, and then spread widely today. It is also said that MoF has established a sub-dept focusing on regional liability management under their department of budget. ...
So PeakVT, that would mean the heavily indebted people would be forced into default by 30% interest rates, since they would all be over the limit in an instant. That would put an end the CC companies and their backing banks PDQ.
Ok, so I shot of my mouth a bit fast. But at this point the heavily indebted people are likely to default anyway, and I'd like to see both sides of the ridiculous expansion of unsecured credit get burnt. And how.
Dawg sez off is also right that crowding will have a negative result
Rob, please define "negative".
Hahahaha.
We're trying to get by on just one car now
That's one reason I've restricted my job searches to Seattle and Portland. Not only are they kink-friendly, they've got fairly good mass transit. Portland is definitely better but the job opportunities aren't anywhere near as good.
The Fed will not be able to monetize the borrowing needs of the government without a hyperinflationary collapse of the currency. In the absence of willing lenders, unwilling ones will have to be found.
George, where's all nice antique furniture gone to?
- Oh well, we rented most of that & it was repossessed.
George, there's no more silverware...what did you do with that?
- Sorry Obama, me Daddy borrowed that and then melted it down.
Jeeze George!...At least the damm Whitehouse is still here.
- Heh, heh, yes it is...sort of. You'll have to check with the Chinese owners to see if they'll let you stay as tenant.
Silver is a more fragile market than gold, a lot smaller in terms of supply and trading volume.
It's debatable whether there are more above ground stocks of gold or silver, as both have been mined for centuries and very little has disappeared.
But it's clear that bigger stocks of gold can move quickly, especially from central bank accounts and large dealers and traders
It would be a lot easier to engineer a short squeeze of silver than gold, especially in terms of requiring delivery of physical metal.
Like I said, ETFs are systematically devouring 20% of global silver mine supply. You could capture a lot of silver physical delivery capacity by stockpiling shares of SLV. Then, you could deliver the shares and receive bullion in return.
But to get enough SLV shares to engineer this, you would have to start accumulating well ahead of time.
There's no question that silver ETFs increase the potential for a short squeeze on physical. It would not have to be engineered by one participant but rather could be done by several working independently on the same perceived opportunity.
all thios talk about the fed monetrizing treasury issuance highlights the fact that the treasury doesnt need to issue debt to spend money and we dont borrow money from china or anyone else when the federal govt spends. the fed buying treasuries is operationally the same as if the traesuries were never issued in the first place. the traesuries account at the fed is debited and a members account is credited. reserves are increased by the amount of the treasury spending and the funds rate drops to 0 as there are no securities used to drain the reserve add.
there will never be an issue of not being able to issue traesuries or the chinese not buying or a default if they chose not to default. we may ge inflation if all those excess reserves get lent out but that certainly doesnt seem to be happening.
Dow Down 300 as Investors Shift Focus to Economy- AP
I have to sigh and think, "making money won't always be this easy, you must remember that". And then I think, "what were said investors focusing on before?" and that is a question I just can't answer.
Are the "useful" demands for silver and gold the same, albeit smaller than their wealth storage demands?
Silver is used very heavily in industrial applications and therefore used up with the notable exceptions of ETFs like SLV and CEF. Gold much less so. Gold is primarily a store of value and as such in vaults of central banks, ETFs (one hopes) and in the ground (either backyard or to be mined). Most gold ever mined is still available above ground.
Off topic and hopefully closing the subthred: ETFs have been placing massive demand for physical silver creating their own weather until prices faltered. As much as 30% of annual production. Just like home prices, it worked until it didn't.
The American economy works much like my weekly vacuuming. I move the easy chair to vacuum the carpet underneath...yes I do, really. And what do I find every week. Gobs of coins.....a plethora of riches. It's amazing wealth generation. I put the coins in my pocket then sit in the chair to contemplate my credit card purchases for the week, feeling much richer.
The next week...there are more coins under the chair! I am now expanding my vacuuming schedule to once a day, going forward.
This is a repeat of what happened during the John Law bubble (and probably many other bubbles). Physical demand for real metal rose sharply as people exited the paper world as quickly as possible.
(Lo made the rounds back in 2004 trying to tell them how fragile the whole economy was. The Chicago guys above just came out with their earthshaking paper this year).
The cost of doing that is higher rates. Look at US givt CDS. Arguable the risk free rate just became risky and hence the capital market implications are a 50 bps risk increasee for every compny across the spectrum. yet some more good news for valuatio
i agree there is a "cost" to higher deficits which is genarally inflation as public sector spending helps boost agregate demand and inflation and a fed response.
i was only trying to highlight that people who were talking about the fed monetizing debt were correct and it speeaks to the operational aspects of federal govt deficit spending.
You remind me too much of the future-past-me that could have stayed in Simi Valley in 1990.
Broward Horne
No argument here. You couldn't have paid me to live in Simi in 1990. I had sold all my non personal use real estate by Spring 2006. What's left is at such a low cost basis as to make no matter. With low cost of living it is hard to beat Southern California. My only distress is in the ability of government to increase taxes at every level. LA is now 8.75% Sales Tax and 9.3% for the rich aka $46,000. I honestly have no idea where the money is going. Take those four.; you earn a $1 were 7.6% is off the top. Then another 7.6% and 31% income tax and then you buy a gallon of gas with an effective rate of 18%. Your $1 of effort buys you $0.44 of gasoline. And those 44ยข represent enough profit for everyone involved to pay their taxes.
Worrying about "Net Worth" has been a loser, doom-and-gloom, unpatriotic move.--Average Joe
I can't imagine seeing it that way. The guy you mentioned who focused on maximizing short-term consumption will actually be able to consume less over the course of his life than someone who builds wealth.
Consider the guy you mentioned who saves $1000 a month. Eventually that money, invested in his own business or in other people's businesses, will earn returns that supplement his income from work. He is free to take a job that pays less in the short term but provides long-term opportunities, while the month-to-month guy is dependent on his paycheck for life.
At some point people want to retire or scale back working, but how will the month-to-month guy do that? If you say he was saving for retirement, then at some point he must have abandoned his month-to-month philosophy and begun saving money.
When it comes to measuring wealth, there's income, net worth, and to a lesser extent cash flow. I can't understand someone saying net worth doesn't matter, unless they're saying wealth doesn't matter to them.
Planning to be broke all your life is completely stupid. I think you agree but are saying stupidity is the norm.
The credit crisis and the stock market are clearly decoupled now. The credit issues are priced in. Tight credit doesn't mean crap if people don't have jobs forcing them to choose between mortgage payments and eating. You've gotta love Saudi Arabia...those good old friends of ours who cut supply at the worst time. I can't wait until gas spikes above $5 per gallon next Summer with O-shit running the show.
Progress until there is not.
Let's see unemployment for a year.
Not until I get my 2nd stimulus check.
At least that's the work from Comrade Pelosi.
Cordially,
K.
third?
oh, and first.
y'know, I'm now agreeing with those who question the numbers' value given the massive intervention.
No offense, CR.
A healthy economy has healthy looking credit markets. The PTB have taken this little fact and turned it on its head. They are hell bent to create, through intervention, the "numbers" that would indicate a healty credit market.
They are attempting to reverse engineer a healthy credit market by controlling the indicators!
Moreover, I think the clear panic that existed in Oct has subsided.
The economy is still going to be horrible for a long time, but the panic level has definitely decreased.
At least the dollar is becoming competitive again, at least against the euro - who knows, maybe this trend will continue to the point that dollars will be given away for virtually nothing.
Oh, wait....
I don't want to be the pall bearer here, but despite progress being made in credit numbers, isn't credit (debt) the whole reason this thing is teetering on the precipice?
Fughhhhhhhhhh!
Forget credit, how about everyone/everywhere starts paying back what they owe.
Debt is not wealth!
Credit used wisely, see a home (when it makes sense) and start a small business that actually sells/makes thingys people want and can use, then I will start believing.
However, banksters getting money at 1% from the fed and still shafting people w/CCs and overpriced homes, isn't going to cut for me.
Economy is dead man walking!
deb,
Exactly. We have a patient on a heart/lung machine and are saying, "Look! Regular pulse and respirations!"
What ever happened to the monoline blowup that would take down the world? They've held on so far.
MBIA, Ambac Losses Widen on Higher Claims Forecast (Update4) - Bloomberg.com
PeakVT writes:
What ever happened to the monoline blowup that would take down the world? They've held on so far.
whatever happened to CDS blowup?
oh wait, really long fuse
/checks fuse
yes, it's lit.
Moreover, I think the clear panic that existed in Oct has subsided.
The economy is still going to be horrible for a long time, but the panic level has definitely decreased.
iceman | 11.05.08 - 12:28 pm | #
Respectfully, selling off in a climate of insolvency is not panic.
Respectfully, selling off in a climate of insolvency is not panic.
asl hearts lenin | 11.05.08 - 12:45 pm | #
Neither is running from a tsunami. Quite rational.
Good point. But claiming that now is a great time to catch fish flopping on the newly extended shoreline...not rational.
CR,
A while back we had a back-and-forth argument about the likelyhood of walkaways by people who could otherwise "afford" their home.
I argued that many wouldn't walk, as we have become used to being upsidedown on large purchase loans as new car sales indicate.
However, I must add some anectodal evidence that may support your side of the argument.
I have 8 people who directly work for me. I have learned that 4 of them have chosen to stop paying their mortgage in the last months. Two are due to divorces induced by money problems. They were struggling as it was, and with a divorce they have no choice but to bail. Both are allowing their wife and kids to stay in the house until they are kicked out and expect a year or so of free rent and thus an ability to save and pay for the other costs of divorce.
The third was having marriage problems but chose to stay together, stop paying, save aggressively and then buy in about 3 years with a big down payment, a credit history flawed only by the forclosure. (they assume that future lenders will discount this as anomoly).
The 4th has been alone in his house for about a year (bought when married and divorced a year ago). He can afford the payment but it's over 50% of his income and he doesn't see that it's worth it anymore. He will chose the strategy of saving aggressively, living free, waiting for an eviction and expects it to take months to years.
They all site mainstream media articles that you have posted citing the economic reasons to stop paying.
(They have become aware of my interests in housing and have sought advice, noting what their peers are doing and they are feeding off the decisions of others feeling safety in numbers as they are in the good company of multiple defaulters)
Considering that half of all marriages end in divorce, I expenct more of this activity over the years.
Our argument may hinge on the definition of "afford", however there is no doubt that many are proactively deciding to stop paying. It is a premptive move based upon the idea that forclosures will take a long time and that the ability to save a down payment and the forgiveness of a forclosure during the "bubble years" will mean that recovering their financial reputation will be doable.
Bush 2005:
"The survival of liberty in our land increasingly depends on the success of liberty in other lands."
BushBanished:2009
The success of liberty in other lands increasingly depends on the restoration of liberty in our land.
Down goes Frazier
Down goes Frazier
GS puts still off the charts...
nov 70p's at 2.60!
Wow, I can't tell you how much money I've made since I started investing according to a spam advertiser's advice! This is even better than when that Nigerian man needed help getting that money out of the country!
Bosons sailing through charming quarks, that vibrate on the amino acids making up strands of microbial dna on the hairs on the butts of the fleas stowed away in the frigid clothing of those arranging the deck chairs...
(sorry, last time)
So, trend down day today, or will the PPT/short covering/recovery from the Obama coronation party hangover/etc. give us an after-lunch stick save?
Wow, I can't tell you how much money I've made since I started investing according to a spam advertiser's advice!
I invest by CNBC. Give it a try if you become dissatisfied with spam advertisers.
Byzantine_Ruins writes:
Wow, I can't tell you how much money I've made since I started investing according to a spam advertiser's advice! This is even better than when that Nigerian man needed help getting that money out of the country!
Don't forget those nice Columbian parcels you get in the mail, you just have to drop them off at the bus depot...easy money.
I think there are levels to discussions about credit markets.
Level 1 - My paycheck, and what I can buy/charge. Not looking good now, and looking worse over the next year.
Level 2 - Buying a house or 2nd house. At close to %10 interest, 20% down it not going to happen as often.
Also cars. Probably still finance a washing machine.
Level 3 - Small business loans.
Here is the limit of my knowledge. I know there is interbank lending, big company borrowing, muni, state, and fed borrowing etc. What I have learned here is that if the banks don't have it, or they are scared to lend it, then every level collapses.
Like this I suppose...
U.S. Economy: ISM Services Index Slumps to Lowest on Record
By Timothy R. Homan
Nov. 5 (Bloomberg) -- Service industries in the U.S. contracted the most on record in October as credit dried up and consumers reined in spending.
The Institute for Supply Management's non-manufacturing index, which covers almost 90 percent of the economy, fell to 44.4, below economists' forecasts and the worst result since records began in 1997. A private survey indicated that companies axed 157,000 workers last month
ova,
Long and short-term I care about Level 3--small business loans.
In my arena, that means federal contracting. You get paid, but if banks don't advance the 90s of salary you need on hand to pay people on those contracts, you're SOL. Even the big-box contractors are seeing stress (commercial paper getting "better" relatively). But the number people the small businesses employ far exceeds the cumulative number that big box contractors can employ. The smaller tend to pay much better as well since they don't have marble coated buildings to pay for along with a dozen useless management support staff per contract to pay for...any case, level 3 goes down, that's the red button to watch being pushed before the mushroom cloud...
S&P earnings are still going to $50 no matter who wins or who is Treasury Sec...times 12..S&P 610 here we come..
cc,
yep.
The big picture is that boat has already struck the iceberg.
Doesn't really matter at this point whose steering it into the ocean.
homedad43, there are good reasons to question whether these numbers are useful ... and I'm open to other measures. When we see the Fed start to shrink their balance sheet, these numbers will matter more.
Best Wishes.
Here's some scintillating analysis, care of la times:
The Great American Housing Nightmare: Next Phase | Money and Markets: Free Investment Email Newsletter
Scintilla, scintillating... same root, but one means small now, and only the other barely preserves the original meaning of "spark" in ordinary conversatio
If I could add on thing to my above post.......I believe all mentioned a very large property tax bill they intend on not paying that will be due next month. Most are in the $6-9000 range as impound accounts were so "yesterday" over the last several years.
While a large mortgage payment kinda feels like rent, throwing this kinda money down the rat hole of taxes on a house that you can't see affording long-term is just too hard to do.
I guess we're going to get daily "We've got progress, folks!" updates on the credit crisis, instead of focusing on why the fundamentals are still out of whack and what that means for the future. I've noticed a lot of this on the housing/economics blogs since it became apparent that The Big O was going to run away with the election.
So, will the PPT withdraw now?
Steinn writes:
So, will the PPT withdraw now?
Yes, to their fortress of solitude, on a pyramid of skulls sits a throne from which they will judge...
or PPT is under-pants gnomes. I vote for gnomes.
You keep comparing the 3 month T-bill to the fed funds target. Not only is the target relevant only insofar as it is met, it is only relevant insofar as it will be constant for the next 3 months. What you want is the 3 month OIS rate; a gap between that and the t-bill rate indicates a liquidity premium. A gap between 3 month OIS and the fed funds target means that the market expects easier monetary policy before that T-bill matures than what the FOMC is currently claiming.
Folks, be patient; today is Obama's day off.
All -- including the credit indicators -- will be much better, beginning tomorrow.
When we see the Fed start to shrink their balance sheet, these numbers will matter more.
CR
You assume they want to or can shrink their BS. I am not sure it can be done in the next 5-10 years.
dwj,
congratulate you for being topical and sharing a well-articulated view on the relevance of the indexes used to judge the credit-markets and economy as a whole...
market ends at a 3.4% loss today.
You want a glimpse at a real economist (in the sense of economist as "tender of our home")?
David Cutler, Adviser to PEBO on all issues health care related.
I have complete faith in veeeeery few people. This is one.
Steinn, it appears that the PPT is still active: futures purchases are supporting the market, it appears to me.
My guess is that they have switched from, 'No crash before the election' to 'Now, we must save the system and our jobs.'
So, we may have down days, but no really big down days.
Until the sheeple panic.
Could that be Friday, with an 'unexpectedly' ugly October employment report?
UB,
Please ellaborate? not ubernerish though
They are attempting to reverse engineer a healthy credit market by controlling the indicators
Perception is reality.
The Feds are still operating under the mistaken belief that the "credit crisis" is a function of confidence.
There's a Mass Belief System (MBS) and one of its major tenets is to avoid thinking about debt. Even I am shocked at how pervasive and entrenched it is in popular mindset.
more from the Murdoch Street Journal:
'Underwater' Need Not Mean Foreclosure
Why Most People Who Owe More Than a Property's Worth Will Still Keep Their Homes
By KAREN BLUMENTHAL
'Underwater' Need Not Mean Foreclosure - WSJ.com
(probably subscription required )
Uncle Billy, Militant writes:
"Here's some scintillating analysis, care of la times:"
Man, and I thought I was bearish about housing! Marty Weiss is saying [paraphrasing] "Sell your properties, they're going down by half, then half again, then half again."
I was only thinking about 60% declines.
I am waiting on my stimulus check. Used the last one to pay for summer school class for my college age child. Need an even bigger one this year cause he has to take a summer lab. Keep it coming congress............
Sounds like a PR machine to me.
I want to invest my 2nd stimulus check in EEV.
Aviv Nevo and friends have uncovered more flaws with how we calculate cpi!
Timing and Quantity of Consumer Purchases and the Consumer Price Index
heard it from a friend , who
heard it from a friend , who
heard it from another
that its all going dow
Magnolia writes:
I am waiting on my stimulus check. Used the last one to pay for summer school class for my college age child. Need an even bigger one this year cause he has to take a summer lab. Keep it coming congress............
I however am not waiting for my pony. The last pony pooped all over my lawn, ate the tires off my car, and mauled the neighbor kid. Had to put the pony down.
Pony steaks however are very nice.
/that is all.
Elaborate on what Babel?
Comrade-Dope jg (jg) writes:
"Until the sheeple panic. Could that be Friday, with an 'unexpectedly' ugly October employment report?"
I note that you put 'unexpectedly' in quotes, but how much worse could it be than what is currently expected? Or am I just so bearish that my judgment is impaired? Do the "sheeple" really expect a benign October unemployment report?
David Cutler, oh i misunderstood , thought you pulled his name out for Tres...
Aviv Nevo and Adam Rosen tackle a central challenge of applied research!
Identification with Imperfect Instruments
I have a feeling this paper will not bring our downward slide to a grinding halt.
Wouldn't most economists be better applied to taking inventory at produce packing centers or hospitals?
"Potter's not selling he's buying"
Warre
Check the blog below. It is a money machine folks.
CR is the only money making blog I need.
I used to think blowing a million bucks was a big deal before I came here!
Gold -3%
Food -3%
Mixed energy -3%
Oil -5%
Silver +1.5%
Dealbreaker:
"Goldman is said to look like "a [kosher] slaughterhouse" this morning. Apparently LevFin has been hit hard, with the focus, as of now, on VPs and admin. No "big names" have been told to pack up their staplers yet, but they may actually be praying to be given the boot-- we're told "there will basically be no bonuses this year,* especially at senior levels."
Yaaa...
Whoa, that last one was tongue in cheek. Nevo is doing almost exactly that!
Not-so-Classical Measurement Errors: A Validation Study of Homescan
"Not-so-Classical Measurement Errors: A Validation Study of Homescan"
https://www.homescan.com/homescan/US/EN/Login.htm
rich
You're trying to make a point... I am missing it...
safe_as_apartments Market Timing and Forecasting Alert:
Given this morning's downward movement, safe_as_apartments is revising his forecast at close:
The S&P will add 100 points today.
Good luck, and good trading.
babel: Don't have any problem with David Cutler as SecTreas. Zero.
safe_as_apartments
My guess is Dow up 500 FTW... A slower gain is more sustainable.
The rally to yesterday was on ever declining volume. Was a bad sign (still is, even with todays drop).
According to IRS.gov there were 139,000,000 individual tax returns filed last year.
If we take the national debt of $10,000,000,000,000 and double it to $20,000,000,000,000 we could send each and every tax filer almost $72,000 in stimulus!! Someone get this plan in front of Pelosi and Frank...
sm_l, I take analyst expectations with a grain of salt.
Published expectations are that jobs will fall 186-210K. My jaundiced read of such published expectations is that 'analysts' really expect jobs to fall 150-175, so that they can trumpet a 150-175K fall as 'beat expectations.'
Economic Calendar
So, anything north of 150-175K-200K will be viewed as 'unexpectedly weak.'
Just my unsympathetic/jaundiced view of Wall Street 'analysis.'
Average Joe,
Wow. All I have to say about your anecdotes is that these people will actually help the housing market find the bottom. But not paying the tax bills is going to be very destructive, I bet they are still using the public schools and other services those taxes pay for. We have a whole new class of freeloaders on the system and combined with the likely loss of tax revenue from illegals that went home, it doesn't look good for cities and counties.
CR,
What about the deal you were watching? Did they close? If so, what were they?
Mark
I argued that many wouldn't walk, as we have become used to being upsidedown on large purchase loans as new car sales indicate.
Other upside-down loans come after the debtor for the difference. I don't understand why mortgages work differently. My understanding is in most states you could be a millionaire, stop paying your mortgage, and the only thing they can do is take the house and report the nonpayment on your credit report. Ruined credit is a small price to pay for saving tens of thousands of dollars.
Look what Obama is doing to the markets! Stocks are falling and only yesterday before he was president elect they were going up.
Comrade-Dope jg
I think this sell off is on the expectation of a bad Friday number. Already pricing it in IMO. Of course the market is not closed yet we could go down a lot more.
tim - rich is bullish on silver (at the moment)
Ponyless: Hold on, let me sacrifice a goat, rip out the entrails, and then tell you how the elections are REALLY affecting the market...
deb writes:
A healthy economy has healthy looking credit markets. The PTB have taken this little fact and turned it on its head. They are hell bent to create, through intervention, the "numbers" that would indicate a healty credit market.
They are attempting to reverse engineer a healthy credit market by controlling the indicators!
deb | 11.05.08 - 12:28 pm | #
deb - when I was a student pilot, the instructor called this "chasing the numbers". Human behavior is such that we over-compensate trying to reach our goal. In flying, it was over-compensating by trying to reach your given altitude too quickly and not anticipating how fast you would get there. As a new pilot, you don't have the knowledge yet to plan on how to correct your speed, position, etc, in advance for a smooth transition to the assigned value.
The government (Fed/Treasury, etc), however, shouldn't be flying by the seat of their pants as these are seasoned economists (theoretically).
I agree with your comment. Not only are they chasing the numbers, the numbers don't have much meaning any more because they are artificially derived.
If these numbers worsened considerably, how would they correct it?
Ponyless,
There's a new sherrif in town, and his name, is reggie obama....
now everyone can start blaming someone new in January...
financial babel, why wait till January? i try to stay ahead of the crowds.
ah a true leader in every sense of the word....
Rahm Emanual is noting but Rove in hemp clothing...
yeah, ok i like this...
friardaddy: beautifully put.
Wow. All I have to say about your anecdotes is that these people will actually help the housing market find the bottom. But not paying the tax bills is going to be very destructive, I bet they are still using the public schools and other services those taxes pay for. We have a whole new class of freeloaders on the system and combined with the likely loss of tax revenue from illegals that went home, it doesn't look good for cities and counties.
A nation that trains its citizens to get ahead through get-rich-quick schemes and scamming their neighbor is destined to be poor.
Hopefully we don't see the government apply the same sort of thinking to create "quick fix" for the economy.
There is none. Just ways to exchange short-term boosts for long-term poverty.
friar daddy...
is the bad answer to your question is steer away from the spectators...and crash in the airfield...?????
I think we need to add up CR's indicators as a synthetic index. Kind of an updated misery index. Maybe we can call it the "Calculated Misery Index".
Does anyone know a website that details how those wo were for the bailout vs those who voted against it fared last night?
Calculated Risk writes:
homedad43, there are good reasons to question whether these numbers are useful ... and I'm open to other measures. When we see the Fed start to shrink their balance sheet, these numbers will matter more.
Seriously, I enjoy the numbers they are good mile markers, but waiting for the Fed to shrink their balance sheet?
Maybe this will happen--right after I grow my hair back and get taller.
deb - when I was a student pilot, the instructor called this "chasing the numbers". Human behavior is such that we over-compensate trying to reach our goal. In flying, it was over-compensating by trying to reach your given altitude too quickly and not anticipating how fast you would get there. As a new pilot, you don't have the knowledge yet to plan on how to correct your speed, position, etc, in advance for a smooth transition to the assigned value.
The government (Fed/Treasury, etc), however, shouldn't be flying by the seat of their pants as these are seasoned economists (theoretically).
I agree with your comment. Not only are they chasing the numbers, the numbers don't have much meaning any more because they are artificially derived.
If these numbers worsened considerably, how would they correct it?
Excellent comments, here's another flying related term I think has relevance:
Pilot-induced oscillation occurs when the pilot of an aircraft inadvertently commands an often increasing series of corrections in opposite directions, each an attempt to cover the aircraft's reaction to the previous input with an overcorrection in the opposite direction. As such it is a coupling of the frequency of the pilot's inputs and the aircraft's own frequency.
Pilot-induced oscillation - Wikipedia, the free encyclopedia
ac writes:
Wow. All I have to say about your anecdotes is that these people will actually help the housing market find the bottom. But not paying the tax bills is going to be very destructive, I bet they are still using the public schools and other services those taxes pay for. We have a whole new class of freeloaders on the system and combined with the likely loss of tax revenue from illegals that went home, it doesn't look good for cities and counties.
And, film at eleven of mass evictions, some forcible, all sad and full of misery and woe. What of public opinion when this train comes round the bend?
We have a whole new class of freeloaders on the system and combined with the likely loss of tax revenue from illegals that went home
Broad Amnesty program will bring them back. I think they got nervous before the election and the downturn. There is no better place to not work than the US.
Maybe this will happen--right after I grow my hair back and get taller.
Volker the Viking | 11.05.08 - 1:48 pm | #
A black man was just elected POTUS, miracles do happen. Good luck with the hair!
Volker the Viking
I am hopeful
there is no doubt that many are proactively deciding to stop paying. It is a premptive move based upon the idea that forclosures will take a long time and that the ability to save a down payment and the forgiveness of a forclosure during the "bubble years" will mean that recovering their financial reputation will be doable.--Average Joe
I know I'm repeating myself, but I don't think financial reputation is that important compared to receiving tens of thousands of dollars of free money. If someone has a house that's, say, $100k upside-down and foreclosure meant they could never borrow money again, the foreclosure would still be a good deal. Would you pay $100k for the right to be in debt? I understand your point is they won't be forbidden from borrowing for long. My point is it's hard to imagine giving up a big chunk of money to preserve my ability to get into debt in the future.
"There is no better place to not work than the US."
You obviously haven't been to Canada. There are some things that we Canadians are #1 in.
Why@ ZIRP writes: I bet they are still using the public schools and other services those taxes pay for.
Worse than that, IIRC they are paid from taxes!
"My point is it's hard to imagine giving up a big chunk of money to preserve my ability to get into debt in the future.
Charles J Gervasi"
Agreed.
Pissed Off In California
You have to Come to the Yay. I can't tell the GA housing apart from the SFH and luxury condos.
Zombie Kung Fu Panda writes:
Dealbreaker:
"Goldman is said to look like "a [kosher] slaughterhouse" this morning. Apparently LevFin has been hit hard, with the focus, as of now, on VPs and admin. No "big names" have been told to pack up their staplers yet, but they may actually be praying to be given the boot-- we're told "there will basically be no bonuses this year,* especially at senior levels."
Yaaa...
Zombie Kung Fu Panda | Homepage | 11.05.08 - 1:31 pm | #
Link?? I cant find that on Dealbook
"sdtfs writes:
Why@ ZIRP writes: I bet they are still using the public schools and other services those taxes pay for."
If somebody buys their county tax lien, these taxes are still being paid.
"there will basically be no bonuses this year,*
Believe it when I see it...
If they don't get bonuses, how will the strippers get paid?
ac writes:
Wow. All I have to say about your anecdotes is that these people will actually help the housing market find the bottom. But not paying the tax bills is going to be very destructive, I bet they are still using the public schools and other services those taxes pay for. We have a whole new class of freeloaders on the system and combined with the likely loss of tax revenue from illegals that went home, it doesn't look good for cities and counties.
And, film at eleven of mass evictions, some forcible, all sad and full of misery and woe. What of public opinion when this train comes round the bend?
Now at least let's be clear about who wrote what. Careful with quoting people who are quoting others.
BTW I would argue that managing the economy for the sake of public opinion is the opposite of what leadership is.
["There is no better place to not work than the US."
You obviously haven't been to Canada. There are some things that we Canadians are #1 in.
Pissed Off In California ]
You beat me to the punch. There are plenty of places where being unemployed is rewarded handsomely. The USA may be on that list soon if the Health handout system and more generous welfare programs are put into place, to encourage freeloading and punish work.
Elvis writes:
If they don't get bonuses, how will the strippers get paid?
Elvis | 11.05.08 - 1:57 pm | #
Who will buy the cocaine?
"My point is it's hard to imagine giving up a big chunk of money to preserve my ability to get into debt in the future."
This is a good point,
However, many people still believe that the housing market will rebound like the stock market and that their house will give them back that 100k they have lost if they can just stay put.
The move to forclose and buy later isn't to save the large amount in principle, it's to get out of the large monthly and trade it for a future smaller one on a same or similar house.
Breaking news:
GM to announce something on Friday
GM to announce 'important changes' on Friday: report - MarketWatch
bearly
Again here in the YAY if you are lucky enough to win the GA lottery and have no job you get Free meals, buildings built up to code and new appliances. If you make Min. wage about 10-12 dollars those things are unattainable.
GM to announce something on Friday
GM to be debt free courtesy of the US taxpayer and/or handing California over to the Chinese?
Bank holding company...
Rahm Emanuel? How come he was mentioned upthread? Because of this?
Black, Jew to Run Nation - Barack Obama - Gawker
What did Pelosi call him after they reached concensus on Tarp? Frank was "maestro" and Emmanuel was...?
Also, do Pelosi's staffers read CR? I called someone else maestro here on the blog the day before she made that comment. I don't think I've heard someone use that word since I saw the Seinfeld episode years before.
crispy&cole
Corresponds with earnings. Not good. GM will become a bank holding company with Citi ATMs installed in every chevy...
Energycon we must be on the same wavelength...
"If these numbers worsened considerably, how would they correct it?"
Partial panel training?
Corresponds with earnings.
Tim the casual observer
I thought they were loosing money...off to buy boatloads of stock!
GM to announce something on Friday
The pump was successful and all the important people have shed their stock.
The move to forclose and buy later isn't to save the large amount in principle, it's to get out of the large monthly and trade it for a future smaller one on a same or similar house. --Average Joe
That sounds like the thought process of people who don't care about their networth and intend to live month-to-month for the rest of their lives.
I understand the hope of another sudden spike in RE prices happening again (just years after the last bubble) shows concern for networth, but it also shows stupidity, IMHO. Like the dot com bubble, the real estate bubble was a one-time thing. I
CNBC awaiting Oh!-Bama bounce...
I recall a few months back when all of their dealers purchased millions of dollars worth of stock as a vote of confidence...LOL!! Talk about doubling down...
From Uncle Wiki:
"Emanuel was born in Chicago, Illinois in 1959. His father, the Jerusalem-born Benjamin M. Emanuel, is a pediatrician and was a member of the Irgun, a militant Zionist group that later became part of the Israeli Defense Forces, in the 1940s.[3][4][5] His mother, Martha Smulevitz, worked as an X-ray technician; she was the daughter of a local union organizer,[1] and would herself become a civil rights activist; she was also once the owner of a Chicago-area rock and roll club"
"Speculation has been raised regarding the connection of Emanuel's Congressional election success to convicted former Chicago water department boss Don Tomczak.[21]
The newspaper USA Today reported in late January 2007 that Emanuel failed to disclose that he was an officer of a family charity [22], a violation of law requiring members of Congress to report non-profit leadership roles."
OT.
R.I.P Michael Crichton.
A nation that trains its citizens to get ahead through get-rich-quick schemes and scamming their neighbor is destined to be poor.
ac, I would like to nominate you for site philosopher. You do come out with some good ones. Weren't you the one who first coined the phrase "Debt is not wealth"? That is one of my all time favorites.
Excerpts from Wikipedia on David Cutler:
"David Matthew Cutler is Dean of the Social Sciences and Otto Eckstein Professor of Applied Economics at Harvard University. He holds a joint appointment in both the economics department and in Harvard's Kennedy School of Government. He joined the Harvard faculty after receiving his Ph.D. in Economics from the Massachusetts Institute of Technology in 1991.
While his work on health economics covers a broad range of subtopics, he is particularly notable for his work on the value of the health care system as a whole. Much of his work argues that the United States has realized good "bang for its buck" by any reasonable measure of the value of a statistical year of life in good health. That is, while health care is extremely expensive, we also place a very high value on documentable health gains. He also argues that we could gain considerably more health for the dollar if reimbursement for care could be tied to the health value of the service instead of the intensity of the service...Cutler's 2003 "Why have Americans become more obese?" discusses rising obesity as an outcome of the revolution in mass food packaging. He includes vacuum packing, improved preservatives, deep freezing, and microwaves as culprits. Consumer prices on items like various frozen foods, soda, and potato chips are increasing at half the rate of fresh fruits and vegetables. This mass preparation makes for lower costs, and more food consumption. Meanwhile, calories expended haven't changed much. Accordingly, Cutler posits that the 20 minute average reduced time of food preparation has resulted in a calorie increase of 100 per day per individual, on average. These extra 100 calories can largely account for a 10-12 lb. weight gain in the American population over the past 20 years."
Non-conventional view of cost/benefit of American health care...not sure I agree but interesting idea.
"R.I.P Michael Crichton"
Really??
"If these numbers worsened considerably, how would they correct it?"
They would change the numbers.
When the economy gets bad the value of the DOW declines. So all you have to do to make the economy good is make the value of the DOW increase.
Simple isn't it?
The USA may be on that list soon if the Health handout system and more generous welfare programs are put into place, to encourage freeloading and punish work.
If you believe that the system will be rigged to encourage people not to work, and yet you yourself are a hard worker, shouldn't you be looking at that as an opportunity as opposed to whining about it?
I've never looked at a guy sitting on his front steps drinking beer at 10AM and thought, "man, that dude is making my life so much harder". I go about my business, work hard and succeed much more often than I fail. Am i being "punished"? Doesn't feel like it to me.
Perhaps you should look at things differently and stop blaming poor dumb people for your problems.
Credit Card Bond Sales Plunge to Zero, First Time in 15 Years: Credit Card Bond Sales at Zero, First Time Since 1993 (Update1) - Bloomberg.com
More on Obamuel:
Emanuel, Tomczak and the Chicago Machine - B12 Solipsism
Is there still such a thing as the "Chicago Mob"? Chicagoans?
Dude, it is sell the news day.
TF at new lod.
Priceless Quote!! Snow is a beggar, how sad and I hope the new Admin stops this cronyism
"Former Treasury Secretary John Snow, now chairman of Cerberus, joined the call for federal help for automakers today, telling CNBC that the government needs to ensure ``that a vital industry like autos, which is such a big part of the overall economy, doesn't lead us into a deeper and harsher downturn"
GM's `Time Is Very Short' for U.S. Aid, Altman Says (Update3) - Bloomberg.com
Michael Crichton was one smart guy. His books were good to read on the beach.
PeakVT:
Wow. Will there be a Federal facility for that now too?
I sure someone posted on this already, but while the credit crunch indicators seem to be easing for the big players it doesn't seem to be the case for all industries, particularly those that service the consumer. Expected in a credit revulsion I suppose, but not good.
Credit Card Bond Sales at Zero, First Time Since 1993 (Update1) - Bloomberg.com
"Credit Card Bond Sales Plunge to Zero, First Time in 15 Years"
"Nov. 5 (Bloomberg) -- Credit card companies were shut out of the market for bonds backed by customer payments in October for the first time in more than 15 years, as investors shunned the debt amid the global credit freeze. . . ."
ac, I would like to nominate you for site philosopher. You do come out with some good ones. Weren't you the one who first coined the phrase "Debt is not wealth"? That is one of my all time favorites.
I don't think so.
I'd like to think that saying has been around for centuries or millennia.
Welch is gushing: Obama Win Is Management Lesson to All: Welch - Politics and Government * US * News * Story - CNBC.com
"If you look at management skills as being execution, as one of the real issues, this guy demonstrated without question the best execution I've ever seen in a political campaign," Welch said.
c+c,
Dealbreaker link here
...btw, didn't you used to run a music factory or something:)
"Former Treasury Secretary John Snow, now chairman of Cerberus, joined the call for federal help for automakers today, telling CNBC that the government needs to ensure ``that a vital industry like autos, which is such a big part of the overall economy, doesn't lead us into a deeper and harsher downturn"
Oh no.
We're going to have to give Nevada to China too.
Exxon Mobile favorite Author dead at 66 RIP.
I've never looked at a guy sitting on his front steps drinking beer at 10AM and thought, "man, that dude is making my life so much harder"
Haven't seen one yet that I'd want to trade places with.
A nation that trains its citizens to get ahead through get-rich-quick schemes and scamming their neighbor is destined to be poor.
I don't know how you can control greed and corruption in a fiat system run by a fed that believes inflation is necessary and beneficial.
Inflation is theft. Theft is immoral in all civilized societies. A corrupt monetary foundation is the root of our problem.
So many work so hard so that so few can gather the inflation.
What a sham.
Bp said to be making a a bid for CHK.
Is there still such a thing as the "Chicago Mob"? Chicagoans?
Uncle Billy, Militant | Homepage | 11.05.08 - 2:11 pm | #
Who cares? The Wall Street gang is so much more efficient at fleecing the sheeple.
Let's face it, people with ability to pay their mortgages are going to walk-away in droves. The exodus has commenced, albeit slowly. The only reason we have not seen a locust-like swarm of walkers already is that LIBOR plunged in the second half of '07 and the Fed cuts dropped Prime down to the point where 80/20 ARM resets did not blow the alt-A folks out of the water with massive payment spikes. We would be looking at a completely different landscape right now had LIBOR and the Prime remained elevated.
Morality will be kicked to the curb faster than you can say "ruthless default". Go ahead, say it - "ruthless default". There is no way in this world we live in that the masses are going to suck on being hundreds of thousands of dollars upside down and paying a hefty premium to continue owning over renting or re-purchasing. They are going to join the increasingly popular walkers' club, with a safety-in-numbers philosophy, live for free for many months, then segue into phase two as a renter, then eventually re-purchase down the road after values have completed their cratering.
It is going to be a sight to behold, much like the wildebeast migration on the Serengeti.
Too bad about Michael Crichton. In my opinion, an excellent author unafraid to voice opinions contrary to conventional wisdom. One of his consistent themes, that we should be careful of reckless use of technology, applies in finance and economics as well as in science.
Peak VT,
Excellent find. The Credit Card Bonds presage the Treasury Bond issuance of the nest 5 weeks. Epic FAIL.
Wow. Will there be a Federal facility for that now too?
A good TARP covers everything. (Seriously, I think the language allows the Treasury to do nearly anything as long as it sends a carrier pigeon to Congress.)
I would be open to a debate about nationalizing the auto industry. But only in the context of equity and preferred wipeouts and bondholder haircuts.
"telling CNBC that the government needs to ensure ``that a vital industry like autos, which is such a big part of the overall economy, doesn't lead us into a deeper and harsher downturn"
Three years too late Mr. Snow. What is it with that three-headed dog? It must be eating IQ points for its meals.
Gervasi,
Two guys making the same money start with a net worth of worth of ZERO.
One guy rents an apartment, pays his bills, drives a paid-off $5000 Toyota and saves $1000 a month.
The other guy buys a Hummer and a McMansion.
After a year, the saver has $12000 in savings. Big whoop.
The other guy has all the chicks, has friends who think he's "made it", obviously appears to be the "richer one" and has generally lived a better life.
America has praised the spender and punished/discouraged the saver.
Worrying about "Net Worth" has been a loser, doom-and-gloom, unpatriotic move.
I'm organizing going to start to organize all the Gap employees. Close stores without paying us a severance!? I have been folding sweaters for 10 years!
I think the op-ed of wsj by Mr. Golub, former chairman and CEO of American Express, is a good one.
I Vote No Confidence in Congress
See: I Vote No Confidence in Congress - WSJ.com
Inflation is theft. Theft is immoral in all civilized societies. A corrupt monetary foundation is the root of our problem.
But it's a good kind of theft!
12th Percentile writes:
If you believe that the system will be rigged to encourage people not to work, and yet you yourself are a hard worker, shouldn't you be looking at that as an opportunity as opposed to whining about it?
What he said. Everyone feels entitled to something. Some people feel entitled to having luxurious lifestyles because they're smart, lucky, or hard working, even when others around them are living in poverty. Others feel entitled to a comfortable lifestyle, even when they contribute nothing to society other than another gaping mouth to feed, because they are human beings.
Which of these offends your delicate sensibilities depends to a large extent on whether you feel like work has instrinsic worth, people have instrinsic worth, both, or neither, and to a lesser extent on whether you are an ant or a grasshopper.
Average Joe
That 12000 grand can be saved and invested. That is why you surround yourself with people who like you for you. Life is more fulfilling that way
"Two guys making the same money start with a net worth of worth of ZERO.
One guy rents an apartment, pays his bills, drives a paid-off $5000 Toyota and saves $1000 a month.
The other guy buys a Hummer and a McMansion.
After a year, the saver has $12000 in savings. Big whoop.
The other guy has all the chicks, has friends who think he's "made it", obviously appears to be the "richer one" and has generally lived a better life.
America has praised the spender and punished/discouraged the saver."
6 months later the other guy has downgraded to a used Tercel, a double-wide and chicks with no front teeth.
I prefer to be guy #1.
No, I think RE taxes will get paid.
They DO the foreclosures. They won't suffer through any federal bank welfare BS.
We can go down with panic or without; it looks like easing indicators say 'without'.
I think they generally kept good order on the Titanic, too.
CR is following credit crisis indicators. The failure of Credit Card issuers to secure bond backing is beyond important. And let us be clear. When they say zero sales they mean in fact that the bid prices were suicide numbers. Wow, imagine that. A mark to market and refusal to accept. Exactly the same thing we see with banks and their REO inventory.
Unions have a place but they can be scary. I was working at a unnamed Hospital when the service workers were on Strike. Anyone who crossed the picket line was spit on. Two who crossed the picket line were assaulted and treated for open wounds. I thought these tactics died 30 years ago I was wrong.
Credit Crisis Indicators: More Progress
Through the first 10 months of 2008, world markets have lost about $16.22 trillion, according to S&P research. Furthermore, the size of the world stock market was estimated at about $60.9 trillion USD at the end of 2007, thus the loss of almost a third of global sharevalue is a wakeup call for global financial systemic failure.
Adjusting LIBOR for a few weeks means shit
Georgia is heading for a runoff in Senate seats. At stake is the supermajority, Saskashvili preparing for a press conference
Did anybody but me catch that in O's acceptamce speech, he said we were in the worst financial crisis in a century?
That means since 1908. That means he thinks we're going into depression. He didn't smile very much, for a winner.
GOod thing the credit crisis is over and Obama got elected or the market would be in trouble.
"I thought these tactics died 30 years ago I was wrong.
Tim the casual observer"
Unions are great, if you are the mafia. Otherwise, they played out a long time ago. BTW, full disclosure, I am anti-union, because I believe they have become a farce of themselves.
Zirp: One of the running themes in my rants has been the marriage of really smart people with really bad people, having created the situation we're in now. If Joey Donuts sells meth or extorts money, that's one thing, but if his son Sal goes to Harvard, meets a bunch of nice Wall Street guys, and then sucks the juice out of the entire economy, that's quite another. That's what it feels like anyway.
Don't need organized crime I guess when money makes everyone fall into the same efficient line anyway, but the mind wants to connect all the dots in a way that there are identifiable villains.
He didn't smile very much, for a winner.
Lawyerliz
Hard to smile a whole lot when your grandmother just died and you are exhausted.
Elvis
no Union Booster but the CEO's etc with their huge compensation packages didn't do themselves any favors. Two forces tugging at each other with everyone else caught in the middle.
6 months later the other guy has downgraded to a used Tercel, a double-wide and chicks with no front teeth.
I prefer to be guy #1.
Except as guy #1 you're paying for guy #2's mortgage and unemployment insurance.
That's the whole moral hazard argument, anyhow.
You're paycheck is guy #2's safety net and his excuse for doing crazy things.
Some people would argue that the solution to this problem is to put people in virtual prisons so they can't engage in risky behavior.
Personally I think there's some merit to the idea of simply not providing the incentives for risky behavior.
Maybe that doesn't apply to unemployment insurance so well. But paying for peoples mortgages or bailing out financial firms may be a different story. Likewise for flooding the financial system with money every time people become risk averse.
[BTW, full disclosure, I am anti-union, because I believe they have become a farce of themselves.]
Designed to fleece both union ranks and the employers. Good business if you can break kneecaps.
True, Elvis.
By the way, the taxes will get paid sooner or later, the problem is it might be much, much later. In Fla, they sell tax sale certificates, and sooner or later the bank has to redeem them or lose the property. Don't know what happens elsewhere.
Thanks, R-D-, for the amplification on the credit card bond sale. Thanks, P-VT, for the link.
I will pay attention to that, now.
I like to know about imminent failure. Allows me to get a front row seat.
Rob Dawg writes:
CR is following credit crisis indicators. The failure of Credit Card issuers to secure bond backing is beyond important.
Double-underlined. The central bankers can play The Lending Game with their toy banks all they like and spend as much money as they like manipulating the dashboard readings.
The actual market says, no ballgame.
yogi,
Remember your bet?
71.6% vs. 17.0%.
20% plus? Yep!
I always did like watching that, especially the part where the crocodiles swallow the wildebeasts whole.
Another 300pt move in the Dow.
[Yawn]
"Michael Crichton was one smart guy. His books were good to read on the beach"
I did like a lot of his early stuff.
I felt that State of Fear should've been a non-fiction essay rather than a bad novel. As it was, it might've been one of the worst novels I've read in recent years. Perhaps I only disliked Naked Lunch a little more.
It's worth owning, but only if you want the footnotes and the cites.
Right on time. The 11:30 market shuffle. Let's see how long it last today. IMO not too long.
I'm glad everyone liked that credit card bond link. And I hope the CC industry chokes on its own debt and cuts everyone's limit by 80%.
Hey! It's only 2:30. Looks like we have a case of premature PPTulation today.
So this rumor about no bonuses for Wall Street execs...
Can anyone tell me which commodity exchange the cocaine futures trade on? Cuz I just got this great idea...
Speed:
Another 300pt move in the Dow.
Wait til the market opens in an hour and ten minutes.
I sense fear in the herd.
Through the first 10 months of 2008, world markets have lost about $16.22 trillion, according to S&P research. Furthermore, the size of the world stock market was estimated at about $60.9 trillion USD at the end of 2007, thus the loss of almost a third of global sharevalue is a wakeup call for global financial systemic failure.
Of course no value has been lost in reality.
The market is just a scale that measures real value.
And that scale has become a little bit more accurate this year.
PPT, just because you have a new master who is taking the day off, you may NOT take the day off.
Buy those credit card bonds through your shady shylock shells, shysters!
Hurry, before the sheeple awaken!
I think the PPT will run like a clock when Geithner is running Treasury.
I wonder if GWB is watching Lassie right now.
The PPT has been somewhat erratic in their timing this week. Either they're having trouble adjusting to DST or they're trying to add a bit of "like a box of chocolates" flavor to their 3-4PM matinee.
Good to see that some things won't change under O-, like our daily stick save.
Indian Mafia has its hooks into Bollywood!
Indian mafia - Wikipedia, the free encyclopedia
Which might explain the poopon maknee video:
YouTube - May He Poop? (an Indian music video translation)
Was ANY anti-bailout message sent to Congress? I don't think so. If we had organized the resources of this board we could have defeated a high profile legislator. But we are a nation of individuals, for better or worse.
I take the blame.
I wonder if GWB is watching Lassie right now.
With a half-empty bottle of JD.
Say what you want about GWB, but I'd love to party with that guy.
PeakVT writes:
I'm glad everyone liked that credit card bond link. And I hope the CC industry chokes on its own debt and cuts everyone's limit by 80%.
But that would reduce my ability to stimulate the economy almost into the 5 digit range.
Again. thanks for bringing it up. Byz is right, it cannot be emphasized enough. Everything we've been doing for the last few months has been predicated on infinite appetite for USG debt. FAIL.
Rob Dawg writes:
PeakVT writes:
I'm glad everyone liked that credit card bond link. And I hope the CC industry chokes on its own debt and cuts everyone's limit by 80%.
The letter was already sent - bet you thought it was junk mail.
I want to throw dubya up in the air, watch him spin and land in the splits.
Did anybody but me catch that in O's acceptamce speech, he said we were in the worst financial crisis in a century?
That means since 1908. That means he thinks we're going into depression.
Worst financial crisis in a century doesn't necessarily imply worst economic crisis in a century.
But it's a hell of a good start.
"Again. thanks for bringing it up. Byz is right, it cannot be emphasized enough. Everything we've been doing for the last few months has been predicated on infinite appetite for USG debt. FAIL."
It's all about crowd-out of debt. Why lend to consumer financials going into a bad recession when you can get a guaranteed return from the government.
I think it is probably Thomas the Tank Train.
Less meat to the story line to have to follow.
ac wrote:
Really? You have a cite from an authoritative source for this silly assertion? Tell you what, go get your ivy league economics phD before spouting your silly nostrums.
Sliver up, glod down.
Please explain, to a PM novice.
It's all about crowd-out of debt. Why lend to consumer financials going into a bad recession when you can get a guaranteed return from the government.
And then there is international crowding out. Like bunds or gilts at higher interest rates?
I prefer to be guy #1
I am guy #1...
Except that my Toyota is seven years old instead of five.
Sick. Ben can get outside the margins. That's freaking me out.
But now guy #2 is getting a tax-free government bailout.
Lawyerliz writes:
Did anybody but me catch that in O's acceptamce speech, he said we were in the worst financial crisis in a century?
That means since 1908. That means he thinks we're going into depression. He didn't smile very much, for a winner.
I caught it. But at times, maybe most times people hear what they want. He has some educating for the electorate. He will have to reel out carefully and regularly what this all means. He also said that the solution will be found the '...same way Americans have solved every problem--from the ground up...' or words to that effect. He's anticipating the need, as I 'heard' last night of neighborhoods working together with areas to re-knit communities back to productive units of our society.
This will mean many things that I won't bother listing here. Suffice it to say that I will be meeting with local officials in my town with a specific action plan for how to address what will almost certainly deteriorate into the makings of civil unrest should nothing proactive be done.
And yes, I think he is comparing it to the worst that has happened. And to that, I simply shrug and wonder, why not now, why not me, rather we do this now than leave it to another who won't see the other side of all this for what it is, and that is a better day.
Rob Dawg writes:
PeakVT writes:
"I'm glad everyone liked that credit card bond link. And I hope the CC industry chokes on its own debt and cuts everyone's limit by 80%."
So PeakVT, that would mean the heavily indebted people would be forced into default by 30% interest rates, since they would all be over the limit in an instant. That would put an end the CC companies and their backing banks PDQ. For those of us not in debt, I guess we would then be issued new SS cards with mag stripes, as Uncle Sam would be the only card issuer standing
Rob,
"Everything we've been doing for the last few months has been predicated on infinite appetite for USG debt. FAIL."
At what price? People are flocking to USG debt at essentially -3% interest. So there must be a larger market if the return was at least positive in real terms. No fail yet.
Gold down, dollar down, Dow down, oil down. Where's the upside?
And as for his limited smiling. Yes, he's tired and his close personal friend and Grandmother just died.
But, he also has had a full load of hay dumped onto his splendid splinter of a frame. That would be enough to give the best of those amongst us pause and cause to reflect soberly.
Silver has far less above ground supply than gold. Silver is a byproduct of base metals mining (i.e. copper/sync) which at present is cut back significantly. This might result in silver shortage.
Speed writes:
Gold down, dollar down, Dow down, oil down. Where's the upside?
Short gold, short the dollar, short the DOW, short oil
RE writes:
It's all about crowd-out of debt. Why lend to consumer financials going into a bad recession when you can get a guaranteed return from the government.
And then there is international crowding out. Like bunds or gilts at higher interest rates?
And don't forget the Chicomms committing to internal investment.
There's a real possibility of a Treasury issuance failure. There just isn't anyone, even Roubini or Rogers who can tell us what would happen.
Pissed off is also right that crowding will have a negative result.
I will be sending a headless pony to guy #1 and guy #2. Wakey wakey...
I am debt, the destroyer of worlds.
oneworldcurrency yogi writes:
"Sliver up, glod down.
Please explain, to a PM novice."
Markets are insane? Market actors are insane? Someone was long glod/short silver and got a margin call? Who knows? These markets make no sense to me anymore.
Thanks for the link...the scum at Glodman sachs are really pissed...BAHHAHAH
Goldman Layoffs: More From The Front Lines - Dealbreaker - A Wall Street Tabloid - Business News Headlines and Financial Gossip
http://research.stlouisfed.org/publications/es/08/ES0828.pdf
Predicting PCE Synopsis: Result 2008 Q3 = -2.3%
!
St. Louis Fed: Series: ALTSALES, Light Weight Vehicle Sales: Autos & Light Trucks
Auto Sales are updated for a new chart
(Seasonally adjusted)
Really obscures the boom times with many SUV sales not qualifying under 'light-truck
"Except that my Toyota is seven years old instead of five."
You lucky bastard. Our Honda gave out 6 months ago and I walk/bike most places now. We're trying to get by on just one car now.
Crazed volitility going into the last hour? DOW ends in green?
There's a real possibility of a Treasury issuance failure. There just isn't anyone, even Roubini or Rogers who can tell us what would happen.
I'll take a shot at what would happen:
The fed takes the treasuries on its own balance sheet and issues credit directly to the treasury. Bernanke has already said he would keep long term rates low by doing this.
"Yes, he's tired and his close personal friend and Grandmother just died."
Plus now that the excitement is over, he's probably beginning to think about the puppetmasters will be making him dance for the next four years.
"The fed takes the treasuries on its own balance sheet and issues credit directly to the treasury. Bernanke has already said he would keep long term rates low by doing this."
That's called raw printing. Debt markets don't take too kindly to these sorts of actions when they sniff them out.
But now guy #2 is getting a tax-free government bailout.
I'm okay with that.
Guy #1 (me) is now interviewing with Canadian companies.
Ref: People walking away from debt.
The real moral hazard for bailing out the banks and requiring taxpayers to fund it is the ease people are showing in walking away from debt. Add in the MSM touting these occurrences(jingle mail) and cries of "it's just a business decision" the consumer is making and you have disaster.
The problem is they are right to a degree. Our entire system is collapsing and going to the public trough, why shouldn't the taxpayer take advantage as well?
What will be necessary for this to be reversed and stopped is many prosecutions of fraud from the top down. A few show trials of high level executives, caps on executive pay, and tighter restrictions on companies taking public funds would help immensely.
My thought is this has gone too far and the problem is too large. The economy will suffer increased job loss and further bankruptcy in the public and private sector. The court system will be overwhelmed. Legislation will be passed with even more unintended consequence.
I continuously read about people's "neighbors" who have walked away and hurt property values or lived an enviable life fueled by "abuse of debt". Accountability and responsibility is taught primarily through societal norms. The norm is now default. Thank the government for deficit spending, the marketers for making us consumers, the banks for lax lending standards, the education system for not teaching personal finance, and the consumer for consuming.
Remember the entire chain of debt abuse when you decide it's ok to support a new law with draconian measures holding your neighbors responsible. Resist the urge to punish the relatively innocent simply because the people who benefited the most(banks, large conglomerates, wall street...) are untouchable.
Debt as a privilege with very high lending standards is a welcome return of sanity. Greed and displays of wealth engendering shame from society. Business not requiring high quarterly growth to fuel executive pay through stock options and increased share price at all costs. People living simply and in touch with their community and a better understanding of civic duty. The cycle is swinging back into balance. A few years of hardship will be the price. Necessary and welcome. IMO.
Anonymous writes:
"Crazed volitility going into the last hour? DOW ends in green?"
Looking at the charts, it's as if the market is sitting there saying to itself: "Now What?"
read somewhere that 800k ran out of unemployment in oct and 200-300k run out nov and dec.
do they count them as unemployed or do they just though the cracks?
That's called raw printing. Debt markets don't take too kindly to these sorts of actions when they sniff them out.
Pissed Off In California
AKA monetizing the debt, and the short road to perdition where inflation resides
Are the "useful" demands for silver and gold the same, albeit smaller than their wealth storage demands?
Coming soon to a city near you!
New York City Must Rescind Tax Cut, Reduce Jobs, Bloomberg Says
By Henry Goldman
Nov. 5 (Bloomberg) -- New York City, reeling from financial turmoil on Wall Street, must roll back a property tax cut and reduce its workforce by 3,000 to help shrink a $4 billion budget gap over the next 18 months, Mayor Michael Bloomberg said.
The job cuts, including the firing of 500 workers, and a 7 percent property tax increase starting in January, were included in a budget modification plan Bloomberg presented in City Hall today. The job cuts represent part of an effort to save $1.5 billion to offset projected declines in tax receipts, with the city now facing $3.1 billion less in revenue in fiscal 2010 than last year, the mayor said.
New York City Must Raise Taxes, Cut Jobs, Mayor Says (Update1) - Bloomberg.com
Say what you want about GWB, but I'd love to party with that guy.
Struck me as the kind of guy who'd bird dog your girl and then puke on your couch.
Maybe the trick is you party at his house.
The fed takes the treasuries on its own balance sheet and issues credit directly to the treasury.
Angry Saver | 11.05.08 - 3:03 pm | #
The inbreeding strategy!
Robert says,
And don't forget the Chicomms committing to internal investment.
There's a real possibility of a Treasury issuance failure. There just isn't anyone, even Roubini or Rogers who can tell us what would happen.
Completely agree. I have been worried about that for quite a while. It is bound to come to the forefront sooner rather than later. Treasury issuance is at huge levels at this point and most demand is only on the short end which competes with rollovers.
As to China. From China financial markets a few days ago:
There are rumors that the MoF has prepared a report saying municipal governments are under liability management difficulties, and passed the report to the State Council. People are guessing that issuance of provincial government debt may be coming soon.
I asked him to track this for me, and the next day he wrote the following:
Normally in the past the most important resources for regional governments are sales of lands (ranging from 40% to 60% of total regional budget as said) and fees (not taxes). But now land sales have sunk with the decline in real estate. This obviously violated the regional budgets.
I am guessing the regional budgets are thought to be facing pressures both from declining income and expanding expenditures as a part of fiscal expansion. The rumors was first quoted by China Security Journals yesterday, and then spread widely today. It is also said that MoF has established a sub-dept focusing on regional liability management under their department of budget. ...
So PeakVT, that would mean the heavily indebted people would be forced into default by 30% interest rates, since they would all be over the limit in an instant. That would put an end the CC companies and their backing banks PDQ.
Ok, so I shot of my mouth a bit fast. But at this point the heavily indebted people are likely to default anyway, and I'd like to see both sides of the ridiculous expansion of unsecured credit get burnt. And how.
That's called raw printing. Debt markets don't take too kindly to these sorts of actions when they sniff them out.
The bond vigilantes now work in Asian and and European central banks.
Q: How did we (mis)manage things so badly?
A: Wall street lies.
The system is insolvent.
Is there any good economic news? Anything? The plus side of my ledger sheet is still empty.
Dawg sez off is also right that crowding will have a negative result
Rob, please define "negative".
Hahahaha.
We're trying to get by on just one car now
That's one reason I've restricted my job searches to Seattle and Portland. Not only are they kink-friendly, they've got fairly good mass transit. Portland is definitely better but the job opportunities aren't anywhere near as good.
I... like the rain, too.
The Fed will not be able to monetize the borrowing needs of the government without a hyperinflationary collapse of the currency. In the absence of willing lenders, unwilling ones will have to be found.
Didn't Bloomberg just say a few days ago that he would try to avoid layoffs by finding other positions within the city for "displaced workers"?
Things are moving quickly.
The "Rugman" is back on CNBC.
That's called raw printing. Debt markets don't take too kindly to these sorts of actions when they sniff them out.
No, no, no. It's not called printing, it is called quantitative easing.
12th Percentile | 11.05.08 - 2:11 pm
what if that guy drinking beer last year was in the housing projects but this year is in your hood....
i hand out to hand up at my expense is BS, where as a hand up and production at my expense are two different things
"The bond vigilantes now work in Asian and and European central banks."
Now I understand why the bond market hasn't crashed.
We're writing Treasury/GSE prospectuses in English and the bond vigalantes speak Mandarin.
i>oward Horne writes:
Dawg sez off is also right that crowding will have a negative result
Rob, please define "negative".
Ref: anti-matter.
Too esoteric? Okay, think "Ghostbusters" and "Ray, what do you mean by 'bad'?"
Obama moves into the Whitehouse:
George, where's all nice antique furniture gone to?
- Oh well, we rented most of that & it was repossessed.
George, there's no more silverware...what did you do with that?
- Sorry Obama, me Daddy borrowed that and then melted it down.
Jeeze George!...At least the damm Whitehouse is still here.
- Heh, heh, yes it is...sort of. You'll have to check with the Chinese owners to see if they'll let you stay as tenant.
Poor Bloomberg, all that wasted goodwill on "fixing" term-limits.
The backlash will send him into an early retirement. Maybe we can clawback his billions.
Yancey Ward writes:
The Fed will not be able to monetize the borrowing needs of the government without a hyperinflationary collapse of the currency.
Not when the borrowing needs are an attempt to fund the entire US economy with whip money out of Uncle Sugar's breast pocket, no.
Silver is a more fragile market than gold, a lot smaller in terms of supply and trading volume.
It's debatable whether there are more above ground stocks of gold or silver, as both have been mined for centuries and very little has disappeared.
But it's clear that bigger stocks of gold can move quickly, especially from central bank accounts and large dealers and traders
It would be a lot easier to engineer a short squeeze of silver than gold, especially in terms of requiring delivery of physical metal.
Like I said, ETFs are systematically devouring 20% of global silver mine supply. You could capture a lot of silver physical delivery capacity by stockpiling shares of SLV. Then, you could deliver the shares and receive bullion in return.
But to get enough SLV shares to engineer this, you would have to start accumulating well ahead of time.
There's no question that silver ETFs increase the potential for a short squeeze on physical. It would not have to be engineered by one participant but rather could be done by several working independently on the same perceived opportunity.
Is there any good economic news? Anything
all thios talk about the fed monetrizing treasury issuance highlights the fact that the treasury doesnt need to issue debt to spend money and we dont borrow money from china or anyone else when the federal govt spends. the fed buying treasuries is operationally the same as if the traesuries were never issued in the first place. the traesuries account at the fed is debited and a members account is credited. reserves are increased by the amount of the treasury spending and the funds rate drops to 0 as there are no securities used to drain the reserve add.
there will never be an issue of not being able to issue traesuries or the chinese not buying or a default if they chose not to default. we may ge inflation if all those excess reserves get lent out but that certainly doesnt seem to be happening.
When I read headlines like this on Yahoo Finance
Dow Down 300 as Investors Shift Focus to Economy- AP
I have to sigh and think, "making money won't always be this easy, you must remember that". And then I think, "what were said investors focusing on before?" and that is a question I just can't answer.
Thanks for the PM analysis. I trust the filtered posters here more than Google.
Are the "useful" demands for silver and gold the same, albeit smaller than their wealth storage demands?
Silver is used very heavily in industrial applications and therefore used up with the notable exceptions of ETFs like SLV and CEF. Gold much less so. Gold is primarily a store of value and as such in vaults of central banks, ETFs (one hopes) and in the ground (either backyard or to be mined). Most gold ever mined is still available above ground.
Off topic and hopefully closing the subthred: ETFs have been placing massive demand for physical silver creating their own weather until prices faltered. As much as 30% of annual production. Just like home prices, it worked until it didn't.
Right, silver is an industrial metal generally, and, generally, only a precious metal in times of uncertainty.
sg....that's quite the explanation!
It's like a magician pulling a coin out of my ear.
Gold down, dollar down, Dow down, oil down. Where's the upside?
My puts.
hat tip to Rich for the EEV call out a few days ago.
Rich, if you ever want to start a blog or newsletter, I'm in.
Rich et al
Thanks re: EEV
unwilling lenders will have to be found
Paging Rob Dawg!
Paging Rob Dawg!
Its just a matter of time
Before you make up your mind
To give up all that cash
That you've been hiding
It's just a question of when
I've told you time and again
We'll get all that cash
You've been denying
Sooner or later
Debt is gonna get ya
Sooner or later
Obama gonna win!
I have to rib you, Dawg.
You remind me too much of the future-past-me that could have stayed in Simi Valley in 1990.
Looks like no magical mountain at the end of the market's journey today.
Completely off-topic.
Today's science lesson:
Rainforest Fungus Naturally Synthesizes Diesel | Wired Science | Wired.com
Yeah, my puts just got interesting too.
Auto Sales are updated for a new chart
Sweet. Here's that data as sales per 1000 people for the past year.
10/01/07\t52.74
11/01/07\t52.85
12/01/07\t52.56
01/01/08\t50.38
02/01/08\t50.33
03/01/08\t49.46
04/01/08\t47.53
05/01/08\t46.67
06/01/08\t44.72
07/01/08\t41.01
08/01/08\t44.85
09/01/08\t40.78
10/01/08\t34.39
eev is still a good buy....Could run to 140 on a whim...or hedge fund collapse or currency collapse..etc etc etc...
The American economy works much like my weekly vacuuming. I move the easy chair to vacuum the carpet underneath...yes I do, really. And what do I find every week. Gobs of coins.....a plethora of riches. It's amazing wealth generation. I put the coins in my pocket then sit in the chair to contemplate my credit card purchases for the week, feeling much richer.
The next week...there are more coins under the chair! I am now expanding my vacuuming schedule to once a day, going forward.
Since y'all talking about silver, these are interesting graphs on physical demand versus paper demand -
Premium for Silver Coins Soars - SilverSeek.com
http://goldandsilverblog.com/wp-content/uploads/2008/10/chart1.jpg
http://goldandsilverblog.com/wp-content/uploads/2008/10/chart2.jpg
This is a repeat of what happened during the John Law bubble (and probably many other bubbles). Physical demand for real metal rose sharply as people exited the paper world as quickly as possible.
"Silver is a byproduct of base metals mining (i.e. copper/sync) which at present is cut back significantly. This might result in silver shortage"
Yes, might be hard to finance a lot of new mines, wellheads, etc.
Taken for Granite writes:
Say what you want about GWB, but I'd love to party with that guy.
Struck me as the kind of guy who'd bird dog your girl and then puke on your couch.
Maybe the trick is you party at his house.
Exactly. Hear he has a nice aquifer ranch in Venezuala - nice view, and all of the northernSAmerica vices you could want.
Bill Payer writes:
sg....that's quite the explanation!
It's like a magician pulling a coin out of my ear.
exactly like that if your ear is the issuer of coins
Okay boys and girls, I have located and vetted our new Treasury Secretary:
Presenting Andrew Lo, Director of the MIT Laboratory for Financial Engineering:
Wall Street's Extreme Sport - NY Times
And... abstract of the paper that explains what happens when people play with models:
http://faculty.chicagogsb.edu/amit.seru/research/default_rsv6.pdf
(Lo made the rounds back in 2004 trying to tell them how fragile the whole economy was. The Chicago guys above just came out with their earthshaking paper this year).
SG
The cost of doing that is higher rates. Look at US givt CDS. Arguable the risk free rate just became risky and hence the capital market implications are a 50 bps risk increasee for every compny across the spectrum. yet some more good news for valuatio
Boy, I really screwed up.
sync = Zinc.
I must have reentered my old stomping ground, the concurrency ward.
Re: Wired
The rainforest has tremendous biodiversity. The mushy green team wins again. And no, you can't patent a fungus.
SG,
The FED and WallStreet with all their financial alchemy would have us believe that there's a free lunch somewhere.
There is no free lunch. Never has been, never will be.
ew thread up
Tim @ 2:27 - Crossing a picket line is called 'scabbing' and you do it at your peril
I always did like watching that, especially the part where the crocodiles swallow the wildebeasts whole.
Indeed. Of course, as we all know the vast majority of the wildebeast will migrate safely.
Ten minutes to market open, we're getting a lot of action on the first-order dow futures exchange.
i agree there is a "cost" to higher deficits which is genarally inflation as public sector spending helps boost agregate demand and inflation and a fed response.
i was only trying to highlight that people who were talking about the fed monetizing debt were correct and it speeaks to the operational aspects of federal govt deficit spending.
sg under a different moniker a few months ago got the thread into a tizzy with exactly the same comments.
It is not time well spent.
You remind me too much of the future-past-me that could have stayed in Simi Valley in 1990.
Broward Horne
No argument here. You couldn't have paid me to live in Simi in 1990. I had sold all my non personal use real estate by Spring 2006. What's left is at such a low cost basis as to make no matter. With low cost of living it is hard to beat Southern California. My only distress is in the ability of government to increase taxes at every level. LA is now 8.75% Sales Tax and 9.3% for the rich aka $46,000. I honestly have no idea where the money is going. Take those four.; you earn a $1 were 7.6% is off the top. Then another 7.6% and 31% income tax and then you buy a gallon of gas with an effective rate of 18%. Your $1 of effort buys you $0.44 of gasoline. And those 44ยข represent enough profit for everyone involved to pay their taxes.
"Lucifer's Inverted Hammer writes"
Love the handle. My favorite comet book.
Worrying about "Net Worth" has been a loser, doom-and-gloom, unpatriotic move.--Average Joe
I can't imagine seeing it that way. The guy you mentioned who focused on maximizing short-term consumption will actually be able to consume less over the course of his life than someone who builds wealth.
Consider the guy you mentioned who saves $1000 a month. Eventually that money, invested in his own business or in other people's businesses, will earn returns that supplement his income from work. He is free to take a job that pays less in the short term but provides long-term opportunities, while the month-to-month guy is dependent on his paycheck for life.
At some point people want to retire or scale back working, but how will the month-to-month guy do that? If you say he was saving for retirement, then at some point he must have abandoned his month-to-month philosophy and begun saving money.
When it comes to measuring wealth, there's income, net worth, and to a lesser extent cash flow. I can't understand someone saying net worth doesn't matter, unless they're saying wealth doesn't matter to them.
Planning to be broke all your life is completely stupid. I think you agree but are saying stupidity is the norm.
The credit crisis and the stock market are clearly decoupled now. The credit issues are priced in. Tight credit doesn't mean crap if people don't have jobs forcing them to choose between mortgage payments and eating. You've gotta love Saudi Arabia...those good old friends of ours who cut supply at the worst time. I can't wait until gas spikes above $5 per gallon next Summer with O-shit running the show.