Sorry for the OT question: I'm looking for data about the Canberra housing market, preferably with explanation of the likely implications for a price bust in the medium-term. Any suggestions for where to look?
There are a lot of impoverished and unemployed risk managers out there who sounded the warning. Look where it got them. Look out below corporate America. Buh-bye !
By ANNE D'INNOCENZIO, Associated Press
Last updated: 2:25 p.m., Friday, December 19, 2008
NEW YORK -- Retailers are accelerating their use of survival tactics -- slashing prices further and pulling merchandise off shelves to send to liquidators -- as the number of holiday shopping days dwindles. But January and beyond look scarier for even relatively healthy merchants as the passing of the holidays give shoppers no reason at all to spend.
\t
What's worse, the industry expects a rise in returns after the holidays as shoppers seek to convert their unwanted gifts to much-needed cash as they struggle with rising layoffs, tightening credit and shrinking retirement funds.
By CHRIS CHURCHILL, Business writer
First published in print: Friday, December 19, 2008
ALBANY In recent weeks, the drumbeat of local layoffs has been thundering.
\t
This week alone, about 100 jobs were eliminated at Rensselaer Polytechnic Institute and 15 cuts were announced at Momemtive Performance Materials Inc. in Waterford.
Then, on Thursday, Plug Power Inc. in Latham said it would eliminate an additional 90 jobs.
...
Since November 2007, the Capital Region has lost 1,200 nonfarm jobs. And the unemployment rate has climbed from 3.8 percent to 5.2 percent.
That's the region's highest November unemployment rate since 1992.
Moreover, there is this troubling sign for upcoming months: The three pillars of the area's employment education, health care and government are showing signs of weakness.
Be sure to read this interview with President Bush in today's WSJ for more interesting comments about the policies of the current administration. Yet he remains a believer in the cyclicality of politics, and his own stamp on the party. He says a younger generation will "take our philosophy, which is right of center -- compassionate conservatism is how I describe it -- and win." He doesn't believe change requires an ideological shift, but rather "new faces, new voices, fresh energy" that take "the same basic philosophy -- lower taxes, strong national defense, a belief in a responsibility era."
Yeah, the responsibility era. That's my impression after watching the TARP being given out willy-nilly with few, if any, consequences for those at the top of the aided companies.
RE writes:
Gold price is the true barometer of hyperinflation. To me, the only question is when it goes vertical, not if.
Funny, Rich's line has been resonating with me all day too. We have the same argument, i just lacked the guts to give into my own recognition. The 'I wouldn't join any club that would have me as a member.' problem.
Yes, reporters, blame the minorities, the conned and suckers across the world. Never mention that everyone involved was getting their cut of the action. Then the Gigantic Ponzi scheme collapsed. Now the taxpayers are holding the bag, mugged by Wall Street and the White House.
Looking back, Keith B. Hennessey, Mr. Bush's current chief economics adviser, says he and his colleagues did the best they could "with the information we had at the time."
That implies a flaw related to quality or completeness of information, whereas the record shows an absence of experience, judgement or, if you will, wisdom.
This grown man, responsible for advising the President, is blaming data.
The 'I wouldn't join any club that would have me as a member.' problem. Kondratieff canuk | 12.20.08 - 7:31 pm | #
I lack that social element as well which is why I call myself a gold investor and NOT a gold bug. I would actually be a very strange breed of a gold bug and so I studiously avoid the classification.
CR, without Tanta's presence, you may have to rebalance your natural "cool detachment" style to more heavily-weight your recent "acerbic wit" style: there are far too many people who need their feet held to the fire for what they said, and did, and did not do. The "history rewriting" phase is in full swi
When the other guys do bad stuff, there are "ideologues" at work, but when your own guys do it, they're called "pragmatists." It's interesting to note that the term "ideologue" was not used by The New York Times in the linked article. It was added by CR.
I lack that social element as well which is why I call myself a gold investor and NOT a gold bug. I would actually be a very strange breed of a gold bug and so I studiously avoid the classification.
RE | 12.20.08 - 7:36 pm | #
heheh..well put. Well, i used to trade in gold, and manufacture in gold. I know the shite inside and out, backwards and forwards, as a metal. I know the effect it has on people. I know its alloys, and its melting point. I know its production cost. I know its swindlers. I know gold. Here i am sitting on the fence.
Its all about confidence in USD. I know i should be buying, and i have the perfect argument why.
Tubes - "What Do You Want From Life?"
Hazard - "Escalator of Life"
Tubes again - "White punks on Dope"
Anti-Flag - "The Consumer's Song"
Bob Seger - "House Behind A House"
Rage Against the Machine - "New Millenium Homes" from the aptly name album "The Battle of Los Angeles"
This whole economic mess is no surprise to me but the magnitude is. I could see people substituting credit for income in the early 90's. Bush along with many others have blindly out fooled themselves with charts and bad math. Any Idiot knows never lend money to someone who can't pay it back. Now the same thinking is being plated out in reverse by the same idiots who got us here. I am kind of tired of it. The Government bubble is going to explode just like the rest.
Sorry, CR, but I can't let pass the idea that Fannie and Freddie were a small part of the problem. They were the biggest players in the mortgage market, and both went under- and they didn't go under holding the "good" part of the the mortgage market.
Congratulations.....Bush has created a new hypertext linkage definition of kleptocracy* and massive US financial ponzi scheme to keep the bullshit US economy going where credit must flow like a raging river or Americas house of cards goes bust trumps everything else.
*government by those who seek chiefly status and personal gain at the expense of the governed.
Mission accomplished and BOL to 98 or 99% of Americans for at least next 10 years.
RE writes:
When gold lease rates outpace corresponding treasury interest rates, you have a pretty solid case. It hasn't happened very often in history...
RE | 12.20.08 - 7:48 pm | #
It's all about the USD. Some of my very knowledgeable friends, whose opinion i respect, say it won't tank. I say it will. The problem is i cannot define 'tank' to my own satisfaction. I can see a world economic dislocation, but i cannot see a changing of the guard in currency base - not without a war, and there is no losing this next one. Currency won't matter.
It all goes back to 1913. The root of all evil begins when the money-maggots took control of the issue of money. Period. Case Closed and BOOK IT. We never had a chance after this.
There is no amount of reality that will ever get through to the true believers. My boss, for example. Named his dog "Reagan." Has a George W. Bush bobble-head doll in his office. He parrots revisionist propaganda - blames the economy on the past two years of Democratic control of Congress, of which Obama was a member, so it's his fault.
A mind is a terrible thing to waste. Or, a waste is a terrible thing to mind. Either way.
El Cliffo writes: When the other guys do bad stuff, there are "ideologues" at work, but when your own guys do it, they're called "pragmatists." It's interesting to note that the term "ideologue" was not used by The New York Times in the linked article. It was added by CR.
I think it's a fair distinction here. Pragmatists do what is expedient at the moment; ideologues ignore the situation and follow some external rule-set. We've seen what happens when you follow either path too much, so it's no a matter than one or the other is always "good". In the case of the Bush Administration, it's clear that it was ideology that drove the blindness to what was happening at the moment.
Yancey Wardwrites: Sorry, CR, but I can't let pass the idea that Fannie and Freddie were a small part of the problem. They were the biggest players in the mortgage market, and both went under- and they didn't go under holding the "good" part of the the mortgage market.
I'll defend them. While their hands were certainly not without blemish, the attempts to rewrite the historical record to make F&F the prime culprits is revisionism pure and simple. Let the record show: it was private-sector lending that drove the worst excesses of the bubble. F&F were a small part of the problem.
Niall Ferguson:"Excessive debt is the key to this crisis; it is the reason we are confronting no ordinary recession, curable by a simple downward adjustment of interest rates. It is the reason we still have to fear, if not a second Great Depression, then very likely the biggest recession since the 1930s. We are living through the painful end of an age of leverage which saw total private and public debt in the US rise from about 155 per cent of gross domestic product in the early 1980 to something like 342 per cent by the middle of this year."
Looking back, Keith B. Hennessey, Mr. Bushs current chief economics adviser, says he and his colleagues did the best they could with the information we had at the time.
This is an outrageous claim. By 2005, econ blogs were full of commenters who were very clear on the magnitude of the housing bubble, the lending scams and lack of prudent standards of the mortgage industry, the massive growth in no-doc, 1/o and other exotic mortgage products. Wall Street's securitizations were widely derided as full of toxic crap...how many thousands of comments have we waded thru making that observation.
It's all about the USD. Some of my very knowledgeable friends, whose opinion i respect, say it won't tank. I say it will. The problem is i cannot define 'tank' to my own satisfaction. Kondratieff canuk | 12.20.08 - 7:56 pm | #
I don't think it is quite that simple. I believe it is about money supply vs. above ground gold supply. Competitive devaluation, which I consider inevitable, will result in a big edge for gold. Note that China has already announced that it will unilaterally increase the money supply by 17%. The game will soon start in earnest. Even the Eurozone will be forced to play the game, however reluctantly.
These coming devaluations might very well undermine confidence in a number of currencies including the U.S. Dollar. I think that the Trotsky/Heinz article provides an excellent and balanced overview of the present situation.
Many years ago Robert Waterman (In Search of Excellence: Lessons from America's Best-Run Companies) presented in an interview two examples of responses to unforeseen events in corporate America.
Ford had developed something called a 'magic door-gate', an option for some of their station wagons, which could become detached from the vehicle and injure people, sometimes severely.
At about the same time, a Coleman lantern or stove had exploded.
Ford looked into the public relations aspects at their ensuing board meeting, developing strategies to contain the damage to their brand. And 'old man Coleman', dispensing with meeting protocol, essentially instructed his board to take whatever steps were required to assure, absolutely, that no person ever again would be injured by one of the company's products.
What I miss among all the finger-pointing at every level of this mess is someone with Coleman's clarity, intentions and moral clarity.
Is Cojure concerned as I am at the run up in beggar ty neighbor currency manipulations and concurent repudiation of international credit necessary for world commerce? Or did he eat a particularly disagreeable cat for supper?
mp, you're on the record waiting for unified political action... uh, while we hold our breaths waiting on that one (esp. in California), care to share some of the "positive developments" and "negative developments" we should be a-waitin' for the horsemen to be ridin' in on?
If there is going to be one silver lining to this epic buster cluck, it will be the economic destruction of Iran's nuclear programs. You really don't want the IDF doing this kind of work. Everyone here does understand the Israelis have submarine launched nuclear cruise missiles, yes?
--
Watching Cowboys game with ex-Marine neighbor. He stood up with his palm on the heart during the national anthem. We are Cooking some T-bone for simple dinner.
c&c, Tell the truth those RATMs were my second and third choices because I couldn't remember the #1 from P.I.L.
Same Old Story - Public Image Limited
Some people got: more kicks than halfpence And cry for attention, like cracks in the pavement And all of this pointed, like perfect TV When you're sowing the wind, you reap the whirlwind
Who gets the mansions - we get the ruins Same old story Your flexible nature, serving no purpose Like a terrible artist, using no shadow And the king of the castle, is pulling new shapes Gilding the lilies, and all of them fakes
Typical tragic, small house and small street Narrow the outlook, small minded complete The emperor's new clothes, get clearer and clearer Dictate to the fingers, that tighten the trigger
And the king of the castle is pulling new shapes Life is a poison, it begins at home Pride is a trinket, a security blanket You could tangle the spiders on the webs that we weave
I was far from the only and by no means the first person to recognize that CA, AZ, NV and FL were bubble markets, but just as a point of reference, I went back and looked up a couple of my early posts on the subject. These were from July 24, 2005. Certainly not my first post on the topic, but I would say by mid 2005 it was a general consensious among experienced Real Estate investors that CA, AZ, NV and FL prices were unsustainable. (link: Property Ladder TV show on TLC )
If history is written by th winners - who's the winner here?
In California F&F were not the dominant players after 2004 - valuations outstripped the conforming limit. Wall Street "risk based" rate sheets ruled the day - EMC, DB, Deloitte, Lehman, et al - had a loan for everyone.
However, outside the sun states, conforming balances were dominant. I suspect that geography plays a big role on when and whether F&F were more culpable than the privateers.
All of which begs the question- why didn't the WH have accurate data? Since HMDA is mandatory on any loan, it stands to reason the rest of the loan data was also available.
"After the resignation of Yves Leterme, the king needs to find a successor quickly. Not one of the ruling parties is asking for new elections," De Standaard said on its front page. Leterme has been in power only for nine months as leader of a fragile, five-party coalition meant to ease a dispute between Belgium's linguistic groups that had reignited speculation the 178-year-old country could break up.
Ah Belgium... finally a political unit that makes California look better-run!
Almost two years, "Dr Strangemoney," a commenter here, objected vehemently to Conjure's "Global Financial Meltdown Clock." In fact, he launched a personal attack against mp.
mp, in the interest of harmony, asked Conjure to discontinue the clock near midnight. Conjure acceded to mp's request as they are friends of many years.
Shortly before the collapse of Bear Stearns' hedge funds, someone asked me what time it was. I said it was too late, the clock had already struck and had melted down. I said, "If you don't know what time it is by now, Conjure can't help you."
If you'd prefer, we can discontinue Conjure's clock.
As for California's problems, the Governor won't be able to enact the pay cut... last time he tried that the Controller said the "computers can't handle a pay cut".
@When gold lease rates outpace corresponding treasury interest rates, you have a pretty solid case. It hasn't happened very often in history...
RE | 12.20.08 - 7:48 pm | #
"Looking back, Keith B. Hennessey, Mr. Bushs current chief economics adviser"
Everytime this clown was on teevee in 2008 (usually after the jobs report or the gdp #'s came out) all he did was cheerlead and talk about how great things were. He is not an economist, he is a spinmeister!
mp, I find the clocks have a bracing effect on the uninitiated, and would like them to continue (even if two separate clocks seems to be a difficult concept for most to follow... perhaps you need an FAQ?).
The clear implication is the information was and remains available.
There can't be more than a very small number of those now dodging criticism who were not presented with the necessary information - there are examples in the NYT article - and who refused to credit what they were being told.
My guess is they believed they were being bored by idealogues, so discounted or rejected what they heard.
Belgium is the Manhattan of the EU. They had a horrible scandal of pedophilia and corruption that led to mass protests years ago and never really recovered.
During the height of the investigation into the role the police, judicial and legislative into concealing the horrific allegations against the powerful the fire department symbolically sprayed down the legislative building to clean it out.
The Belgium government never really regained the confidence of the governed. Google it. Fascinating reading of a very dark nature.
Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in.
How, he wondered aloud, did we get here?
Please Mr. Bush come over to my house for few hours and I can explain what happened...get out of your ivory tower (house) for a short trip down main street
I saw an interesting ad on CNN as I sat in the waiting room outside the fitting rooms at a dept store. It was for cookies. Buy the cookies, eat them for breakfast and lunch, and lose weight. Plus! Save $1500.00 a year on your food costs! They came down heavy on the savings for food.
I have to admit, the B&B Dopes/Gangistan stuff gets to me after a while. But this new side of Jas, with the 35-year old son and his all-cash Beemer purchase (UST Strips profits, right?) plus a T-bone dinner with an ex-Marine in front of a Cowboys game...?
...dang, Jas, this B&B Dope raises a glass to you tonight.
GOFO Since July 1989, twelve market makers have contributed their rates for lending gold (against US dollars) to the GOFO page on Reuters and at 10am a mean is calculated automatically giving the market, in effect, a gold LIBOR (London Interbank Offered Rate). In 1997 a second page 'GOFOâ was added providing logical data which allows the user to apply the rates to other applications such as spreadsheets and charts. Reuters LBMA07 gives a full list of contributor codes. See also
--
"Jas, you didn't tell him about the born and bred dope thing did you?"
Comrade Kristina ,
You bet I did! People who know me personally don't take offense. He addresses me as big brother and he know big brother knows best!
"Those marines can be kinda touchy 'bout some stuff..."
He knows that I love America as much as he does and he has come to appreciate my insights. He is 100% Scot and I am a big fan of Scots. I really liked Scotland outside of Glasgow. Last year his family and he brought haggis and stuff with him dressed in his family regalia. We have great time.
Well, what are they going to say? We knew, oh yes we knew, but the economy was screamin. We liked the money and power and could care less. People always clean up after us. Thats why god made you little people.
Great idea! And we taxpayers now hold unknown amounts of this stuff. Let's use it to pay for the compensation of Bush, Paulson, Bernanke, and their staff.
U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Federal Reserve Board Governor Ben S. Bernanke, Deflation: Making Sure "It" Doesn't Happen Here
Now that were here I got a pretty good idea where were going.
Yeah, C.R. - Fannie and Freddie didn't have anything to do with this mess. G.S., B.S., L. Bros., etc. were selling peanut-backed securities to the world. And by the way, Fannie's leverage was 150-1, but I guess your idol Paul Krugman (Nobel laurate) never mentioned that. Remember, in 2005 I told you that Fannie and Freddie were disasters in the making and that they would take the whole economy down with them.
I think it isn't exactly right to say that securitization was "an enabler" to the financial crisis. Securitization is hardly a novel concept. Bond Girl | Homepage | 12.20.08 - 9:13 pm | #
Sure it was.
Securitization is and has been a scheme to enable incremental lending by the banking system without increasing the banks balance sheets, apparent leverage, and reserves. When the securitization stopped, the system had two choices: shut-down the lending funded by securitization (credit crisis) or bring all the formerly securitized loans onto the banking system's balance sheets (bank implosion).
Either way, it was the lack quality control on the loans being fed into the securitization process combined with the complete absence of reserves to absorb losses anywhere in the securitization stream that blew up our financial system.
VietnamVet writes:
Yes, reporters, blame the minorities, the conned and suckers across the world. Never mention that everyone involved was getting their cut of the action. Then the Gigantic Ponzi scheme collapsedVietnamVet | 12.20.08 - 7:33 pm | #
Now the taxpayers are holding the bag, mugged by Wall Street and the White House.
The taxpayers had a big role in this also. I do believe.
The much beloved girlfriend wants to make a brief errand run on the way to the grocery story this afternoon so we drive into a 98% traffic gridlock in the local regional mall. Upon reflection, it is our worst immobilized automobile situation since unknowingly attempting a short cut through the St. Louis Zoo on fund raising day about a year ago. The point being that tradition has tremendous inertia. Christmas is the day when gifts are given, and even those aware that going out of business bargains are going to be everywhere in January are still enmeshed in the expectations of the culture.
Every government statistic is manipulated and massaged to suit its interests. If Shawdowstats is to believed, the CPI is 3 to 5 percentage points higher, GDP is 3 to 5% lower, unemployment is 5 to 12% higher (all in absolute terms) than the establishment numbers.
The government has been lying so long that it started believing its lies.
With all the fake happy news clouding everyone's vision, no wonder they missed this crisis.
To CR's credit, he was warning much before than 99% of economists.
It's unbelievable that with all our technology, we had to wait until Dec 2008 to officially declare that the nation had been in recession since December 2007. Shadowstats had us in recession since November 2006.
To top it all, we have no idea where our trillions are going:
"Dec. 12 (Bloomberg) -- The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral."
To sum up, we don't know where we are in the economic landscape and we don't know where we are headed. Prepare for new surprises.
NYT: But for much of Mr. Bushs tenure, government statistics show, incomes for most families remained relatively stagnant while housing prices skyrocketed. That put homeownership increasingly out of reach for first-time buyers like Mr. West.
So Mr. Bush had to, in his words, use the mighty muscle of the federal government to meet his goal. He proposed affordable housing tax incentives. He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.
Concerned that down payments were a barrier, Mr. Bush persuaded Congress to spend up to $200 million a year to help first-time buyers with down payments and closing costs.
NYT: It was an opportunity to address the risky subprime lending practices head on. But that was never seriously discussed. More senior aides, like Karl Rove, Mr. Bushs chief political strategist, were wary of overly regulating an industry that, Mr. Rove said in an interview, provided a valuable service to people who could not otherwise get credit. While he had some concerns about the industrys practices, he said, it did provide an opportunity for people, a lot of whom are still in their houses today.
Ideology and politics can make a deadly cocktail or drug-mashup. Bush was drinking hard and snorting bigtime on his own compounds, listening to that great economic philosopher - Karl Rove.
Commendably, the article does mention Bush's largest campaign donor Roland Arnall, CEO of BK Ameriquest and Bush's pick as U.S. Ambassador the the Netherlands, and White House discussions about Mr. Arnall.
Shadowstats is not to be believed. Look at how perfectly their "measure" tracks official CPI. They don't recalculate anything, they just take the official number and add 3% to it. They way they present it, about how they recompute using the old algorithm and so on, is totally misleading.
[the only people blind to this story were getting paid to be blind.
12th Percentile ]
Agree 100%. No other plausible explanation. Absolutely impossible to gather a room of anything but retards that couldn't have come to the obvious conclusion that big trouble was on the way.
roadkill writes:
yes W is to blame - so now it will be fixed, it may take eight years or more (it term limits are extended) - so everything will be okay
roadkill | 12.20.08 - 9:36 pm | #
"and completely ignores the securitization process (a major enabler to the crisis)."
...it brought to mind two things that I believe were unique to recent events. One, submitting tranches to the ratings agencies in such a way that portions of pools of mediocre loans suddenly became AAA-rated, and two, using subprime RMBS as the basis for synthetic pools, thus expanding the dollar amount of speculation well beyond the underlying pool of actual mortgages.
I admit I am not a fixed-income guy, so maybe I have it wrong, but these strike me as significant drivers in the current crisis.
You have to separate a lack of quality control from securitization as an instrument. This is true for any investment vehicle. I am generally frustrated that this is lost on people.
A question for the group:
If I beat my husband at a 5K race in February (which I will), I get a bottle of Scotch of my choosing. What should I request?
several weeks ago on c-span a panel of economists were discussing the credit crisis. One guy said Freddie and Fannie accounted for about 15% of the problem.
The majority, he said, was wall streets fault, and further, that more than securitization it was a cds (derivatives) problem.
The revised terms and conditions were determined after consultation with asset-backed securities (ABS) issuers, investors, and dealers, and include an extension of the TALF loan maturity from one to three years and additional specification of eligible ABS collateral. In addition, to provide more certain investor access, TALF loans will be provided to all eligible borrowers with eligible collateral rather than distributed through an auction.
Here's how bad the bubble mentality is in California.
I was here during the dot-com crash. Pre crash most of my neighbours were paper millionaires. Within 6 months everyone had lost most of their paper wealth, and atleast half had lost their jobs. Houses in our neighborhood took a brief very fast 20% drop only to recover within the year a year.
Within 3 years better parts of the city I live in (East Bay side of BA) were pushing a million dollars for 20 year old cookie cutter suburbia tract homes.
Wages hadn't risen, weather hadn't gotten any beter, schools hadn't gotten any better. Only lending standards had changed.
I would try to explain to the neighbors that NO house in our city city is worth a million dollars, no way no hell. I would get all sorts of explanations. People will buy here cause houses in the South Bay side are so expensive. And on and on.
We sold our house in 2004. Pretty soon a lot of neighbors were treating us pretty frostily since it was clear we didn't buy the koolaid anymore. We didn't even discuss anything about the house. They would always try to explain why we were wrong selling.
This is a neighborhood that got DECIMATED during the dot-com bust, and yet people by and large refused to see the next bubble on the horizon.
Brilliant is only as good as whether you are right or wrong. Beyond that, it is some sort of personality assessment. Truth is, there are very, very few 'brilliant' guys in this world.
DCRogers writes:
As for California's problems, the Governor won't be able to enact the pay cut... last time he tried that the Controller said the "computers can't handle a pay cut".
That panel and others like them aren't getting at the essence of the problem: gross mismanagement of risk. At all levels. Personal, institutional, corporate, municipal and federal.
The objections voiced here repeatedly, and by most everyone - whether about dodgy practices contributing to the crisis or about dodgy methods of addressing it - are all fundamentally about execrable risk management.
Absolutely impossible to gather a room of anything but retards that couldn't have come to the obvious conclusion that big trouble was on the way. \t bearly bearly | 12.20.08 - 9:38 pm | #
Also agree. I knew many people who pay no attention to econ or RE matters who commented on the unsustainabe nature of housing prices in 2005. I'm in Sacramento, so it was early here, but if someone who pays no attention notices this before a team of Ivy League PhDs responsible for studying the issue, there is a huge problem.
That whole thing about getting someone to understand something when his paycheck depends on him not understanding it. The reality is that the data pointed to something that was at odds with the ideology. Now they blame the data.
greenlander writes:
"Obviously, Mr. Bush doesn't read this blog. If he was a reader, he'd have know about all these problems three years ago."
greenlander | 12.20.08 - 9:20 pm | #
I'll bet there's another group who did not read the CR blog: New York Times editors.
All of a sudden (Dec. 21, 2008) they've discovered couldawouldashoulda in the residential mortgage/housing mess. Does anyone want to bother doing a NYT archives search for reporters' stories on the growing housing bubble? Might well be lean pickin's.
Maybe one of their business writers got a not-for-attribution interview with Tim Geithner in 2005 and reported same? I doubt it.
Brother. They couldn't see the bubble in 2007? Here are just a few milestones that come to mind.
Nov 2006: Implode-O-Meter Launched
Dec 2005: HousingPanic Launched
These were stick-in-your-eye "Emporer has no clothes" vehicles.
I remember following AppraisersForum.com throughought 2003 as they detailed all the pressure and fraud they encounteres to "hit numbers".
I remember my own Realtor in August of 2002 telling me in Anaheim, that it was a good market to sell (we successfully established a new price point in my neighborhood) but admitted it was not a "healthy" market because of how desperate buyers were. Balance had disappeared.
Yeah, that bubble just came out of nowhere. /snark/
If I beat my husband at a 5K race in February (which I will), I get a bottle of Scotch of my choosing. What should I request?
Bond Girl | Homepage | 12.20.08 - 9:42 pm | #
I'm a big fan of the 18-year-old Macallan. (Alright, fan might be an understatement: I named my daughter after it.)
Wall Street, Rome-on-the-Potomac, in both the executive and legislative branches,and their academic enablers from the Court Economists at the Fed to the aspiring court economists in the Ivy League schools all contributed heavily to the development of the housing finance mess. A good complement to the NY Times axe grinding is the axe grinding linked at Belmont Club:
Pissed Off In California writes: This is a neighborhood that got DECIMATED during the dot-com bust, and yet people by and large refused to see the next bubble on the horizon.
Failure to accurately predict the future is not a character flaw. Believing that the world continues along roughly the same paths as before is actually a requirement to day to day decision making. The mistakes made that created this crisis can be traced back to people with money, influence and authority, but asking your neighbors for skeptical analysis of political decisions is not really reasonable given our culture. Hoping they would use credit with prudence, however, is another thing.
A lengthy article, unfortunately by a committee to ensure that any rough edges are filed off and any responsibility can be diluted. "moving forward", that tiresome meme of this gasping administration, is noticeably absent...importantly blank. "How did we get here?" doesn't take several pages to identify the important lapses in regulation...and the adjunct question "moving forward, what can we expect?" is not one that this committee of reporters has the balls to ask. So NYT Business section, how did you get here?
I forgot to add that when we interviewed real-estate agents only one had been through a downturn in the market before (mid 90s). His exact words to me were "I can get you the price you are asking but I can't believe people would buy at this price"
If I beat my husband at a 5K race in February (which I will), I get a bottle of Scotch of my choosing. What should I request?
With the ways things are going, you may want to change your gift to Scrapple. A couple of pieces in the morning, and there's no need to eat the rest of the day.
If I beat my husband at a 5K race in February (which I will), I get a bottle of Scotch of my choosing. What should I request? Bond Girl | Homepage | 12.20.08 - 9:42 pm | #
Don't tell him until he has taken you on a distillery tour in Scotland this summer.
He wouldn't want you to make an uninformed investment decision. Right?
I'm inclined to go easy on the role of risk managers in this mess. As someone on this thread has said, there are likely a lot of them impoverished and unemployed due to the fact that they warned management.
When money is being made, the computer-model whiz kids provided managers the needed cover for doing what they wanted to doi.e., make money. Risk managers were like the HR guy is in "The Office." Unwelcome.
"What good news wood we be getting next week mp ?"
I'm hoping--in fact Conjure and I have been arguing for many months--that someone will decide it's time to take over some banks and either deep-six their bad paper in the Laurentian Abyss, shoot it into outer space, or isolate it in some Fed entity. Then, either re-capitalize those banks or shut them down, while ordering the survivors to start lending again.
Somehow, I don't think that's going to happen. If it did, it would be "good" news.
I do not know if it has been mentioned or not:
WASHINGTON The global financial system was teetering on the edge of collapse when President Bush and his economics team huddled in the Roosevelt Room of the White House for a briefing that, in the words of one participant, scared the hell out of everybody.
It was Sept. 18. Lehman Brothers had just gone belly-up, overwhelmed by toxic mortgages. Bank of America had swallowed Merrill Lynch in a hastily arranged sale. Two days earlier, Mr. Bush had agreed to pump $85 billion into the failing insurance giant American International Group.
The president listened as Ben S. Bernanke, chairman of the Federal Reserve, laid out the latest terrifying news: The credit markets, gripped by panic, had frozen overnight, and banks were refusing to lend money.
Then his Treasury secretary, Henry M. Paulson Jr., told him that to stave off disaster, he would have to sign off on the biggest government bailout in history.
Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in.
How, he wondered aloud, did we get here? THE RECKONING; White House Philosophy Stoked Mortgage Bonfire - NY Times
yes, Old Crow is bourbon, or whiskey. Come on now Bond Girl. If I could remember the name of it I'd recommend a 120 proof Scotch I had years ago-it was like packing my head with cotton.
BG
I'm a casual drinker but I like Johnney Walker
Then again that could be a social construct of going to school in Thailand for a few months
JW Black of course
"Are you serious--is that really a quote from Bernanke?"
Samdog - that's Bernanke talking. The clue about that whole approach of his is this: he is confusing 'money', meaning the dollar markers we trade around, with 'momey', the concept of owed value or wealth.
He thinks that manipulating one will manipulate the other. Lots of economists believe that so he is not alone. Just wrong.
Hey ... I'm just a small business man from Orange County. I was complaining to my wife about this real estate bubble in spring of 2003. The question is, if I saw it back then, how did the notions top economist miss it?
I know the answer, but I'm so gawd damn aggravated by this deal, it feels good to repeatedly ask that question.
"even those aware that going out of business bargains are going to be everywhere in January are still enmeshed in the expectations of the culture." \t $12 Help
I did hold off on the Wii Fit fr the wife when I noticed it's going for $150+ rather than $89. Told her to expect the gift late. Even when it makes rational sense to hold off, there's the guilt of loved ones not opening what they want on Christmas. For adults, they can deal with it. I can't ask the same for my 4 year old. Luckily she says "whatever Santa wants to bring." I was so proud, though I have to wonder if she's unamerican. What would McCarthy say?
Fed Opens TALF Loans to All Borrowers, Extends Term (Update2)
Dec. 19 (Bloomberg) -- The Federal Reserve revised its $200 billion program aimed at reviving credit to consumers and small businesses, extending the term of loans to three years from one year.
Under the Term Asset-Backed Securities Loan Facility, or TALF, the Fed will also loan to all eligible borrowers rather than through an auction process, the central bank said today in a statement in Washington. The change is designed to provide more certain investor access, the Fed said.
BTW, if there are any other Scotch drinkers on the board, I bought one yesterday I like immensely: McCarthy's. From Oregon! About $50, compares very nicely to traditional Scotches in that price range, peaty, but smooth.
I found the part about Rahm Emmanuel particularly interesting. One reason I chose to support Obama early in the primaries was because he was the one candidate not saying flagrantly stupid things about the housing fiasco or financial crisis. Now I wonder how much of this was Rahm whispering in Obama's ear:
Rahm Emanuel, a leading Democrat, former investment banker and now the incoming chief of staff to President-elect Barack Obama, warned the White House it was not doing enough. He said he told Joshua B. Bolten, Mr. Bushs chief of staff, and Mr. Paulson in a series of phone calls that the credit crisis would get deep and serious and that the only answer was big, internationally coordinated government intervention.
You got to strangle this thing and suffocate it, he recalled saying.
Instead, Mr. Bush developed Hope Now, a voluntary public-private partnership to help struggling homeowners refinance loans. And he worked with Congress to pass a stimulus package that sent taxpayers $150 billion in tax rebates.
In a speech to the Economic Club of New York in March 2008, he cautioned against Washingtons temptation to say that anything short of a massive government intervention in the housing market amounts to inaction, adding that government action could make it harder for the markets to recover.
When I saw the Magic Cookies ad I was at the mall. I hate the mall. I get cranky. I noticed 2 things:
The shopper demographic was missing a key element. The 20 to 40 year old shopaholic was not to be seen. It was families, preteens and couples. A solid wall of moving people with no bags. I asked the wife and kid 'Why are these people here if they are not buying anything?' They gave me the "look."
The second thing was the lack of personal space. Non North Americans don't understand it. It dawned on me why we don't like being crowded. Also, why people try to be polite about. In a society where many carried weapons, and still do, crowding, pushing, etc was a hostile act that can and was dangerous.
"Santa better come thru with what she wants or you're in a heap of trouble..." \t NorkaWest
Possibly, but she really doesn't seem to care. More accurately, she's interested in evrything, so whatever I get she'll be psyched. It's abnormal, I swear. Get this, the kid can get enough of books. Anyone remember books? Weird.
"Obama got a lot of money from these people. If he does decide to clean up this mess, truly clean up this mess, he will have to take them all down."
Yes. I think most informed people agree on that part. The only thing they're doing now is further concentrating wealth and preserving irrelevant institutions, which is extremely dangerous from all points of view, including the economic and social.
Glenn Hubbard is now desperate for anybody to hear his solutions.
What a SCHMUCK. You reading this Glenn, you're a schmuck? You didn't catch this before and your solutions are moronic now.
Why don't you academics understand that you can't cure over indebtedness with more debt?
Perhaps when the economy actually goes into a recession, and you're still sitting around debating it, we fire you or cut your pay like the rest of the world. I'm sure it would be constructive in helping you make more accurate forecasts.
And how many jerkoff "progressives" in Congress and elsewhere had a duty to raise a public outcry about what was going on, and failed to do so, for self-serving reasons?
Great video, perhaps "Burning down the House" as an encore.
Re: FNM and FRE. yes they were over leveraged, and mostly took on too much at the very end, as the new issue private label MBS market started to fall apart. But mostly, it was that they were mono lines, by design, exposed only to low to moderate sized residential mortgages. GSE underwritten mortgages were of far higher quality than the pvt label stuff, protected by PMI or larger down payments. However, the underlying houses were bid up just like the rest of the houses. This meant that they had to be standing on the beach, that was their job, they were sort of like the lifeguard. The tectonic plates keep building upo more and more pressure, until there was a huge undersea earthquake and generated a Tsunami of defaults. Even Michael Phelps would have drowned if he were standing on Phuket Beach in Thailand on 12/26/04.
It seems that it is somewhat clear what happened to cause the depression of the 30s, bubbles followed by deflation and unemployment. What is the mystery with this one that many cannot see how the easy money caused the bubble and now the deflation as the bubble burst. The question is can we maintain employment.
Any honest appraiser saw this coming. We were SCREAMING at the TOP of our lungs that the pressure was at DANGER levels but we were cordially escorted out of the building because closings were taking place....They did not want disruptions. I am not amazed, shocked, or surprised that it finally fell. I am surprised at how fast and far it is falling with no end in sight. GOD bless you all and I wish you a Merry Christmas. Please remember that this too shall pass. I will save all rantings and violent expression against our governing IDIOT IN CHIEF and his YES MAN econ staff....and the rest of his supporting cast.
"As Mr. Thomas began digging into New Centurys failure that spring, he became fixated on a particular statistic, the rent-to-own ratio."
I was trying to buy a home in 2004 in SoCal. My realtor was pushing me to buy a place that I didn't really like, stating that I could live there for awhile, refinance, and buy another place while renting that one out.
As a renter, I knew what the monthly rent on similar properties would be. I asked why in the world I should want to rent it out at a huge loss each month. My realtor just kept calling it an investment.
I should really call and thank her for what she said, making me realize how out of whack things were and still are.
Rahm, an investment banker? Come on, he arranged the regulatory word on a deal to merge a pair of energy companies in Illinois during the Clinton administration. Presto Exelon.
Hey, I resent that. Manhattan is many things, but Belgium it ain't. NYC has one of the best governments in the country under Bloomberg, who is hugely popular, so the analogy doesn't work on any level.
Has anyone here ever been at sea? When you get ready to approach land you see and smell the difference. You start spotting more crap floating, the air begins to smell different. Then you see the first smudge of landfall.
We are just begining the approaching the isle of Despair. All of what we are talking about will not prepare you for what is going to happen once we make port.
The only thing they're doing now is further concentrating wealth and preserving irrelevant institutions, which is extremely dangerous from all points of view, including the economic and social.
mp
~~~
I think Volcker would be the man to wield the axe ... I think he even might enjoy a bit of it ...
On the Isle of Despair, the big banks aren't zombies; they are two month old beached whales stinking up the coast.
NorkaWest | 12.20.08 - 10:27 pm
The Port Authority just noticed that and is planning do something very soon. First they have to put out the no bid contract for their removal. That is, after they study the situation and build a road to get to them.
A senior Chinese official has pledged that China will consider any request for assistance from Taiwan during the current global financial downturn.
Taiwanese firms have invested billions of dollars in China and the island's reliance on the mainland both as a market for its goods and as a supplier is likely to increase as the US, a key market for Taiwan, continues its economic slump.
For the Beans, Bullets & Bullion crowd Seeing as how we are most likely approaching the end of this thread..I can't believe this great 'heads tune hasn't been linked... Life During Wartime
It has a "Watch in High Quality" option - don't know if that means audio as well.
Ilargi: The credit crisis yesterday brought down a first entire government, in Belgium. As Niall Ferguson writes today:
It is all but inevitable that we shall see serious political and geopolitical upheavals in 2009, as the recession takes its toll on weak governments (Thailand and Greece are already reeling) and raises the stakes in inter-state rivalries (India-Pakistan).
In the same vein, Stoneleigh looks ahead at the equally inevitable upcoming wars in the labour markets. Millions upon millions of people around the globe will lose their jobs in the next year, and many if not most of the lucky ones who will still be employed can expect drastic cuts to their benefits and salaries. Since governments at all levels, if only to prevent having to fire employees, will try to raise taxes at the same time that people get poorer, widespread mayhem is guaranteed. And that's before people start figuring out what happened to their savings and pensions.
Alex Galvez, 28, an automotive technician who works in Long Beach, California, said he lost half his income this year. He was shopping for his nephews today at the Westfield Santa Anita Mall, in Arcadia, California.
In past years, wed probably get 10 gifts for each of our nephews, he said. This year its probably one.
The ICSC has estimated that in November and December, sales at stores open at least a year may decline as much as 1 percent. That would be largest drop since at least 1969, when the New York-based trade group starting tracking data.
Its sad for the kids, said Galvez. Theyre used to getting a ton of gifts.
10 gifts now 1 and its sad...
Amazing....Whatever happened to being happy with a new bat!
"Amazing....Whatever happened to being happy with a new bat!"
That's what I want for Christmas. It will help me knock some sense into the bubble crowd in my neck of the woods. On the other hand I might get carpel tunnel syndrome from all the swinging.
I think the way the auto bailout was handled made it worse. Not because they got the bailout but that it exposed the complete lack of cooperation and judgment of the Congress. Instead of a measured debate we got petrified ideological scatology.
Agree, but no bailout would have accellerated it. Who wants to start a contest on 4Q GDP. My guess -5.5% on orgional read, eventually revised to closer to -6.0%
The Congressional "debate" on the auto bailout was pure theater, right? They all knew Paulson would be there in the end anyway. In a sense it was perfect "cooperation" within the Congress. Everyone got to play to the home crowd with the understanding that it didn't really matter.
ova writes:
"Non North Americans don't understand it. It dawned on me why we don't like being crowded. Also, why people try to be polite about. In a society where many carried weapons, and still do, crowding, pushing, etc was a hostile act that can and was dangerous"
Someone made a comment on the previous thread about how UAW members ough to shoot at people in foreign cars. Your point was what came to my mind.
I live in the South--if you shoot at a foreign (or ANY) car: expect return fire--guaranteed(!)
No one said anything so as not to encourage anti-social trolling ....
Also, we do not eat our kitties... Comrade Kristina | 12.20.08 - 8:29 pm | #
Bartender and ex-stripper sends us a perfect straight line like this? Perhaps your husband might be open to a more liberal interpretation of munching the felines.
Can we all agree that Fanne and Freddie aren't a big part of the problem because the problem is so enormous?
Besides the hedge funds, there is the much-anticipated retail implosion. And, after the holidays, a surge in layoff announcements and a further rise in unemployment.
If you like peaty single malts, then you have to go with Laphroaig. And if money is no limit, go the next step up to Lagavulin. As far as mortgage-backed bonds being TALFed are concerned, that's for another post.
"No one said anything so as not to encourage anti-social trolling ...."
Nova's not trolling...it's an interesting observation.
Personally, I love his posts. I do wish he would describe his recent dreams, as he did one Saturday night...
Back from a pre-Christmas get-together this afternoon (daughter in law graduation from nursing courses) and opended and read Christmas cards. Conversation at the gathering and in all but one of the cards mentioned economic slowdown or business slowdown or layoff or general feeling of being threatened by the economy.
I just listen. People have all made up their own minds about what and why - mostly wrong in my opinion, but perhaps I'm wrong, too, so I don't argue. I will just say that this has gone from a fairly obscure economic situation to the point where everybody is well aware. It took a while to get on the general public radar, but it is certainly there now.
I'm hoping--in fact Conjure and I have been arguing for many months--that someone will decide it's time to take over some banks and either deep-six their bad paper in the Laurentian Abyss, shoot it into outer space, or isolate it in some Fed entity. Then, either re-capitalize those banks or shut them down, while ordering the survivors to start lending again.
Somehow, I don't think that's going to happen. If it did, it would be "good" news.
mp | 12.20.08 - 10:03 pm | # [kill][hide comment]
mp, you're such an optimist. This crew is going to run out the clock and disappear.
OT: I didn't expect anyone else here would read RRW. Missed being on the crash page once. One of the few benefits of being at the back of the pack. Read Bike (British)?
fried writes:
"No one said anything so as not to encourage anti-social trolling ...."
Nova's not trolling...it's an interesting observation.
Personally, I love his posts. I do wish he would describe his recent dreams, as he did one Saturday night...
fried | 12.20.08 - 10:49 pm | #
I'm not talking about nova...
I talking about someone else why was hinting that people who drive foreign cars deserve to get shot by the UAW members! Sheesh...
The reason it is now on everybody's radar is that the effects are now reaching everybody. For instance: restaurant business down 40 percent in small, remote northern Minnesota town. No layofs there, no business closings... so why the slowdown? It is because many retirees in the area are down 30 to 50 percent in their retirement IRA or pension investments.
"And you may ask yourself
What is that beautiful house?
And you may ask yourself
Where does that highway go?
And you may ask yourself
Am I right? ...am I wrong?
And you may tell yourself
My god!...what have I done?"
at big5 (sporting goods) today to pick up some slippers for wifey and my weekly box of 22LR. There was a sign printed on 8.5x11 taped to the gun rack. The sales guy wouldnt give me a copy, so i am paraphrasing- "due to unexpected demand, we may be unable to deliver some firearms." followed by a list of assorted mossberg shotguns, 30.06 rifles, and .22s
The message is getting to everyone. Here's an email I received today...
As you may know, Governor Gregoire released her proposed budget yesterday. The
budget asks for a 14% decrease in funding for the University of Washington for
each of the next two years. This cut is in addition to the $17 million in
retroactive reductions we are taking in the current fiscal year. This will be
one of the largest budget cuts the University of Washington has ever faced in
its 147 years of existence. To put this in perspective, the current budget
deficit is roughly equal to the annual budget of the College of Arts and
Sciences.
"due to unexpected demand, we may be unable to deliver some firearms."
After our recent days-long power outage, with gas stations closed, grocery stores limping open on generators, I started to see how civil unrest could indeed come fairly quickly once people are deprived of the comforts of life.
The towns w/o power for 8 days have had their utility crews harrassed by frazzled citizens.
AngryRenter, the heavy-handed partisan spin of the FreedomWorks link you provided completely overwhelms any useful information it contains. If you've an inside contact there, you may wish to suggest that unless they make an intellectually serious rewrite, they'll not be taken seriously by anyone except for the next generation of Kool-aid drinkers. The problems we face are too serious to waste time on this kind of one-sided analysis.
Awesome thread music..that song has rocked my world since I first heard it in high school...the meanings just kept piling up...and now yet another one...coming home from a date....it feels poignant again.
Yes, this entire mess is the ultimate result and symbol of GOP anti-regulatory ideology and it's fruits...and the attack on Fannie, Freddie, and the Community Reinvestment Act are just distraction propaganda pumped out by the Vast Right Wing Noise Machine - the ultimate in psychological projection - right out of Orwell's playbook. They are part and parcel of the Great Conservative Walkback (kos) - being spearheaded in particular these days by David Frum and Glen Hubbard.
The problem that we face is that there is too much leverage in the system. Thus the solution is simple, reduce it. What does it take to reduce leverage in the system? Unwinding all the CDOs. That has been happening already as events of default become more and more common but there needs to be a push to make it official.
Young Chuck moved to Texas and bought a donkey from a farmer for $100.00.
The farmer agreed to deliver the donkey the next day.
The next day he drove up and said, 'Sorry son, but I have some bad news, the donkey died.'
Chuck replied, 'Well, then just give me my money back.'
The farmer said, 'Can't do that. I went and spent it already.'
Chuck said, 'OK, then, just bring me the dead donkey.'
The farmer asked, 'What ya gonna do with him?
Chuck said, 'I'm going to raffle him off.'
The farmer said 'You can't raffle off a dead donkey!'
Chuck said, 'Sure I can Watch me. I just won't tell anybody he's dead.'
A month later, the farmer met up with Chuck and asked, 'What happened with that dead donkey?'
Chuck said, 'I raffled him off. I sold 500 tickets at two dollars apiece and made a profit of $898.00.'
The farmer said, 'Didn't anyone complain?'
Chuck said, 'Just the guy who won. So I gave him his two dollars back.'
Chuck now works for Goldman Sachs.
Yeah, I would not read too much into this. Big 5 has horrible supply chain management. Every store seems to have a different mix....and I mean WAY different. Guess it just depends on where the delivery drivers feel like going.
If I beat my husband at a 5K race in February (which I will), I get a bottle of Scotch of my choosing. What should I request? Bond Girl | Homepage | 12.20.08 - 9:42 pm | #
Good luck to you! I suggest Laphroig but the Famous Grouse comes in a decent single-malt variety.
I had an absolutely gorgeous 25 yo Scotch over 15 years ago and I can still remember how it just tumbled over my lips, across my tongue and down my throat. I think it was one of the Glen's..Glenlivet, Glenmorangie, Glenfiddich. Stunning stuff.
@ Lionel, "'This will be one of the largest budget cuts the University of Washington has ever faced in its 147 years of existence. To put this in perspective, the current budget deficit is roughly equal to the annual budget of the College of Arts and Sciences.'
Doesn't exactly make you go out and buy stuff.
This email I received really filled me with confidence:
Letter from President Faust about the global economic crisis
Cambridge, Mass.
November 10, 2008
To Harvard Faculty, Students, and Staff:
I write today about the global economic crisis and its implications for us at Harvard.
We all know of the extraordinary turbulence still roiling the worlds financial markets and the broader economy. The downturn is widely seen as the most serious in decades, and each days headlines remind us that heightened volatility and persisting uncertainty have become our new economic reality.
For all the challenges such circumstances present, we are fortunate to be part of an institution remarkable for its resilience. Over centuries, Harvard has weathered many storms and sustained its strength through difficult times. ...
But we must recognize that Harvard is not invulnerable to the seismic financial shocks in the larger world. Our own economic landscape has been significantly altered. ...
Our principal sources of revenue are all likely to be affected by these new economic forces. Consider, first, the endowment. ... Moodys ... projected a 30 percent decline in the value of college and university endowments in the current fiscal year. While we can hope that markets will improve, we need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint.
And you may find yourself living in a shotgun shack
And you may find yourself in another part of the world
And you may find yourself behind the wheel of a large automobile
And you may find yourself in a beautiful house, with a beautiful
wife
And you may ask yourself-Well...How did I get here?
And you may ask yourself
How do I work this?
And you may ask yourself
Where is that large automobile?
And you may tell yourself
This is not my beautiful house!
And you may tell yourself
This is not my beautiful wife!
And you may ask yourself
What is that beautiful house?
And you may ask yourself
Where does that highway go?
And you may ask yourself
Am I right?...Am I wrong?
And you may say to yourself
NYT has an interesting snapshot of the problems we face. I initially felt sorry for him, but it turns out he has maxed his credit cards, has two cars, cashed out his home equity, and refuses to commute or take non-management jobs. A Boomer icon for the ages:
Gold Lease Rate The cost of borrowing gold, the daily level of which reflects the supply and demand for metal in the lending market. The daily GOFO page on Reuters gives a good indication of the state of the leasing market.
Panics hit America every 17 years, on average, for about a century, from 1819 to 1920 (in 1819, 1837, 1857, 1873, 1894, 1907 and 1920). The word panic aroused such a negative reaction (in 1894 and 1907) that Herbert Hoover invented a less threatening word for the 1929 eventconnoting a small pothole in the road. Hoover called the 1929 panic merely a depression.
That linked article on the backwardation tendency in gold is pretty good. Here's the most important paragraph.
"Hyperinflations have several distinct stages that have been observed throughout history in the course of the acceleration of inflation to ever higher rates of change, there always comes a certain threshold point what I refer to as the 'point of no return'.
This is the point at which the public realizes that the inflation is a deliberate policy that is set to continue, for the simple reason that the government issuing the money in question is technically bankrupt."
I believe that not only is gold price the true barometer of hyper inflation but it is also a leading indicator. Price will signal a coming trend, and true backwardation would confirm it.
It's not unlike oil/commodities price, if you think about it. The decline in these price, starting last summer, was the leading indicator of deflation/demand destruction. This deflation could have been long and devastating but for two things: 1) Bernanke's Fed and how quick it was to pull triggers on lower rates and over-the-top stimulus; and 2) all other major CBs and govts. around the world imitating Bernanke.
Part of deflation/demand destruction is psychological. If consumers think it's coming, they stop spending. I think part of Bernanke's gambit was to control their minds and convince them it's a brief phase.
The govt is not going to be able to unwind ZIRP and all this debt and liquidity. It's a fixture and the only way out is currency devaluation/hyperinflation which gold is signalling.
My mother was raised in Shanghai during WW2, on a street lined by high walls. When strangers appeared the older children would shepherd the younger to the safety behind the walls.Every so often news would come of kidnapped children.
Good luck to you! I suggest Laphroig but the Famous Grouse comes in a decent single-malt variety.
Scott | 12.20.08 - 11:27 pm | #
He's the one that needs the luck.... I just ran a marathon a couple months ago. That's why I'm asking for help picking out my Scotch. I might have let him win, if it weren't for the prize
rich, thank you for your posts. i have been slowly building a position in oil and agriculture. i took some profit on gold-- thinking it will slide near term as we get an obamastimulus rally. anyway, i value your thoughts, so keep them coming!
Anybody else think this NYT article is about 15 months too late ? \t mmckinl | \t \t \t \t12.20.08 - 11:46 pm | # Well, maybe, but in a way, it's very timely, because Cato, Heritage, and the other compenents of the noise machine have been at full tilt of late claiming this is all an outgrowth of old Democratic policies (CRA specifically), FNM, FRE as the chief enablers. This is, of course, BS, as CR pointed at in his post - they were the least abusive, and probably wouldn't be swamped by the bubble if WS hadn't gone nuts. It's important to remind people of the real history, and not the insta-revisionist garbage.
dryfly- "I'm still thinking we'll see a managed bankruptcy."
We're expecting to be in Michigan sometime during mid-2009 to attend a major equipment selloff.
Hoping to pick up a lot of tool room equipment.
Spoke with an associate on Friday. He says scrap iron is now $71/ton, not enough to interest even the bottom feeders. So, if they don't sell the equipment, they'll have to pay to have someone come in and take the oxygen lance to it and haul it away.
Talk about a bridge to nowhere. I'm hoping you are right Dryfly - banko is in the way for at least one of them. But that comment belongs in another thread - I thought we were talking Scotch here.
Sorry, Bond Girl - your original inquiry made it seem like you had no idea what was 'good'. So which brand are you leaning towards?
Being happy with a new bat. Yes. The grandmother of our kids (91) reported a conversation she had with others in the doctor's waiting room recently. In particular one woman said she was never so happy as a child as when she had a potato to play with. She dressed it up in many different ways. They were all discussing the depression, in the doctor's waiting room. We have a long way to go I think.
I noticed one of the GM guys(Fritz Henderson, for you Leno fans) go into double speak when asked if they were going to sell the Saturn division. I heard a rumor a Chinese company was interested. Nous voyons.
Spoke with an associate on Friday. He says scrap iron is now $71/ton, not enough to interest even the bottom feeders. So, if they don't sell the equipment, they'll have to pay to have someone come in and take the oxygen lance to it and haul it away. mp | 12.20.08 - 11:57 pm | #
I'm encouraging every mfgr I work with to be looking for equipment NOW - it's out there in spades - especially in and around 'Detroit'.
They did say something about an "orderly" bankruptcy, whatever that means (to them). Bond Girl | Homepage | 12.20.08 - 11:57 pm | #
Means they keep running while the 'under new management' sign is put up.
The fear [and justified] is that once the companies are blown apart in a DISorderly bankruptcy - they and the supply chain never get back together again. That's how you end up with a 3 million jump in joblessness in six months. Not good.
It is pervasive though - the meme is been planted deep already.
\t dryfly | \t \t \t \t12.20.08 - 11:54 pm | # Yes, I'm aware...I'm shocked at where I hear it parroted back to me from my social network...often from people I've been trying to educate for three years now. It's disturbingly apparent that it's fairly trivial to plant it if you get out there early and beat the drum. IIRC, Tanta took a few early anti-GSE trolls to task here on this very issue - while not exonerating or idealizing the GSEs. Of course, nuance doesn't fit our society. Jas' "pigmen" have quite a network for getting their spin out, and the footsoldiers (2nd tier cheerleaders like Boortz and Savage) or their producers are well-fed by Cato and the like. Like I said: Orwell would be horrified at how well his playbook has been implemented. Even a multi-column 'in depth' reporter like Gretchen Morgensen, whose nuance far exceeds the average attention span, was oversimplied (Tant's Gretchen-watch).
I'm still thinking we'll see a managed bankruptcy.
At least now there is plenty of time to manage it. I think bondholders, suppliers, and the UAW can all be brought to the table. Dealers will all want the other guy to be shut down, so they're the ones who will have to be told to like it or lump it.
Now is a Great time to..... | 12.20.08 - 11:56 pm | #
My goal is to be able break 20 minutes, but that is not going to happen, I think. Not sure about his time....
Shnaps,
I had originally asked for Johnnie Walker Blue, mainly because I was wondering if it was worth the price, but I started to wonder if I actually wanted a blended Scotch. I really do not drink that kind of stuff on a regular basis because I actually like Scotch and would run through it too fast. My favorite for drinking is Glenmorangie or Balvenie.
Anyone wondering about the GSE's importance to the our current circumstances hasn't read Doug Noland's excellent weekly commentaries over at Prudent Bear. The GSE's were central to the explosion of credit throughout the 90s.
Although the housing bubble itself was mostly limited to this century, and the earliest seeds were laid almost a century back, the most egregious economic crimes have all been committed since Greenspan was named Fed Chairmen in 1987.
if they don't sell the equipment, they'll have to pay to have someone come in and take the oxygen lance to it and haul it away.
mp | 12.20.08 - 11:57 pm | #
Tragedy on a scale that makes one weep. The industrial age version of eating your seed corn.
I expect my employer to lay off my entire division (they said they want to sell us but that's wishful thinking as far as I'm concerned). I'm in the process of trying to convince them to let me have all the tools I work with as my severance. An oscilloscope and CAD software aren't expensive to have hauled away, but they're worthless if you don't have anyone left who knows how to use them.
[If he does get to serious they will arrange something to remove the threat.
nova ]
LOL. I don't think anyone in America needs to lose any sleep over the notion that Obama is going to change much of anything. What's he going to do? Insist one nationwide austerity measures, for the wealthy? That will work out famously. But he will have to pretend to. He can't claim ignorance since the bubble already exploded.
The Presidency is largely an acting job. And Obama seems to be a pretty good drama queen - face on TV daily and dribbling out annoucements about which deck chair goes where on the already badly listing Titanic...
me me me me/1!!!!
sorry....... got a little excited about being 1st
Becoming an expert is a disease that prevents clear thinking.
Sorry for the OT question: I'm looking for data about the Canberra housing market, preferably with explanation of the likely implications for a price bust in the medium-term. Any suggestions for where to look?
I'm going to have to come back and see if I beat Thirdston, since even if it appears I'm third, I know appearances can deceive.
There are a lot of impoverished and unemployed risk managers out there who sounded the warning. Look where it got them. Look out below corporate America. Buh-bye !
Stores using survival tactics, look past holidays
By ANNE D'INNOCENZIO, Associated Press
Last updated: 2:25 p.m., Friday, December 19, 2008
NEW YORK -- Retailers are accelerating their use of survival tactics -- slashing prices further and pulling merchandise off shelves to send to liquidators -- as the number of holiday shopping days dwindles. But January and beyond look scarier for even relatively healthy merchants as the passing of the holidays give shoppers no reason at all to spend.
\t
What's worse, the industry expects a rise in returns after the holidays as shoppers seek to convert their unwanted gifts to much-needed cash as they struggle with rising layoffs, tightening credit and shrinking retirement funds.
..
Story not found -- StoryID: 752361 -- Times Union - Albany NY
Job-loss picture likely to darken
By CHRIS CHURCHILL, Business writer
First published in print: Friday, December 19, 2008
ALBANY In recent weeks, the drumbeat of local layoffs has been thundering.
\t
This week alone, about 100 jobs were eliminated at Rensselaer Polytechnic Institute and 15 cuts were announced at Momemtive Performance Materials Inc. in Waterford.
Then, on Thursday, Plug Power Inc. in Latham said it would eliminate an additional 90 jobs.
...
Since November 2007, the Capital Region has lost 1,200 nonfarm jobs. And the unemployment rate has climbed from 3.8 percent to 5.2 percent.
That's the region's highest November unemployment rate since 1992.
Moreover, there is this troubling sign for upcoming months: The three pillars of the area's employment education, health care and government are showing signs of weakness.
Job-loss picture likely to darken -- Page 1 -- Times Union - Albany NY
Be sure to read this interview with President Bush in today's WSJ for more interesting comments about the policies of the current administration.
Yet he remains a believer in the cyclicality of politics, and his own stamp on the party. He says a younger generation will "take our philosophy, which is right of center -- compassionate conservatism is how I describe it -- and win." He doesn't believe change requires an ideological shift, but rather "new faces, new voices, fresh energy" that take "the same basic philosophy -- lower taxes, strong national defense, a belief in a responsibility era."
Yeah, the responsibility era. That's my impression after watching the TARP being given out willy-nilly with few, if any, consequences for those at the top of the aided companies.
The way to boost the housing market may be to ensure that there are plenty of jobs that pay enough for people to afford them at 2.5-3X income.
Gold price is the true barometer of hyperinflation. To me, the only question is when it goes vertical, not if.
rich | 12.20.08 - 1:49 pm | #
An excellent article on gold at acting-man by Trotsky/Heinz.
Some thoughts on the recent backwardation in gold
An idea whose blame has come.
about six months before 2007 was when I started reading this blog, in July of 2007, I sold. smartest thing I ever did ...
RE writes:
Gold price is the true barometer of hyperinflation. To me, the only question is when it goes vertical, not if.
Funny, Rich's line has been resonating with me all day too. We have the same argument, i just lacked the guts to give into my own recognition. The 'I wouldn't join any club that would have me as a member.' problem.
Yes, reporters, blame the minorities, the conned and suckers across the world. Never mention that everyone involved was getting their cut of the action. Then the Gigantic Ponzi scheme collapsed. Now the taxpayers are holding the bag, mugged by Wall Street and the White House.
Buck passer Bush will have Karl Rove workin hard in that legacy fantasy!
Looking back, Keith B. Hennessey, Mr. Bush's current chief economics adviser, says he and his colleagues did the best they could "with the information we had at the time."
That implies a flaw related to quality or completeness of information, whereas the record shows an absence of experience, judgement or, if you will, wisdom.
This grown man, responsible for advising the President, is blaming data.
The 'I wouldn't join any club that would have me as a member.' problem.
Kondratieff canuk | 12.20.08 - 7:31 pm | #
I lack that social element as well which is why I call myself a gold investor and NOT a gold bug. I would actually be a very strange breed of a gold bug and so I studiously avoid the classification.
CR, without Tanta's presence, you may have to rebalance your natural "cool detachment" style to more heavily-weight your recent "acerbic wit" style: there are far too many people who need their feet held to the fire for what they said, and did, and did not do. The "history rewriting" phase is in full swi
"swi" --> "swing"
DCRogers, I think it's important to realize how obvious this problem was - and how some people were blinded to the story. I'm sure I'll post more!
Best Wishes.
I'd just like to say that the guy we see climbing in our great western state parks didn't strike me as a Talking Heads fan. Well done, CR.
When the other guys do bad stuff, there are "ideologues" at work, but when your own guys do it, they're called "pragmatists." It's interesting to note that the term "ideologue" was not used by The New York Times in the linked article. It was added by CR.
the only people blind to this story were getting paid to be blind.
RE writes:
I lack that social element as well which is why I call myself a gold investor and NOT a gold bug. I would actually be a very strange breed of a gold bug and so I studiously avoid the classification.
RE | 12.20.08 - 7:36 pm | #
heheh..well put. Well, i used to trade in gold, and manufacture in gold. I know the shite inside and out, backwards and forwards, as a metal. I know the effect it has on people. I know its alloys, and its melting point. I know its production cost. I know its swindlers. I know gold. Here i am sitting on the fence.
Its all about confidence in USD. I know i should be buying, and i have the perfect argument why.
Tubes - "What Do You Want From Life?"
Hazard - "Escalator of Life"
Tubes again - "White punks on Dope"
Anti-Flag - "The Consumer's Song"
Bob Seger - "House Behind A House"
Rage Against the Machine - "New Millenium Homes" from the aptly name album "The Battle of Los Angeles"
So, El Cliffo, please point us to the pragmatic parts of the last few years you'd like to support.
last comment of the night.
I am shocked that Rob Dawg is referring to RATM songs.
rock on, RD, rock on.
it's important to realize how obvious this problem was - and how some people were blinded to the story.
If your ideology tells upfront you what the answer is, it is easy to come with an argument that leads to this answer.
Its all about confidence in USD. I know i should be buying, and i have the perfect argument why.
Kondratieff canuk | 12.20.08 - 7:42 pm | #
When gold lease rates outpace corresponding treasury interest rates, you have a pretty solid case. It hasn't happened very often in history...
This whole economic mess is no surprise to me but the magnitude is. I could see people substituting credit for income in the early 90's. Bush along with many others have blindly out fooled themselves with charts and bad math. Any Idiot knows never lend money to someone who can't pay it back. Now the same thinking is being plated out in reverse by the same idiots who got us here. I am kind of tired of it. The Government bubble is going to explode just like the rest.
Sorry, CR, but I can't let pass the idea that Fannie and Freddie were a small part of the problem. They were the biggest players in the mortgage market, and both went under- and they didn't go under holding the "good" part of the the mortgage market.
Congratulations.....Bush has created a new hypertext linkage definition of kleptocracy* and massive US financial ponzi scheme to keep the bullshit US economy going where credit must flow like a raging river or Americas house of cards goes bust trumps everything else.
*government by those who seek chiefly status and personal gain at the expense of the governed.
Mission accomplished and BOL to 98 or 99% of Americans for at least next 10 years.
Because the
I am shocked that Rob Dawg is referring to RATM songs.
rock on, RD, rock on.
12th Percentile | 12.20.08 - 7:43 pm | #
"Dawg in da house?"
Be sure to check out the lyrics.
Love the song!
RE writes:
When gold lease rates outpace corresponding treasury interest rates, you have a pretty solid case. It hasn't happened very often in history...
RE | 12.20.08 - 7:48 pm | #
It's all about the USD. Some of my very knowledgeable friends, whose opinion i respect, say it won't tank. I say it will. The problem is i cannot define 'tank' to my own satisfaction. I can see a world economic dislocation, but i cannot see a changing of the guard in currency base - not without a war, and there is no losing this next one. Currency won't matter.
Oh. My. God. That video was so incredibly appropriate (and hilarious). I had heard that song before but had never seen the video.
I can just see that guy inside Bush's brain trying to make things work.
It all goes back to 1913. The root of all evil begins when the money-maggots took control of the issue of money. Period. Case Closed and BOOK IT. We never had a chance after this.
There is no amount of reality that will ever get through to the true believers. My boss, for example. Named his dog "Reagan." Has a George W. Bush bobble-head doll in his office. He parrots revisionist propaganda - blames the economy on the past two years of Democratic control of Congress, of which Obama was a member, so it's his fault.
A mind is a terrible thing to waste. Or, a waste is a terrible thing to mind. Either way.
El Cliffo writes: When the other guys do bad stuff, there are "ideologues" at work, but when your own guys do it, they're called "pragmatists." It's interesting to note that the term "ideologue" was not used by The New York Times in the linked article. It was added by CR.
I think it's a fair distinction here. Pragmatists do what is expedient at the moment; ideologues ignore the situation and follow some external rule-set. We've seen what happens when you follow either path too much, so it's no a matter than one or the other is always "good". In the case of the Bush Administration, it's clear that it was ideology that drove the blindness to what was happening at the moment.
Yancey Wardwrites: Sorry, CR, but I can't let pass the idea that Fannie and Freddie were a small part of the problem. They were the biggest players in the mortgage market, and both went under- and they didn't go under holding the "good" part of the the mortgage market.
I'll defend them. While their hands were certainly not without blemish, the attempts to rewrite the historical record to make F&F the prime culprits is revisionism pure and simple. Let the record show: it was private-sector lending that drove the worst excesses of the bubble. F&F were a small part of the problem.
Niall Ferguson:"Excessive debt is the key to this crisis; it is the reason we are confronting no ordinary recession, curable by a simple downward adjustment of interest rates. It is the reason we still have to fear, if not a second Great Depression, then very likely the biggest recession since the 1930s. We are living through the painful end of an age of leverage which saw total private and public debt in the US rise from about 155 per cent of gross domestic product in the early 1980 to something like 342 per cent by the middle of this year."
DCRogers writes:
(what you wrote)
Ok we have sunk into politics, i have one question. Are they evil? Define Cheney.
I personally see this bunch as very distorted. Let an American say what it is..
As for Frum, he really irks me..as a Canadian.
Looking back, Keith B. Hennessey, Mr. Bushs current chief economics adviser, says he and his colleagues did the best they could with the information we had at the time.
This is an outrageous claim. By 2005, econ blogs were full of commenters who were very clear on the magnitude of the housing bubble, the lending scams and lack of prudent standards of the mortgage industry, the massive growth in no-doc, 1/o and other exotic mortgage products. Wall Street's securitizations were widely derided as full of toxic crap...how many thousands of comments have we waded thru making that observation.
It's all about the USD. Some of my very knowledgeable friends, whose opinion i respect, say it won't tank. I say it will. The problem is i cannot define 'tank' to my own satisfaction.
Kondratieff canuk | 12.20.08 - 7:56 pm | #
I don't think it is quite that simple. I believe it is about money supply vs. above ground gold supply. Competitive devaluation, which I consider inevitable, will result in a big edge for gold. Note that China has already announced that it will unilaterally increase the money supply by 17%. The game will soon start in earnest. Even the Eurozone will be forced to play the game, however reluctantly.
These coming devaluations might very well undermine confidence in a number of currencies including the U.S. Dollar. I think that the Trotsky/Heinz article provides an excellent and balanced overview of the present situation.
RE writes:
"These coming devaluations might.."
This is the part i understand. Lack of confidence as the driver. You cannot say it in lessor words.
Bravo for the thread music.
IMHO, this whole crisis could have been avoided had more salesmen/banksters worn bow ties.
Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in.
How, he wondered aloud, did we get here?
I shouted out who killed the Kennedies.
When after all, it was you and me.
Comrade Byzantine_Ruins , Dylan was ahead of the curve. Which when known eventually becomes the curve.
CONJURE'S GLOBAL DEPRESSION CLOCK
The time is--
11:59:52
Conjure and I regret that the situation is becoming increasingly unstable.
Hopefully, we'll see some positive developments this coming week.
I have a question, can conjure see the future?
I saw it once, and it was meaningless, or at the very most perplexing.
Or is he just smarter...like a master...
Many years ago Robert Waterman (In Search of Excellence: Lessons from America's Best-Run Companies) presented in an interview two examples of responses to unforeseen events in corporate America.
Ford had developed something called a 'magic door-gate', an option for some of their station wagons, which could become detached from the vehicle and injure people, sometimes severely.
At about the same time, a Coleman lantern or stove had exploded.
Ford looked into the public relations aspects at their ensuing board meeting, developing strategies to contain the damage to their brand. And 'old man Coleman', dispensing with meeting protocol, essentially instructed his board to take whatever steps were required to assure, absolutely, that no person ever again would be injured by one of the company's products.
What I miss among all the finger-pointing at every level of this mess is someone with Coleman's clarity, intentions and moral clarity.
11:59:52
mp | 12.20.08 - 8:23 pm | #
Is Cojure concerned as I am at the run up in beggar ty neighbor currency manipulations and concurent repudiation of international credit necessary for world commerce? Or did he eat a particularly disagreeable cat for supper?
Rob - Ashes in the Fall..another great song that fits from RATM...just saying...
YouTube - Rage Against The Machine - Ashes In The Fall Live in London
mp, you're on the record waiting for unified political action... uh, while we hold our breaths waiting on that one (esp. in California), care to share some of the "positive developments" and "negative developments" we should be a-waitin' for the horsemen to be ridin' in on?
Do I repeat myself? Do I?
What prompted the one second tick off from yesterday by Conjure? Also, we do not eat our kitties...
burnside, do I need to call in the Department of Redundency Department?
If there is going to be one silver lining to this epic buster cluck, it will be the economic destruction of Iran's nuclear programs. You really don't want the IDF doing this kind of work. Everyone here does understand the Israelis have submarine launched nuclear cruise missiles, yes?
We believe what we believe based on our beliefs. Believe it.
anonymous writes:
We believe what we believe based on our beliefs. Believe it.
Madoff was a Master...
--
Watching Cowboys game with ex-Marine neighbor. He stood up with his palm on the heart during the national anthem. We are Cooking some T-bone for simple dinner.
Touchdown Cowboys! Got to go.
Jas
Look at that. An Indian is rooting for the Cowboys.
Oh Jas....ain't that sweet...
Jas, you didn't tell him about the born and bred dope thing did you? Those marines can be kinda touchy 'bout some stuff...
c&c,
Tell the truth those RATMs were my second and third choices because I couldn't remember the #1 from P.I.L.
Same Old Story - Public Image Limited
Some people got: more kicks than halfpence
And cry for attention, like cracks in the pavement
And all of this pointed, like perfect TV
When you're sowing the wind, you reap the whirlwind
Who gets the mansions - we get the ruins
Same old story
Your flexible nature, serving no purpose
Like a terrible artist, using no shadow
And the king of the castle, is pulling new shapes
Gilding the lilies, and all of them fakes
Typical tragic, small house and small street
Narrow the outlook, small minded complete
The emperor's new clothes, get clearer and clearer
Dictate to the fingers, that tighten the trigger
And the king of the castle is pulling new shapes
Life is a poison, it begins at home
Pride is a trinket, a security blanket
You could tangle the spiders on the webs that we weave
I was far from the only and by no means the first person to recognize that CA, AZ, NV and FL were bubble markets, but just as a point of reference, I went back and looked up a couple of my early posts on the subject. These were from July 24, 2005. Certainly not my first post on the topic, but I would say by mid 2005 it was a general consensious among experienced Real Estate investors that CA, AZ, NV and FL prices were unsustainable. (link: Property Ladder TV show on TLC )
How, he wondered aloud, did we get here?
Redux of what Obama will be saying when the treasury market bubble blow up.
Yancey's comments makes me morn the loss of Tanta.
Yancey please go read The Big Picture on F&F's responsibility.
Nice!
Down goes Belgium!
Failure to Bail out Bank Topples Belgian Government - Financials * Europe * News * Story - CNBC.com
California leads and the nation follows. Getting scary in the Golden State.
Mish's Global Economic Trend Analysis: California Implodes In Multiple Ways
If history is written by th winners - who's the winner here?
In California F&F were not the dominant players after 2004 - valuations outstripped the conforming limit. Wall Street "risk based" rate sheets ruled the day - EMC, DB, Deloitte, Lehman, et al - had a loan for everyone.
However, outside the sun states, conforming balances were dominant. I suspect that geography plays a big role on when and whether F&F were more culpable than the privateers.
All of which begs the question- why didn't the WH have accurate data? Since HMDA is mandatory on any loan, it stands to reason the rest of the loan data was also available.
"After the resignation of Yves Leterme, the king needs to find a successor quickly. Not one of the ruling parties is asking for new elections," De Standaard said on its front page. Leterme has been in power only for nine months as leader of a fragile, five-party coalition meant to ease a dispute between Belgium's linguistic groups that had reignited speculation the 178-year-old country could break up.
Ah Belgium... finally a political unit that makes California look better-run!
TALF to open up $200b to hedge funds (FT via Jesse's Crossroads):
Jesse's Café Américain: Speculation Nation Part 2
Predictable. Egregious.
Conjure says, "Kristina, only for you."
FRB: Press Release--Board releases revised information detailing operational aspects of Term Asset-Backed Securities Loan Facility (TALF)--December 19, 2008
Almost two years, "Dr Strangemoney," a commenter here, objected vehemently to Conjure's "Global Financial Meltdown Clock." In fact, he launched a personal attack against mp.
mp, in the interest of harmony, asked Conjure to discontinue the clock near midnight. Conjure acceded to mp's request as they are friends of many years.
Shortly before the collapse of Bear Stearns' hedge funds, someone asked me what time it was. I said it was too late, the clock had already struck and had melted down. I said, "If you don't know what time it is by now, Conjure can't help you."
If you'd prefer, we can discontinue Conjure's clock.
It's really up to you.
As for California's problems, the Governor won't be able to enact the pay cut... last time he tried that the Controller said the "computers can't handle a pay cut".
Dummy question: what's a gold lease rate?
@When gold lease rates outpace corresponding treasury interest rates, you have a pretty solid case. It hasn't happened very often in history...
RE | 12.20.08 - 7:48 pm | #
"Looking back, Keith B. Hennessey, Mr. Bushs current chief economics adviser"
Everytime this clown was on teevee in 2008 (usually after the jobs report or the gdp #'s came out) all he did was cheerlead and talk about how great things were. He is not an economist, he is a spinmeister!
mp, I find the clocks have a bracing effect on the uninitiated, and would like them to continue (even if two separate clocks seems to be a difficult concept for most to follow... perhaps you need an FAQ?).
Exit, exactly.
The clear implication is the information was and remains available.
There can't be more than a very small number of those now dodging criticism who were not presented with the necessary information - there are examples in the NYT article - and who refused to credit what they were being told.
My guess is they believed they were being bored by idealogues, so discounted or rejected what they heard.
Belgium is the Manhattan of the EU. They had a horrible scandal of pedophilia and corruption that led to mass protests years ago and never really recovered.
During the height of the investigation into the role the police, judicial and legislative into concealing the horrific allegations against the powerful the fire department symbolically sprayed down the legislative building to clean it out.
The Belgium government never really regained the confidence of the governed. Google it. Fascinating reading of a very dark nature.
Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in.
How, he wondered aloud, did we get here?
Please Mr. Bush come over to my house for few hours and I can explain what happened...get out of your ivory tower (house) for a short trip down main street
Dummy question: what's a gold lease rate?
RhodesianGreenbackinAZ | 12.20.08 - 8:47 pm | #
Cost of borrowing physical gold.
thx, NorkaWest.
I saw an interesting ad on CNN as I sat in the waiting room outside the fitting rooms at a dept store. It was for cookies. Buy the cookies, eat them for breakfast and lunch, and lose weight. Plus! Save $1500.00 a year on your food costs! They came down heavy on the savings for food.
I have to admit, the B&B Dopes/Gangistan stuff gets to me after a while. But this new side of Jas, with the 35-year old son and his all-cash Beemer purchase (UST Strips profits, right?) plus a T-bone dinner with an ex-Marine in front of a Cowboys game...?
...dang, Jas, this B&B Dope raises a glass to you tonight.
More info on gold lease rates:
GOFO
Since July 1989, twelve market makers have contributed their rates for lending gold (against US dollars) to the GOFO page on Reuters and at 10am a mean is calculated automatically giving the market, in effect, a gold LIBOR (London Interbank Offered Rate). In 1997 a second page 'GOFOâ was added providing logical data which allows the user to apply the rates to other applications such as spreadsheets and charts. Reuters LBMA07 gives a full list of contributor codes. See also
I think it isn't exactly right to say that securitization was "an enabler" to the financial crisis. Securitization is hardly a novel concept.
ova writes:
I saw an interesting ad on CNN as I sat in the waiting room outside the fitting rooms at a dept store. It was for cookies.
Wow, a whole department store for cookies? I thought there were only a couple dozen kinds of cookies, at most.
So, what was the ad for?
mp(Excellent) writes:
Conjure says, "Kristina, only for you."
Three years, huh?
Late 2011 / early 2012, unless extended.
And that's the optimistic institutional perspective.
--
"Jas, you didn't tell him about the born and bred dope thing did you?"
Comrade Kristina ,
You bet I did! People who know me personally don't take offense. He addresses me as big brother and he know big brother knows best!
"Those marines can be kinda touchy 'bout some stuff..."
He knows that I love America as much as he does and he has come to appreciate my insights. He is 100% Scot and I am a big fan of Scots. I really liked Scotland outside of Glasgow. Last year his family and he brought haggis and stuff with him dressed in his family regalia. We have great time.
Jas
Well, what are they going to say? We knew, oh yes we knew, but the economy was screamin. We liked the money and power and could care less. People always clean up after us. Thats why god made you little people.
Byzantine, from where did you get three years?
Samdog. The ad was for magic food!
Obviously, Mr. Bush doesn't read this blog. If he was a reader, he'd have know about all these problems three years ago.
great we know who to blame not let's get started in fixing this
... as the sheriff leads the assault victims back to the scene of the crimes for more of the same
12th Percentile writes:
the only people blind to this story were getting paid to be blind.
12th Percentile | 12.20.08 - 7:41 pm | #
Then you surely must include the speculators and greedy. Right?
ova,
sometimes it's best not to encourage me ...
Via Angry Bear: Bonuses paid in mortgage backed securities.
Great idea! And we taxpayers now hold unknown amounts of this stuff. Let's use it to pay for the compensation of Bush, Paulson, Bernanke, and their staff.
Jas,
Did you get your snow shoveled? Is your heart still ok?
play it smart--go easy on the ghee tonight ...
U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Federal Reserve Board Governor Ben S. Bernanke, Deflation: Making Sure "It" Doesn't Happen Here
Now that were here I got a pretty good idea where were going.
...and on a happier note, I closed escrow on the sale of my recently inherited OC home yesterday!
Things can only get better.
Hello...
Anybody out there?
Yeah, C.R. - Fannie and Freddie didn't have anything to do with this mess. G.S., B.S., L. Bros., etc. were selling peanut-backed securities to the world. And by the way, Fannie's leverage was 150-1, but I guess your idol Paul Krugman (Nobel laurate) never mentioned that. Remember, in 2005 I told you that Fannie and Freddie were disasters in the making and that they would take the whole economy down with them.
I think it isn't exactly right to say that securitization was "an enabler" to the financial crisis. Securitization is hardly a novel concept.
Bond Girl | Homepage | 12.20.08 - 9:13 pm | #
Sure it was.
Securitization is and has been a scheme to enable incremental lending by the banking system without increasing the banks balance sheets, apparent leverage, and reserves. When the securitization stopped, the system had two choices: shut-down the lending funded by securitization (credit crisis) or bring all the formerly securitized loans onto the banking system's balance sheets (bank implosion).
Either way, it was the lack quality control on the loans being fed into the securitization process combined with the complete absence of reserves to absorb losses anywhere in the securitization stream that blew up our financial system.
Ah, yes. I thought you were referring to something else.
VietnamVet writes:
Yes, reporters, blame the minorities, the conned and suckers across the world. Never mention that everyone involved was getting their cut of the action. Then the Gigantic Ponzi scheme collapsedVietnamVet | 12.20.08 - 7:33 pm | #
Now the taxpayers are holding the bag, mugged by Wall Street and the White House.
The taxpayers had a big role in this also. I do believe.
Hello...
Anybody out there?
Uffish Thought | 12.20.08 - 9:29 pm | #
Stop gloating.
[;-)
Anonymous:
Are you serious--is that really a quote from Bernanke?
The much beloved girlfriend wants to make a brief errand run on the way to the grocery story this afternoon so we drive into a 98% traffic gridlock in the local regional mall. Upon reflection, it is our worst immobilized automobile situation since unknowingly attempting a short cut through the St. Louis Zoo on fund raising day about a year ago. The point being that tradition has tremendous inertia. Christmas is the day when gifts are given, and even those aware that going out of business bargains are going to be everywhere in January are still enmeshed in the expectations of the culture.
Bush:
How, he wondered aloud, did we get here?
Every government statistic is manipulated and massaged to suit its interests. If Shawdowstats is to believed, the CPI is 3 to 5 percentage points higher, GDP is 3 to 5% lower, unemployment is 5 to 12% higher (all in absolute terms) than the establishment numbers.
The government has been lying so long that it started believing its lies.
With all the fake happy news clouding everyone's vision, no wonder they missed this crisis.
To CR's credit, he was warning much before than 99% of economists.
It's unbelievable that with all our technology, we had to wait until Dec 2008 to officially declare that the nation had been in recession since December 2007. Shadowstats had us in recession since November 2006.
To top it all, we have no idea where our trillions are going:
"Dec. 12 (Bloomberg) -- The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral."
To sum up, we don't know where we are in the economic landscape and we don't know where we are headed. Prepare for new surprises.
Shadow Government Statistics - Home Page
NYT: But for much of Mr. Bushs tenure, government statistics show, incomes for most families remained relatively stagnant while housing prices skyrocketed. That put homeownership increasingly out of reach for first-time buyers like Mr. West.
So Mr. Bush had to, in his words, use the mighty muscle of the federal government to meet his goal. He proposed affordable housing tax incentives. He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.
Concerned that down payments were a barrier, Mr. Bush persuaded Congress to spend up to $200 million a year to help first-time buyers with down payments and closing costs.
NYT: It was an opportunity to address the risky subprime lending practices head on. But that was never seriously discussed. More senior aides, like Karl Rove, Mr. Bushs chief political strategist, were wary of overly regulating an industry that, Mr. Rove said in an interview, provided a valuable service to people who could not otherwise get credit. While he had some concerns about the industrys practices, he said, it did provide an opportunity for people, a lot of whom are still in their houses today.
Ideology and politics can make a deadly cocktail or drug-mashup. Bush was drinking hard and snorting bigtime on his own compounds, listening to that great economic philosopher - Karl Rove.
--
Samdog,
You bet! Oh, yeah, I am breathing fine. Thanks.
Jas
Commendably, the article does mention Bush's largest campaign donor Roland Arnall, CEO of BK Ameriquest and Bush's pick as U.S. Ambassador the the Netherlands, and White House discussions about Mr. Arnall.
yes W is to blame - so now it will be fixed, it may take eight years or more (it term limits are extended) - so everything will be okay
Shadowstats is not to be believed. Look at how perfectly their "measure" tracks official CPI. They don't recalculate anything, they just take the official number and add 3% to it. They way they present it, about how they recompute using the old algorithm and so on, is totally misleading.
[the only people blind to this story were getting paid to be blind.
12th Percentile ]
Agree 100%. No other plausible explanation. Absolutely impossible to gather a room of anything but retards that couldn't have come to the obvious conclusion that big trouble was on the way.
roadkill writes:
yes W is to blame - so now it will be fixed, it may take eight years or more (it term limits are extended) - so everything will be okay
roadkill | 12.20.08 - 9:36 pm | #
Youre a funny one!
Brock Sampson writes:
"Shadowstats is not to be believed. Look at how perfectly their "measure" tracks official CPI."
Yep, you said it all--they want to charge $175 for free info ...
Bond Girl:
When I saw this...
"and completely ignores the securitization process (a major enabler to the crisis)."
...it brought to mind two things that I believe were unique to recent events. One, submitting tranches to the ratings agencies in such a way that portions of pools of mediocre loans suddenly became AAA-rated, and two, using subprime RMBS as the basis for synthetic pools, thus expanding the dollar amount of speculation well beyond the underlying pool of actual mortgages.
I admit I am not a fixed-income guy, so maybe I have it wrong, but these strike me as significant drivers in the current crisis.
Anyone that blames it solely on the government is living in a bizarre world.
Its about time Americans took some responsibility for their own stupidity also!
NorkaWest,
You have to separate a lack of quality control from securitization as an instrument. This is true for any investment vehicle. I am generally frustrated that this is lost on people.
A question for the group:
If I beat my husband at a 5K race in February (which I will), I get a bottle of Scotch of my choosing. What should I request?
several weeks ago on c-span a panel of economists were discussing the credit crisis. One guy said Freddie and Fannie accounted for about 15% of the problem.
The majority, he said, was wall streets fault, and further, that more than securitization it was a cds (derivatives) problem.
@bond girl
There are a lot of good single malts, but Glenlivet is my favorite. And Conjure's.
mp(Excellent) writes:
Byzantine, from where did you get three years?
Quote from Fed Press Release:
FRB: Press Release--Board releases revised information detailing operational aspects of Term Asset-Backed Securities Loan Facility (TALF)--December 19, 2008
The revised terms and conditions were determined after consultation with asset-backed securities (ABS) issuers, investors, and dealers, and include an extension of the TALF loan maturity from one to three years and additional specification of eligible ABS collateral. In addition, to provide more certain investor access, TALF loans will be provided to all eligible borrowers with eligible collateral rather than distributed through an auction.
Here's how bad the bubble mentality is in California.
I was here during the dot-com crash. Pre crash most of my neighbours were paper millionaires. Within 6 months everyone had lost most of their paper wealth, and atleast half had lost their jobs. Houses in our neighborhood took a brief very fast 20% drop only to recover within the year a year.
Within 3 years better parts of the city I live in (East Bay side of BA) were pushing a million dollars for 20 year old cookie cutter suburbia tract homes.
Wages hadn't risen, weather hadn't gotten any beter, schools hadn't gotten any better. Only lending standards had changed.
I would try to explain to the neighbors that NO house in our city city is worth a million dollars, no way no hell. I would get all sorts of explanations. People will buy here cause houses in the South Bay side are so expensive. And on and on.
We sold our house in 2004. Pretty soon a lot of neighbors were treating us pretty frostily since it was clear we didn't buy the koolaid anymore. We didn't even discuss anything about the house. They would always try to explain why we were wrong selling.
This is a neighborhood that got DECIMATED during the dot-com bust, and yet people by and large refused to see the next bubble on the horizon.
"He was seen as a whiz kid, “a brilliant guy,”
Brilliant is only as good as whether you are right or wrong. Beyond that, it is some sort of personality assessment. Truth is, there are very, very few 'brilliant' guys in this world.
Byzantine- "Quote from Fed Press Release:"
Yes, I finally realized you were referring to the press release. Initially, I thought you were referring to something else.
Sorry.
DCRogers writes:
As for California's problems, the Governor won't be able to enact the pay cut... last time he tried that the Controller said the "computers can't handle a pay cut".
Like Real Estate, Gub'ment payroll only goes up.
God I miss Tanta patrolling the comments to shut down the ideologues.
I just can't see CR mixing it up in that same manner.
mp(Excellent) writes:
Yes, I finally realized you were referring to the press release. Initially, I thought you were referring to something else.
On no problem.
I was off playing Geometry Wars.
aughty:
That panel and others like them aren't getting at the essence of the problem: gross mismanagement of risk. At all levels. Personal, institutional, corporate, municipal and federal.
The objections voiced here repeatedly, and by most everyone - whether about dodgy practices contributing to the crisis or about dodgy methods of addressing it - are all fundamentally about execrable risk management.
It's really up to you.
mp
~~~~
What good news wood we be getting next week mp ?
Absolutely impossible to gather a room of anything but retards that couldn't have come to the obvious conclusion that big trouble was on the way.
\t bearly
bearly | 12.20.08 - 9:38 pm | #
Also agree. I knew many people who pay no attention to econ or RE matters who commented on the unsustainabe nature of housing prices in 2005. I'm in Sacramento, so it was early here, but if someone who pays no attention notices this before a team of Ivy League PhDs responsible for studying the issue, there is a huge problem.
That whole thing about getting someone to understand something when his paycheck depends on him not understanding it. The reality is that the data pointed to something that was at odds with the ideology. Now they blame the data.
I'd just like to say that the guy we see climbing in our great western state parks didn't strike me as a Talking Heads fan.
Yeah, that surprized me, as well. Bill's a hipcat...who woulda thunk?
Rearranging the first post for historical accuracy:
"There is no question we did not recognize the severity of the problems....
Had we, we would have attacked"
the usual suspects: taxes, regulations, the CRA, minorities, and unions.
greenlander writes:
"Obviously, Mr. Bush doesn't read this blog. If he was a reader, he'd have know about all these problems three years ago."
greenlander | 12.20.08 - 9:20 pm | #
I'll bet there's another group who did not read the CR blog: New York Times editors.
All of a sudden (Dec. 21, 2008) they've discovered couldawouldashoulda in the residential mortgage/housing mess. Does anyone want to bother doing a NYT archives search for reporters' stories on the growing housing bubble? Might well be lean pickin's.
Maybe one of their business writers got a not-for-attribution interview with Tim Geithner in 2005 and reported same? I doubt it.
Brother. They couldn't see the bubble in 2007? Here are just a few milestones that come to mind.
Nov 2006: Implode-O-Meter Launched
Dec 2005: HousingPanic Launched
These were stick-in-your-eye "Emporer has no clothes" vehicles.
I remember following AppraisersForum.com throughought 2003 as they detailed all the pressure and fraud they encounteres to "hit numbers".
I remember my own Realtor in August of 2002 telling me in Anaheim, that it was a good market to sell (we successfully established a new price point in my neighborhood) but admitted it was not a "healthy" market because of how desperate buyers were. Balance had disappeared.
Yeah, that bubble just came out of nowhere. /snark/
If I beat my husband at a 5K race in February (which I will), I get a bottle of Scotch of my choosing. What should I request?
Bond Girl | Homepage | 12.20.08 - 9:42 pm | #
I'm a big fan of the 18-year-old Macallan. (Alright, fan might be an understatement: I named my daughter after it.)
Bond Girl:
Don't know much about blended Scotch, but I can recommend these single malts:
Glenrothes
Oban
Macallan
These are all generally sweeter rather than peaty.
12-year-old is fine, but if budget allows 18- or 21-year you will probably enjoy it even more.
Bond Girl,
The Macallan, if you win by a lot.
Old Crow, if by a little. This is real cheap, but not harsh, lemony. A secret.
American Whiskey: A Basic Collection of American Straight Whiskeys
Wall Street, Rome-on-the-Potomac, in both the executive and legislative branches,and their academic enablers from the Court Economists at the Fed to the aspiring court economists in the Ivy League schools all contributed heavily to the development of the housing finance mess. A good complement to the NY Times axe grinding is the axe grinding linked at Belmont Club:
Belmont Club » The March of Folly
Anatomy of a Train Wreck: Causes of a Mortgage Meltdown
http://www.independent.org/pdf/policy_reports/2008-10-03-trainwreck.pdf
Together their axes trim away a lot of pretensions of innocence among the cast of characters who played a role in this fiasco.
Pissed Off In California writes: This is a neighborhood that got DECIMATED during the dot-com bust, and yet people by and large refused to see the next bubble on the horizon.
Failure to accurately predict the future is not a character flaw. Believing that the world continues along roughly the same paths as before is actually a requirement to day to day decision making. The mistakes made that created this crisis can be traced back to people with money, influence and authority, but asking your neighbors for skeptical analysis of political decisions is not really reasonable given our culture. Hoping they would use credit with prudence, however, is another thing.
A lengthy article, unfortunately by a committee to ensure that any rough edges are filed off and any responsibility can be diluted.
"moving forward", that tiresome meme of this gasping administration, is noticeably absent...importantly blank.
"How did we get here?" doesn't take several pages to identify the important lapses in regulation...and the adjunct question "moving forward, what can we expect?" is not one that this committee of reporters has the balls to ask. So NYT Business section, how did you get here?
mp what is your magical sack's opinion as to inflation indexed government securities, ala TIPS and I-Bonds?
Jas,
Where are you anyway?
I thought you lived in SF Bay area, but obviously not.
Are you in the Sierras?
Why do you stay in US with B&B Dopes, Gangsters and Fraudsters?
Better a small homogeneous democracy or a monarchy or sheikdom.
Jas is here where its safe.
I forgot to add that when we interviewed real-estate agents only one had been through a downturn in the market before (mid 90s). His exact words to me were "I can get you the price you are asking but I can't believe people would buy at this price"
If I beat my husband at a 5K race in February (which I will), I get a bottle of Scotch of my choosing. What should I request?
With the ways things are going, you may want to change your gift to Scrapple. A couple of pieces in the morning, and there's no need to eat the rest of the day.
Scrapple: Pork Mush...The Pennsylvania Treat
++ Habbersett Scrapple Corporate Internet Site | Homepage ++
If I beat my husband at a 5K race in February (which I will), I get a bottle of Scotch of my choosing. What should I request?
Bond Girl | Homepage | 12.20.08 - 9:42 pm | #
Don't tell him until he has taken you on a distillery tour in Scotland this summer.
He wouldn't want you to make an uninformed investment decision. Right?
I'm inclined to go easy on the role of risk managers in this mess. As someone on this thread has said, there are likely a lot of them impoverished and unemployed due to the fact that they warned management.
When money is being made, the computer-model whiz kids provided managers the needed cover for doing what they wanted to doi.e., make money. Risk managers were like the HR guy is in "The Office." Unwelcome.
Old Crow is bourbon, no?
"What good news wood we be getting next week mp ?"
I'm hoping--in fact Conjure and I have been arguing for many months--that someone will decide it's time to take over some banks and either deep-six their bad paper in the Laurentian Abyss, shoot it into outer space, or isolate it in some Fed entity. Then, either re-capitalize those banks or shut them down, while ordering the survivors to start lending again.
Somehow, I don't think that's going to happen. If it did, it would be "good" news.
I do not know if it has been mentioned or not:
WASHINGTON The global financial system was teetering on the edge of collapse when President Bush and his economics team huddled in the Roosevelt Room of the White House for a briefing that, in the words of one participant, scared the hell out of everybody.
It was Sept. 18. Lehman Brothers had just gone belly-up, overwhelmed by toxic mortgages. Bank of America had swallowed Merrill Lynch in a hastily arranged sale. Two days earlier, Mr. Bush had agreed to pump $85 billion into the failing insurance giant American International Group.
The president listened as Ben S. Bernanke, chairman of the Federal Reserve, laid out the latest terrifying news: The credit markets, gripped by panic, had frozen overnight, and banks were refusing to lend money.
Then his Treasury secretary, Henry M. Paulson Jr., told him that to stave off disaster, he would have to sign off on the biggest government bailout in history.
Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in.
How, he wondered aloud, did we get here?
THE RECKONING; White House Philosophy Stoked Mortgage Bonfire - NY Times
yes, Old Crow is bourbon, or whiskey. Come on now Bond Girl. If I could remember the name of it I'd recommend a 120 proof Scotch I had years ago-it was like packing my head with cotton.
But I can't remember.
BG
I'm a casual drinker but I like Johnney Walker
Then again that could be a social construct of going to school in Thailand for a few months
JW Black of course
"Are you serious--is that really a quote from Bernanke?"
Samdog - that's Bernanke talking. The clue about that whole approach of his is this: he is confusing 'money', meaning the dollar markers we trade around, with 'momey', the concept of owed value or wealth.
He thinks that manipulating one will manipulate the other. Lots of economists believe that so he is not alone. Just wrong.
Hey ... I'm just a small business man from Orange County. I was complaining to my wife about this real estate bubble in spring of 2003. The question is, if I saw it back then, how did the notions top economist miss it?
I know the answer, but I'm so gawd damn aggravated by this deal, it feels good to repeatedly ask that question.
John R:
I should have drawn the distinction.
Risk management failures do not necessarily reflect on risk managers. Plenty of anecdotal evidence they were often brushed off.
"even those aware that going out of business bargains are going to be everywhere in January are still enmeshed in the expectations of the culture."
\t $12 Help
I did hold off on the Wii Fit fr the wife when I noticed it's going for $150+ rather than $89. Told her to expect the gift late. Even when it makes rational sense to hold off, there's the guilt of loved ones not opening what they want on Christmas. For adults, they can deal with it. I can't ask the same for my 4 year old. Luckily she says "whatever Santa wants to bring." I was so proud, though I have to wonder if she's unamerican. What would McCarthy say?
At Merrill they just lied to the risk managers.
More on the Fed TALF program.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=apVRQVrRh3U0
Fed Opens TALF Loans to All Borrowers, Extends Term (Update2)
Dec. 19 (Bloomberg) -- The Federal Reserve revised its $200 billion program aimed at reviving credit to consumers and small businesses, extending the term of loans to three years from one year.
Under the Term Asset-Backed Securities Loan Facility, or TALF, the Fed will also loan to all eligible borrowers rather than through an auction process, the central bank said today in a statement in Washington. The change is designed to provide more certain investor access, the Fed said.
I can't ask the same for my 4 year old. Luckily she says "whatever Santa wants to bring."
Anonymous | 12.20.08 - 10:07 pm | #
Santa better come thru with what she wants or you're in a heap of trouble...
Somehow, I don't think that's going to happen. If it did, it would be "good" news.
mp
~~~~
I liked your first post better ... Fed to Loan to Hedge Funds ...
I think they are still going in the opposite direction, still looting the country ...
Bernanke is bound by his role as head of the Privately owned and Operated Federal reserve to protect his shareholders ... the Member Banks.
They would probably fire Sheila Bair within an hour if she dared to really do her job and foreclose on these insolvent Wall Street Banks.
Obama got a lot of money from these people. If he does decide to clean up this mess, truly clean up this mess, he will have to take them all down.
megamik. yes. it got mentioned. it's the post your comment is attached to.
If there's any salient thing I've learned by studying this bubble and it's unwinding... it's that "Nobody rings a bell at the top" is patently false.
There is PLENTY of evidence and any person of sane perspective will be near the exit door when the top comes.
Just stay away from the kool-aid and remember it's never "a new era" where "the old rules don't apply"
Santa's what brought down the U.S. Screw Santa.
BTW, if there are any other Scotch drinkers on the board, I bought one yesterday I like immensely: McCarthy's. From Oregon! About $50, compares very nicely to traditional Scotches in that price range, peaty, but smooth.
Obama's not going to clean up jack crap.
Just stay away from the kool-aid and remember it's never "a new era" where "the old rules don't apply"
Mozo Maz | 12.20.08 - 10:12 pm |
So you're saying that math etc is not a rumor, yes?
What a damning article!
I found the part about Rahm Emmanuel particularly interesting. One reason I chose to support Obama early in the primaries was because he was the one candidate not saying flagrantly stupid things about the housing fiasco or financial crisis. Now I wonder how much of this was Rahm whispering in Obama's ear:
Rahm Emanuel, a leading Democrat, former investment banker and now the incoming chief of staff to President-elect Barack Obama, warned the White House it was not doing enough. He said he told Joshua B. Bolten, Mr. Bushs chief of staff, and Mr. Paulson in a series of phone calls that the credit crisis would get deep and serious and that the only answer was big, internationally coordinated government intervention.
You got to strangle this thing and suffocate it, he recalled saying.
Instead, Mr. Bush developed Hope Now, a voluntary public-private partnership to help struggling homeowners refinance loans. And he worked with Congress to pass a stimulus package that sent taxpayers $150 billion in tax rebates.
In a speech to the Economic Club of New York in March 2008, he cautioned against Washingtons temptation to say that anything short of a massive government intervention in the housing market amounts to inaction, adding that government action could make it harder for the markets to recover.
Scotch drinkers know Scotch only comes from one place. Otherwise it is whiskey
Mr. Hayden,
I've actually had Old Crow
The people of Kentucky would be very upset to hear your freely associating "bourbon"and "whiskey."
Lionel,
That is the coolest thing I've ever heard.
Norka,
I should definitely suggest that....
When I saw the Magic Cookies ad I was at the mall. I hate the mall. I get cranky. I noticed 2 things:
The shopper demographic was missing a key element. The 20 to 40 year old shopaholic was not to be seen. It was families, preteens and couples. A solid wall of moving people with no bags. I asked the wife and kid 'Why are these people here if they are not buying anything?' They gave me the "look."
The second thing was the lack of personal space. Non North Americans don't understand it. It dawned on me why we don't like being crowded. Also, why people try to be polite about. In a society where many carried weapons, and still do, crowding, pushing, etc was a hostile act that can and was dangerous.
"Santa better come thru with what she wants or you're in a heap of trouble..."
\t NorkaWest
Possibly, but she really doesn't seem to care. More accurately, she's interested in evrything, so whatever I get she'll be psyched. It's abnormal, I swear. Get this, the kid can get enough of books. Anyone remember books? Weird.
"Obama got a lot of money from these people. If he does decide to clean up this mess, truly clean up this mess, he will have to take them all down."
Yes. I think most informed people agree on that part. The only thing they're doing now is further concentrating wealth and preserving irrelevant institutions, which is extremely dangerous from all points of view, including the economic and social.
Glenn Hubbard is now desperate for anybody to hear his solutions.
What a SCHMUCK. You reading this Glenn, you're a schmuck? You didn't catch this before and your solutions are moronic now.
Why don't you academics understand that you can't cure over indebtedness with more debt?
Perhaps when the economy actually goes into a recession, and you're still sitting around debating it, we fire you or cut your pay like the rest of the world. I'm sure it would be constructive in helping you make more accurate forecasts.
Obama got a lot of money from these people. If he does decide to clean up this mess, truly clean up this mess, he will have to take them all down."
If he does get to serious they will arrange something to remove the threat.
And how many jerkoff "progressives" in Congress and elsewhere had a duty to raise a public outcry about what was going on, and failed to do so, for self-serving reasons?
Great video, perhaps "Burning down the House" as an encore.
Re: FNM and FRE. yes they were over leveraged, and mostly took on too much at the very end, as the new issue private label MBS market started to fall apart. But mostly, it was that they were mono lines, by design, exposed only to low to moderate sized residential mortgages. GSE underwritten mortgages were of far higher quality than the pvt label stuff, protected by PMI or larger down payments. However, the underlying houses were bid up just like the rest of the houses. This meant that they had to be standing on the beach, that was their job, they were sort of like the lifeguard. The tectonic plates keep building upo more and more pressure, until there was a huge undersea earthquake and generated a Tsunami of defaults. Even Michael Phelps would have drowned if he were standing on Phuket Beach in Thailand on 12/26/04.
It seems that it is somewhat clear what happened to cause the depression of the 30s, bubbles followed by deflation and unemployment. What is the mystery with this one that many cannot see how the easy money caused the bubble and now the deflation as the bubble burst. The question is can we maintain employment.
Any honest appraiser saw this coming. We were SCREAMING at the TOP of our lungs that the pressure was at DANGER levels but we were cordially escorted out of the building because closings were taking place....They did not want disruptions. I am not amazed, shocked, or surprised that it finally fell. I am surprised at how fast and far it is falling with no end in sight. GOD bless you all and I wish you a Merry Christmas. Please remember that this too shall pass. I will save all rantings and violent expression against our governing IDIOT IN CHIEF and his YES MAN econ staff....and the rest of his supporting cast.
But Nil, everything's going to be A Okay cuz Rahm's whispering in Obama's ear...and Rahm knows Wall Street. Bwahahahah!
Bond Girl, Cragganmore 12 yr is very good without too crazy a price.
"The question is can we maintain employment."
Given the current state of affairs? Doubtful, IMO.
I should have said - crazy price does not matter.
"As Mr. Thomas began digging into New Centurys failure that spring, he became fixated on a particular statistic, the rent-to-own ratio."
I was trying to buy a home in 2004 in SoCal. My realtor was pushing me to buy a place that I didn't really like, stating that I could live there for awhile, refinance, and buy another place while renting that one out.
As a renter, I knew what the monthly rent on similar properties would be. I asked why in the world I should want to rent it out at a huge loss each month. My realtor just kept calling it an investment.
I should really call and thank her for what she said, making me realize how out of whack things were and still are.
Rahm, an investment banker? Come on, he arranged the regulatory word on a deal to merge a pair of energy companies in Illinois during the Clinton administration. Presto Exelon.
"Belgium is the Manhattan of the EU."
Hey, I resent that. Manhattan is many things, but Belgium it ain't. NYC has one of the best governments in the country under Bloomberg, who is hugely popular, so the analogy doesn't work on any level.
I should have said - crazy price does not matter.
Bond Girl | Homepage | 12.20.08 - 10:20 pm | #
Definitely need a distillery tour with a side trip to St. Andrew's.
"How did we get here?" Well, W, that is the question isn't it? Too much time in the war room.
It will give me something to drink when everything finally implodes....
Nades,
Do they drink Johnnie Walker in Thailand? And what were you doing over there?
Has anyone here ever been at sea? When you get ready to approach land you see and smell the difference. You start spotting more crap floating, the air begins to smell different. Then you see the first smudge of landfall.
We are just begining the approaching the isle of Despair. All of what we are talking about will not prepare you for what is going to happen once we make port.
regulatory 'work' I meant to type
@ Bond Girl, "If I beat my husband at a 5K race in February (which I will), I get a bottle of Scotch of my choosing. What should I request?"
Bowmore 12 year. 25 year if you really want to twist the knife (and enjoy a very nice glass).
Nova:
On the Isle of Despair, the big banks aren't zombies; they are two month old beached whales stinking up the coast.
The only thing they're doing now is further concentrating wealth and preserving irrelevant institutions, which is extremely dangerous from all points of view, including the economic and social.
mp
~~~
I think Volcker would be the man to wield the axe ... I think he even might enjoy a bit of it ...
Question is: Does Obama have the cojones ...
On the Isle of Despair, the big banks aren't zombies; they are two month old beached whales stinking up the coast.
NorkaWest | 12.20.08 - 10:27 pm
The Port Authority just noticed that and is planning do something very soon. First they have to put out the no bid contract for their removal. That is, after they study the situation and build a road to get to them.
Johnny Walker is a "Classic" Asian whiskey.
From the BBC
BBC NEWS | Asia-Pacific | China offers Taiwan economic aid
A senior Chinese official has pledged that China will consider any request for assistance from Taiwan during the current global financial downturn.
Taiwanese firms have invested billions of dollars in China and the island's reliance on the mainland both as a market for its goods and as a supplier is likely to increase as the US, a key market for Taiwan, continues its economic slump.
China rising.
"Question is: Does Obama have the cojones ..."
He may have the cojones, but the question may be moot by the time he gets his hands on the levers.
The situation is deteriorating rapidly.
Stratonovich,
I've honestly not tried Bowmore - does it have a lot of peat to it?
The situation is deteriorating rapidly.
mp
~~~~
No doubt. I guess the Fed had to lend to Hedgies because the Madoff scandal has opened the redemption floodgates ...
I don't think most of the hedge funds can do anything but fold ... more de-leveraging ... more panic ...
Re: Various references to the thread music...
For the Beans, Bullets & Bullion crowd
Seeing as how we are most likely approaching the end of this thread..I can't believe this great 'heads tune hasn't been linked... Life During Wartime
It has a "Watch in High Quality" option - don't know if that means audio as well.
The situation is deteriorating rapidly.
mp | 12.20.08 - 10:31 pm |
mp, the auto bailout did not slow it down?
Ilargi: The credit crisis yesterday brought down a first entire government, in Belgium. As Niall Ferguson writes today:
It is all but inevitable that we shall see serious political and geopolitical upheavals in 2009, as the recession takes its toll on weak governments (Thailand and Greece are already reeling) and raises the stakes in inter-state rivalries (India-Pakistan).
In the same vein, Stoneleigh looks ahead at the equally inevitable upcoming wars in the labour markets. Millions upon millions of people around the globe will lose their jobs in the next year, and many if not most of the lucky ones who will still be employed can expect drastic cuts to their benefits and salaries. Since governments at all levels, if only to prevent having to fire employees, will try to raise taxes at the same time that people get poorer, widespread mayhem is guaranteed. And that's before people start figuring out what happened to their savings and pensions.
Weather, Discounts Collide as Holiday Shoppers Dither
Weather, Discounts Collide as Holiday Shoppers Dither (Update1) - Bloomberg.com
Alex Galvez, 28, an automotive technician who works in Long Beach, California, said he lost half his income this year. He was shopping for his nephews today at the Westfield Santa Anita Mall, in Arcadia, California.
In past years, wed probably get 10 gifts for each of our nephews, he said. This year its probably one.
The ICSC has estimated that in November and December, sales at stores open at least a year may decline as much as 1 percent. That would be largest drop since at least 1969, when the New York-based trade group starting tracking data.
Its sad for the kids, said Galvez. Theyre used to getting a ton of gifts.
10 gifts now 1 and its sad...
Amazing....Whatever happened to being happy with a new bat!
"mp, the auto bailout did not slow it down?"
No, not really.
"I don't think most of the hedge funds can do anything but fold ... more de-leveraging ... more panic ..."
Yes.
@ JohnR(VA), "I'll bet there's another group who did not read the CR blog: New York Times editors."
In defense of NYT bubble coverage:
It IS Saturday night, so rock blogging is in order...
Sat 4th row for the Heads "Stop Making Sense" tour at the Greek Theater in Berkeley in 1984. Damn, that was a good show.
"Amazing....Whatever happened to being happy with a new bat!"
That's what I want for Christmas. It will help me knock some sense into the bubble crowd in my neck of the woods. On the other hand I might get carpel tunnel syndrome from all the swinging.
"mp, the auto bailout did not slow it down?"
No, not really.
mp
~~~~
I think the way the auto bailout was handled made it worse. Not because they got the bailout but that it exposed the complete lack of cooperation and judgment of the Congress. Instead of a measured debate we got petrified ideological scatology.
@ Bond Girl, "I've honestly not tried Bowmore - does it have a lot of peat to it?"
Well let me just check on that again. ... Mmmmm ... Peaty.
"mp, the auto bailout did not slow it down?"
No, not really.
mp | 12.20.08 - 10:38 pm | #
Agree, but no bailout would have accellerated it. Who wants to start a contest on 4Q GDP. My guess -5.5% on orgional read, eventually revised to closer to -6.0%
The Congressional "debate" on the auto bailout was pure theater, right? They all knew Paulson would be there in the end anyway. In a sense it was perfect "cooperation" within the Congress. Everyone got to play to the home crowd with the understanding that it didn't really matter.
ova writes:
"Non North Americans don't understand it. It dawned on me why we don't like being crowded. Also, why people try to be polite about. In a society where many carried weapons, and still do, crowding, pushing, etc was a hostile act that can and was dangerous"
Someone made a comment on the previous thread about how UAW members ough to shoot at people in foreign cars. Your point was what came to my mind.
I live in the South--if you shoot at a foreign (or ANY) car: expect return fire--guaranteed(!)
No one said anything so as not to encourage anti-social trolling ....
Counterpointer - did you post this a while back? Worth another view.
David Bowie and the Arcade Fire - WAKE UP
Also, we do not eat our kitties...
Comrade Kristina | 12.20.08 - 8:29 pm | #
Bartender and ex-stripper sends us a perfect straight line like this? Perhaps your husband might be open to a more liberal interpretation of munching the felines.
Can we all agree that Fanne and Freddie aren't a big part of the problem because the problem is so enormous?
Besides the hedge funds, there is the much-anticipated retail implosion. And, after the holidays, a surge in layoff announcements and a further rise in unemployment.
Bond Girl, a mixed metaphor for you?
YouTube - It's A Mad, Mad, Mad, Mad World - Tyler Fitzgerald
Bond Girl,
If you like peaty single malts, then you have to go with Laphroaig. And if money is no limit, go the next step up to Lagavulin. As far as mortgage-backed bonds being TALFed are concerned, that's for another post.
sdtfs, please don't go to work on Kristina. She is a good sport, or seems to be.
Stratonovich,
You are soooo funny. My husband is a fan of Laphroaig. That would be like rewarding him for losing
"No one said anything so as not to encourage anti-social trolling ...."
Nova's not trolling...it's an interesting observation.
Personally, I love his posts. I do wish he would describe his recent dreams, as he did one Saturday night...
Bondgirl,
Jameson's Whiskey
Back from a pre-Christmas get-together this afternoon (daughter in law graduation from nursing courses) and opended and read Christmas cards. Conversation at the gathering and in all but one of the cards mentioned economic slowdown or business slowdown or layoff or general feeling of being threatened by the economy.
I just listen. People have all made up their own minds about what and why - mostly wrong in my opinion, but perhaps I'm wrong, too, so I don't argue. I will just say that this has gone from a fairly obscure economic situation to the point where everybody is well aware. It took a while to get on the general public radar, but it is certainly there now.
Sorry mp, my purient mind at work. Apologies to Kristina if she's offended.
I'm hoping--in fact Conjure and I have been arguing for many months--that someone will decide it's time to take over some banks and either deep-six their bad paper in the Laurentian Abyss, shoot it into outer space, or isolate it in some Fed entity. Then, either re-capitalize those banks or shut them down, while ordering the survivors to start lending again.
Somehow, I don't think that's going to happen. If it did, it would be "good" news.
mp | 12.20.08 - 10:03 pm | # [kill][hide comment]
mp, you're such an optimist. This crew is going to run out the clock and disappear.
OT: I didn't expect anyone else here would read RRW. Missed being on the crash page once. One of the few benefits of being at the back of the pack. Read Bike (British)?
"Jameson's Whiskey"
It's not a coincidence there are so many alcoholics in Ireland; they cook up some really dangerous stuff.
Jameson's is one of them.
fried writes:
"No one said anything so as not to encourage anti-social trolling ...."
Nova's not trolling...it's an interesting observation.
Personally, I love his posts. I do wish he would describe his recent dreams, as he did one Saturday night...
fried | 12.20.08 - 10:49 pm | #
I'm not talking about nova...
I talking about someone else why was hinting that people who drive foreign cars deserve to get shot by the UAW members! Sheesh...
Unemployment graphs from 1890 to the present. With subgraphs by age, race, occupation, etc.
The reason it is now on everybody's radar is that the effects are now reaching everybody. For instance: restaurant business down 40 percent in small, remote northern Minnesota town. No layofs there, no business closings... so why the slowdown? It is because many retirees in the area are down 30 to 50 percent in their retirement IRA or pension investments.
Frank Rich in the NYTImes...
"The wholesale loss of confidence is so catastrophic that even the new president's new deal can not set it right".
OP-ED COLUMNIST; Who Wants to Kick a Millionaire? - NY Times
mp writes:
"Jameson's Whiskey"
It's not a coincidence there are so many alcoholics in Ireland; they cook up some really dangerous stuff.
Jameson's is one of them.
mp | 12.20.08 - 10:53 pm | #
Practice makes perfect.
thanks CR for the video
david byrne is a genius
my God what have we done
"And you may ask yourself
What is that beautiful house?
And you may ask yourself
Where does that highway go?
And you may ask yourself
Am I right? ...am I wrong?
And you may tell yourself
My god!...what have I done?"
sporkfed - LOL, I just had an eclipse with 1780.
OT:
at big5 (sporting goods) today to pick up some slippers for wifey and my weekly box of 22LR. There was a sign printed on 8.5x11 taped to the gun rack. The sales guy wouldnt give me a copy, so i am paraphrasing- "due to unexpected demand, we may be unable to deliver some firearms." followed by a list of assorted mossberg shotguns, 30.06 rifles, and .22s
probably nothing...
RIP
HSBC banker found hanged by belt at 5-star London hotel after 'committing suicide'
| Mail Online
The message is getting to everyone. Here's an email I received today...
As you may know, Governor Gregoire released her proposed budget yesterday. The
budget asks for a 14% decrease in funding for the University of Washington for
each of the next two years. This cut is in addition to the $17 million in
retroactive reductions we are taking in the current fiscal year. This will be
one of the largest budget cuts the University of Washington has ever faced in
its 147 years of existence. To put this in perspective, the current budget
deficit is roughly equal to the annual budget of the College of Arts and
Sciences.
Doesn't exactly make you go out and buy stuff.
FreedomWorks did its own summary of the crisis: Roots of the Crisis | FreedomWorks
Feedback appreciated.
The Jason Thomas in the story-- the one sounding the alarm-- used to work for us.
Another vote for The Macallan -- 18 year preferably.
Brilliant. Just fucking brilliant.
Raspberries to Bush.
Tips of the hat to CR and Conjure.
"due to unexpected demand, we may be unable to deliver some firearms."
After our recent days-long power outage, with gas stations closed, grocery stores limping open on generators, I started to see how civil unrest could indeed come fairly quickly once people are deprived of the comforts of life.
The towns w/o power for 8 days have had their utility crews harrassed by frazzled citizens.
It did open my eyes.
Frank Rich in the NYTImes...
"The wholesale loss of confidence is so catastrophic that even the new president's new deal can not set it right".
~~~~
Except that it is not just lack of confidence anymore, it is an economic phenomena. It has metastasized to the real economy.
"RIP"
Very sad. The pathology never changes. It is the single constant.
AngryRenter, the heavy-handed partisan spin of the FreedomWorks link you provided completely overwhelms any useful information it contains. If you've an inside contact there, you may wish to suggest that unless they make an intellectually serious rewrite, they'll not be taken seriously by anyone except for the next generation of Kool-aid drinkers. The problems we face are too serious to waste time on this kind of one-sided analysis.
and mr bush wondered...
How, he wondered aloud, did we get here?
easy
you clicked your ruby slippers together three times, while saying
theres no place like home
theres no place like home
theres no place like home
Jameson's
Jameson's is kerosene. If you're going Irish, you want Black Bush.
If you stick with Scotch, then no one has yet mentioned Highland Park. Very drinkable. And a second for Lagavulin for those who insist on peat.
As for JW, it truly is Asian. I can't tell you the number of bottles of duty free JW Blue I've seen mixed with Coke by Koreans on KAL.
Awesome thread music..that song has rocked my world since I first heard it in high school...the meanings just kept piling up...and now yet another one...coming home from a date....it feels poignant again.
Yes, this entire mess is the ultimate result and symbol of GOP anti-regulatory ideology and it's fruits...and the attack on Fannie, Freddie, and the Community Reinvestment Act are just distraction propaganda pumped out by the Vast Right Wing Noise Machine - the ultimate in psychological projection - right out of Orwell's playbook. They are part and parcel of the Great Conservative Walkback (kos) - being spearheaded in particular these days by David Frum and Glen Hubbard.
The problem that we face is that there is too much leverage in the system. Thus the solution is simple, reduce it. What does it take to reduce leverage in the system? Unwinding all the CDOs. That has been happening already as events of default become more and more common but there needs to be a push to make it official.
has anyone else seen cars with shoes on the back shelf. What's it mean?
Young Chuck moved to Texas and bought a donkey from a farmer for $100.00.
The farmer agreed to deliver the donkey the next day.
The next day he drove up and said, 'Sorry son, but I have some bad news, the donkey died.'
Chuck replied, 'Well, then just give me my money back.'
The farmer said, 'Can't do that. I went and spent it already.'
Chuck said, 'OK, then, just bring me the dead donkey.'
The farmer asked, 'What ya gonna do with him?
Chuck said, 'I'm going to raffle him off.'
The farmer said 'You can't raffle off a dead donkey!'
Chuck said, 'Sure I can Watch me. I just won't tell anybody he's dead.'
A month later, the farmer met up with Chuck and asked, 'What happened with that dead donkey?'
Chuck said, 'I raffled him off. I sold 500 tickets at two dollars apiece and made a profit of $898.00.'
The farmer said, 'Didn't anyone complain?'
Chuck said, 'Just the guy who won. So I gave him his two dollars back.'
Chuck now works for Goldman Sachs.
probably nothing...
unhappyCakeEater | 12.20.08 - 10:57 pm |
Yeah, I would not read too much into this. Big 5 has horrible supply chain management. Every store seems to have a different mix....and I mean WAY different. Guess it just depends on where the delivery drivers feel like going.
I should add - the live version from Stop Making Sense was probably the best recording of that song.
1913 The federal income tax is created. The new law allows taxpayers to deduct their mortgage interest, among other interest expenses.
Why even read beyond the first sentence of "analysis"?
If I beat my husband at a 5K race in February (which I will), I get a bottle of Scotch of my choosing. What should I request?
Bond Girl | Homepage | 12.20.08 - 9:42 pm | #
Good luck to you! I suggest Laphroig but the Famous Grouse comes in a decent single-malt variety.
I had an absolutely gorgeous 25 yo Scotch over 15 years ago and I can still remember how it just tumbled over my lips, across my tongue and down my throat. I think it was one of the Glen's..Glenlivet, Glenmorangie, Glenfiddich. Stunning stuff.
Go for a nice ripe old age.
Sigh.
@ Lionel, "'This will be one of the largest budget cuts the University of Washington has ever faced in its 147 years of existence. To put this in perspective, the current budget deficit is roughly equal to the annual budget of the College of Arts and Sciences.'
Doesn't exactly make you go out and buy stuff.
This email I received really filled me with confidence:
Letter from President Faust about the global economic crisis
Cambridge, Mass.
November 10, 2008
To Harvard Faculty, Students, and Staff:
I write today about the global economic crisis and its implications for us at Harvard.
We all know of the extraordinary turbulence still roiling the worlds financial markets and the broader economy. The downturn is widely seen as the most serious in decades, and each days headlines remind us that heightened volatility and persisting uncertainty have become our new economic reality.
For all the challenges such circumstances present, we are fortunate to be part of an institution remarkable for its resilience. Over centuries, Harvard has weathered many storms and sustained its strength through difficult times. ...
But we must recognize that Harvard is not invulnerable to the seismic financial shocks in the larger world. Our own economic landscape has been significantly altered. ...
Our principal sources of revenue are all likely to be affected by these new economic forces. Consider, first, the endowment. ... Moodys ... projected a 30 percent decline in the value of college and university endowments in the current fiscal year. While we can hope that markets will improve, we need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint.
My favorite part of the "analyis" is
James Johnson, one-time advisor to Barack Obamas presidential campaign, receives nearly $4 million in loans from "Friends of Angelo."
What exactly does this have to do with anything? I went from chuckling to outright laughter when I got here.
Somehow, I don't think that's going to happen. If it did, it would be "good" news.
mp | 12.20.08 - 10:03 pm | #
Outstanding news. The only better news would be if they also put the taken over bank exec's in stocks and pillories.
And you may find yourself living in a shotgun shack
And you may find yourself in another part of the world
And you may find yourself behind the wheel of a large automobile
And you may find yourself in a beautiful house, with a beautiful
wife
And you may ask yourself-Well...How did I get here?
And you may ask yourself
How do I work this?
And you may ask yourself
Where is that large automobile?
And you may tell yourself
This is not my beautiful house!
And you may tell yourself
This is not my beautiful wife!
And you may ask yourself
What is that beautiful house?
And you may ask yourself
Where does that highway go?
And you may ask yourself
Am I right?...Am I wrong?
And you may say to yourself
MY GOD!...WHAT HAVE I DONE?
Timeless lyrics. Prophetic somehow.
( Lyric credits to the Talking Heads)
Thus the solution is simple, reduce it. What does it take to reduce leverage in the system? Unwinding all the CDOs.
~~~~~
That would be a small start ...
NYT has an interesting snapshot of the problems we face. I initially felt sorry for him, but it turns out he has maxed his credit cards, has two cars, cashed out his home equity, and refuses to commute or take non-management jobs. A Boomer icon for the ages:
Extended Benefits Are a Lifeline for Many Unemployed - NY Times
Dummy question: what's a gold lease rate?
RhodesianGreenbackinAZ | 12.20.08 - 8:47 pm | #
Gold Lease Rate
The cost of borrowing gold, the daily level of which reflects the supply and demand for metal in the lending market. The daily GOFO page on Reuters gives a good indication of the state of the leasing market.
Panics hit America every 17 years, on average, for about a century, from 1819 to 1920 (in 1819, 1837, 1857, 1873, 1894, 1907 and 1920). The word panic aroused such a negative reaction (in 1894 and 1907) that Herbert Hoover invented a less threatening word for the 1929 eventconnoting a small pothole in the road. Hoover called the 1929 panic merely a depression.
That linked article on the backwardation tendency in gold is pretty good. Here's the most important paragraph.
"Hyperinflations have several distinct stages that have been observed throughout history in the course of the acceleration of inflation to ever higher rates of change, there always comes a certain threshold point what I refer to as the 'point of no return'.
This is the point at which the public realizes that the inflation is a deliberate policy that is set to continue, for the simple reason that the government issuing the money in question is technically bankrupt."
I believe that not only is gold price the true barometer of hyper inflation but it is also a leading indicator. Price will signal a coming trend, and true backwardation would confirm it.
It's not unlike oil/commodities price, if you think about it. The decline in these price, starting last summer, was the leading indicator of deflation/demand destruction. This deflation could have been long and devastating but for two things: 1) Bernanke's Fed and how quick it was to pull triggers on lower rates and over-the-top stimulus; and 2) all other major CBs and govts. around the world imitating Bernanke.
Part of deflation/demand destruction is psychological. If consumers think it's coming, they stop spending. I think part of Bernanke's gambit was to control their minds and convince them it's a brief phase.
The govt is not going to be able to unwind ZIRP and all this debt and liquidity. It's a fixture and the only way out is currency devaluation/hyperinflation which gold is signalling.
@Outsider
My mother was raised in Shanghai during WW2, on a street lined by high walls. When strangers appeared the older children would shepherd the younger to the safety behind the walls.Every so often news would come of kidnapped children.
No ransoms were ever sought.
They NEVER bought meat on the open market.
mp, the auto bailout did not slow it down?
nova | Homepage | 12.20.08 - 10:36 pm | #
It wasn't a bailout so much as a temporary reprieve.
Good luck to you! I suggest Laphroig but the Famous Grouse comes in a decent single-malt variety.
Scott | 12.20.08 - 11:27 pm | #
He's the one that needs the luck.... I just ran a marathon a couple months ago. That's why I'm asking for help picking out my Scotch. I might have let him win, if it weren't for the prize
Currently Accounting | 12.20.08 - 11:33 pm
Another trick of the corporate media ...
Find some aberrational ingrate and portray him as the rule and not the exception.
It wasn't a bailout so much as a temporary reprieve.
dryfly | 12.20.08 - 11:37 pm | #
It was a "bridge loan," until the new administration starts and the real assistance comes....
Great thread music selection. Gotta love the "Talking Heads". My personal fave "Psycho Killer".
rich, thank you for your posts. i have been slowly building a position in oil and agriculture. i took some profit on gold-- thinking it will slide near term as we get an obamastimulus rally. anyway, i value your thoughts, so keep them coming!
Has anyone here ever been at sea?
Not in a long time.
Bond Girl - whoops, I didn't read all the comments before responding - and I can't spell. Lots of good suggestions already.
Anybody else think this NYT article is about 15 months too late ?
mp - can we stop the bond meltdown clock at least? That one actually scares me.
Sdtfs - I also thought the 'eating kitty' remark was some sort of euphamism. Glad I'm not the only one with a dirty mind.
Crabsofsteel - I'd give a resounding second to my favorite single-malt Lagavulin, but Bond Girl is an apparent Scotch-virgin.
Bond Girl - you'll prolly like Glenfiddich.
nades - 'casual drinkers' don't drink Scotch.
George W. Bush - How? You, for starters.
Anybody else think this NYT article is about 15 months too late ?
mmckinl | 12.20.08 - 11:46 pm | #
And woefully incomplete as CR pointed out. Shocking - not.
Harvard Fund Managers Clear $26.8 Million - WSJ.com
Harvard Fund Managers Clear $26.8 Millio
Anybody else think this NYT article is about 15 months too late ?
\t mmckinl | \t \t \t \t12.20.08 - 11:46 pm | #
Well, maybe, but in a way, it's very timely, because Cato, Heritage, and the other compenents of the noise machine have been at full tilt of late claiming this is all an outgrowth of old Democratic policies (CRA specifically), FNM, FRE as the chief enablers. This is, of course, BS, as CR pointed at in his post - they were the least abusive, and probably wouldn't be swamped by the bubble if WS hadn't gone nuts. It's important to remind people of the real history, and not the insta-revisionist garbage.
It was a "bridge loan," until the new administration starts and the real assistance comes....
Bond Girl | Homepage | 12.20.08 - 11:40 pm | #
I'm still thinking we'll see a managed bankruptcy.
but Bond Girl is an apparent Scotch-virgin.
You are so very wrong....
It's important to remind people of the real history, and not the insta-revisionist garbage.
Scott | 12.20.08 - 11:50 pm | #
It is pervasive though - the meme is been planted deep already.
WAY WAY OT...Bond Girl, how fast you guys doing the 5ks? I ask only because I just got back into running after a 35 yr absence
dryfly- "I'm still thinking we'll see a managed bankruptcy."
We're expecting to be in Michigan sometime during mid-2009 to attend a major equipment selloff.
Hoping to pick up a lot of tool room equipment.
Spoke with an associate on Friday. He says scrap iron is now $71/ton, not enough to interest even the bottom feeders. So, if they don't sell the equipment, they'll have to pay to have someone come in and take the oxygen lance to it and haul it away.
Interesting times, indeed.
Dryfly,
They did say something about an "orderly" bankruptcy, whatever that means (to them).
Talk about a bridge to nowhere. I'm hoping you are right Dryfly - banko is in the way for at least one of them. But that comment belongs in another thread - I thought we were talking Scotch here.
Sorry, Bond Girl - your original inquiry made it seem like you had no idea what was 'good'. So which brand are you leaning towards?
Being happy with a new bat. Yes. The grandmother of our kids (91) reported a conversation she had with others in the doctor's waiting room recently. In particular one woman said she was never so happy as a child as when she had a potato to play with. She dressed it up in many different ways. They were all discussing the depression, in the doctor's waiting room. We have a long way to go I think.
I noticed one of the GM guys(Fritz Henderson, for you Leno fans) go into double speak when asked if they were going to sell the Saturn division. I heard a rumor a Chinese company was interested. Nous voyons.
Hoping to pick up a lot of tool room equipment.
Spoke with an associate on Friday. He says scrap iron is now $71/ton, not enough to interest even the bottom feeders. So, if they don't sell the equipment, they'll have to pay to have someone come in and take the oxygen lance to it and haul it away.
mp | 12.20.08 - 11:57 pm | #
I'm encouraging every mfgr I work with to be looking for equipment NOW - it's out there in spades - especially in and around 'Detroit'.
They did say something about an "orderly" bankruptcy, whatever that means (to them).
Bond Girl | Homepage | 12.20.08 - 11:57 pm | #
Means they keep running while the 'under new management' sign is put up.
The fear [and justified] is that once the companies are blown apart in a DISorderly bankruptcy - they and the supply chain never get back together again. That's how you end up with a 3 million jump in joblessness in six months. Not good.
ew thread by the way
It is pervasive though - the meme is been planted deep already.
\t dryfly | \t \t \t \t12.20.08 - 11:54 pm | #
Yes, I'm aware...I'm shocked at where I hear it parroted back to me from my social network...often from people I've been trying to educate for three years now. It's disturbingly apparent that it's fairly trivial to plant it if you get out there early and beat the drum. IIRC, Tanta took a few early anti-GSE trolls to task here on this very issue - while not exonerating or idealizing the GSEs. Of course, nuance doesn't fit our society. Jas' "pigmen" have quite a network for getting their spin out, and the footsoldiers (2nd tier cheerleaders like Boortz and Savage) or their producers are well-fed by Cato and the like. Like I said: Orwell would be horrified at how well his playbook has been implemented. Even a multi-column 'in depth' reporter like Gretchen Morgensen, whose nuance far exceeds the average attention span, was oversimplied (Tant's Gretchen-watch).
I'm still thinking we'll see a managed bankruptcy.
At least now there is plenty of time to manage it. I think bondholders, suppliers, and the UAW can all be brought to the table. Dealers will all want the other guy to be shut down, so they're the ones who will have to be told to like it or lump it.
It's important to remind people of the real history, and not the insta-revisionist garbage.
~~~~~
I think people realize who was in charge the last 8 years ... The people that believe Cato and Heritage now will always believe them ...
My take is that people , even if they don't understand the details, know who walked away with hundreds of billions...
Now is a Great time to..... | 12.20.08 - 11:56 pm | #
My goal is to be able break 20 minutes, but that is not going to happen, I think. Not sure about his time....
Shnaps,
I had originally asked for Johnnie Walker Blue, mainly because I was wondering if it was worth the price, but I started to wonder if I actually wanted a blended Scotch. I really do not drink that kind of stuff on a regular basis because I actually like Scotch and would run through it too fast. My favorite for drinking is Glenmorangie or Balvenie.
Wow, I'm late to this party.
Anyone wondering about the GSE's importance to the our current circumstances hasn't read Doug Noland's excellent weekly commentaries over at Prudent Bear. The GSE's were central to the explosion of credit throughout the 90s.
Although the housing bubble itself was mostly limited to this century, and the earliest seeds were laid almost a century back, the most egregious economic crimes have all been committed since Greenspan was named Fed Chairmen in 1987.
"It's important to remind people of the real history, and not the insta-revisionist garbage."
If Joe Sixpack gets cold enough and hungry enough, he won't care who was responsible.
He'll let God sort it out.
tj, I think the major economic crimes against the US began during the mid-60s, but that's just me. I guess.
if they don't sell the equipment, they'll have to pay to have someone come in and take the oxygen lance to it and haul it away.
mp | 12.20.08 - 11:57 pm | #
Tragedy on a scale that makes one weep. The industrial age version of eating your seed corn.
I expect my employer to lay off my entire division (they said they want to sell us but that's wishful thinking as far as I'm concerned). I'm in the process of trying to convince them to let me have all the tools I work with as my severance. An oscilloscope and CAD software aren't expensive to have hauled away, but they're worthless if you don't have anyone left who knows how to use them.
[If he does get to serious they will arrange something to remove the threat.
nova ]
LOL. I don't think anyone in America needs to lose any sleep over the notion that Obama is going to change much of anything. What's he going to do? Insist one nationwide austerity measures, for the wealthy? That will work out famously. But he will have to pretend to. He can't claim ignorance since the bubble already exploded.
The Presidency is largely an acting job. And Obama seems to be a pretty good drama queen - face on TV daily and dribbling out annoucements about which deck chair goes where on the already badly listing Titanic...