"Credit Suisse Group AGs investment bank has found a new way to reduce the risk of losses from about $5 billion of its most illiquid loans and bonds: using them to pay employees year-end bonuses.
........Bonuses will take the first hit should the securities decline further in value.
"
"China's increased purchase of US Treasury securities should not be interpreted as an endorsement of the assumption that the US can borrow its way out of the current financial crisis," the China Daily said in an editorial.
"[The plan] will include a tax cut designed to pump $50 billion to $100 billion into the economy almost immediately; around $100 billion in aid to state governments,"
In theory, a percentage of the rest of the stimulus ends up in state coffers, too, through taxes.
But will this actually work? Or simply be neutralized by continued cuts in state and local gov'ts?
They had the same problem back in the '30s. Federal aid was neutralized by state cutbacks. I'm unconvinced that $50-$100 bill is going to disrupt that dynamic.
I suspect that very little of this will actually get spent in the first two quarters. Too little, too late, and spread out over too long a period. If this Keynsian approach is going to work they need a trillion immediately and another trillion or so for medium-term stimulus. The Obama administration clearly does not get it any more than the bush administration.
(For the record, if it were up to me I'd nationalize the whole steaming pile of hifi shite, make legal proceedings against banksters & fraudsters a national priority , and tax the living f@#$# out bourgeoisie capitalist scum.)
The five largest firms on the street handed out $120 billion in bonuses over a five year period -- more than the GDP of 150 nations.
Still, we are talking 2006. Those were the fat years, right?
In all, Merrill handed out $5 billion to $6 billion in bonuses that year. A 20-something analyst with a base salary of $130,000 collected a bonus of $250,000. And a 30-something trader with a $180,000 salary got $5 million.
But Merrills record earnings in 2006 $7.5 billion turned out to be a mirage. The company has since lost three times that amount, largely because the mortgage investments that supposedly had powered some of those profits plunged in value.
Unlike the earnings, however, the bonuses have not been reversed.
And even with this the Wall St crooks were still bailed out with $750B of 99%+ of American taxpayer money.
Help me out here - did anyone not see this coming ?? Did anyone not understand that the economies of many global sate governments are near collapse ?? And your bet is what ? The generationaly rich will simply kiss ass ? Is that your bet ?
$700B? Ben pisses that out before brushing his teeth.
My favorite part:
"The transition team has conveyed the figures to Capitol Hill, where the package is likely to grow as it works its way through the House and Senate."
Did you just realize that we're all really screwed ? Maybe dealing with the emotional side effects of how totally f@#ked, not one, not two, but probably three generations will be?
They failed to mention the new tax rate is 80%. And if you complain 90%. Plus they plan to tax the 20% you get to keep at 80%. What a freat F****** deal!
zirp, tarp, 5% mortgages, $850 bio in stimulus, $1.70ish gas - yep an aweful lot of shock therapy being applied to the patient. Residential housing probably stops being a statistical drag on gdp around Q2 next year as well. Probably enough to damp the recession and give the impression of a mild recovery in the second half of 09. Problem is, the Fed is busily creating a massive liquidity trap, and the stimulus is effectively more debt accumulation by what is now the debtor of last resort - the federal government. It probably buys a year maybe two of marginal economic growth, certainly better than a recession/depression, but ultra-low interest rates and excess debt accumulation are what got us here in the first place, so it's hard to believe they're solutions now.
"But will this actually work? Or simply be neutralized by continued cuts in state and local gov'ts"
Not to get ideological about it, but isn't Cali analogous to auto industry, unless the systemic issues are addressed (revenue vs. spending), what does aid accomplish except buy time until "better days"?
"It probably buys a year maybe two of marginal economic growth, certainly better than a recession/depression, but ultra-low interest rates and excess debt accumulation are what got us here in the first place, so it's hard to believe they're solutions now."
Events may overtake, and anyway, the horse might learn to sing.
""Credit Suisse Group AGs investment bank has found a new way to reduce the risk of losses from about $5 billion of its most illiquid loans and bonds: using them to pay employees year-end bonuses.
"
Does this make a "market" and kick assets out of Level 3 limbo?
Does anyone know what the 2.5% surcharge on income tax in CA the state senate is considering? Is that 2.5% of your tax bill? 2.5% of your taxable pay?
$50b-$100b in lowered Fed tax is smaller than the previous rebate check and it seems like it would just get crushed by the potential future CA taxes.
So did China just imply that the US's borrowing habit is now on double secret probation?
Kinda what it sounded like to me. My guess is that in some back room in the Great Hall of the People high level officials are debating the relative merits of continuing to float easy credit to their biggest-but-faltering customers, or reprising China's age-old tradition of unplugging from the world economy and returning to xenophobic self-sufficiency when things get iffy. The PRC's Mandate of Heaven probably hinges on making the right call.
California Democrats to Seek Bypass on Budget Impasse
Dec. 18 (Bloomberg) -- California lawmakers are set to vote today on a plan to raise $9.3 billion in taxes to help ease the states record budget deficit, using a loophole Democrats say lets them get around a required two-thirds vote.
The proposal would tax oil drillers, slap a 2.5 percent surcharge on income taxes and replace gasoline taxes with a flat 39-cent-a-gallon fee. Democrats controlling the Legislature say they need only a simple majority because they are cutting some taxes while increasing others in equal measure and are raising user fees that dont need a two-thirds vote Republicans have used to thwart tax increases.
Desperate times dont call for desperate measures; desperate times call for creative thinking, Senate President Pro Tem Darrell Steinberg, a Democrat from Sacramento, told reporters yesterday.
There is absolutely no way the combined effects from Fed/Treasury initiatives, Obama Stimulus, and cheaper energy fail to give us positive GDP growth. The real question is will it be sustainable growth. For my part I think not.
"Not to get ideological about it, but isn't Cali analogous to auto industry, unless the systemic issues are addressed (revenue vs. spending), what does aid accomplish except buy time until "better days"?"
--Comrade V
Nothing ideological about that.
State employees and Teacher's unions == UAW.
Bumbling Legislature == Management
Ahhnold == goofy ineffectual CEO
Voters == stock and bond holders
Judiciary == nutcase regulators
I don't think California is capable of addressing the systemic issues in a way that won't make things even worse. I would like to be proven wrong, but I don't see any evidence that the state will come to its senses.
Nova,
I'm not smart enough to comprehend the long term consequences, and I don't pretend to be. I read most people's thought here with great interest and great respect.
I've made my call. That's what I can contribute. Take it or leave it.
"Does anyone know what the 2.5% surcharge on income tax in CA the state senate is considering? Is that 2.5% of your tax bill? 2.5% of your taxable pay?"
The way I read the reports, it is the former, but we'll have to see.
I can not believe they singled out veterinary care for additional tax. We've already received an e-mail blast from the vet that their cost will go up 9%. It almost seems vindictive. What is the logic for that?
"Not to get ideological about it, but isn't Cali analogous to auto industry, unless the systemic issues are addressed (revenue vs. spending), what does aid accomplish except buy time until "better days"?
Comrade V | 12.18.08 - 4:55 pm | # "
There's no question that the budget has to balance. The Dems are trying an end-run around the budget process that includes extra taxes, which will probably face Republican lawsuits.
But yes, things like prison costs and public safety pensions have to be addressed as well, among the most egregious things. Or, even worse -- do we need three overlapping public systems of higher education with high redundancy.
All of these things have powerful (aka rich) constituencies, of course.
The 2.5% surcharge is on taxable revenue. Nominal top rate is 9.3% AGI. Lots of things drop AGI and several things can drop the 9.3% but the "surcharge" is calculate your AGI, multiply by the old rate (i.e. 9.3%) plus 2.5%. The top rate is now 11.7% in other words. Bye bye upper class.
I can not believe they singled out veterinary care for additional tax. We've already received an e-mail blast from the vet that their cost will go up 9%. It almost seems vindictive.
I guess they figure pets are a luxury item. But the unintended consequences are that pets are going to be abandoned at even a greater rate.
Hmm.
So a hypothetical person making $100k who has roughly $7,000 withheld would see their taxes raised $175?
Other than being annoying that is certainly tolerable. I can't imagine it helping much. . .
I'm pretty sure that international economic warfare is about to start in earnest.
Already we're seeing competitive rate cuts. The Swiss as well as the Japanese (again)are headed toward ZIRP to counteract rising values of their currencies. (The former against the Euro, the latter against the dollar.)
Won't be long before every nation has a zero interest rate at its CB.
Economic warfare tends to be followed by military warfare, unfortunately.
My comment was on the sur-charge to the tax. If the sur-charge is to the agi, that is very bad news. That would be over $3k to they hypothetical person aformentioned.
Neuromancer writes:
Hmm.
So a hypothetical person making $100k who has roughly $7,000 withheld would see their taxes raised $175?
Other than being annoying that is certainly tolerable. I can't imagine it helping much. . .
Neuromancer | 12.18.08 - 5:10 pm | #
The issue is you can not let them get a foot hold or next year it will rise another 2.5%... just another $175.
These guys increased the budget by over 40% in 3 years. They need to be stopped.
President-elect Barack Obama's economic team is crafting a stimulus package to send to Congress worth between $675 billion and $775 billion over two years ... An Obama adviser familiar with the planning said the package could top out around $850 billion.
Why not just average the esitmates and call it $2.3 Trillion? Oh, wait... thats summing the estimates --my bad. Hold on... that's usually how these things end up working out, right?
So a hypothetical person making $100k who has roughly $7,000 withheld would see their taxes raised $175?
Other than being annoying that is certainly tolerable. I can't imagine it helping much. . .
Neuromancer
That would be nice but a useless exercise, not worth the effort. The legal costs are going eat more than that. $100k paying $6000 (typical) would pay $8500. Essentially erasing any normal deductions. This is far more politically defensible than one of their other ideas of eliminating the home mortgage interest deduction. Elizabeth Hill at the LAO referred to that tax break as a loophole.
I have to ask again, why are we not just declaring a one year tax holiday since that's what the stimulus dollar amount is up to now? Is it because that would actually be fair and not all directed at well connected wealthy people?
Yea - I kinds thought it was not a sur-charge on the tax, it was a surcarge on AGI.
That will be very, very hard on people. You could see a lot of anger over that one.
Is there any way to opt-out of payinf for this Stimulus Plan?
Emigrate.
And like others above, I do think the stimulus may buy some time and resolve some of the short-term pain, and will happily use the sucker's rally to make final preparations for our inevitable fall from World Leader Status. And hey, who knows? Obama just might save the world, in which case I'll just snicker as I spend the next 5 years blowing through the beans and rice in the pantry.
A 2.5 percent income tax surcharge that would be applied to a person's total state tax bill. If someone normally owed the $1,000, for example, that would be an extra $25.
Bob Dobbs writes:
...But yes, things like prison costs and public safety pensions have to be addressed as well, among the most egregious things. Or, even worse -- do we need three overlapping public systems of higher education with high redundancy.
Wholeheartedly agree that CA state legislature and voters have become additcted to spending money they don't have and deep cuts are necessary. However, I would not place CA's public university systems in the cross-hairs just yet.
I consider CA's excellent and affordable higher education to be one of the last best things about living here. Once they take that away, what's the advantage of living here vs. anywhere else? The cheap housing? Easy commutes? Low taxes?
A lot of these economic predictions I see overlook the fact that most of our economy is driven by decisions that consumers make, not by decisions that the Fed, Congress or Obama makes.
Retail sales fell off a cliff in October because consumers got scared and decided to cut back. Sure, there are important long-term factors at work as well, such as high consumer debt levels and stagnant wages. But most of the people who cut back on spending had the ability to spend more, they just decided to spend less. And the cumulative effect of their decisions was to send our economy into a tailspin, because we have a consumer-based economy.
In my mind, the main factor as far as when the economy recovers is when consumers start spending more. The Fed can print all the money they want, and Congress can pass their stimulus plans, but if the average US consumer has made a fundamental decision that the long-term economic future is scary and that he needs to spend a lot less and save a lot more then there is going to be a huge economic bloodbath as this plays out.
Desperate times dont call for desperate measures; desperate times call for creative thinking, Senate President Pro Tem Darrell Steinberg, a Democrat from Sacramento, told reporters yesterday.
Dec. 18 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke is basing hundreds of billions in emergency lending on credit ratings from companies that gave AAA grades to toxic securities.
The Fed has purchased $308.5 billion in commercial paper and lent $631.8 billion under eight credit programs, most of which require appraisals of short-term debt and loan collateral by major nationally recognized statistical ratings organizations. That, in effect, means Moodys Investors Service, Standard & Poors and Fitch Ratings.
Well if you think about it, the CA community college is really just 12th grade with cigarettes (then again, I don't think my current crop of grads finished 11th grade either) and the CSU system is redundant for UC.
REBear,
You are one of the one's I count as smarter than me. To clarify my earlier remark, I merely see a temporary pull back from the brink. Protectionism is a policy. I'm trading mood. Sorry, that's the limit of my smarts.
Also does anyone else think it's creepy that since this whole TARP thing began my Citibank ATM's have been shooting out only totally newly printed money?
Popeye - given the way this market responds to news.. you may very well be up big tomorrow in light of this stimulus plan. This is certainly a trader's market..
OT: Not to pick nits but Steve Liesman on CNBC today quoted Alan Greenspan (in the Economist) as saying house prices would stabilise early next year. The word "early" is Mr Liesman's.
The quote is:
"Another critical price for the return of global financial stability is that of American homes. Those prices are likely to stabilise next year and with them the levels of home equitythe ultimate collateral for global holdings of American mortgage-backed securities, some toxic."
"Like many residents who work for private employers, Ms. Nolan-Stewart, an AT&T account manager, says she is astounded at the generosity of public-employee pensions. "If I were to retire, my retirement would be one-quarter of what I make today for the rest of my life," she says. By contrast, city firefighters and police who retire at age 50 with 30 years of service may retire with 90% or more of their final year's salary."
Actually, its not just firefighters, its others such as Caltrans (highways) etc. And 90% is conservative. One Cal State workers on this board [link on request] explained how system can be gamed to yield over 100% of highest annual pay.
And consider the highest salaries (note these are not even "First Responders"):
As a benchmark, just consider how much savings a private citizen would have to anuitize to generate a similar payout (in this interest rate environment)?
I am not being pejorative, or ideological, just factual.
If I was a citizen of another state I would question - just as the auto companies have been sharply questioned - why Cali should get any aid until it addresses its systemic issues.
To be fair - pensions are not the only problem, but its the elephant in the room that won't go away but nice people don't want to talk about.
I can not believe they singled out veterinary care for additional tax. We've already received an e-mail blast from the vet that their cost will go up 9%. It almost seems vindictive. What is the logic for that?
Those of you wealthy enough to be able to feed and care for both yourself and a pet should do the patriotic thing and pay more taxes.
"Also does anyone else think it's creepy that since this whole TARP thing began my Citibank ATM's have been shooting out only totally newly printed money?"
--Anonymous
They probably just bolted printers to the back of the cash slots.
I guess my bank is still solvent, because my ATM dispenses dirty limp bills.
Credit-Card Users Feel Pain as U.S. Banks Reap Gain (Update2)
By Elizabeth Hester and Ari Levy
Dec. 18 (Bloomberg) -- Credit-card companies, facing an increase in defaults and a decline in consumer spending, are raising some rates, adding fees and cutting credit lines as the Federal Reserve makes the most sweeping changes to the industry in 30 years.
The provisions, approved by the Fed today and effective July 1, 2010, may curtail lenders ability to raise interest rates on current balances, require they apply payments to charges with higher interest rates first and extend the time customers have to pay bills before incurring late fees. The Office of Thrift Supervision, which regulates savings and loans, and the National Credit Union Administration approved the rules today.
"It sounds like this bill will be around $850 billion over two years, and will be signed before the end of January. Add this to the stimulus from lower gasoline and energy bills, lower adjustable rate mortgages, and lower rates for those that refinance. That is a lot of stimulus ... "
Home Prices are off 25% from peak per Case Shiller Index upto now.
That means a 5 Trillion loss on the 20 Trillion of Housing wealth in this country by the end of 2008.
Not mention the losses incurred in the stock market.
The stimulus is still a fraction of what is already lost.
Altair wrote:
...
The Fed can print all the money they want, and Congress can pass their stimulus plans, but if the average US consumer has made a fundamental decision that the long-term economic future is scary and that he needs to spend a lot less and save a lot more then there is going to be a huge economic bloodbath as this plays out.
Altair
Unless the average consumer thinks a crash in the value of the dollar will eat up the cash they're saving.
He has a point. If things do not turn around in a year, we wont have a functional financial system.
crispy&cole writes:
Ignore Mr Magoo...he has called the bottom 9 or 10 times already, why don't they bring that up everytime they quote him?
crispy&cole | Homepage | 12.18.08 - 5:26 pm | #
Isn't this more like pocket change compared to Bush's multi-trillion spending ("stimulus")?
A real change would have been slashing gov. spending such that fed income tax would be zero (something radical that Ron Paul was/is proposing). Imagine how much money would be freed up for the consumers! (I might shed a tear or two for accountants and companies like Quicken, but probably only in my dreams.
Instead, Obama's more spending sounds like Bush 3.0 (not that McCain would have been any diff/better -- which is why I didn't vote Nov 4th)....
Caterpillar plants in Clayton, Sanford to have temporary layoffs
Caterpillar has announced an undisclosed number of temporary layoffs at its facilities in Clayton and Sanford.
The heavy equipment maker released a statement Thursday afternoon outlining the layoffs. Caterpillar (NYSE: CAT) said the decisions were made in response to reduced demand for the products made at those facilities mostly machinery for residential construction, which has dropped significantly around the country in the midst of the economic downturn.
Hard to believe the Chinese beat the US without firing a shot. They beat us by taking our jobs (assisted by the assclowns in Washington)to their country and selling us cheap plastic shit in return. They even financed the purchase (very thoughtful). We will implode from the debt created from this mess. There is no creative thinking in Washington today. Only a frantic attempt to maintain the status quo (through pouring taxpayer cash by the bucketload into a black hole). Increased debt won't solve a debt problem. Insolvency issues need to be addressed in an orderly manner and work through this national bankruptsy. The 700 B should have been used to start the real Bank of America owned by taxpayers and the failed institutions who made bad bets need to move into history...
"But yes, things like prison costs and public safety pensions have to be addressed as well, among the most egregious things. Or, even worse -- do we need three overlapping public systems of higher education with high redundancy."
Wow, maybe I'm preaching to the choir after all. Haven't heard from RE yet.
Better hope the Miseans aren't right about stimulus spending...
ac | 12.18.08 - 4:55 pm | #
AC, PLease explain.
Comrade Clueless Dufus
I think the Austrian crowd generally argues that stimulus spending just moves capital around in the economy, rather than generating legitimate growth, and at best delays the inevitable.
As I understand it they take they view that this economic downturn is necessary, not something that we should try to avoid. And that by trying to avoid it we simply make things worse (by continuing to misuse resources).
I tend to share this view these days and I would tend to summarize it by saying that the structure of the economy should take precedence over the size of the economy.
I suspect that lost economic activity (e.g. the number of businesses) is far easier to restore than lost economic structure (e.g. viability of the currency and attitudes toward debt).
"Hard to believe the Chinese beat the US without firing a shot."
I'm not sure that holding a trillion dollars in US debt that will be repaid, if at all, with cheap dollars is that resounding a Chinese victory over the US. Our relationship with the Chinese is a bit like a prostitution arrangement- neither side comes out all that well.
Children, fools and/or propagandizers .... most of you fall into one or more of those categories. Oh, sorry, I left out the folks who are talking their trading bets as booked.
I will not dispute that our country is in crisis. I will not debate with children, fools or folks talking up the bets they've booked.
Get serious friends. This is our country we are talking about.
"but ultra-low interest rates and excess debt accumulation are what got us here in the first place, so it's hard to believe they're solutions now"
If more spending and borrowing while forcing interests rates lower were the answer, why do we EVER have recessions. We could just borrow and spend our way to prosperity, easy and painless! The problem lies in the end game. I cannot for the life of me imagine how this all has some sort of benign ending.
Good news! We can solve California's budget crisis by firing all the Dept. of Corrections' shrinks and medical staff and enrolling our prisoner population in Kaiser Permanente.
"I consider CA's excellent and affordable higher education to be one of the last best things about living here. Once they take that away, what's the advantage of living here vs. anywhere else? The cheap housing? Easy commutes? Low taxes?
HARM | Homepage | 12.18.08 - 5:19 pm | # "
I'm actually on staff at a UC; D. Jane was, too, as I recall. And have in the past few years had more than enough experience as a student in community college and the UC system (though I'm over 50).
I simply think the whole system should be better integrated. Like, why does lower division at Berkeley even exist? Taking general ed classes in units of 100 taught by lecturers, or grad students, what's that about? Leave lower division to the CCs, except in some cases.
Further, move some 4-year programs down to the CCs, or have them carry most of the program and send the students to a nearby state college for selected upper-div. classes. This works particularly well for applied-science degrees: AJ, nursing, fire science, business, aeronautics, etc.
Finally, WTF is this monopoly UC gets on doctoral degrees? Hell with that. Create one system of higher ed with research universities and teaching universities, and programs that shuttle students between them for different parts of their degrees.
"The problem lies in the end game. I cannot for the life of me imagine how this all has some sort of benign ending."
Agreed- I love the benign term "mop up the liquidity" that people seem to be using. Another word for that is "take the oxygen out of the economic room as soon as the recovery starts."
When the Fed has to start selling all these treasury bonds instead of buying them that big sucking sound you'll hear will be the oxygen for any economic recovery being sucked out of the room.
MENDRISIO/ZURICH, Switzerland (Reuters) - Sealed off by grey concrete walls and barbed wire, the workmen in protective glasses and steel-toed boots at this smelter cannot work fast enough to meet demand from the nervous rich for gold.
This refinery near Lake Lugano in the Alps is running day and night as people worried about recession rush to switch their assets into something that may hold its value.
"I have been in the gold business for 30 years and I have never experienced anything like this," said Bernhard Schnellmann, director for precious metal services at the refiner Argor-Heraeus, one of the world's three largest.
"Production has dramatically increased since the middle of the year. We cannot cope with demand," said Schnellman, wearing a gold watch on his wrist.
Spot gold hit a record $1,030.80 an ounce on March 17. It fell below $700 in late October, partly because investors sold their holdings to cover losses in equity and bond markets hit by the credit crisis, and is now around $830 an ounce. Nervy investors spur rush at Swiss gold refiners
| Reuters
"The 700 B should have been used to start the real Bank of America owned by taxpayers and the failed institutions who made bad bets need to move into history..."
Oh come now...who do you think really controls this nation?
"I think the Austrian crowd generally argues that stimulus spending just moves capital around in the economy, rather than generating legitimate growth, and at best delays the inevitable."
I think, ac, the government is just committing your future labor for their purpose, thus depriving you of the ability to commit it for your own purposes. In the end, there is only so much work that you can do in your life, and you can work for yourself or for what the government determines is the common good. They pick.
Those of you wealthy enough to be able to feed and care for both yourself and a pet should do the patriotic thing and pay more taxes.
We're all in this together.
Harry H | 12.18.08 - 5:26 pm | # "
Maybe we should eliminate deductions for children, since those of you who who are too poor to afford children should do the patriotic thing and pay more taxes.
Let's see them come across the Pacific and collect on their loans to us.
Until then, they just own a bunch of IOU's.
That would be why China's been using a lot of their newfound wealth to invest in their many new friends throughout Africa, the mid-east, and South America.
"Those IOUs are the very fabric of our economy and currency. If we welch on Tbills it won't be the RMB that collapses."
Inflating the debt away is a far more likely scenario than outright default. And that will really only work with the long bonds- the short-term bills will have inflation expectations priced in.
A 2.5% surcharge on taxable income is insane. It amounts to only $600m or less than 2% of the deficit. The projected deficit rose more than that in the last 24 hours. Violate the State Constitution for a measley $600m? No way.
squeezed, way up thread, has it right, too little, too late
and the reason is that it is now impossible to quickly reverse public sentiment, it took a long time for consumers to go from being profligate spenders and borrowers to squeezing every last nickel before buying something
the reverse in consumer psychology probably started around mid-2006, and didn't result in a complete reversal until August or September of 2008
the time for this sort of stimulus was probably mid-2007 to early 2008, that would have convinced people that the government was acting decisively, but now, it will just result in projects financed by the government constituting a greater and greater percentage of economic activity
just as the Fed action yesterday will be interpreted as yet another panic response, so will this one
and, am I the only one who perceives that deficit hawks are already chipping away at it, stretching the stimulus plan out over two years, instead of doing it all at once?
von Paulus made the same mistake at Stalingrad in late August 1942: sending his units into battle piecemeal, instead directing maximum force at the point of attack
"Those of you wealthy enough to be able to feed and care for both yourself and a pet should do the patriotic thing and pay more taxes.
We're all in this together."
No, we most distinctly are not "in this together".
I have no interest in the neocon mantra " socialize the losses".
Your future is your problem, not mine. Unless you'd like to like the crowd claw back all of your gains over the last 8 years.
"As I understand it they take they view that this economic downturn is necessary, not something that we should try to avoid. And that by trying to avoid it we simply make things worse (by continuing to misuse resources)."
But whatever policy evolves has to be politically as well as economically feasible. Three hundred million people aren't avatars in a computer game, or digits in a theory.
[You so seriously know the answer to your own question.
Popeye ]
But it seems to me that would occur when the collapse is already in full swing so it's not at all clear to me that confidence in the USD would return. It could be too late then.
Don't know but my bank went from *** to ** in 12 months also Memorandum reports rating likely to decline within 12 months. What is really strange is how the local tellers pumpup your assurance with a prepared script when you inquire.
Mine's a ****, but it's a small local bank the the NorthEast, where banks got burned pretty badly in the '90s, so I think they've been pretty conservative.
ova writes:
...just realize that we're all really screwed ? Maybe dealing with the emotional side effects of how totally f@#ked, not one, not two, but probably three generations will be?
It can really piss you off...
Under the Stratonovich time convention you might have thought so. Regrettably, under the Ito convention where you don't know what happens until it happens, we discovered that you were actually 3rd.
Altair said: "...Retail sales fell off a cliff in October because consumers got scared and decided to cut back. Sure, there are important long-term factors at work as well, such as high consumer debt levels and stagnant wages. But most of the people who cut back on spending had the ability to spend more, they just decided to spend less. And the cumulative effect of their decisions was to send our economy into a tailspin, because we have a consumer-based economy..."
Let's be careful with the generalizations. I'm one of those people (with the ability to spend more), and I'm spending as much as I ever did. What I did do this year, though, was pay down my consumer debt in big chunks, and not out of fear but simply because it's the smart thing to do.
But I seem to be the only person in America who's so old-fashioned.
I'm going to give you a little hint. If you think you are right about something, don't shout it every two minutes. There is a guy who lives on a street corner in my city who has the same urgency and utmost certainty about his predictions as you do, hey, maybe you are the same guy posting on the computers from the public library?.
Unless the consumer who also saves thinks (s)he needs to SAVE MORE to have an equivalent amount of savings as the dollar value drops. Talk of unintended consequences.
Unless the average consumer thinks a crash in the value of the dollar will eat up the cash they're saving.
rcc | 12.18.08 - 5:28 pm | #
MY FRIEND it it is on that precise question I place my cash at risk. Indeed, it could be too late. Indeed, your side may have overstated it's case.
I, certainly, am not smart enough to know who wins that coin toss except to say that I'm betting on the group of folks who have consistently won for the past 2000 years. Who are you betting will win ?
Unless the consumer who also saves thinks (s)he needs to SAVE MORE to have an equivalent amount of savings as the dollar value drops. Talk of unintended consequences.
They can inflate faster than you can save, if they want to "encourage" you to spend.
"Is floating a massive stimulus bill really 'change'?"
Sure it is. Bush only gave out $150B directly to the proles in 2008. Obama is fixing to at least quintuple this. That's more than half an order of magnitude of "change."
"By the end of September, just before the Treasury Department's Troubled Asset Relief Program proposal and right around the time the market sailed off into uncharted mania, Core Bond's credit exposure to those various markets totaled more than 180% of net assets on a dollar basis. In other words, for every dollar of shareholder capital in the fund, it was exposed to the credit-driven movement of more than $1.80 worth of securities."
After viewing a video recommended here called the "The Money Masters" (google youtube) I have a notion this whole debacle is a contrivance by the Central Bankers to take control of government treasuries around the world.
?What I did do this year, though, was pay down my consumer debt in big chunks, and not out of fear but simply because it's the smart thing to do.
But I seem to be the only person in America who's so old-fashioned.
Sebastian
What other smart things did you do this year? Short the financials? Not waste your time on blogs that didn't believe you? Go heavy shorts? Sell Oil and oil related at $147?
...or reprising China's age-old tradition of unplugging from the world economy and returning to xenophobic self-sufficiency when things get iffy.
I've got this strange feeling that within a year's time there will be a lot of other countries that are going to be "unplugging from the world economy". Maybe since we are so hyper synchronized it will be a rapid mass unplugging?
I've been out of the university system quite a while so appreciate your comments. I wasn't even aware that Berkeley offered remedial/general ed classes. Agree it's probably better to leave those to the CCs, and, yes, the various systems could be a lot better integrated.
Well, the obvious comment no one has made about this announcement. It's backward.
Here, it looks like a stimulus smaller than what's been talked about, that may, in a panic, grow larger, maybe much larger.
Should have done the opposite. Announce an eye-popping figure. Jaw-dropping. At least $1T. Maybe $2 or $3T. Set expectations for crazy future inflation, which is the only thing that could get consumers spending again. Then, never actually spend it.
It is interesting to have a thread with popeye and sebastian and sebastian is the voice of reason.
Popeye is this year's sebastian! Sebastian, why don't you tell him how your long positions worked out that you were touting when all the posters here said the market was going south (they turned out to be right in a BIG way)
NOT Irving Fisher! writes:
There is absolutely no way the combined effects from Fed/Treasury initiatives, Obama Stimulus, and cheaper energy fail to give us positive GDP growth.
Really. The last five years have been inflated by nothing less, and now this debt has to be reckoned with (reconciled, repaid). They are pushing on a string, the unemployment avalanche will continue. Stimulus of job creation will not equal the demand destruction. They cannot replace the lost real estate book assets, the biggest wave of deflation responsible for the over all market deleveraging.
It might not even slow the impact of the dislocation of the economy as we have come to know it. I.e. the sudden impact of hitting the ground sans parachute.
1 trillion spent by gov will not prevent negative growth in 'these' circumstances. Sorry.
Particularly laudable is the spending on broadband access, a progressive view of the medium as utility, which will be "paid back" a hundredfold over its lifespan, just like public libraries.
The distinction between taxes and fees, though semantic to the average citizen, is
critical because fees can be enacted with a simple majority vote, while taxes cannot.
When lawyers don't like the constraints placed upon them by citizens, they move the linguistic goal posts.
Can we kill all the lawyers, if we change word "kill" to "recycled"?
What other smart things did you do this year? Short the financials? Not waste your time on blogs that didn't believe you? Go heavy shorts? Sell Oil and oil related at $147?
Rob Dawg | Homepage | 12.18.08 - 6:07 pm | #
12th Percentile writes:
It is interesting to have a thread with popeye and sebastian and sebastian is the voice of reason.
Apparently, I'm viewed as a stupid person. It is a complete truth that to date, I have a 22.7% increase over the balance I held on 12/31/07. But I must be a fool.
I'm sorry. I don't NEED to help you super smart folks. Enjoy your circle jerk.
I've already publicly (and frequently so nobody misses it) admitted to being wrong about a great many things this year. But I'm glad to see that all the people who were right are magnanimous winners, gracious to people who don't run away and hide but take their medicine like grown-ups.
Anyway, right or wrong on whatever forecasts I made, my behavior as a consumer and the behavior of others like me all goes into the mix of the economy. I have discretionary income and I'm spending it, recession or not, and I'm hardly alone.
can not believe they singled out veterinary care for additional tax. We've already received an e-mail blast from the vet that their cost will go up 9%. It almost seems vindictive. What is the logic for that?
They want to encourage people to put their pets to sleep. Pet health care costs are too high. It's hurting the economy.
I have discretionary income and I'm spending it, recession or not, and I'm hardly alone. - Sebastian
I am being magnanimous by not bringing up a great many other examples of your poor judgement and reasoning skills. I'll just let this instance of your proudly dissipating cash into the teeth of a cash crunch of epic proportions as more than enough self inflicted punishment.
What other smart things did you do this year? Short the financials?
You know, if you just broke even this year, you outperformed 99% of the MBA-toting, CFA-wearing, bonus-earning professional money managers and hedge fund managers out there.
"They want to encourage people to put their pets to sleep. Pet health care costs are too high. It's hurting the economy."
The intensity of affection many people invest in their pets can be astonishing. If they're forced by circumstances to have them put down, there are going to a lot of emotionally bruised and bitter people.
You've contributed nothing, so I guess no screwing for us.
Regarding, the dollar, Ben is fighting deflation. He is fighting to keep the dollar weak. But all asset markets seem to suggest more deflation ahead. I don't know how big the global asset market is. Guess maybe $100 trillion? I've seen numbers around $600 trillion. In this context, a fed balance sheet expansion of 2-3 trillion, and a 1 trillion stimulus don't make much impact. The dollar could strengthen more. Also, consider that this is global deleveraging, and the yen and dollar were both highly leveraged, so they should gain the most in deleveraging.
Sebastian,
I for one laud you for sticking around, (or coming back) and graciously taking your lumps. I would have bet the house we would never see you again.
Popeye,
If Seb's delivery sucked, you're miles ahead. I believe you made a good call a few weeks ago, and I don't remember you getting any crap on the board for it. Just remember, having a winning night in the casino doesn't make you a genius, it makes you lucky.
Ipod,
Where are you?
The intensity of affection many people invest in their pets can be astonishing. If they're forced by circumstances to have them put down, there are going to a lot of emotionally bruised and bitter people.
This is true. But if people could just watch their pets being put down, they wouldn't feel this way.
They pack them in a big washing machine like thing, all close together, like a spiritual animal community.
Then they just suck the air out all at once. It's painless.
Believe you are correct. There is an opportunity to have a 'leveraged impact' with expectations as opposed to actual $$$. Not convinced that the dollar will debase right here and now. What is the alternative store of value? With an expectation of the commodity complex 'deflating' (I'm greedy and won't touch gold under $600 - which I think it can be dragged down to) the dollar is the one-eyed man in the land of the blind.
A big big headline number can create inflationary expectations without a dollar collapse IMHO..Americans can easily be optimistic in the face of the abyss.. it's in our DNA.
Markel writes:
Well, the obvious comment no one has made about this announcement. It's backward.
Here, it looks like a stimulus smaller than what's been talked about, that may, in a panic, grow larger, maybe much larger.
Should have done the opposite. Announce an eye-popping figure. Jaw-dropping. At least $1T. Maybe $2 or $3T. Set expectations for crazy future inflation, which is the only thing that could get consumers spending again. Then, never actually spend it.
Markel | 12.18.08 - 6:11 pm | #
Troll? It's a serious question leading to a discussion of the complete hypocrisy of the conservative/libertarians. And they are the same liars who brought us this economic disaster.
1 trillion spent by gov will not prevent negative growth in 'these' circumstances. Sorry.
Kondratieff canuk
~~~~
Agree completely ... the deflation of credit will continue unabated until the banks are sorted out. a Trillion next year is peanuts. By the time it takes hold we'll have another 5-7 million unemployed and it will be getting worse ... not better.
hmm.. i am thinking through the hints that popeye keeps dropping about his views.
i think it basically comes down to a belief that Obama+Dems will plow cash into American corporations, starting from the automakers. At the same time they would plow cash into US households through tax-cuts. These steps would cause the stock market to rise in the belief that other companies stand to get support from the USG. The deficit spending will not be a problem because the rest of the world will be collapsing causing a flight to the USD as the reserve currency even if the Fed is printing money. Lower energy costs and a possible stabilization of the US housing market might also play a role in his bets on retail among other sectors that can benefit from a rebound in consumer spending..
The people that have been winning for 2000 years are the rich?
Thats my extrapolation of popeye's comments. popeye, wanna confirm or deny?
Congressman Louis T. McFadden's quote from Depression days rings true today
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". -- Congressman Louis T. McFadde
Rob Dawg said: "...I'll just let this instance of your proudly dissipating cash into the teeth of a cash crunch of epic proportions as more than enough self inflicted punishment."
Well, this answer's Sebastian's World's question: No, it's not my delivery, it's the attitude of the respondents.
I'm not "proudly" disapating cash, but simply living my life, paying for food, clothes, housing, car repairs, electricity and gasoline just like everybody else, the vast majority of Americans, in fact.
If you don't have as much cash to disapate as others and you're bitter about it (or whatever it is that teed you off, I have no idea), that's not my fault and it doesn't mean that everyone without a bunker mentality is a dope.
What is a depression about 2 quarters of 10% contraction?
20% of ~15trillion (a year's GDP)
is 3 trillion
That should be the headline number of the package, have the major money center banks particpate with FDIC backed debt off their insolvent balance sheets.
The fundamental prinicple should be increasing incomes over the next generation.
CR cites the size of the plan and says "that's a lot of stimulus." Sorry, it's a lot of things, but not necessarily what you say. It's a lot of government spending, a lot of borrowing from abroad, a lot of state and local governments feeding at the government trough, and a lot of displaced private spending. Whether it will stimulate real activity in a lasting way is highly controversial. A lot will depend on what the money is spent on and where it is spent. Because every state, city, and county will want something, it will be spread far to thin to help the parts of the country that are deeply depressed. Because the govnt. is looking to spend a lot of money quickly, there will be poor planning, no bidding, lots of waste. In short, this program will further increase our indebtedness to foreigners and probably not boost real output in a lasting way.
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning" - Henry Ford
Heliben,
Thank you for your courtesy. Any wisdom my 25 years of trading experience ought to be worth seems to be mere whisps of smoke to the geniuses who speak on this thread. I must have been a fool to have profited from the market for so long with so little intelligence. Trade well.
I frankly would much prefer their miscreants as opposed to ours.
Psychopaths and sociopaths did not ascend to the heights of lucre in their age.
km4 writes:
Congressman Louis T. McFadden's quote from Depression days rings true today
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". -- Congressman Louis T. McFadden
km4 | 12.18.08 - 6:40 pm
If you don't have as much cash to disapate as others and you're bitter about it (or whatever it is that teed you off, I have no idea), that's not my fault and it doesn't mean that everyone without a bunker mentality is a dope.
Respectfully.
Sebastian
Sebasitian, your theories have not worked. Not even close. Holding your actions up as an example is not justified by the results. You aren't Robert Kiyoski but that is hardly an endorsement.
I have discretionary income as well and I am also spending it, but only on Cabbage Patch Kids, Beanie Babies, Infomercial Coin Sets, Star Wars Character Cards and other similar investment collectibles.
Anonymous writes:
I have to ask again, why are we not just declaring a one year tax holiday since that's what the stimulus dollar amount is up to now? Is it because that would actually be fair and not all directed at well connected wealthy people?
No, it is because all of the idiots who will go out and buy ipods etc... with tax savings instead of their mortgage.
It's long established that Keynesian very well. However, when borrowing is used in place of tax revenues, the system implodes. Plain and simple, stop with the enormous tax cuts for entities that don't need them.
sm_landlord writes:
"Also does anyone else think it's creepy that since this whole TARP thing began my Citibank ATM's have been shooting out only totally newly printed money?"
--Anonymous
National City's come with a string attached ...their parking lot looks like a kite factory exploded.
PSgirl writes:
sm_landlord writes:
"Also does anyone else think it's creepy that since this whole TARP thing began my Citibank ATM's have been shooting out only totally newly printed money?"
--Anonymous
BAC as well. Kind of creepy.
PSgirl | 12.18.08 - 6:50 pm | #
i>PSgirl writes:
sm_landlord writes:
"Also does anyone else think it's creepy that since this whole TARP thing began my Citibank ATM's have been shooting out only totally newly printed money?"
BAC as well. Kind of creepy.
Wait until they come out wet and with the same serial numbers.
I'm actually back at UC and I think I brought the weather back with me.
The reason for undergrads at UC is they make us enough money to have grad programs. There is also the issue of departments being cut back and forced to come up with sel-supporting activities. If it was restructured correctly, we could make the tiered system work but boy, talk about beating back 100 yrs of entrenched ideology.
Here's my plan:
CA Comm College: vocational AS
CSU: Bachelors and some AS
UC: grad and research campuses.
We also need a better system for gouging.... Err I mean dealing with foreign national students but that is an argument for a soapbox, strong drink, and another time.
Rob Dawg said: Sebastian, your theories have not worked. Not even close. Holding your actions up as an example is not justified by the results."
You know, if you'd like me to itemize the things I've been wrong about, I'm happy to. I was dead-wrong, way wrong about there being no recession, I made an absolutely ludicrous (in hindsight) stock recommendation on NEW (now vaporized wherever dead mortgage lenders go), recommended other small-cap stocks in the belief that the stock market was going to correct by only about -15% and not -45% (and more to come?).
So, now that that's out of the way, are you saying that it's a bad idea to spend any money, even for the things that I need? Or that paying off my consumer debt is a bad idea? And that all the millions and millions of us who have income and assets should simply stop spending our money and paying off our debts, period?
What is your point, because the only point you're making is that you're an obnoxious jerk with a chip on your should for some reason that I can't fathom.
wmbz, you are correct. Surprised this isn't more widely known. The entire RNC headquarters looks like the Monday morning commute from Fire Island. It's called the "Velvet Mafia."
Oh, and a stimulus isn't paid for by a tax hike. You don't get a stimulative effect by doling out money with one hand and hoovering it out of the economy with the other.
The real issue threatening our fiscal house is America's refusal to tax itself. Wage earners pay more than their share (FICA exceeds income tax for many) but the rich, especially the super rich, are very, very lightly taxed. A feather brush, really. If anything at all. They have plenty of resources we can tap to pay down the debt. And we will, eventually.
ac writes:
Better hope the Miseans aren't right about stimulus spending...
ac | 12.18.08 - 4:55 pm | #
Is it safe to assume that there are a few individuals leaning towords the Austrian school??
If so, in these turbulent times, can we convince people to eliminate the FED, or at least privatise the FDIC??
Show of hands???
I was vehemently against the TARP. I wrote, e-mailed, phoned, sent money. I even went to a demonstration on Wall Street. But now that it's done you can't just cut off someone's medicare. Obama has to have a chance to level the field. What if you're playing a round of poker and just as the deal finally gets to you, everyone agrees that the dealer has an unfair advantage and the rules must be changed.
If this guy has listened to me in 2006 and 2007 (we were both in the same forum) he wouldn't be in...
That is what mean when I talk about people like Sebastian, they listen to the wrong crowd and don't have enough brains to figure out things on their own.
Sebastian is a good example of what ails many Americans.
What is your point, because the only point you're making is that you're an obnoxious jerk with a chip on your should for some reason that I can't fathom.
--
Assets are deflating at $10-15Tr/year and this joker thinks that a stimulus of less than a trillion would jolt the economy into a recovery. Can you spell born-and-bred dope? Advised by Crooks!
America is doomed because Americans are thoroughly doped and Crooks have firm grip on power as evidences by Obamas appointments. I will let you know when there is any change in status.
Get serious friends. This is our country we are talking about.
No, this country has belonged to the banks since 1913. Did you miss the part where everything blew up and the first thing the government does is save the banks, overriding the clear will of the people?
So, now that that's out of the way, are you saying that it's a bad idea to spend any money, even for the things that I need?
You said discretionary spending. I think that words what I think it means not what you wish to redefine it as meaning.
Or that paying off my consumer debt is a bad idea?
Depends. Just how aggressive should I be about my deductible 3.25% HELOC? Enough to cash in my 4.15% CD?
And that all the millions and millions of us who have income and assets should simply stop spending our money and paying off our debts, period?
Reducto absurdum is unbecoming Seb.
What is your point, because the only point you're making is that you're an obnoxious jerk with a chip on your should for some reason that I can't fathom.
Don't you think since you admit to being unable to discern my point that you might refrain from the insults until you get smart enough and educated enough to understand my point? Indeed, if you had gotten smarter and more informed earlier you'd be better off today. There's bitter here but it isn't mine. Check your pants.
"Pavel,
Your totally on target. My sis had to put her 17 year old dog down tuesday. i even shed a tear. she's pretty bummed."
If a dog has reached the age of 17 it means it has been extremely well cared for. Nothing to feel guilty about there.
But the emotional loss remains, and if one is forced to abandon an animal to euthanasia because of financial reasons there is a load of bitterness to add to the sorrow of loss.
There's a difference though between poverty and frugality. Poverty means deprivation, but a modest life can mean concentration on what makes life worthwhile, not on 'stuff.' Loved ones and friends, family, community are incomparably more important than 'stuff' and status. The only futile life is a life without love.
Indeed, I will live in a cardboard box before I put down my Rhodesian Ridgeback due to poverty.
@ Pavel Chichikov writes:
"They want to encourage people to put their pets to sleep. Pet health care costs are too high. It's hurting the economy."
The intensity of affection many people invest in their pets can be astonishing. If they're forced by circumstances to have them put down, there are going to a lot of emotionally bruised and bitter people.
Pavel Chichikov | 12.18.08 - 6:27 pm | #
"But if people could just watch their pets being put down, they wouldn't feel this way.
They pack them in a big washing machine like thing, all close together, like a spiritual animal community.
Then they just suck the air out all at once. It's painless."
This is a truly horrific image.
And if it's so "spiritual" and "painless" then let's start euthanizing the chronically ill and the elderly in like fashion. We really cant afford their care and they have no viable economic future.
"This is a truly horrific image.
And if it's so "spiritual" and "painless" then let's start euthanizing the chronically ill and the elderly in like fashion. "
If this Soylent Green 'solution' ever comes to pass, then you will know that we are truly finished as a society.
Despite the pain popeye and sebastian (of the past) may cause some here you need to have both sides of the coin at all times or else you are going to get screwed. Being 100% in doom and gloom or 100% into farting rainbows is only correct for an instantaneous point in time. We live in the period between inflection points so don't run off the people who might make you dig deeper for data or think more critically.
fIRST
My commenting journey is now complete.
1$T!
Change you can believe in.
...where the package is likely to grow as it works its way through the House and Senate
Talk about an understatement.
Just add a zero after it.. drop said amount from helicopters or B-52s.. and avoid depression
Bridges to nowhere. Woohoo!
There are those, of course, who prefer govt. bridge loans to nowhere. Takes all kinds.
So when does all this get paid back?
around $100 billion in aid to state governments
So half of that is already earmarked for California?
Caleefornia vill get bailed out. Zuper!
Sorry for OT. Reported in Alea, but I think it is an interesting story:
Alea
"Credit Suisse Group AGs investment bank has found a new way to reduce the risk of losses from about $5 billion of its most illiquid loans and bonds: using them to pay employees year-end bonuses.
........Bonuses will take the first hit should the securities decline further in value.
"
Sweet. Problem solved. I'm going to stop hoarding my cash and go shopping.
Are you being sarcastic, it can never be paid back.
"Ministry of Truth writes:
So when does all this get paid back?
Ministry of Truth | 12.18.08 - 4:43 pm | #"
China says lending to US will not go on forever
China says lending to US will not go on forever
"China's increased purchase of US Treasury securities should not be interpreted as an endorsement of the assumption that the US can borrow its way out of the current financial crisis," the China Daily said in an editorial.
All is better - now go hit the malls people.. spend.. spend.. speeeend!
Yep it's ponies for everyone
jo6pac
"[The plan] will include a tax cut designed to pump $50 billion to $100 billion into the economy almost immediately; around $100 billion in aid to state governments,"
In theory, a percentage of the rest of the stimulus ends up in state coffers, too, through taxes.
But will this actually work? Or simply be neutralized by continued cuts in state and local gov'ts?
They had the same problem back in the '30s. Federal aid was neutralized by state cutbacks. I'm unconvinced that $50-$100 bill is going to disrupt that dynamic.
I suspect that very little of this will actually get spent in the first two quarters. Too little, too late, and spread out over too long a period. If this Keynsian approach is going to work they need a trillion immediately and another trillion or so for medium-term stimulus. The Obama administration clearly does not get it any more than the bush administration.
(For the record, if it were up to me I'd nationalize the whole steaming pile of hifi shite, make legal proceedings against banksters & fraudsters a national priority , and tax the living f@#$# out bourgeoisie capitalist scum.)
Why keep it under a trillion? I mean really.. $150 billion here or there.. who cares?
Wouldn't it be better to over spend than under spend?
Besides.. $850 billion is peanuts.. just ask AIG..
Rather dark and dreary Chinese statement. They need to quit being subtle.
After the "Big Spend" which won't work...then what? No followup plan? No surprise.
Fake Profits, Fat Bonuses
Daily Kos: Fake Profits, Fat Bonuses
The five largest firms on the street handed out $120 billion in bonuses over a five year period -- more than the GDP of 150 nations.
Still, we are talking 2006. Those were the fat years, right?
In all, Merrill handed out $5 billion to $6 billion in bonuses that year. A 20-something analyst with a base salary of $130,000 collected a bonus of $250,000. And a 30-something trader with a $180,000 salary got $5 million.
But Merrills record earnings in 2006 $7.5 billion turned out to be a mirage. The company has since lost three times that amount, largely because the mortgage investments that supposedly had powered some of those profits plunged in value.
Unlike the earnings, however, the bonuses have not been reversed.
And even with this the Wall St crooks were still bailed out with $750B of 99%+ of American taxpayer money.
The revolution may yet still be televised
Help me out here - did anyone not see this coming ?? Did anyone not understand that the economies of many global sate governments are near collapse ?? And your bet is what ? The generationaly rich will simply kiss ass ? Is that your bet ?
Is your Bank Safe? Now you can find out.
Bankrate.com Safe & Sound (tm): Bankrate free rating system for banks, thrifts, credit unions
Interesting info and analysis language used for lower rated banks.
Don't tell your banker what is reported because then they become surprised and defensive.
Mine couldn't believe and wanted the link.
BOOM! Happy days are here again! 21 skiddoo and all that jazz
"For the record, if it were up to me I'd nationalize the whole steaming..."
A US Gosplan? You want what would undoubtedly be the largest bureaucracy in history managing the US economy? Have you thought this through?
$700B? Ben pisses that out before brushing his teeth.
My favorite part:
"The transition team has conveyed the figures to Capitol Hill, where the package is likely to grow as it works its way through the House and Senate."
now.. what does that mean?
"Obama Team Aims to Keep Stimulus Under $1 Trillion"
A year ago (Dec. 2007), Bush said he only needed about $150b.
Estimate the Dec. 2009 tally accordingly.
[primarily to temporarily assume more of the cost of Medicaid, in hopes of staving off benefit cuts or tax increases]
How novel. Boundless largesse.
Popeye | 12.18.08 - 4:50 pm
Did you just realize that we're all really screwed ? Maybe dealing with the emotional side effects of how totally f@#ked, not one, not two, but probably three generations will be?
It can really piss you off...
Why is that link about China to Yahoo Singapore? Is this article not accessble by the US Yahoo?
Yes we can borrow!
ot one cent, you gotta take into account inflation.
They failed to mention the new tax rate is 80%. And if you complain 90%. Plus they plan to tax the 20% you get to keep at 80%. What a freat F****** deal!
Solve a debt problem with debt. Great deal!
" Ministry of Truth writes:
So when does all this get paid back?"
And they all moved away from him on the Group W bench.
zirp, tarp, 5% mortgages, $850 bio in stimulus, $1.70ish gas - yep an aweful lot of shock therapy being applied to the patient. Residential housing probably stops being a statistical drag on gdp around Q2 next year as well. Probably enough to damp the recession and give the impression of a mild recovery in the second half of 09. Problem is, the Fed is busily creating a massive liquidity trap, and the stimulus is effectively more debt accumulation by what is now the debtor of last resort - the federal government. It probably buys a year maybe two of marginal economic growth, certainly better than a recession/depression, but ultra-low interest rates and excess debt accumulation are what got us here in the first place, so it's hard to believe they're solutions now.
Unlike the earnings, however, the bonuses have not been reversed.
It's even more infuriating when you consider that the TARP money is funding 2008 bonuses. Probably 2009 - 2012 bonuses too.
Without the TARP, all the IBs and most of the major banks would have failed.
TARP enabled bonuses (and dividends) - WTF!
It's certainly too late. Is it too little as well?
ova writes:
Popeye | 12.18.08 - 4:50 pm
Did you just realize that we're all really screwed ?
Nova,
No. You misunderstand me. I am actively betting that you are mistaken.
No disrespect intended. That is simply my bet.
Bob Dobbs writes:
"But will this actually work? Or simply be neutralized by continued cuts in state and local gov'ts"
Not to get ideological about it, but isn't Cali analogous to auto industry, unless the systemic issues are addressed (revenue vs. spending), what does aid accomplish except buy time until "better days"?
Better hope the Miseans aren't right about stimulus spending...
I'm not optimistic though given that they've been right about so many other things recently.
"It probably buys a year maybe two of marginal economic growth, certainly better than a recession/depression, but ultra-low interest rates and excess debt accumulation are what got us here in the first place, so it's hard to believe they're solutions now."
Events may overtake, and anyway, the horse might learn to sing.
Popeye | 12.18.08 - 4:55 pm
Ok, it would not be the first time I was mistaken. Good luck.
So did China just imply that the US's borrowing habit is now on double secret probation?
They've already won. Notice how keeping the plan under $1T is somehow an expression of fiscal prudence and careful planning.
There's very few economic principals that everyone agrees upon. One is:
"Long term debt to fund short term operations is never sustainable."
Better hope the Miseans aren't right about stimulus spending...
ac | 12.18.08 - 4:55 pm | #
AC, PLease explain.
GM loses 1/6 of its share value today, despite WH assurances...not good.
The Fed should just give everyone their own home printing press.
rationaljeff writes:
Why is that link about China to Yahoo Singapore? Is this article not accessble by the US Yahoo?
F*^k China. If they don't buy our debt, then they are screwed too.
""Credit Suisse Group AGs investment bank has found a new way to reduce the risk of losses from about $5 billion of its most illiquid loans and bonds: using them to pay employees year-end bonuses.
"
Does this make a "market" and kick assets out of Level 3 limbo?
This is entirely unnecessary.
The Maestro says 'All will be fine' in six to 12 months.
Greenspan Says Financial Markets May Rebound in 6 to 12 Months - Bloomberg.com
Don't panic, O-! Listen to The Maestro!
George Clinton - If Anybody Gets Funked Up (It's Gonna Be You)
YouTube -
About 1000 hedgies to close this year.
Yahoo! 404 - Page Not Found
Does anyone know what the 2.5% surcharge on income tax in CA the state senate is considering? Is that 2.5% of your tax bill? 2.5% of your taxable pay?
$50b-$100b in lowered Fed tax is smaller than the previous rebate check and it seems like it would just get crushed by the potential future CA taxes.
So did China just imply that the US's borrowing habit is now on double secret probation?
Kinda what it sounded like to me. My guess is that in some back room in the Great Hall of the People high level officials are debating the relative merits of continuing to float easy credit to their biggest-but-faltering customers, or reprising China's age-old tradition of unplugging from the world economy and returning to xenophobic self-sufficiency when things get iffy. The PRC's Mandate of Heaven probably hinges on making the right call.
Where will the money go? To taxes:
California Democrats to Seek Bypass on Budget Impasse
Dec. 18 (Bloomberg) -- California lawmakers are set to vote today on a plan to raise $9.3 billion in taxes to help ease the states record budget deficit, using a loophole Democrats say lets them get around a required two-thirds vote.
The proposal would tax oil drillers, slap a 2.5 percent surcharge on income taxes and replace gasoline taxes with a flat 39-cent-a-gallon fee. Democrats controlling the Legislature say they need only a simple majority because they are cutting some taxes while increasing others in equal measure and are raising user fees that dont need a two-thirds vote Republicans have used to thwart tax increases.
Desperate times dont call for desperate measures; desperate times call for creative thinking, Senate President Pro Tem Darrell Steinberg, a Democrat from Sacramento, told reporters yesterday.
Above from Bloomberg.
Pelosi/Frank/Bush/Cheney/Schumer Win!
You Lose !
There is absolutely no way the combined effects from Fed/Treasury initiatives, Obama Stimulus, and cheaper energy fail to give us positive GDP growth. The real question is will it be sustainable growth. For my part I think not.
"Not to get ideological about it, but isn't Cali analogous to auto industry, unless the systemic issues are addressed (revenue vs. spending), what does aid accomplish except buy time until "better days"?"
--Comrade V
Nothing ideological about that.
State employees and Teacher's unions == UAW.
Bumbling Legislature == Management
Ahhnold == goofy ineffectual CEO
Voters == stock and bond holders
Judiciary == nutcase regulators
I don't think California is capable of addressing the systemic issues in a way that won't make things even worse. I would like to be proven wrong, but I don't see any evidence that the state will come to its senses.
So it's gotta be a bailout.
Exactl Dawg - but how is that sur-charge computed?
Nova,
I'm not smart enough to comprehend the long term consequences, and I don't pretend to be. I read most people's thought here with great interest and great respect.
I've made my call. That's what I can contribute. Take it or leave it.
Is there any way to opt-out of payinf for this Stimulus Plan?
For those of us who don't wish to participate?
Good luck to you popeye! I hope your position works out.
Cheers
Dawg... any details on how the "surcharge" would work?
"GM loses 1/6 of its share value today, despite WH assurances...not good."
--calmo
With the talk of prepak BK coming out of Washington, losing only 1/6th is a good day.
(ps that was a legit comment.. not tryin to be snarky..)
Neuromancer writes:
"Does anyone know what the 2.5% surcharge on income tax in CA the state senate is considering? Is that 2.5% of your tax bill? 2.5% of your taxable pay?"
The way I read the reports, it is the former, but we'll have to see.
I can not believe they singled out veterinary care for additional tax. We've already received an e-mail blast from the vet that their cost will go up 9%. It almost seems vindictive. What is the logic for that?
"It's certainly too late. Is it too little as well?"
Why does anyone think that the real economy will improve in Q1-Q2 2009?
Negative feedback from economic free-fall in the developing world will just be kicking in in Q1-Q2.
"Not to get ideological about it, but isn't Cali analogous to auto industry, unless the systemic issues are addressed (revenue vs. spending), what does aid accomplish except buy time until "better days"?
Comrade V | 12.18.08 - 4:55 pm | # "
There's no question that the budget has to balance. The Dems are trying an end-run around the budget process that includes extra taxes, which will probably face Republican lawsuits.
But yes, things like prison costs and public safety pensions have to be addressed as well, among the most egregious things. Or, even worse -- do we need three overlapping public systems of higher education with high redundancy.
All of these things have powerful (aka rich) constituencies, of course.
Sure looks like another 2.5% of your taxable income, N-. Moving that marginal tax rate from 9.2% to 11.7%.
Lovely.
I am very happy that I will be retiring on Jan. 31.
"What is the logic for that?"
--Comrade V
Vet-PAC did not make the required campaign contributions??
Hey Neuromancer and you too Calmo.
The 2.5% surcharge is on taxable revenue. Nominal top rate is 9.3% AGI. Lots of things drop AGI and several things can drop the 9.3% but the "surcharge" is calculate your AGI, multiply by the old rate (i.e. 9.3%) plus 2.5%. The top rate is now 11.7% in other words. Bye bye upper class.
I can not believe they singled out veterinary care for additional tax. We've already received an e-mail blast from the vet that their cost will go up 9%. It almost seems vindictive.
I guess they figure pets are a luxury item. But the unintended consequences are that pets are going to be abandoned at even a greater rate.
Hmm.
So a hypothetical person making $100k who has roughly $7,000 withheld would see their taxes raised $175?
Other than being annoying that is certainly tolerable. I can't imagine it helping much. . .
It almost seems vindictive
"Hand over the cash, punk, or Fido takes one in the gut"
I'm pretty sure that international economic warfare is about to start in earnest.
Already we're seeing competitive rate cuts. The Swiss as well as the Japanese (again)are headed toward ZIRP to counteract rising values of their currencies. (The former against the Euro, the latter against the dollar.)
Won't be long before every nation has a zero interest rate at its CB.
Economic warfare tends to be followed by military warfare, unfortunately.
My comment was on the sur-charge to the tax. If the sur-charge is to the agi, that is very bad news. That would be over $3k to they hypothetical person aformentioned.
"Instead, it should race against time to undertake painful but critical reforms to revive its economy before such demand peaks any time soon."
hmmmmmmm...
"F*^k China. If they don't buy our debt, then they are screwed too."
Not really. For all its capitalist trappings China has the safety net of a return to socialism and central planning.
No, N-, you will fork over another $2.5K.
Neuromancer writes:
Hmm.
So a hypothetical person making $100k who has roughly $7,000 withheld would see their taxes raised $175?
Other than being annoying that is certainly tolerable. I can't imagine it helping much. . .
Neuromancer | 12.18.08 - 5:10 pm | #
The issue is you can not let them get a foot hold or next year it will rise another 2.5%... just another $175.
These guys increased the budget by over 40% in 3 years. They need to be stopped.
Old Chinese Proverb...Lie, Cheat or Steal on Goverment you disappear.
Old US Proverb...Lie, Cheat or Steal we make you WallStreet Banker or A Goverment Official.
unirealist writes:
I'm pretty sure that international economic warfare is about to start in earnest.
I'm pretty sure that is part of what I had in mind when I suggested that the market will rally.
Wake up folks. Reality is here.
President-elect Barack Obama's economic team is crafting a stimulus package to send to Congress worth between $675 billion and $775 billion over two years ... An Obama adviser familiar with the planning said the package could top out around $850 billion.
Why not just average the esitmates and call it $2.3 Trillion? Oh, wait... thats summing the estimates --my bad. Hold on... that's usually how these things end up working out, right?
Krugman must be creaming his shorts over such a large stimulus...
Everyone should watch with great interest what is happening in CA. We are ground zero. Problems coming to your state soon. . .
So a hypothetical person making $100k who has roughly $7,000 withheld would see their taxes raised $175?
Other than being annoying that is certainly tolerable. I can't imagine it helping much. . .
Neuromancer
That would be nice but a useless exercise, not worth the effort. The legal costs are going eat more than that. $100k paying $6000 (typical) would pay $8500. Essentially erasing any normal deductions. This is far more politically defensible than one of their other ideas of eliminating the home mortgage interest deduction. Elizabeth Hill at the LAO referred to that tax break as a loophole.
popeye-
I'm pretty sure that is part of what I had in mind
You mean like protectionism?
Economic warfare tends to be followed by military warfare, unfortunately.
unirealist | 12.18.08 - 5:11 pm | #
yep
I have to ask again, why are we not just declaring a one year tax holiday since that's what the stimulus dollar amount is up to now? Is it because that would actually be fair and not all directed at well connected wealthy people?
Yea - I kinds thought it was not a sur-charge on the tax, it was a surcarge on AGI.
That will be very, very hard on people. You could see a lot of anger over that one.
$1 trillion?
Why stop there--the party's just getting started....
Is there any way to opt-out of payinf for this Stimulus Plan?
Emigrate.
And like others above, I do think the stimulus may buy some time and resolve some of the short-term pain, and will happily use the sucker's rally to make final preparations for our inevitable fall from World Leader Status. And hey, who knows? Obama just might save the world, in which case I'll just snicker as I spend the next 5 years blowing through the beans and rice in the pantry.
"I'm pretty sure that is part of what I had in mind when I suggested that the market will rally."
And you are deluded if you think the USA is in a position of strength.
GD II -- GD I
China -- USA
USA -- UK
Easy Rob Dawg. "sur"charge is on top of another charge. Damn the French. They are raising our taxes
From Dems' tax-hike plan passes, Schwarzenegger pledges veto - San Jose Mercury News
A 2.5 percent income tax surcharge that would be applied to a person's total state tax bill. If someone normally owed the $1,000, for example, that would be an extra $25.
Bob Dobbs writes:
...But yes, things like prison costs and public safety pensions have to be addressed as well, among the most egregious things. Or, even worse -- do we need three overlapping public systems of higher education with high redundancy.
Wholeheartedly agree that CA state legislature and voters have become additcted to spending money they don't have and deep cuts are necessary. However, I would not place CA's public university systems in the cross-hairs just yet.
I consider CA's excellent and affordable higher education to be one of the last best things about living here. Once they take that away, what's the advantage of living here vs. anywhere else? The cheap housing? Easy commutes? Low taxes?
I can see it now...
The Emergency Military Mobilization Act, funded from the elimination of that pesky "home mortgage deduction" loophole.
yeah, i like that.
When the others say they can't, our Government can!
A lot of these economic predictions I see overlook the fact that most of our economy is driven by decisions that consumers make, not by decisions that the Fed, Congress or Obama makes.
Retail sales fell off a cliff in October because consumers got scared and decided to cut back. Sure, there are important long-term factors at work as well, such as high consumer debt levels and stagnant wages. But most of the people who cut back on spending had the ability to spend more, they just decided to spend less. And the cumulative effect of their decisions was to send our economy into a tailspin, because we have a consumer-based economy.
In my mind, the main factor as far as when the economy recovers is when consumers start spending more. The Fed can print all the money they want, and Congress can pass their stimulus plans, but if the average US consumer has made a fundamental decision that the long-term economic future is scary and that he needs to spend a lot less and save a lot more then there is going to be a huge economic bloodbath as this plays out.
I will be irritated if that 2.5% is effective in '08. I thought I beat the system (i.e., higher rates) by doing my IRA liquidation back in March.
Desperate times dont call for desperate measures; desperate times call for creative thinking, Senate President Pro Tem Darrell Steinberg, a Democrat from Sacramento, told reporters yesterday.
Here's something creative; cut your expenditures.
Obama 's stimulus will be too late ...
We are losing 500,000 jobs a month ... We will lose another 5 million jobs before this stimulus even gets past allocation into the economy.
What, me worry?
Dec. 18 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke is basing hundreds of billions in emergency lending on credit ratings from companies that gave AAA grades to toxic securities.
The Fed has purchased $308.5 billion in commercial paper and lent $631.8 billion under eight credit programs, most of which require appraisals of short-term debt and loan collateral by major nationally recognized statistical ratings organizations. That, in effect, means Moodys Investors Service, Standard & Poors and Fitch Ratings.
Fed Loans Guided by Raters Grading Subprime Debt AAA (Update1) - Bloomberg.com
Well if you think about it, the CA community college is really just 12th grade with cigarettes (then again, I don't think my current crop of grads finished 11th grade either) and the CSU system is redundant for UC.
Two down, what should I cut next?
REBear,
You are one of the one's I count as smarter than me. To clarify my earlier remark, I merely see a temporary pull back from the brink. Protectionism is a policy. I'm trading mood. Sorry, that's the limit of my smarts.
Also does anyone else think it's creepy that since this whole TARP thing began my Citibank ATM's have been shooting out only totally newly printed money?
As corrupt as our government is on every level I'm sure this will be money flushed right down the toilet. Samo, Samo.
Can someone please stop him!!
Banks need more capital
Dec 18th 2008
From The Economist print edition
In a guest article, Alan Greenspan says banks will need much thicker capital cushions than they had before the bust.
Premium content | Economist.com
REBear,
I am a short term trader. I can't apologize for that.
Better buy now, you'll surely be locked out forever later.
Popeye - given the way this market responds to news.. you may very well be up big tomorrow in light of this stimulus plan. This is certainly a trader's market..
OT: Not to pick nits but Steve Liesman on CNBC today quoted Alan Greenspan (in the Economist) as saying house prices would stabilise early next year. The word "early" is Mr Liesman's.
The quote is:
"Another critical price for the return of global financial stability is that of American homes. Those prices are likely to stabilise next year and with them the levels of home equitythe ultimate collateral for global holdings of American mortgage-backed securities, some toxic."
Jim
Is there any way to opt-out of payinf for this Stimulus Plan?
You (and your money) could:
- stop working
- stop declaring, or
- leave
I guess they figure pets are a luxury item. But the unintended consequences are that pets are going to be abandoned at even a greater rate.
Or mustard sales will increase.
sm_landlord writes:
"Nothing ideological about that.
State employees and Teacher's unions ..."
Another perspective on Cali government union pensions:
Calpers Losses Add to a City's Stress - WSJ.com
Here's the relevant quote:
"Like many residents who work for private employers, Ms. Nolan-Stewart, an AT&T account manager, says she is astounded at the generosity of public-employee pensions. "If I were to retire, my retirement would be one-quarter of what I make today for the rest of my life," she says. By contrast, city firefighters and police who retire at age 50 with 30 years of service may retire with 90% or more of their final year's salary."
Actually, its not just firefighters, its others such as Caltrans (highways) etc. And 90% is conservative. One Cal State workers on this board [link on request] explained how system can be gamed to yield over 100% of highest annual pay.
And consider the highest salaries (note these are not even "First Responders"):
State Workers Making More than 200K - Sacramento News - Local and Breaking Sacramento News | Sacramento Bee
As a benchmark, just consider how much savings a private citizen would have to anuitize to generate a similar payout (in this interest rate environment)?
I am not being pejorative, or ideological, just factual.
If I was a citizen of another state I would question - just as the auto companies have been sharply questioned - why Cali should get any aid until it addresses its systemic issues.
To be fair - pensions are not the only problem, but its the elephant in the room that won't go away but nice people don't want to talk about.
Comrade V writes:
I can not believe they singled out veterinary care for additional tax. We've already received an e-mail blast from the vet that their cost will go up 9%. It almost seems vindictive. What is the logic for that?
Those of you wealthy enough to be able to feed and care for both yourself and a pet should do the patriotic thing and pay more taxes.
We're all in this together.
"Also does anyone else think it's creepy that since this whole TARP thing began my Citibank ATM's have been shooting out only totally newly printed money?"
--Anonymous
They probably just bolted printers to the back of the cash slots.
I guess my bank is still solvent, because my ATM dispenses dirty limp bills.
Why do banks have a death wish?
Credit-Card Users Feel Pain as U.S. Banks Reap Gain (Update2)
By Elizabeth Hester and Ari Levy
Dec. 18 (Bloomberg) -- Credit-card companies, facing an increase in defaults and a decline in consumer spending, are raising some rates, adding fees and cutting credit lines as the Federal Reserve makes the most sweeping changes to the industry in 30 years.
The provisions, approved by the Fed today and effective July 1, 2010, may curtail lenders ability to raise interest rates on current balances, require they apply payments to charges with higher interest rates first and extend the time customers have to pay bills before incurring late fees. The Office of Thrift Supervision, which regulates savings and loans, and the National Credit Union Administration approved the rules today.
Ignore Mr Magoo...he has called the bottom 9 or 10 times already, why don't they bring that up everytime they quote him?
Thanks for the link, Serf.
No wonder we have budget problems here on the Left Coast; these guys are inept at creating a good-sized tax increase.
Annual tax bill moving from 100% to 102.5% --> nothingburger.
Are these ratings credible. All the banks I use are * or **.
"It sounds like this bill will be around $850 billion over two years, and will be signed before the end of January. Add this to the stimulus from lower gasoline and energy bills, lower adjustable rate mortgages, and lower rates for those that refinance. That is a lot of stimulus ... "
Home Prices are off 25% from peak per Case Shiller Index upto now.
That means a 5 Trillion loss on the 20 Trillion of Housing wealth in this country by the end of 2008.
Not mention the losses incurred in the stock market.
The stimulus is still a fraction of what is already lost.
Not to mention what losses are yet to come...
Altair wrote:
...
The Fed can print all the money they want, and Congress can pass their stimulus plans, but if the average US consumer has made a fundamental decision that the long-term economic future is scary and that he needs to spend a lot less and save a lot more then there is going to be a huge economic bloodbath as this plays out.
Altair
Unless the average consumer thinks a crash in the value of the dollar will eat up the cash they're saving.
Dare I ask WTF "health-information technology" is?
crispy,
He has a point. If things do not turn around in a year, we wont have a functional financial system.
crispy&cole writes:
Ignore Mr Magoo...he has called the bottom 9 or 10 times already, why don't they bring that up everytime they quote him?
crispy&cole | Homepage | 12.18.08 - 5:26 pm | #
Elvis Costello - Pump It Up:
YouTube -
Change you can believe in
Isn't this more like pocket change compared to Bush's multi-trillion spending ("stimulus")?
A real change would have been slashing gov. spending such that fed income tax would be zero (something radical that Ron Paul was/is proposing). Imagine how much money would be freed up for the consumers! (I might shed a tear or two for accountants and companies like Quicken, but probably only in my dreams.
Instead, Obama's more spending sounds like Bush 3.0 (not that McCain would have been any diff/better -- which is why I didn't vote Nov 4th)....
Caterpillar plants in Clayton, Sanford to have temporary layoffs
Caterpillar has announced an undisclosed number of temporary layoffs at its facilities in Clayton and Sanford.
The heavy equipment maker released a statement Thursday afternoon outlining the layoffs. Caterpillar (NYSE: CAT) said the decisions were made in response to reduced demand for the products made at those facilities mostly machinery for residential construction, which has dropped significantly around the country in the midst of the economic downturn.
Caterpillar, which previously announced plans to shut its Clayton and Sanford plants for 10 days this month, also says it is planning additional non-production days at the facilities in 2009.
Caterpillar plants in Clayton, Sanford to have temporary layoffs - Triangle Business Journal:
Economic warfare tends to be followed by military warfare, unfortunately.
unirealist | 12.18.08 - 5:11 pm | #
Then the US has nothing to fear.
We may not understand world economics, but we sure do understand a good war.
Problem is, if the stimulus is too small, we'll be seeing President Mitt Romney in 2012. Better politically to err on the size of too big.
Hard to believe the Chinese beat the US without firing a shot. They beat us by taking our jobs (assisted by the assclowns in Washington)to their country and selling us cheap plastic shit in return. They even financed the purchase (very thoughtful). We will implode from the debt created from this mess. There is no creative thinking in Washington today. Only a frantic attempt to maintain the status quo (through pouring taxpayer cash by the bucketload into a black hole). Increased debt won't solve a debt problem. Insolvency issues need to be addressed in an orderly manner and work through this national bankruptsy. The 700 B should have been used to start the real Bank of America owned by taxpayers and the failed institutions who made bad bets need to move into history...
Bob Dobbs writes:
"But yes, things like prison costs and public safety pensions have to be addressed as well, among the most egregious things. Or, even worse -- do we need three overlapping public systems of higher education with high redundancy."
Wow, maybe I'm preaching to the choir after all. Haven't heard from RE yet.
Better hope the Miseans aren't right about stimulus spending...
ac | 12.18.08 - 4:55 pm | #
AC, PLease explain.
Comrade Clueless Dufus
I think the Austrian crowd generally argues that stimulus spending just moves capital around in the economy, rather than generating legitimate growth, and at best delays the inevitable.
As I understand it they take they view that this economic downturn is necessary, not something that we should try to avoid. And that by trying to avoid it we simply make things worse (by continuing to misuse resources).
I tend to share this view these days and I would tend to summarize it by saying that the structure of the economy should take precedence over the size of the economy.
I suspect that lost economic activity (e.g. the number of businesses) is far easier to restore than lost economic structure (e.g. viability of the currency and attitudes toward debt).
"Hard to believe the Chinese beat the US without firing a shot."
I'm not sure that holding a trillion dollars in US debt that will be repaid, if at all, with cheap dollars is that resounding a Chinese victory over the US. Our relationship with the Chinese is a bit like a prostitution arrangement- neither side comes out all that well.
Children, fools and/or propagandizers .... most of you fall into one or more of those categories. Oh, sorry, I left out the folks who are talking their trading bets as booked.
I will not dispute that our country is in crisis. I will not debate with children, fools or folks talking up the bets they've booked.
Get serious friends. This is our country we are talking about.
"but ultra-low interest rates and excess debt accumulation are what got us here in the first place, so it's hard to believe they're solutions now"
If more spending and borrowing while forcing interests rates lower were the answer, why do we EVER have recessions. We could just borrow and spend our way to prosperity, easy and painless! The problem lies in the end game. I cannot for the life of me imagine how this all has some sort of benign ending.
Thanks for the link to State salaries, Comrade V.
Good news! We can solve California's budget crisis by firing all the Dept. of Corrections' shrinks and medical staff and enrolling our prisoner population in Kaiser Permanente.
Arnold! Are you listening???
Broward Horne @ 5:11
First chuckle of the day. Glad I put that out there. Thanks!
To me, "Change I can believe in" would be clawbacks from all the crooks in lending & housing instead of more government spending.
This only encourages more theft.
fools....? How much did you lose today?
"I consider CA's excellent and affordable higher education to be one of the last best things about living here. Once they take that away, what's the advantage of living here vs. anywhere else? The cheap housing? Easy commutes? Low taxes?
HARM | Homepage | 12.18.08 - 5:19 pm | # "
I'm actually on staff at a UC; D. Jane was, too, as I recall. And have in the past few years had more than enough experience as a student in community college and the UC system (though I'm over 50).
I simply think the whole system should be better integrated. Like, why does lower division at Berkeley even exist? Taking general ed classes in units of 100 taught by lecturers, or grad students, what's that about? Leave lower division to the CCs, except in some cases.
Further, move some 4-year programs down to the CCs, or have them carry most of the program and send the students to a nearby state college for selected upper-div. classes. This works particularly well for applied-science degrees: AJ, nursing, fire science, business, aeronautics, etc.
Finally, WTF is this monopoly UC gets on doctoral degrees? Hell with that. Create one system of higher ed with research universities and teaching universities, and programs that shuttle students between them for different parts of their degrees.
"The biggest fear is that people will do too little," said one Democratic leadership aide
That's not my fear.
"The problem lies in the end game. I cannot for the life of me imagine how this all has some sort of benign ending."
Agreed- I love the benign term "mop up the liquidity" that people seem to be using. Another word for that is "take the oxygen out of the economic room as soon as the recovery starts."
When the Fed has to start selling all these treasury bonds instead of buying them that big sucking sound you'll hear will be the oxygen for any economic recovery being sucked out of the room.
Nervy investors spur rush at Swiss gold refiners
MENDRISIO/ZURICH, Switzerland (Reuters) - Sealed off by grey concrete walls and barbed wire, the workmen in protective glasses and steel-toed boots at this smelter cannot work fast enough to meet demand from the nervous rich for gold.
This refinery near Lake Lugano in the Alps is running day and night as people worried about recession rush to switch their assets into something that may hold its value.
"I have been in the gold business for 30 years and I have never experienced anything like this," said Bernhard Schnellmann, director for precious metal services at the refiner Argor-Heraeus, one of the world's three largest.
"Production has dramatically increased since the middle of the year. We cannot cope with demand," said Schnellman, wearing a gold watch on his wrist.
Spot gold hit a record $1,030.80 an ounce on March 17. It fell below $700 in late October, partly because investors sold their holdings to cover losses in equity and bond markets hit by the credit crisis, and is now around $830 an ounce.
Nervy investors spur rush at Swiss gold refiners
| Reuters
"Hard to believe the Chinese beat the US without firing a shot."
Still a few rounds to go in that one. and the shtf scenarios for China are pretty messy.
99% of the people in China would still trade places with any American in a heartbeat.
Another word for that is "take the oxygen out of the economic room as soon as the recovery starts."
And we know how well they anticipated this whole disaster--so, sure: trust me, it'll work!!!
Bruce writes:
Hard to believe the Chinese beat the US without firing a shot.
Let's see them come across the Pacific and collect on their loans to us.
Until then, they just own a bunch of IOU's.
"The 700 B should have been used to start the real Bank of America owned by taxpayers and the failed institutions who made bad bets need to move into history..."
Oh come now...who do you think really controls this nation?
"I think the Austrian crowd generally argues that stimulus spending just moves capital around in the economy, rather than generating legitimate growth, and at best delays the inevitable."
I think, ac, the government is just committing your future labor for their purpose, thus depriving you of the ability to commit it for your own purposes. In the end, there is only so much work that you can do in your life, and you can work for yourself or for what the government determines is the common good. They pick.
" Harry H writes:
Those of you wealthy enough to be able to feed and care for both yourself and a pet should do the patriotic thing and pay more taxes.
We're all in this together.
Harry H | 12.18.08 - 5:26 pm | # "
Maybe we should eliminate deductions for children, since those of you who who are too poor to afford children should do the patriotic thing and pay more taxes.
We're all in this together.
/Snark 0ff
crispy&cole writes:
fools....? How much did you lose today?
375,000
What's really scary is the Chinese need to keep 1.2B people in line.
male:female ratio for younger men is out-of-whack due to central planning rules.
I was there in '02 I'll be there again in Jan '09--curious to see what it's like in bad times.
In '02 I was a little ill at ease by seeing lots of idle me
"Until then, they just own a bunch of IOU's."
LOL!
Those IOUs are the very fabric of our economy and currency. If we welch on Tbills it won't be the RMB that collapses.
Serious question - How does the Fed & Treasury fight a USD collapse ? Hike FF rate to 4% overnight?
Let's see them come across the Pacific and collect on their loans to us.
Until then, they just own a bunch of IOU's.
That would be why China's been using a lot of their newfound wealth to invest in their many new friends throughout Africa, the mid-east, and South America.
"What's really scary is the Chinese need to keep 1.2B people in line."
There are very few armed scots-irish in china.
As I understand it they take they view that this economic downturn is necessary, not something that we should try to avoid.
I don't think that fits with a debt money system. The fed must expand credit or the system will collapse.
"Those IOUs are the very fabric of our economy and currency. If we welch on Tbills it won't be the RMB that collapses."
Inflating the debt away is a far more likely scenario than outright default. And that will really only work with the long bonds- the short-term bills will have inflation expectations priced in.
bearly writes:
Serious question - How does the Fed & Treasury fight a USD collapse ? Hike FF rate to 4% overnight?
Dollar will only collapse when the entire world sees it as unreliable...coming to a location near you soon.
Gubbmint Cheese
I thank you for your well wishes. May the Force be with you.
Under a trillion!?
Whoa...that's cost savings right there!
A 2.5% surcharge on taxable income is insane. It amounts to only $600m or less than 2% of the deficit. The projected deficit rose more than that in the last 24 hours. Violate the State Constitution for a measley $600m? No way.
Angry Saver writes:
I don't think that fits with a debt money system. The fed must expand credit or the system will collapse
Yeah, and this is really a 'debt bubble' and we don't really have much experience with that, do we?
bearly writes:
Serious question - How does the Fed & Treasury fight a USD collapse ?
You so seriously know the answer to your own question.
squeezed, way up thread, has it right, too little, too late
and the reason is that it is now impossible to quickly reverse public sentiment, it took a long time for consumers to go from being profligate spenders and borrowers to squeezing every last nickel before buying something
the reverse in consumer psychology probably started around mid-2006, and didn't result in a complete reversal until August or September of 2008
the time for this sort of stimulus was probably mid-2007 to early 2008, that would have convinced people that the government was acting decisively, but now, it will just result in projects financed by the government constituting a greater and greater percentage of economic activity
just as the Fed action yesterday will be interpreted as yet another panic response, so will this one
and, am I the only one who perceives that deficit hawks are already chipping away at it, stretching the stimulus plan out over two years, instead of doing it all at once?
von Paulus made the same mistake at Stalingrad in late August 1942: sending his units into battle piecemeal, instead directing maximum force at the point of attack
"Those of you wealthy enough to be able to feed and care for both yourself and a pet should do the patriotic thing and pay more taxes.
We're all in this together."
No, we most distinctly are not "in this together".
I have no interest in the neocon mantra " socialize the losses".
Your future is your problem, not mine. Unless you'd like to like the crowd claw back all of your gains over the last 8 years.
"As I understand it they take they view that this economic downturn is necessary, not something that we should try to avoid. And that by trying to avoid it we simply make things worse (by continuing to misuse resources)."
But whatever policy evolves has to be politically as well as economically feasible. Three hundred million people aren't avatars in a computer game, or digits in a theory.
[You so seriously know the answer to your own question.
Popeye ]
But it seems to me that would occur when the collapse is already in full swing so it's not at all clear to me that confidence in the USD would return. It could be too late then.
Dollar will only collapse when the entire world sees it as unreliable...
And when a viable alternative becomes apparent. There's a little time yet, thanks to sheer inertia if nothing else.
How low do ya'll think conforming 30 year fixed mortgages will go?
Is floating a massive stimulus bill really 'change'?
"Are these ratings credible. All the banks I use are * or **."
Bankrate.com Safe & Sound (tm): Bankrate free rating system for banks, thrifts, credit unions
Don't know but my bank went from *** to ** in 12 months also Memorandum reports rating likely to decline within 12 months. What is really strange is how the local tellers pumpup your assurance with a prepared script when you inquire.
Maybe others will report findings
" LAM writes:
"Are these ratings credible. All the banks I use are * or **."
Bankrate.com: Let us help you find what you're looking for
ss_home.asp
Don't know but my bank went from *** to ** in 12 months also......
Maybe others will report findings
LAM | 12.18.08 - 5:59 pm | # "
Mine's a ****, but it's a small local bank the the NorthEast, where banks got burned pretty badly in the '90s, so I think they've been pretty conservative.
ova writes:
...just realize that we're all really screwed ? Maybe dealing with the emotional side effects of how totally f@#ked, not one, not two, but probably three generations will be?
It can really piss you off...
Glad to see that !!
Stratonovich calculus writes:
1$T!
Stratonovich calculus | 12.18.08 - 4:40 pm | #
Under the Stratonovich time convention you might have thought so. Regrettably, under the Ito convention where you don't know what happens until it happens, we discovered that you were actually 3rd.
Altair said: "...Retail sales fell off a cliff in October because consumers got scared and decided to cut back. Sure, there are important long-term factors at work as well, such as high consumer debt levels and stagnant wages. But most of the people who cut back on spending had the ability to spend more, they just decided to spend less. And the cumulative effect of their decisions was to send our economy into a tailspin, because we have a consumer-based economy..."
Let's be careful with the generalizations.
I'm one of those people (with the ability to spend more), and I'm spending as much as I ever did. What I did do this year, though, was pay down my consumer debt in big chunks, and not out of fear but simply because it's the smart thing to do.
But I seem to be the only person in America who's so old-fashioned.
Sebastia
popeye
I'm going to give you a little hint. If you think you are right about something, don't shout it every two minutes. There is a guy who lives on a street corner in my city who has the same urgency and utmost certainty about his predictions as you do, hey, maybe you are the same guy posting on the computers from the public library?.
Unless the consumer who also saves thinks (s)he needs to SAVE MORE to have an equivalent amount of savings as the dollar value drops. Talk of unintended consequences.
Unless the average consumer thinks a crash in the value of the dollar will eat up the cash they're saving.
rcc | 12.18.08 - 5:28 pm | #
Mostly Lurker:
Agreed--if we keep up this pace, dollar will be toast very soon.
They should start using all the foreclosed houses for Section 8.(like they did with the White House.)
bearly writes:
It could be too late then.
MY FRIEND it it is on that precise question I place my cash at risk. Indeed, it could be too late. Indeed, your side may have overstated it's case.
I, certainly, am not smart enough to know who wins that coin toss except to say that I'm betting on the group of folks who have consistently won for the past 2000 years. Who are you betting will win ?
Sril writes:
Unless the consumer who also saves thinks (s)he needs to SAVE MORE to have an equivalent amount of savings as the dollar value drops. Talk of unintended consequences.
They can inflate faster than you can save, if they want to "encourage" you to spend.
In fact, one of Krugman's recent articles advocates causing 5% inflation to stimulate the economy.
popeye,
"I'm betting on the group of folks who have consistently won for the past 2000 years."
i might be a bit dense today, but what group are you referring to here?
"Is floating a massive stimulus bill really 'change'?"
Sure it is. Bush only gave out $150B directly to the proles in 2008. Obama is fixing to at least quintuple this. That's more than half an order of magnitude of "change."
http://news.morningstar.com/articlenet/article.aspx?id=268433
"By the end of September, just before the Treasury Department's Troubled Asset Relief Program proposal and right around the time the market sailed off into uncharted mania, Core Bond's credit exposure to those various markets totaled more than 180% of net assets on a dollar basis. In other words, for every dollar of shareholder capital in the fund, it was exposed to the credit-driven movement of more than $1.80 worth of securities."
After viewing a video recommended here called the "The Money Masters" (google youtube) I have a notion this whole debacle is a contrivance by the Central Bankers to take control of government treasuries around the world.
Ponyless,
I may be a few martini's ahead of you. If you grant patience; I will attempt to explain.
?What I did do this year, though, was pay down my consumer debt in big chunks, and not out of fear but simply because it's the smart thing to do.
But I seem to be the only person in America who's so old-fashioned.
Sebastian
What other smart things did you do this year? Short the financials? Not waste your time on blogs that didn't believe you? Go heavy shorts? Sell Oil and oil related at $147?
...or reprising China's age-old tradition of unplugging from the world economy and returning to xenophobic self-sufficiency when things get iffy.
I've got this strange feeling that within a year's time there will be a lot of other countries that are going to be "unplugging from the world economy". Maybe since we are so hyper synchronized it will be a rapid mass unplugging?
@Bob Dobbs,
I've been out of the university system quite a while so appreciate your comments. I wasn't even aware that Berkeley offered remedial/general ed classes. Agree it's probably better to leave those to the CCs, and, yes, the various systems could be a lot better integrated.
Rob Dawg,
Lessee, I'll take "go long small cap stocks" for $500!
Oh I'm sorry, your answer must be in the form of a question...
Well, the obvious comment no one has made about this announcement. It's backward.
Here, it looks like a stimulus smaller than what's been talked about, that may, in a panic, grow larger, maybe much larger.
Should have done the opposite. Announce an eye-popping figure. Jaw-dropping. At least $1T. Maybe $2 or $3T. Set expectations for crazy future inflation, which is the only thing that could get consumers spending again. Then, never actually spend it.
popeye, ok. i'll try to catch up in the meantime.
rcc writes:
In fact, one of Krugman's recent articles advocates causing 5% inflation to stimulate the economy.
The Fed and federal govt. abhor deflation and are laboring mightily to stop it. $11Trillion Question is... can they pull it off, and how soon?
It is interesting to have a thread with popeye and sebastian and sebastian is the voice of reason.
Popeye is this year's sebastian! Sebastian, why don't you tell him how your long positions worked out that you were touting when all the posters here said the market was going south (they turned out to be right in a BIG way)
Thanks AC
I'm betting on the group of folks who have consistently won for the past 2000 years
Popeye is long gold?
NOT Irving Fisher! writes:
There is absolutely no way the combined effects from Fed/Treasury initiatives, Obama Stimulus, and cheaper energy fail to give us positive GDP growth.
Really. The last five years have been inflated by nothing less, and now this debt has to be reckoned with (reconciled, repaid). They are pushing on a string, the unemployment avalanche will continue. Stimulus of job creation will not equal the demand destruction. They cannot replace the lost real estate book assets, the biggest wave of deflation responsible for the over all market deleveraging.
It might not even slow the impact of the dislocation of the economy as we have come to know it. I.e. the sudden impact of hitting the ground sans parachute.
1 trillion spent by gov will not prevent negative growth in 'these' circumstances. Sorry.
Particularly laudable is the spending on broadband access, a progressive view of the medium as utility, which will be "paid back" a hundredfold over its lifespan, just like public libraries.
"The Federal Reserve" is just a name like "FedEx". It is not the Federal Government- it is a private firm formed by elite stockholders.
Oh I'm sorry, your answer must be in the form of a question...
citizen energyecon
LoL! "What is glutton for punishment under the no recession column for $5 trillion Alex?"
BTW 2008 is the year I ran both categories of global warming and peak oil.
The Fed is desperately trying to protect its business model.
An economy based on the continual expansion of debt and credit?
The thought disgusts me more and more every day.
["I'm betting on the group of folks who have consistently won for the past 2000 years."
i might be a bit dense today, but what group are you referring to here?
Ponyless in NJ]
Betting against the Muslims.
When lawyers don't like the constraints placed upon them by citizens, they move the linguistic goal posts.
Can we kill all the lawyers, if we change word "kill" to "recycled"?
Here we go again.
Now Obama wants to throw money at the problem.
How much money has been thrown into black holes in the entire history of man, in order to solve a problem?
It never works.
Why are we trying this?
More debt cannot save the debt you have.
BTW, looking at how things are flying apart, esp. w/Caterpillar, I give us another year before depression sets in.
We are waaaaaaaaaaaaaaaaaaay beyond FUBAR at this point. It is only a matter of who will blink first and press the "panic" button.
WMR has learned from knowledgeable sources within the U.S. financial
community that an alarming confidential and limited distribution document
is circulating among senior members of Congress and their senior staff
members that is warning of a bleak future for the United States if it does
not quickly get its financial house in order. House Speaker Nancy Pelosi is
among those who have reportedly read the document. The document is
being called the "C & R"
Can we kill all the lawyers, if we change word "kill" to "recycled"?
No. It wouldn't be grammatically (or politically) correct.
What other smart things did you do this year? Short the financials? Not waste your time on blogs that didn't believe you? Go heavy shorts? Sell Oil and oil related at $147?
Rob Dawg | Homepage | 12.18.08 - 6:07 pm | #
LOL!!
Is a 12 pack a stimulus deductable expense?
Anything is better than the borrow and spend, dollar destroying republican/libertarian policies of the last 8 years.
Ponyless,
12th Percentile writes:
It is interesting to have a thread with popeye and sebastian and sebastian is the voice of reason.
Apparently, I'm viewed as a stupid person. It is a complete truth that to date, I have a 22.7% increase over the balance I held on 12/31/07. But I must be a fool.
I'm sorry. I don't NEED to help you super smart folks. Enjoy your circle jerk.
I've already publicly (and frequently so nobody misses it) admitted to being wrong about a great many things this year. But I'm glad to see that all the people who were right are magnanimous winners, gracious to people who don't run away and hide but take their medicine like grown-ups.
Anyway, right or wrong on whatever forecasts I made, my behavior as a consumer and the behavior of others like me all goes into the mix of the economy. I have discretionary income and I'm spending it, recession or not, and I'm hardly alone.
Sebastia
You ever think that it's your delivery that leads to animosity?
I never called what will happen long term. Screw yourselves for what I might have contributed.
[I have discretionary income and I'm spending it, recession or not, and I'm hardly alone], Yet.
Office max gets a paper cut....
OfficeMax suspends quarterly dividend - MarketWatch
Economist: The economy is flatlining Chairman Bernanke!
Ben: Another 10 billion debt stat!
Economist: Sir, it isn't working!
Ben: Reduce the Fed Funds to 0% and call it Quantitative Easing stat!
Economist: Sir, I think we detected a pulse, but his M1 is totally bloated and he isn't passing anything!
Ben: Damnit! Get me Doc Paulson on the phone stat!
let's just go for 10 trillion. and then stimulate every horny man and woman in the country
They want to encourage people to put their pets to sleep. Pet health care costs are too high. It's hurting the economy.
Does anyone need any additional proof that supply side economics has been a complete failure?
I only started investing for myself in May, 2008. I'm up 350%. Doesn't mean I'm not a fool.
I have discretionary income and I'm spending it, recession or not, and I'm hardly alone. - Sebastian
I am being magnanimous by not bringing up a great many other examples of your poor judgement and reasoning skills. I'll just let this instance of your proudly dissipating cash into the teeth of a cash crunch of epic proportions as more than enough self inflicted punishment.
You know, if you just broke even this year, you outperformed 99% of the MBA-toting, CFA-wearing, bonus-earning professional money managers and hedge fund managers out there.
And I know a lot of people here did.
Here's to you...true men of genius!
You can kiss your economy good-bye, punks.
Not only do I have free pool at THREE bars but now I have free cable movies for ninety days.
"They want to encourage people to put their pets to sleep. Pet health care costs are too high. It's hurting the economy."
The intensity of affection many people invest in their pets can be astonishing. If they're forced by circumstances to have them put down, there are going to a lot of emotionally bruised and bitter people.
Enjoy your circle jerk - because that is exactly what you are engaged in. Adios.
You're right. The cardboard box street houses are full of people with this mantra.
But remember this...your income doesn't know it's discretionary.
Only you do.
Popeye,
You've contributed nothing, so I guess no screwing for us.
Regarding, the dollar, Ben is fighting deflation. He is fighting to keep the dollar weak. But all asset markets seem to suggest more deflation ahead. I don't know how big the global asset market is. Guess maybe $100 trillion? I've seen numbers around $600 trillion. In this context, a fed balance sheet expansion of 2-3 trillion, and a 1 trillion stimulus don't make much impact. The dollar could strengthen more. Also, consider that this is global deleveraging, and the yen and dollar were both highly leveraged, so they should gain the most in deleveraging.
Yeah, and it feel so good!
One other thing:
Ben possibly implemented quantitative easing to circumvent the possibility that China balks at our government debts.
How do you spell failure?
REAGANOMICS aka supply side
Pavel,
Your totally on target. My sis had to put her 17 year old dog down tuesday. i even shed a tear. she's pretty bummed.
Sebastian,
I for one laud you for sticking around, (or coming back) and graciously taking your lumps. I would have bet the house we would never see you again.
Popeye,
If Seb's delivery sucked, you're miles ahead. I believe you made a good call a few weeks ago, and I don't remember you getting any crap on the board for it. Just remember, having a winning night in the casino doesn't make you a genius, it makes you lucky.
Ipod,
Where are you?
This is true. But if people could just watch their pets being put down, they wouldn't feel this way.
They pack them in a big washing machine like thing, all close together, like a spiritual animal community.
Then they just suck the air out all at once. It's painless.
Where is DC1000...he was going long the dollar at the worst time...I wonder how he is doing?
Just how many of these conservative/libertarians holding office are closeted homosexuals?
Believe you are correct. There is an opportunity to have a 'leveraged impact' with expectations as opposed to actual $$$. Not convinced that the dollar will debase right here and now. What is the alternative store of value? With an expectation of the commodity complex 'deflating' (I'm greedy and won't touch gold under $600 - which I think it can be dragged down to) the dollar is the one-eyed man in the land of the blind.
A big big headline number can create inflationary expectations without a dollar collapse IMHO..Americans can easily be optimistic in the face of the abyss.. it's in our DNA.
Markel writes:
Well, the obvious comment no one has made about this announcement. It's backward.
Here, it looks like a stimulus smaller than what's been talked about, that may, in a panic, grow larger, maybe much larger.
Should have done the opposite. Announce an eye-popping figure. Jaw-dropping. At least $1T. Maybe $2 or $3T. Set expectations for crazy future inflation, which is the only thing that could get consumers spending again. Then, never actually spend it.
Markel | 12.18.08 - 6:11 pm | #
" wmbz writes:
Just how many of these conservative/libertarians holding office are closeted homosexuals?
wmbz | 12.18.08 - 6:33 pm | # "
Troll
How come everytime we hear about a stimulus plan the market tanks?
Troll? It's a serious question leading to a discussion of the complete hypocrisy of the conservative/libertarians. And they are the same liars who brought us this economic disaster.
Thank You,
WMBZ
1 trillion spent by gov will not prevent negative growth in 'these' circumstances. Sorry.
Kondratieff canuk
~~~~
Agree completely ... the deflation of credit will continue unabated until the banks are sorted out. a Trillion next year is peanuts. By the time it takes hold we'll have another 5-7 million unemployed and it will be getting worse ... not better.
supply side = continually supply wealthy douchebags with money
Hey, rich. What's the risk, long-term, for going long GDX?
Sure, some mines will be nationalized. But I don't see that happening in Canada and Australia.
xxxxx writes:
" wmbz writes:
Just how many of these conservative/libertarians holding office are closeted homosexuals?
wmbz | 12.18.08 - 6:33 pm | # "
Troll
xxxxx
And if you could have just kept quiet, the troll would have left.
hmm.. i am thinking through the hints that popeye keeps dropping about his views.
i think it basically comes down to a belief that Obama+Dems will plow cash into American corporations, starting from the automakers. At the same time they would plow cash into US households through tax-cuts. These steps would cause the stock market to rise in the belief that other companies stand to get support from the USG. The deficit spending will not be a problem because the rest of the world will be collapsing causing a flight to the USD as the reserve currency even if the Fed is printing money. Lower energy costs and a possible stabilization of the US housing market might also play a role in his bets on retail among other sectors that can benefit from a rebound in consumer spending..
The people that have been winning for 2000 years are the rich?
Thats my extrapolation of popeye's comments. popeye, wanna confirm or deny?
Congressman Louis T. McFadden's quote from Depression days rings true today
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". -- Congressman Louis T. McFadde
Rob Dawg said: "...I'll just let this instance of your proudly dissipating cash into the teeth of a cash crunch of epic proportions as more than enough self inflicted punishment."
Well, this answer's Sebastian's World's question: No, it's not my delivery, it's the attitude of the respondents.
I'm not "proudly" disapating cash, but simply living my life, paying for food, clothes, housing, car repairs, electricity and gasoline just like everybody else, the vast majority of Americans, in fact.
If you don't have as much cash to disapate as others and you're bitter about it (or whatever it is that teed you off, I have no idea), that's not my fault and it doesn't mean that everyone without a bunker mentality is a dope.
Respectfully.
Sebastian
Any thoughts on the ongoing crime syndicate run by the libertarian conservatives?
What is a depression about 2 quarters of 10% contraction?
20% of ~15trillion (a year's GDP)
is 3 trillion
That should be the headline number of the package, have the major money center banks particpate with FDIC backed debt off their insolvent balance sheets.
The fundamental prinicple should be increasing incomes over the next generation.
No, Seb, most of us are Americans here, and we are ALL dopes.
Just ask Jas.
CR cites the size of the plan and says "that's a lot of stimulus." Sorry, it's a lot of things, but not necessarily what you say. It's a lot of government spending, a lot of borrowing from abroad, a lot of state and local governments feeding at the government trough, and a lot of displaced private spending. Whether it will stimulate real activity in a lasting way is highly controversial. A lot will depend on what the money is spent on and where it is spent. Because every state, city, and county will want something, it will be spread far to thin to help the parts of the country that are deeply depressed. Because the govnt. is looking to spend a lot of money quickly, there will be poor planning, no bidding, lots of waste. In short, this program will further increase our indebtedness to foreigners and probably not boost real output in a lasting way.
I spend alot of time on the housingbubbleblog but the posters here appear to be far more informed.
And most Americans are still clueless today....
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning" - Henry Ford
Heliben,
Thank you for your courtesy. Any wisdom my 25 years of trading experience ought to be worth seems to be mere whisps of smoke to the geniuses who speak on this thread. I must have been a fool to have profited from the market for so long with so little intelligence. Trade well.
Neuromancer writes:
Everyone should watch with great interest what is happening in CA. We are ground zero. Problems coming to your state soon. . .
Doubt it. At least not to the extent of CA. CA deserves this. Talk about a welfare state.
I frankly would much prefer their miscreants as opposed to ours.
Psychopaths and sociopaths did not ascend to the heights of lucre in their age.
km4 writes:
Congressman Louis T. McFadden's quote from Depression days rings true today
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". -- Congressman Louis T. McFadden
km4 | 12.18.08 - 6:40 pm
Almost as good as Reefer Madness:
YouTube
- Broadcast Yourself.
wmbz writes:
I spend alot of time on the housingbubbleblog but the posters here appear to be far more informed.
wmbz | 12.18.08 - 6:44 pm | #
agree...thats why a lot of us here stopped posting over there...oh and it takes 2-3 hours for your post to appear
If you don't have as much cash to disapate as others and you're bitter about it (or whatever it is that teed you off, I have no idea), that's not my fault and it doesn't mean that everyone without a bunker mentality is a dope.
Respectfully.
Sebastian
Sebasitian, your theories have not worked. Not even close. Holding your actions up as an example is not justified by the results. You aren't Robert Kiyoski but that is hardly an endorsement.
I have discretionary income as well and I am also spending it, but only on Cabbage Patch Kids, Beanie Babies, Infomercial Coin Sets, Star Wars Character Cards and other similar investment collectibles.
Anonymous writes:
I have to ask again, why are we not just declaring a one year tax holiday since that's what the stimulus dollar amount is up to now? Is it because that would actually be fair and not all directed at well connected wealthy people?
No, it is because all of the idiots who will go out and buy ipods etc... with tax savings instead of their mortgage.
It's long established that Keynesian very well. However, when borrowing is used in place of tax revenues, the system implodes. Plain and simple, stop with the enormous tax cuts for entities that don't need them.
2008 shoelaces in 2009
xxxxx writes:
Almost as good as Reefer Madness:
YouTube
- Broadcast Yourself.
xxxxx | 12.18.08 - 6:46 pm | #
(or whatever it is that teed you off, I have no idea)
nice delivery... no assumptions made, of course.
sm_landlord writes:
"Also does anyone else think it's creepy that since this whole TARP thing began my Citibank ATM's have been shooting out only totally newly printed money?"
--Anonymous
BAC as well. Kind of creepy.
National City's come with a string attached ...their parking lot looks like a kite factory exploded.
PSgirl writes:
sm_landlord writes:
"Also does anyone else think it's creepy that since this whole TARP thing began my Citibank ATM's have been shooting out only totally newly printed money?"
--Anonymous
BAC as well. Kind of creepy.
PSgirl | 12.18.08 - 6:50 pm | #
mr_clueless writes:
Are these ratings credible. All the banks I use are * or **.
mr_clueless | 12.18.08 - 5:26 pm | #
This is the rater that I use. Personally I like it better than the other as it has a report with it:
Bank & Thrifts Screener | Banks & Thrifts Market Performance & Financial Tools | Ratings Screeners | TheStreet.com
sm_landlord writes:
"Also does anyone else think it's creepy that since this whole conversation has become a circle jerk?"
ADIOS JERKS
i>PSgirl writes:
sm_landlord writes:
"Also does anyone else think it's creepy that since this whole TARP thing began my Citibank ATM's have been shooting out only totally newly printed money?"
BAC as well. Kind of creepy.
Wait until they come out wet and with the same serial numbers.
wmbz... What makes you think there are that many gays among the conservative libertarians?
Bob,
I'm actually back at UC and I think I brought the weather back with me.
The reason for undergrads at UC is they make us enough money to have grad programs. There is also the issue of departments being cut back and forced to come up with sel-supporting activities. If it was restructured correctly, we could make the tiered system work but boy, talk about beating back 100 yrs of entrenched ideology.
Here's my plan:
CA Comm College: vocational AS
CSU: Bachelors and some AS
UC: grad and research campuses.
We also need a better system for gouging.... Err I mean dealing with foreign national students but that is an argument for a soapbox, strong drink, and another time.
Popeye, come back!
I placed a trade today specifically because you predicted a rally.
I am not really willing to say whether I bet in favor of the rally or against, but bottom line: anyone who is bangin' Olive Oyl is OK with me.
" sfJack writes:
wmbz... What makes you think there are that many gays among the conservative libertarians?
sfJack | 12.18.08 - 6:57 pm | # "
DNFTT
Rob Dawg said: Sebastian, your theories have not worked. Not even close. Holding your actions up as an example is not justified by the results."
You know, if you'd like me to itemize the things I've been wrong about, I'm happy to. I was dead-wrong, way wrong about there being no recession, I made an absolutely ludicrous (in hindsight) stock recommendation on NEW (now vaporized wherever dead mortgage lenders go), recommended other small-cap stocks in the belief that the stock market was going to correct by only about -15% and not -45% (and more to come?).
So, now that that's out of the way, are you saying that it's a bad idea to spend any money, even for the things that I need? Or that paying off my consumer debt is a bad idea? And that all the millions and millions of us who have income and assets should simply stop spending our money and paying off our debts, period?
What is your point, because the only point you're making is that you're an obnoxious jerk with a chip on your should for some reason that I can't fathom.
Sebastia
wmbz, you are correct. Surprised this isn't more widely known. The entire RNC headquarters looks like the Monday morning commute from Fire Island. It's called the "Velvet Mafia."
Oh, and a stimulus isn't paid for by a tax hike. You don't get a stimulative effect by doling out money with one hand and hoovering it out of the economy with the other.
The real issue threatening our fiscal house is America's refusal to tax itself. Wage earners pay more than their share (FICA exceeds income tax for many) but the rich, especially the super rich, are very, very lightly taxed. A feather brush, really. If anything at all. They have plenty of resources we can tap to pay down the debt. And we will, eventually.
rich writes:
"They want to encourage people to put their pets to sleep. Pet health care costs are too high. It's hurting the economy."
I weep for our Poundcake. The mice will inherit the earth.
ac writes:
Better hope the Miseans aren't right about stimulus spending...
ac | 12.18.08 - 4:55 pm | #
Is it safe to assume that there are a few individuals leaning towords the Austrian school??
If so, in these turbulent times, can we convince people to eliminate the FED, or at least privatise the FDIC??
Show of hands???
I was vehemently against the TARP. I wrote, e-mailed, phoned, sent money. I even went to a demonstration on Wall Street.
But now that it's done you can't just cut off someone's medicare. Obama has to have a chance to level the field. What if you're playing a round of poker and just as the deal finally gets to you, everyone agrees that the dealer has an unfair advantage and the rules must be changed.
--
"Just ask Jas."
Comrade-Dope jg (jg),
If this guy has listened to me in 2006 and 2007 (we were both in the same forum) he wouldn't be in...
That is what mean when I talk about people like Sebastian, they listen to the wrong crowd and don't have enough brains to figure out things on their own.
Sebastian is a good example of what ails many Americans.
Jas
What is your point, because the only point you're making is that you're an obnoxious jerk with a chip on your should for some reason that I can't fathom.
seb... it's your delivery.Period.
--
Assets are deflating at $10-15Tr/year and this joker thinks that a stimulus of less than a trillion would jolt the economy into a recovery. Can you spell born-and-bred dope? Advised by Crooks!
America is doomed because Americans are thoroughly doped and Crooks have firm grip on power as evidences by Obamas appointments. I will let you know when there is any change in status.
Jas
Wow, maybe I'm preaching to the choir after all. Haven't heard from RE yet.
I posted my answer yesterday in the appropriate thread. It is there
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Popeye writes:
Get serious friends. This is our country we are talking about.
No, this country has belonged to the banks since 1913. Did you miss the part where everything blew up and the first thing the government does is save the banks, overriding the clear will of the people?
So, now that that's out of the way, are you saying that it's a bad idea to spend any money, even for the things that I need?
You said discretionary spending. I think that words what I think it means not what you wish to redefine it as meaning.
Or that paying off my consumer debt is a bad idea?
Depends. Just how aggressive should I be about my deductible 3.25% HELOC? Enough to cash in my 4.15% CD?
And that all the millions and millions of us who have income and assets should simply stop spending our money and paying off our debts, period?
Reducto absurdum is unbecoming Seb.
What is your point, because the only point you're making is that you're an obnoxious jerk with a chip on your should for some reason that I can't fathom.
Don't you think since you admit to being unable to discern my point that you might refrain from the insults until you get smart enough and educated enough to understand my point? Indeed, if you had gotten smarter and more informed earlier you'd be better off today. There's bitter here but it isn't mine. Check your pants.
Not going to work but he has to try.
Already spent that much, or more, to no avail.
"Pavel,
Your totally on target. My sis had to put her 17 year old dog down tuesday. i even shed a tear. she's pretty bummed."
If a dog has reached the age of 17 it means it has been extremely well cared for. Nothing to feel guilty about there.
But the emotional loss remains, and if one is forced to abandon an animal to euthanasia because of financial reasons there is a load of bitterness to add to the sorrow of loss.
There's a difference though between poverty and frugality. Poverty means deprivation, but a modest life can mean concentration on what makes life worthwhile, not on 'stuff.' Loved ones and friends, family, community are incomparably more important than 'stuff' and status. The only futile life is a life without love.
"...but he has to try."
Of course he has to try. What's he supposed to say on January 20 - I give up?
As some of us have pointed out here, no one knows what will happen.
all this "we're in it together talk" is reminding me of david weber's honor harrington series and the people's republic dolist system...
Indeed, I will live in a cardboard box before I put down my Rhodesian Ridgeback due to poverty.
@ Pavel Chichikov writes:
"They want to encourage people to put their pets to sleep. Pet health care costs are too high. It's hurting the economy."
The intensity of affection many people invest in their pets can be astonishing. If they're forced by circumstances to have them put down, there are going to a lot of emotionally bruised and bitter people.
Pavel Chichikov | 12.18.08 - 6:27 pm | #
Popeye(Unrated) writes:
I never called what will happen long term. Screw yourselves for what I might have contributed.
Calm down.
halpmeh
Yes, Weber does have a nice economic substrate to his space opera series.
The intensity of feeling people put into these blogs is also astonishing.
"But if people could just watch their pets being put down, they wouldn't feel this way.
They pack them in a big washing machine like thing, all close together, like a spiritual animal community.
Then they just suck the air out all at once. It's painless."
This is a truly horrific image.
And if it's so "spiritual" and "painless" then let's start euthanizing the chronically ill and the elderly in like fashion. We really cant afford their care and they have no viable economic future.
"Indeed, I will live in a cardboard box before I put down my Rhodesian Ridgeback due to poverty. "
It's very simple. My dogs are far more important to me than your children.
"This is a truly horrific image.
And if it's so "spiritual" and "painless" then let's start euthanizing the chronically ill and the elderly in like fashion. "
If this Soylent Green 'solution' ever comes to pass, then you will know that we are truly finished as a society.
Despite the pain popeye and sebastian (of the past) may cause some here you need to have both sides of the coin at all times or else you are going to get screwed. Being 100% in doom and gloom or 100% into farting rainbows is only correct for an instantaneous point in time. We live in the period between inflection points so don't run off the people who might make you dig deeper for data or think more critically.
Amazed if this stimulus comes in under 2 trn, btw. 3 seems more reasonable to expect.
I wish for sanity and a litle, just a little, common sense and fair play.
What if they decide to pay 2x the normal wages for the stimulus work projects? Given the scope, won't that help ramp up inflation?
2x wage comment above was me...don't know why it made me anonymous.