Initial Unemployment Claims Increases Sharply to 573 Thousand
Submitted by
CalculatedRisk on Thu, 12/11/2008 - 5:38am (188 comments)
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Take the market on that!
second
Welcome to The Great Recession!
Can somebody tell me when the birth/death downward adjustment will be made for 2008?
pent up demand?
Bad news is the good! DOW 15000!
Holy. Mother. of. God.
This is what I call domestic terrorism.
Tis but a flesh wound.....
channeling jas via frederick allen lewis
With every item of gangster news--the killing of "Jake" Lengle of the Chicago Tribune; the repeated shootings of Legs Diamond in a New York gang war; the bloody rivalry between Dutch Schultz and Vincent Coll in the New York liquor racket; the capture of "Two-gun" Crowley (a youth who had been emulating gangster ways) after an exciting siege, by the police, of the house in which he was hiding out in New York's upper West Side; the ability of Al Capone, paroled from prison in Pennsylvania, to remain at large despite the universal knowledge that he had long been the dictator of organized crime in Chicago--with every such item of news the public was freshly reminded that the gangsters were on the rise and that it was beer-running and "alky-cooking" which provided them with their most reliable revenue. Preachers and commencement orators and after-dinner speakers inveighed against the "crime wave." District Attorney Crain of New York said the racketeers "have their hands in everything from the cradle to the grave--from babies' milk to funeral coaches"; and President Hoover said that what was needed to combat racketeering was not new laws, but enforcement of the existing ones.
And the October trade deficit is a drag on GDP. Core import prices fell for the 3rd straight month while core export prices fell for the 4th straight month - looking like deflationary impulses are spreading faster than inflationary impulses did. (Paging Barry Ritholz.) Real exports peaked in August and have fallen for 2 straight months. The foreign sector is tossing out some pretty sour signals.
Creative destruction.
"initial" claims won't strike the fear of god into anyone.
i'm with Big, let's rally!
Pick up an unemployment check, go buy some xmas presents.
CR - Time to start quoting U6 not U3 or at least mention it (U6).
BTW: What is the better comparison to 1982, U3 or U6?
Dollars getting dumped into euros and yen. Dang, and I was planning a trip to Paris!
Few more of these and we may be in record territory.
i think some (like us) are waiting to hire after the holidays....
ifaforo, the headline number (U3) has been calculated the same forever. So that is useful for comparing to earlier periods. The other numbers are useful too - and are probably higher than in earlier periods because there are more part time / underemployed people these days.
Best Wishes.
So sad!
FWIW, in the past recessions unemployment usually grew rapidly all the way to the end of the recession. I think we all agree the recession is unlikely to end next month, so I think there's much worse to come. I've given my very rough estimate of 13% based on the A2/P2 spreads before and I'm sticking to it.
I wish there were some way to adjust how the labor supply now adjusts to employment, though. Starting in the 90's unemployment started having a dampened response to employment changes because increasing employment increased the size of the labor market and vice versa. I have yet to see a good evidence-tested explanation for this phenomena so of course there's no way to adjust for it. That could certainly throw off my prediction, so perhaps after the fact I'll end up looking at employment changes instead.
Last graph suggests that we have a long way to go...
This is going downhill fast.
It is time, I think, to point out loudly that the policies of Paulson and Bernanke have utterly failed to help the general economy.
There may be some happy and very wealthy bankers and other friends-of-Hank, but the notions of "Fed tools" and "bailouts" will be jokes for decades to come. This has been looting, as was pointed out at the time of the bailout, and nothing has yet come along to disprove that charge.
Sometimes I wish we could "shade" the period of 2002-2007 with pink for the loose credit euphoric times... Then we could track when "normal times" were vs now...
Then we can say that we are tracking back to normal on things like new car purchases, home depot numbers, retail sales, those non housing things that were fueled by the loose money..
i really believe that we are correcting, and that in some areas we will over correct..
...thnx, CR for the clarification. I thought the unemployment figures used in media had been messed with during Clinton and after.
safe,
I think over the years there has been a disproportionate increase in the number of uninsured workers.
How crass, sounds familiar :
Berlin hits out at ‘crass’ UK strategy
FT.com / Germany - Berlin hits out at ‘crass’ UK strategy
Germany’s finance minister has launched a stinging attack on the “crass Keynesianism” pursued by Gordon Brown, the British prime minister, fuelling tensions on the eve of European economic crisis talks in Brussels.
Peer Steinbrück accuses Mr Brown in a magazine interview of “tossing around billions” and saddling a whole generation with a bill for paying off British debt.
His comments come as the European Union’s 27 leaders meet in Brussels to debate a proposed €200bn fiscal stimulus package, designed to stop a protracted economic slump.
CR,
maybe you need a bailout clock at the header. You know put the total dollars that have been thrown towards the problem and divide by number of households in the US and then people will see whether or not it has been a worthy investment.
The Bush admin. response:
Its become clear that if you stick your head up, itll get cut off, said one White House official. Were done in two months. The next administration can try to find a way out of that maze.
This article may have been posted already but if not:
Surge in jobless claims taps out New Jersey unemployment fund Surge in jobless claims taps out New Jersey unemployment fund | Top New Jersey News - -
Now that's planning.
--
"Creative destruction."
Nemo,
NO. Destructive Creation! (Of DEBT and of Gangistan).
It is the Debt, Stupid!
And it is the Gangistan, Stupid! (That is behind all the troubles; Dopeland is... DOPED; Obama is merely the latest face in Gangistan).
Jas
that is horrible but dont think nj will be the only one.
this is the forever depression with endless unwinding
Gangistan?
Is that new?
That is good.
--
"Welcome to The Great Recession!"
Dave of SV,
NO. Welcome to the Greater Depression! CR would "forecast" Greater Depression in 2013.
Jas
Whatever happened to "national security" as a rational for nationalizing the auto industry? You would think the repubs would be pushing the salvation of US auto industry.
CA revinues came in 18.5% below expectations!!! That budget gap is growing by the day. Unemployment stats are going to be staggering, I'll bet.
California budget woes worsens
| Reuters
The numbers that are going to come out of CA over the next months (years?) are going to be much worse than even I (huge pessimist) feared.
Who will build our tanks/vehicles for the empire? Will China, Japan and Europe build this hardware and what will they bill us for, if so?
Oh goodie. All jas, all the time.
He so insightful. His commentary is so witty. And his vocabulary is superb.
unfortunately brooming money thru Detroit into the dustpan doesn't constitute "national security". Kinda like "trickle sideways"?
even if the automakers go BK, the technology, plants, mftg equipment, etc. will be bought, then operated by new owners, so it ain't "going away", hence, no need for repubs to try to save it. one rule for the bidding. no foreiners allowed to buy it and buyer must keep all PP&E in the US.
--
deb,
I have forecasted CA bankrupcy a while back. It is a certainty by 2010.
Jas
sorry about previous post y'll.
YouTube -
I forecasted that Jas would say he forecasted that, therefore my forecast is superior.
Anonymous | 12.11.08 - 9:23 am |
I believe the answer lay in the fact that the few republicans left may have actually learned their fiscal lesson.... lets hope so
For a couple of years now, everyone was standing with their hands out for fed money based on national security. Are we anymore secure now?
"Now the piper is coming home to roost," Corzine said. "We have to pay that piper. We have to do that either by putting money into that system from some other place, or we're going to have to get help from the federal government."
MMI is rising.
Effective funds rate is falling: 0.11, down 0.02
Black Star Ranch -
I thought the same thing regarding U3. But I believe that they changed the way the survey is done rather than the calculation itself. Perhaps I'm totally incorrect on that - and I can't find the old stuff I thought I read on the topic, so I'm not sure.
Changing inputs vs. changing method is subtly different I suppose.
Anyone else have more detail or remember more?
Every few weeks for nearly four years, the Secret Service screened the IDs of employees for a Maryland cleaning company before they entered the house of Homeland Security Secretary Michael Chertoff, the nation's top immigration official.
The company's owner says the workers sailed through the checks -- although some of them turned out to be illegal immigrants.
Now, owner James D. Reid finds himself in a predicament that he considers especially confounding. In October, he was fined $22,880 after U.S. Immigration and Customs Enforcement investigators said he failed to check identification and work documents and fill out required I-9 verification forms for employees, five of whom he said were part of crews sent to Chertoff's home and whom ICE told him to fire because they were undocumented.
Wow, going parabolic.
How long before there's a revolution a la France?
remember, dynasties are built out of times like this.
wait till you get a load of the new ruling class as excess gets shaken out of the current one. you think columbians are a nasty serious bunch? just wait.
ahhh, to be in my early amoral thirties with a large cash position and the sharply honed skills of corporate fratricide taught to me by today's ruling class. Oh wait, thats me!
oh well, one mans BK is another's five year plan.
I just read a SeekingAlpha blog post recommending CA bonds for their juicy tax-free dividend. Taking the capital losses after the CA default will also reduce your taxes.
I live in NJ. We had not had too much local news about the deficit problem. However, this is about to ramp up and will start seeping into the public's consciousness. I applaud Corzine for trying to tackle the NJ smoke-and-mirrors approach to budgeting. However, he is doomed to become very unpopular once the pain gets ratcheted up. I think we are lucky to have a governer who understands finance as well as Corzine, and who would not even be tempted to sell a Senate seat unless the offer was in the tens of billions.
It's a good thing most people are prudent and have squirreled away at least 6 months of living expenses for a rainy day. Otherwise, these numbers would be cause for serious concern.
It's a great time to be a bum.
--
German official: "Crash Anglo-Saxon behavior."
Surprise! Surprise!
Nations [UK and US] ruled by money whores. Whores doping their johns and getting them hooked.
America is a one giant whorehouse.
Jas
--
"pent up demand?"
REBear,
Yes. For largescale bankrupcies.
Jas
Black Star -
This is from Harpers (not exactly an unbiased source, I realize):
"But in 1994, the Bureau of Labor Statistics redefined the workforce to include only that small percentage of the discouraged who had been seeking work for less than a year. The longer-term discouragedsome 4 million U.S. adultsfell out of the main monthly tally. Some now call them the hidden unemployed. For its last four years, the Clinton Administration also thinned the monthly household economic sampling by one sixth, from 60,000 to 50,000, and a disproportionate number of the dropped households were in the inner cities; the reduced sample (and a new adjustment formula) is believed to have reduced black unemployment estimates and eased worsening poverty figures."
http://www.harpers.org/archive/2008/05/0082023
The current recession is already worse than the '01 recession, but still not as bad as the '90/'91 recession (weekly claims) - although continued claims are at the same level as the '90/'91 recession.
I'm confused by the bottom graph. It seems to suggest that the 74 recession was worse than the 82 recession even though unemployment was higher in 82.
How does "insured unemployment" relate to the size of the labor force?
"It's a good thing most people are prudent and have squirreled away at least 6 months of living expenses for a rainy day."
(on floor laughing arse off)
A whorehouse where few people realised they were the ones getting shafted?
I agree CA will go bankrupt one way or another (prob Federal bailout or something). I have though this for a couple years too. Our state government is completely out to lunch and our budget is an unbelievable disaster. Don't think I'll be buying any Cali bonds for their "juicy yield", thanks anyway.
On the Fed Funds, what is the significance of 0.11%? I'd love to hear CR's take on what it means. It surely means their is no "lowering" of interest rates in the conventional way. Although they are well into unconventional now.
--
"6 months of living expenses" at the beginning of the Greateer Depression?
"on floor laughing arse off"
ditto.
Jas
.....thnx, Sparkle, those changes would HAVE to change the outcome....
Hi CR -- thanks for the claims-as-%-of-covered-employment graph you added.
I have some basic questions I hope you can help with:
(1) In general, what % of total jobs in US are "covered employment"? Has that %age changed over the years?
(2) does norming the graph to % of covered employment do the same thing as norming it to total population growth over the time period? If not, why not?
Thanks~
Back to the salt mines.
Today the NY Fed will try to defend 89 on the SPY.
One bounce off 89 already. 3-4 more coming today.
Selling pressure is relentless.
I applaud Corzine for trying to tackle the NJ smoke-and-mirrors approach to budgeting
http://www.northjersey.com/news/njpolitics/Corzine_pushes_to_delay_pension_payments.html
Corzine is a fraud. A typical gutless, two faced politician.
He proposes a $500 million dollar pension holiday on top of a projected FY 2010 $5 billion dollar deficit.
The man is a sham. I predict he'll be one of the first in line to start selling NJ's public assets to his buddies on wall street.
It's a great time to be a bum.
Lots of new friends.
Black Star - it also tends to be a little more believable since the U6 series begins in 1994. At least that's the earliest data I can find in the BLS stats.
CR- I second Hexagonal's questions above.
CR, employment is weak, and getter weaker by the week, but the title of chart #2 still doesn't look right. Speaking of charts, much appreciated, have you considered a sidebar link to a library of most current chart of your various creations, for quick reference, and forwarding to disbelievers? Thanks.
...yeah - in your spare time, CR....
--
"Corzine is a fraud. A typical gutless, two faced politician."
What do you expect from any Goldchain Silverknife (whorehouse) Madam?
Jas
Congress' promises to extend unemployment benefits suggest that durations might increase--unless counterbalanced by Obama's roadside-orange-vest-modeling jobs.
Now I must post in the previous thread about its overlooked tie to misguided credit policy.
3 month LIBOR dipped below 2% today, if this holds inflation will soon be kicking in. 0% interest rates may, and I stress may, finally be working.
--
from earlier thread...
CR: "I was too optimistic."
What else is new?!
And what is the source of your optimism? Did you ever think about that? That may be a revealing introspection.
In general, Americans suffer, congenitally, from optimitis.
Jas
JJ: you could be right, things certainly are getting ugly out there. I have been at an investor conf this week in SF and co. management has stopped saying that they expect to see a snapback in 1H 2009 to using the terms "highly uncertain" and challenging times". At best they are hoping this is mostly an inventory correction to be resumed by growth in 2Q or 2H. What is amazing is the number of companies that had very modest guidance off their 3Q conf. calls who have prereleased in the first week of December, not even bothering to wait until the quarter ends.
CR: any updates on your thoughts about the economy?
Looking at these charts, I see that reemployment occurs about as rapidly as unemployment when the downturn is over. I was a bit surprised by this. From an historical perspective, are the industries that do all of the laying off/firing, the ones that also do the bulk of the re-hiring or is the the reemployment the result of another industry taking off?
Upthread a commentor expects the BK auto companies/plants to be taken over by new owners--who has the combination of a high bank account and a low IQ?
In general, Americans suffer, congenitally, from optimitis.
Oh goodie. Psychobabble from jas the shrinkologist. Please, tell us more.
Re California:
Any seriosu discussion of repealing proposition 13?
and its just getting started good.
We are in the 3rd to 4th inning.
What does "normalized as a percentage of covered employment" mean? I assume it is correcting for working population in some manner? Does it account for the fact that a lot more people are self-employed now?
Any seriosu discussion of repealing proposition 13?
And does Prop 2 1/2 still exist in Mass?
It's a great time to be a bum
You got that right. It's the new path to wealth. England had a serious problem with "Squatter's Rights" in the 1970s/1980s.
Adverse possession - Wikipedia, the free encyclopedia
Relatives in England at the time almost lost property. I remember recommending a baseball bat.
but that woudn't be crickit.
.....had it not been for prop 13, "grandma" wouldn't have been able to keep her house....
What does "normalized as a percentage of covered employment" mean? I assume it is correcting for working population in some manner? Does it account for the fact that a lot more people are self-employed now?
I'm confused too. I know that the size of the labor force is a reported statistic. Why not just use that?
whats wrong with haloscan? i clickie nothing happens
--
"challenging times".
Dave is SV,
First uttered by John "the Crook" Chambers in January 2001. Still on the job screwing Cisuckers, certifiable born-and-bred American dopes.
Gangistan is in firm control of America.
Jas
gabyjan writes:
whats wrong with haloscan? i clickie nothing happens
Broken by design.
1: 1099s don't show up in unemployment claims
2: Boomers who get called to carousel usually don't return to the workforce.
So both U3 and U6 will be underreporting all through this mess.
This is good news. Monday's FOMC per the Cleveland Fed estimate puts the chances of quarter point FFR at 60%. It's actually dropped a little as ZIRP is now up to 20% probability. Stimulus baby and for those of us with HELOCs tied to prime it's free money. Time to max out the line and buy some CDs and insured California munis.
lowermiddleclass
why?
Sorry gabyjan. I guess "broken by design" was incorrect. Should have been broken by lack of design. Haloscan was probably someone's senior project hacked together in the wee hours of a the morning while pumped up on adderall and redbull.
Time for the 10:00 pump. Should be particularly severe given that Obama speaks at 11.
Of course, given that I'm playing it today, it probably won't materialize...
Read Barry Ritholz at RGE for a discussion of "not in labor force."
RGE - NFP: Even Worse Than Reported
The number of people out of the labor force meaning that they were neither working nor looking for work and that the government did not consider them unemployed jumped by 637,000 last month, the Labor Department said. The number of part-time workers who said they wanted full-time work all counted as fully employed rose by an additional 621,000.
lowermiddleclass thank you in other words gigo?
Of course, given that I'm playing it today, it probably won't materialize...
Gavshire Hathaway | 12.11.08 - 10:09 am | #
The trend is your friend, until the end.
And does Prop 2 1/2 still exist in Mass?
Yup, 25 years and counting. While I was initially opposed to government on autopilot, one participation in a town meeting when the school boosters (maybe only 10% of taxpayers) turn out in force is enough to see the reason for Prop 2.5. It's not only the elected officials that are the problem in small towns. Override success has been dropping rapidly lately, wonder why.
So true Eric.
But I've got Obama in my back pocket.
Obama's roadside-orange-vest-modeling jobs.
LOL!!!
"The trend is your friend, until the end."
It's not really your friend. it just wants you to think it is so it can sucker punch you and take your wallet when you least expect it.
I see that reemployment occurs about as rapidly as unemployment when the downturn is over.
Hate to say it, but "this time is different". This one changes the entire landscape.
With news like this + the newest doreclosure datasthe Dow should be down more than 200 pts . I keep telling myself that there has to be capitualtion at some point .
Obama's roadside-orange-vest-modeling jobs.
Not One Cent | Homepage | 12.11.08 - 9:49 am | #
Q: What's orange and sleeps 8?
A: A DOT truck.
Comrade Bear, that is why I was asking "from an historical perspective". I think this will be much more GD like than the past recessions. Nobody wants to call it GD2 though. Maybe we should call it the Great Reckoning?
PeakVT writes:
"Now the piper is coming home to roost," Corzine said. "We have to pay that piper. We have to do that either by putting money into that system from some other place, or we're going to have to get help from the federal government."
MMI is rising.
Effective funds rate is falling: 0.11, down 0.02
PeakVT | 12.11.08 - 9:29 am |
LOL. I too thought of Tanta and the MMI when I read that sentence. I was just 40 minutes late...for me that's almost like being on time. =)
LMC,
I'm partial to the "Greater Depression" myself, although I admit it doesn't lend itself to a distinctive acronym.
lowermiddleclass
take the 29 add a bit of the 1873 and a pinch of 1837 and maybe thats the recipe for this
WASHINGTON — If the $14 billion bailout plan for U.S. automakers passes, it will help more than just Ford, Chrysler and General Motors. Federal judges would get a pay raise, as well.
The raise _ an annual cost of living adjustment, or COLA _ would bring U.S. District court judges up to par with members of Congress, who will receive an almost $5,000 boost on Jan. 1. District judges and lawmakers now earn $169,300 a year but are expected to be awarded a 2.8 percent raise next year, said Dick Carelli, a spokesman for the Administrative Office of the United States Courts.
2008: Not so great.
2009: The Great Rewind?
the man from nantucket writes:
I forecasted that Jas would say he forecasted that, therefore my forecast is superior.
the man from nantucket | 12.11.08 - 9:29 am |
+1. That got an actual belly laugh out of me. Y'all are in fine form this morning!
why not call it the energizer depression cause it keeps going and going and going....
How 'bout 2009: The Great UnWind?
The Greatest Recession.
Whatever happened to all those happi talk phrases like "permanently high plateau?"
gabyjan,
What? We just got started! This is still '29.
i just hope it doesn't become known as "the great oppression".
Rob,
In a few years they may be lamenting a "permanently low plateau" (e.g., "lost decade").
Tanta gave us great analysis and warning of the mortgage problem. That was the value added here. Without her, this blog has turned into a collection of the day's most alarming headlines.
--
"We just got started! This is still '29."
Comrade Bear (tj & the bear),
Your calendar is stuck. We are in 1930. Please update.
Jas
Jas is correct. We are out of 1929 already.
Times have changed my friends, yesterday the so-called "deflation" died. Welcome back stagflation!
Wondering if the strucutral changes in the labor markets (read increase in contractors and self-employed) means less is more...is there data on how much of the civilian labor market is covered vs. uncovered and what is a lower % of the covered labor market today would be equivalent of higher numbers in the past except those folks are not covered any longer...
jas this is for you.
YouTube - The Alan Parsons Project - Psychobabble
Jas,
Humbly disagree -- but we'll be there in 20 days!
It just wouldn't be a CR thread without Jas Jain launching his verbal Molotov cocktails in every which direction.
Anonymous writes:
In general, Americans suffer, congenitally, from optimitis.
Oh goodie. Psychobabble from jas the shrinkologist. Please, tell us more.
Anonymous | 12.11.08 - 9:54 am |
sort of proves your point Mr Jas. What wine goes best with schadenfreude?
I think there is no serious discussion about repealing prop 13. The effect would be to make older properties suddenly have much, much larger tax bills. Which they coul not pay. This would create tax liens, not revenue. Note that it would not force sales, it would just create a lien.
Far more likely is that more and more municipalities will elect to raise local school bonds - these were amazingly successful in the Novemner election.
School restructuring is likely to look like this: Maintenance will come through 'upgrades' which is the new Obama stimulus. Fed dollars wlll come to teachers easing some of that burden. Textbooks will either go stale, or more liekly, the 'new' texbooks will be something like kindle based education. Cheap to distribute, update, etc.
10:00 pump coming through. Had a 5 minute delay -- printing presses got a paper jam.
In a few years they may be lamenting a "permanently low plateau" (e.g., "lost decade").
Comrade Bear (tj & the bear)
Bouncing along a rocky bottom. Japanese Yen telling us to bend over for our lost decade.
Without her, this blog has turned into a collection of the day's most alarming headlines.
Strongly disagree. CR's analysis & stellar charts are what drew many of us here. Tanta was the icing on the cake.
"NO. Destructive Creation!"
Not Schumpeter... Chumpster!
Doesn't Jas have his own blog? Can't he harangue the people who actually elect to be demeaned and condescended to there? I am guessing he just comes here because he is lonely?
Group Hug for Jas!
A Quote of a child of the Depression..A Banker who took me under his wings when I was 21.
"I have never drank a Coke I thought I could afford."
He was 54 at the time, died 15 years later, estate had to pay 400K just on the Stock he owned in the bank.
Wife had died, no children, no will.
this could change the foreclosure numbers. will have many ripples if it catches hold. -
Supreme Judicial Court Affirms Injunction Obtained by Attorney General Martha Coakley Restricting Foreclosures by Subprime Lender, Fremont Investment & Loan
BOSTON In a unanimous decision, the Supreme Judicial Court (SJC) has affirmed the Superior Court's order barring subprime lender Fremont Investment & Loan from foreclosing on any structurally unfair loan without court approval. The preliminary injunction, issued February 25, 2008, was the first order in the nation that restricted a subprime lenders ability to foreclose based on unfair or deceptive loan origination misconduct. Todays decision from the high court sets precedent by affirming the application of Consumer Protection Law to subprime lending and the foreclosure crisis.
Office of the Attorney General - - Press Release
I lived in NJ for two years. Crushing tax burden for real estate and sales taxes. Seriously - the state is fucked. I don't see how they will raise any additional revenue. To top it off, every level of government is Chicago style of corruption at every level.
Comrade Bear (tj & the bear) writes:
What? We just got started! This is still '29.
\t Comrade Bear (tj & the bear) | \t\t\t\t12.11.08 - 10:22 am
-----
Now, all we need is a remake of Prince's 1999 as 1929, and we can party like it is nineteen... twenty-nine!
I'm digging it.
"I think there is no serious discussion about repealing prop 13."
You think correctly. The baby boomers will succeed in dragging their welfare state to the grave with them, both nationally and through whatever other means they can manage.
The baby boomers will succeed in dragging their welfare state to the grave with them, both nationally and through whatever other means they can manage. - bgates
I am unaware of any age limitations on Prop 13's applicability.
"We just got started! This is still '29."
I personally think we'll be done when XLF hits 5 or so, which would track the DJIA in that era well.
Although we've debated the "fairness" of Prop. 13, its super-majority requirement is one of the only things that has kept the Sacramento gang from taxing us to death. We're already among the highest taxing states.
CA has never had a revenue problem, it's had (and has) a spending problem.
OT
Thursday, December 11, 2008
Crash, 'Treas', Dummies
(Landlord called me early this morning saying I needed to go down into the Anonymous Monetarist storage room because he heard a 'beeping sound'. Curious, I complied.
Much to my surprise, in the back, was the source of the disturbance - in a box labeled 'Scherbius's stuff' - a machine whose instruction manual I had long ago memorized, dusty and emitting a call for attention.
Brought it up to the office and turned it on, stale smell of metal heating up was a bit offensive but it seemed to be in good working order. To test it out I typed in the recent Testimony Of Interim Assistant Secretary For Financial Stability Neel Kashkari Before The House Committee On Oversight And Government Reform, Subcommittee On Domestic Policy: - AM)
Chairman Kucinich, Ranking Member Issa, members of the Subcommittee, good morning and thank you for the opportunity to appear before you. I would like to provide an update on the Treasury Department's actions to stabilize our financial markets and restore the flow of credit to the economy. We have taken action with the following three critical objectives: one, to provide stability to financial markets; two, to support the housing market by preventing avoidable foreclosures and supporting the availability of mortgage finance; and three, to protect taxpayers.
(Piacere. It is a deep and moving honor to discuss the waste mangement business with all of youze.)
We have acted quickly and in coordination with the Federal Reserve, the FDIC, OCC and colleagues around the world to help stabilize the global financial system and it is clear that our coordinated actions have made an impact. Before we acted, we were at a tipping point. Credit markets were largely frozen, denying financial institutions, businesses and consumers access to vital funding and credit. Financial institutions were under extreme pressure, and investor confidence in our system was dangerously low.
(These are trying times for this thing of ours. Credit markets were saying 'va fa napole'. The Borgata was approaching a stage of crisis...)
At the same time, we recognize that a program as large and important as this demands appropriate oversight. We are committed to transparency and oversight in all aspects of the program and continue to take strong action to make sure we comply with the letter and the spirit of the requirements established by the Congress, including regular briefings with the Government Accountability Office, the Financial Stability Oversight Board, and the Inspector General. We are also committed to continuing to meet all of the reporting requirements established by the Congress.
(Let us not forget the Code of Silence. Anti-Trust violations aside... Those that go oobatz get pinched.)
As the markets rapidly deteriorated in October, it was clear to Secretary Paulson and Chairman Bernanke that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks. In early October, after consulting closely with Chairman Bernanke, Secretary Paulson explained that Treasury would use the financial rescue package granted by Congress to purchase equity directly from financial institutions the fastest and most productive way to use our new authorities to help stabilize our financial system. Working with our banking regulators, we have now approved dozens of applications from banks across the country. We will soon post the term sheet for private banks. We feel very strongly that healthy banks of all sizes, both public and private, should use this program to increase lending in their communities.
(Our capo in his esteemed wisdom gave the crew a taste without excessive vig. There was initally discord on points and even unfortunately a necessary message job for those that had not in the past paid tribute. But that jamook Fuld got his, buon' anima.)
With a stronger capital base, our banks will be more confident and better positioned to play their necessary role to support economic activity. Further in support of this goal, just two days ago, our banking regulators issued a statement underscoring the responsibility that banks have in the areas of lending, dividend and compensation policies, and foreclosure mitigation. Treasury commends this action and believes it is critical to focus on the importance of prudent bank lending to restore our economic growth so that we do not repeat the poor lending practices that are a major cause of the current economic problems.
(The shylock business continues.)
On housing, we have worked aggressively to avoid preventable foreclosures, keep mortgage financing available and develop new tools to help homeowners. Here, I will briefly highlight three key accomplishments:
One, in October 2007, Treasury helped establish the HOPE NOW Alliance, a coalition of mortgage servicers, investors and counselors, to help struggling homeowners avoid preventable foreclosures. Through coordinated, industry-wide action, HOPE NOW has significantly increased the outreach and assistance provided to homeowners. HOPE NOW estimates that nearly 2.5 million homeowners have been helped by the industry since July 2007; the industry is now helping about 200,000 homeowners a month avoid foreclosure.
Two, we acted earlier this year to prevent the failure of Fannie Mae and Freddie Mac, the housing GSEs that affect over 70 percent of mortgage originations. These institutions are systemically critical to financial and housing markets, and their failure would have materially exacerbated the recent market turmoil and profoundly impacted household wealth. We have stabilized the GSEs and limited systemic risk.
Three, just three days ago, HOPE NOW, FHFA and the GSEs achieved a major industry breakthrough with the announcement of a streamlined loan modification program that builds on the mortgage modification protocol developed by the FDIC for IndyMac. The adoption of this streamlined modification framework is an additional tool that servicers will now have to help avoid preventable foreclosures. Potentially hundreds of thousands more struggling borrowers will be enabled to stay in their homes.
(The necessary themes musciata are expressed by us. The cafones and poveretts, for whom the books are always closed have been told 'col tempo la foglia digelso diventa seta'.)
On Wednesday, Secretary Paulson outlined three critical priorities and related strategies for the most effective deployment of remaining TARP funds: one, to further strengthen the capital base of our financial system; two, to support the asset-backed securitization market that is critical to consumer finance; and three, to increase foreclosure mitigation efforts. These priorities are necessary to reinforce the stability of the financial system so that banks and other institutions critical to the provision of credit are able to support economic recovery and growth, and to help homeowners avoid preventable foreclosures.
(Gentleman, this Golden Age is quickly coming to an end. It is imperative upon us to complete our spring cleaning for it is possible that there might be mannagge with the tizzun. Already the fanook is getting all chiacchierone on the shy. That NY strunz. This is causing much agita I know for there could be predicates. None of us wish to be guests of the state. This is not time to eat alone.)
Our system is stronger and more stable than just a few weeks ago. Although a lot has been accomplished, we have many challenges ahead of us. We will focus on the goals outlined by Secretary Paulson and develop the right strategies to meet those objectives. Foremost among these will be to ensure that the financial system has sufficient capital to get credit flowing to consumers and businesses. Thank you and I would be happy to answer your questions.
(First though, Madonn' I'm hungry ... gabagool?)
Posted by Anonymous Monetarist at 6:31
I don't understand why so many people seem surprised by the numbers. We've all known we're in a recession for some time. This is a pretty normal pattern for job losses during a recession.
"I am unaware of any age limitations on Prop 13's applicability."
All 22 people in California under 45 who owned their place back in '78 agree, Rob.
Eventually you'll all agree with me that we have no one to blame for this mess but the arabs and the jews.
Ciao
MS
So both U3 and U6 will be underreporting all through this mess.
Comrade Alexei Mikhailovich | 12.11.08 - 10:02 am | #
CIVPART and EMRATIO will take a different cut a the whole pie...
--
"The baby boomers will succeed in dragging their welfare state to the grave with them, both nationally and through whatever other means they can manage."
Baby Doomers were BRED to lead to America's DOOM. By galley, they will succeed.
Doomers are the leaders, both in Gangistan and in Dopeland.
Jas
I'm partial to the "Greater Depression" myself, although I admit it doesn't lend itself to a distinctive acronym.
Comrade Bear (tj & the bear) | 12.11.08 - 10:18 am | #
How about GD^2?
Citizen Energyecon- Agreed on participation rate. It never really recovered from the drop after the 2001 recession. That has to add at least a couple of tenths onto U3.
I put forward a motion to ban MS. Do I hear any seconds?
.....so much for the dumbing down of America's youth...
totally off topic
its snowing in new orleans
Sleet, snow tail off in New Orleans | New Orleans Metro Real Time News - - NOLA.com
Comrade Bear (tj & the bear) writes:
Although we've debated the "fairness" of Prop. 13, its super-majority requirement is one of the only things that has kept the Sacramento gang from taxing us to death. We're already among the highest taxing states.
CA has never had a revenue problem, it's had (and has) a spending problem.
Comrade Bear (tj & the bear) | 12.11.08 - 10:37 am |
Amen. Plus, if prices go much lower even Prop. 13 beneficiaries will get a reduction in their property taxes.
For those who are unaware, even under Prop 13 property taxes can increase at (I think) 2% per year (I know Rob will correct me if I'm wrong on the amount). Already in my neighborhood foreclosures are listed for sale at less than my assessed property value. Should they sell at that amount (rather than being set artificially low for a bidding war) you can bet I will be petioning for a reduction in my property taxes next year.
i think it is a troll spoofing MS's name. can't tell without looking at the IP's.
Do not forget that prop 13 covers commercial properties as well.There might be a few influential corporations with a interest in the Status quo.And Jas,this recent fixations on ladies of ill repute on your part concerns me.Are you dating a Realtor?
Great. So what you are really saying is that labor costs are down and stocks are a good investment. right?
just refreshing y'll
"i think it is a troll spoofing MS's name."
Agreed.
All 22 people in California under 45 who owned their place back in '78 agree, Rob.
bgates
Applies to all property not just those owned in '78. Prop 13 is about as fair as any property tax can be. And if you don't like the deal, walk away.
--
"What wine goes best with schadenfreude?"
Happened to go for wine-tasting yesterday. Was it Peju Cab? There was good Sanghovese (spelling?).
Jas
Corzine: "putting money into that system from some other place"
There's that MBA clicking into action with crackerjack analysis.
"Applies to all property not just those owned in '78."
Of course it does. And "fair" is the first word that comes to mind when young families already paying tens of thousands in Income Tax to Sacto also pay literally 20 times the tax as granny next door, isn't it? For the "me" generation, you betcha!
--
Nothing recent about my analogies of pimps and whores. Have been talking about Money Whores and Intellectual Whores (economists are numerous) for years.
Jas
Of course it does. And "fair" is the first word that comes to mind when young families already paying tens of thousands in Income Tax to Sacto also pay literally 20 times the tax as granny next door, isn't it? For the "me" generation, you betcha!
- bgates
Granny is paying twice the mil rate of the young couple. Is that fair her paying 2.2% to their 1.1%? Perhaps you'd like to pay sales tax based on list price rather than what you paid for a car? Worse, what if some idiot way overpays for the same car and Sacramento comes after you for the difference in sales tax he paid versus what you paid. Prop 13 prevents property taxes from rising based on the stupidest neighbor. Is it "fair?" Of course not, it's a freakin' tax!
"Is it "fair?" Of course not, it's a freakin' tax!"
The same attitude towards legislation and legislators is why we have a parallel legislative system with propositions in the first place.
It is truly serendipitous how the hare-brain schemed of the original progressives ninety years ago have provided for a perfect match with the sophomoric cynicism and endless narcissism of later generations.
still, there's the silver lining - prop 13 will still help the truly old it was partially sold to the voter as protecting, while most of the baby boomers will get negligible value out of it when the CA median goes under 200K with a thud.
That would be highly uncharacteristic of MS. Agree with prior posters.
bgates.....
no one should be forced from their homes if year after year the taxes skyrocket. It affected the older people who DIDN'T continually upgrade their homes. Can't help the new owners - they KNEW what they were biting off - all "Grandma" wants is to be able to afford her home till she dies - lighten up!
" Rob Dawg writes:
The Greatest Recession. Whatever happened to all those happi talk phrases like "permanently high plateau?"
Rob Dawg | Homepage | 12.11.08 - 10:22 am | # "
The PLP (Permanently Low Plateau).
The EMT (Economic Marianas Trench).
....I'm hoping the 3% increase every year in taxes THIS state takes from me doesn't bankrupt ME. As we've seen, government would suck the marrow out of your bones if you gave them half a chance.....
I call attention to a column by David Roche in today's Financial Times. His observation basically is that all of the monetary/fiscal stimulus in play may make the global economic recession less deep, but not any less painful, because they fail to address the underlying cause: namely excessive consumption financed by gobs of overseas funding.
"Replacing excessive private sector leverage with inefficient and market-distorting state leverage is not a path to a more stable world. . . . The state debt does not extinguish the private debt, but merely finances it, so increasing the layering of leverage that lies at the heart of the credit crisis. . . . We have created our own very serious, but quite unique mess."
All such measures, Roche argues, will not get at the basis of the crisis, the "lack of household thrift." Instead, all of the measures in place in the US and the UK will fail to "train the Pavlovian dog (i.e., US and UK consumers) to learn new ways when that is precisely what they need to do."
"lighten up!"
Granny already gets a SS check, Medicare coverage, a low Sacto tax rate.
Young family gets 9% marginal income rates from sacto, 8.5% sales tax on the groceries, diapers, etc, the SS and medicare taxes on top of the federal 20% or so and THEN gets a $8K annual property tax bill instead of granny's $400 next door.
Only in the blissful environment of self-discovery and self-entitlement found in Boomerstan does this make sense.
...yes, but everyone needs a hut....leave THAT at least alone...
--
"....I'm hoping the 3% increase every year in taxes THIS state takes from me doesn't bankrupt ME. As we've seen, government would suck the marrow out of your bones if you gave them half a chance....."
Black Star Ranch,
Especially, a govt controlled by bloodsucking money whores of New York City. The born-and-bred dopes were supporting the gangsters and parasites by "investing" in Scams.
It has been a bad system problem and now chickens are coming home to roost.
Jas
--
Obama understands your anger!
Hallelujah...
Dopes got this joker in Gangistan for 4 years (no more).
Jas
...I'm hoping he'll surprise us....but I've learned to never put any trust in ANY of them...
573,000? Stock market rally time! DOW up 300!
Prop 13 isn't the problem, Prop 98 passed in 1988 is the problem.
Prop 13 played a big role in the crazy boom. If Granny had been "forced" to sell her house she would have made a lot of money and the supply would have held down prices and reduced the costs to the country. The country lost hundreds of billions because of the inflated house prices Prop 13 helped prop up.
Unfairness hurts everybody, although this has worked out to be a particularly extreme example. Same house, same tax. Same income, same tax. Same purchases, same tax. Fairness is a real no-brainer.
It is bad, no question .. but we have to keep things in perspective. The golden 50s-70s were worse. See my blog post on the previous month's number (still valid for this month since they are close):
ambdex: Job numbers - bad, but just how bad?
would somebody please get rid of the gawd aweful accounting changes that are exacerbating this problem? Regulators are closing the barn doors after the cows have gone, just to save their sorry asses from making the mistakes 5 years ago. Now the government is trying to make up the capital that the accountants and regulators are taking away.
Obama is crazy if he thinks building infrastructure is going to help this picture. We need private sector jobs created by small businesses that actually offer something consumers want. We are turning into the Soviet Union!
"would somebody please get rid of the gawd aweful accounting changes "
but we need to follow the Japanese script to the letter!
"We are turning into the Soviet Union!"
No, we're turning into Japan ten years ago. They have spent much of their national money and energy pouring concrete over the remaining habitable 5% of the country that didn't already have concrete on top of it.
real estate based asset pyramid - check
bankers afraid to mark these assets down creating giant zombie banks - check
.000x interest rates - check
needless infrastructure frenzy - check
national debt a multiple of GDP - check
CR,
The update puts it into better perspective. Thanks!
Thanks for adding that last graph, I like that one a lot, it's easier to see the relative severity of the various ones (for the insured anyhow). Wow, check out the trough to peak change in percent total insured unemployed for the '74-'75 recession - 2.7% > 7.0% OUCH!
Jas says: Obama is merely the latest face in Gangistan"
Okay, that's enough for me. How about waiting until Obama actually becomes a gangster before slandering his name ... also why not keep focus on the actual President of the United States who is now in office at this moment.
Notice that Bush has disappeared while the cons and conned continue clicking to heel at whatever the media spotlights.
Or maybe Jas is one of those con squirrels who want to tell me that the political right-wing Con Republicans and corrupted treasonous Democratic "leaders" like Pelosi and Reid who enabled this cabal are JUST THE SAME as the Democratic Party supporters and progressives who have been fighting this all along. These "conservative" artists now say there is no solution, we're all gonna die and just hand your money to the Big Guys and give it all up cause they're ALL the SAME, baby, bad bad bad. Gee, might as well go with the Repubs then, huh?
Of course, the Cons say it because they want off the hook (accountability) and don't mind stuffing Western civilization down the tubes for personal gain. We all know that. Why are you playing that game, Jas?
Or maybe Jas is one of those con squirrels who want to tell me that the political right-wing Con Republicans and corrupted treasonous Democratic "leaders" like Pelosi and Reid who enabled this cabal are JUST THE SAME as the Democratic Party supporters and progressives who have been fighting this all along. These "conservative" artists now say there is no solution, we're all gonna die and just hand your money to the Big Guys and give it all up cause they're ALL the SAME, baby, bad bad bad. Gee, might as well go with the Repubs then, huh?
I think that there is some confusion here. The Democratic Party supporters and progressives who have been fighting this all along are not in office, not in control of the Democratic Party apparatus and have little control over those who do, as the votes to approve the bailout, funding for the Iraq war, and Obama's appointments indicate.
So, until such time as these Democratic party supporters and progressives demonstrate an ability to influence policy, which, to date, they haven't, I would have to say that Jas is correct, rhetorically flourishes aside.
GloomBoom.com writes:
Obama is crazy if he thinks building infrastructure is going to help this picture. We need private sector jobs created by small businesses that actually offer something consumers want. We are turning into the Soviet Union!
Building infrastructure will create private sector jobs, who do you think acutally builds the infrastructure and the tools to do the job. The goverment only pays for it and goverments have ALWAYS paid for it, how many private roads have actually been built? The repubcons always try to sell that idea but the public never buys it.
Keep letting in more illegals and H-1B visa workers you idiots. Congress is hashing plans right now to fast track amnesty for illegal aliens and triple H-1B visas...and everything though that Democrats are good for Main St, ha! Both parties would stab you in the back and sell your body to the highest bidder. Let's see if Obama really supports Made in the USA and bringing jobs back to America like he promised to.
Welcome to 1930, folks. BTW, study up on Depression-era history in 1931 and see what comes next. Banking failures in outside the US begin to de-stabilize the political system in those countries next year. Stay tuned...