MLM, she did receive some credit - Krugman mentioned her several times, so did the WSJ and other papers. She was also credited by Fed researchers in a paper.
The real shame is that no one was listening in 2005, 2006 and even for most of 2007. Those comments above are from June 2005 - she clearly understood what was happening - and yet many policy makers didn't understand these issues until 2007 or even this year.
what could possibly be in the current refi pipeline that would cause rates to move higher with a QE policy strategy underway under a nationalized GSE market?
I wish I had know both of you in 2005 when I was here in Washington State teaching predatory lending classes to Realtors. The mortgage brokers were furious with me and many still to this day blame Wall Street and take zero responsibility. It was lonely back then.
Today I blog/teach about loan modification scams....it's predatory lending all over again.
Who is today's Tanta? Who should I/we be reading today?
There's another theme amongst the commentators that troubles me: the ability to clearly explain the troubles of the past does not guarantee the ability to solve them.
Give us smart, competent people!
...
Give us people of intelligence and common sense with the courage to question the decisions being made around them. Questioning the status quo takes more courage than many of us are willing to put forth. Tanta was special.
Man, Tanta's comments from 05 are still more relevant today than anyone else I've heard from. There's no need for hindsight for any of us who saw this years in the making.
Had I read Tanta's earliest writings on the topic ( and I wish I had) I would have dismissed her as a nut!
I mean, living in Marin County, I had long questioned the smug valuations people were telling me their homes were worth and this was in the 1980's.
I just didn't think there was enough income available to support those valuations but I kept being 'proved' wrong. People sold their houses for the putative value. Some said it was
money from Hong Kong as the 'turnover
date approached. They were right, if a bit off geographically and the mechanism by which money from China fueled the boom.
Still it shows the problem of believing your 'lying eyes'.
Tanta was an ultra liberal. The very kind of person that populated Marin in those days. No doubt she would have voted for Barbara Boxer even as Boxer bragged the increase in the conforming loan limit to the then still 'private' GSE's amounted to a subsidy of $150,000 to Marin homeowners while the rest of America got a crummy $600 check. Hell, Tanta
thought NPR was a 'news' channel but what the hell. We all have our blind spots but Tanta could see the fraud and ledgerdemain behind the mortgage/housing scam.
But I still wouldn't have believed her in 2006. My lying eyes would have deceived me.
In another vein, had another thought...seeing as the commenters are somewhat scattered hither and yon....it might be cool to have an annual "party" for CR regs...same day, but in different major cities?...maybe a "Tanta/CR" party?
Here's a quote from the San Francisco Chronicle that gets right down to the bottom line, from Joseph Grundfest at Stanford:
"Part of the unfortunate reality is that if real estate prices are going to re-equilibrate to a lower level that is significantly lower than the peak, it is mathematically impossible to have that happen without having homeowners and lenders lose a lot of wealth. To the extent that people think government policy can prevent that from happening, the only way you can do that is by having the government say, 'OK, you lenders and homeowners, you won't lose the wealth, we the government will lose the wealth.' And that means that all the rest of us will lose the wealth. But the wealth will be lost."
A careful study of economic policymaking suggests a positive situational analysis and a grounding for going forward, as parties to the agreement have broadly accepted while awaiting further detail on pragmatic measures which might inform final results and outcomes, of which we all unanimously supportive in their general context, the text in front of the learned committee here today.
We further resolve to meet in 6 (six) months times to review progress and suggest further modifications to the current action program as appropriate.
For an article that spoke so highly of Tanta, I thought that was an odd title at first, but I had forgotten the irony attached to David Halberstam's use of the term in his book.
Tanta was among the brightest, but she could never have been considered among "The Best" given her lowly public school education at Illinois State.
As we all know "The Best" come from Harvard, Yale, and so on, but never from Illinois State. (Can't forget the Chicago Business School crowd, either, since they're convinced they belong, too.)
What a shame that, when the Emperor wears no clothes, it takes a kid from the public schools to point that out.
Nearly $8 trillion in federal commitments is already out the door, and half of the $700 billion October rescue package has been spent. The economic downturn is accelerating. And nobody is really in charge
hyperinflation already at work. I thought it was 7 trillion. On friday.
Boy, very impressive. I'm new to this blog, so I only know of Tanta from others' comments. I can understand she must have been extremely distressed by being close to blatant fraud now known to be in the hundreds of billions of dollars. And seeing the elements of the ongoing fraud so clearly. Painful.
Once I was a close observer of another major financial fraud scheme (still going on). I got out. You are hopelessly outgunned (ground into sausage, whatever) if you make waves in the face of people making huge profits.
Its my understanding she was "retired" from the mortgage biz, but was VERY smart, and saw what was comming. I can only imagine what it would be like to see something terrible coming, but unable to do anything, besides "scream" as loudly as possible.
Great post CR - I had to go back to a few of those oldies in the archive and some others. Been some water under the bridge.
Many of them there'd be only 4-5 comments spread over a couple days back then. Don't know what your peeps were but they had to be somewhat proportional (much lower than today - y/n?)...
Not hard to see how Tanta & your message wasn't getting mainstream attention back then. You two were all but screaming in the wilderness.
The challenge with being a Tanta in real life is that real life gets in the way.
Challenging the people who hold power positions, in a public forum, has consequences such as being blackballed from ever becoming employed again in that same industry. Tanta apparently expressed this sentiment.
Realize that people at the top made billions off the bubble run up and had no patience for people in the trenches who saw what was going on day in and day out.
Perhaps one of the solutions to this mess is to put a whistleblower system in place for people to provide anonymous tips. But to who? Clearly regulators were asleep at the wheel.
Not only that, but later Tanta was fairly certain that there is no solution. She was too circumspect to state that flatly, because she didn't want to tip the scales. With her understanding of the mortgage market that's pretty scary.
I was sent to this site by two different people. One of my regular readers sent me the link because the way I write reminded him of Tanta and the other referral came from Seattle Bubble commenters when I asked for them to tell me where I could go to learn more about what was happening. This was at the end of 2006.
The CR website url is on my classroom whiteboard everyday.
I am amazed at how many Realtors and LOs have been absolutely clueless this year.
There has been a turn of sentiment lately. Just this month the Realtors and LOs are finally starting to get it.
"Challenging the people who hold power positions, in a public forum, has consequences such as being blackballed from ever becoming employed again in that same industry. Tanta apparently expressed this sentiment."
Yeah, being the person that "dives on the grenade" is a "High risk/low payoff" proposition.
unless a person chooses to blog anonymously, which was Tanta's path.
I am grateful that she made that decision.... I wonder what would have happened had she blogged as Doris?
She looks exactly as I expected. A feisty no-nonsense blonde (like the blonde boss in the movie Role Models.) She writes with the wisdom of someone in her 60s so I expected her to be older!
MTHood writes:
Prediction: Smart people will become the new black.
The culture is losing patience with careless people making stupid mistakes who then pass the blame.
Re-read Tanta's comments in the original post, and tell me who was being careless or making stupid mistakes? Everyone involved was behaving quite competently and doing what they were being compensated to do: the people who determine credit policy were loosening credit requirements because their bonuses were based on loan volumes, an arrangement that made sense to their bosses because higher volumes meant bigger profits and the credit risk wasn't a concern because it was being dumped on entities that were too big to fail and in any case they'd be out of town with their bags of cash before it hit the fan, the people running the too-big-to-fail entities made plenty of money on the way to their eventual failure, the people who financed those entities are now being made whole by the government....
Who, exactly, was being stupid? I don't see any of the actors here headed for the poorhouse, no matter how disastrous the eventual social impact of their decisions may have been. Even Dave Duncan was doing precisely what he was being well paid to do.
CR - Take a look at the average duration of unemployment at https://research.stlouisfed.org/fred2/series/UEMPMEAN
It is almost at 20 weeks now. With so many layoffs announced, it is quite likely this metric is on its way to a record high.
....as a Moving salesPerson, this is my third Housing Bubble in California where I moved many, many people out of CA to lower priced housing States so they could cash out...
in the past two bubbles, the people came back in U-Hauls....
this time, I think they'll come back to CA, or move somewhere else, with whatever they can cram into their SUV.....
...I'll betcha the majority of the people who cashed out their equity and moved to anouther state did not buy a smaller home for cash, but, rather, they bought a bigger home for 30-40% down and now THEY TOO HAVE A
NEGATIVE EQUTIY in thier new locale...
and, as last IN, THEY WILL BE FIRST OUT when their employer announces layoffs..........
very few average people make two smart decisions in a row....they might get lucky and time their first decison perfectly.....but, to exercise great restraint and not BE GREEDY on two straight decisions is not going to happend to the Average Joe, who moved to Colorado to be a teacher, policeman or work from home "on the net...."
We can't let these people get away with revisionist history. Sorry to copy, but the year 2005 words are amazing. No one saw it? Spare me...These words need to be entered into at least the congressional record.
"The problem with the "why are the lenders stupid" question is not that they aren't stupid, but that the bag is too dispersed to be held by any one particular idiot. The lenders keep making 100% CLTV interest-only loans to borrowers with a 50% debt-to-income ratio on a grossly overpriced property because Fannie Mae will buy the first mortgage and GreenPoint will buy the second mortgage and Radian will write pool insurance for it. Your average bank or S&L believes it is successfully laying off the risk on the Real Deep Pockets who are Too Big To Fail. It has also been my personal experience over the years that the OCC and OTS are not enforcing the old requirements that the people who approve credit policy be insulated from the people who make override bonuses on production volumes."
For those of you not turned on to Doug Nolan at prudentbear (a minority of the readership here), I recommend his writing, and note that he explicitly called this a "credit bubble" in a weekly column dating back to 2000.
Not to detract from Tanta by comparison, of course, she obviously had more brains than the entire fed board of govs combined.
Perhaps one of the solutions to this mess is to put a whistleblower system in place for people to provide anonymous tips. But to who? Clearly regulators were asleep at the wheel.
Jillayne | Homepage | 12.07.08 - 12:42 am | #
The regulators, too, are compensated for being asleep at the wheel. Alertness would cost them future employment opportunities in the industry they regulate.
(I don't actually know to what extent this is true in the banking industry. It's certainly a problem elsewhere.)
Tanta's words resonate with reason and passion - and probably will for a long time. Hell look at recent sales of Liar's Poker.
35 yrs ago and now don't seem all that different:
We'll be fighting in the street
with our children at our feet
And the morals that they worship will be gone
...
And the world looks just the same
And history ain't changed
Cause the banners, they all flown in the last war
...
"The regulators, too, are compensated for being asleep at the wheel. Alertness would cost them future employment opportunities in the industry they regulate."
There should be a rule against this.
But now that you mention it, I have heard of several former bank/mortgage broker regulators being recruited by the same people they once regulated.
for some reason they're only showing the last ten or so commentaries. in any case, he was writing great stuff 8 years ago on the subject, I particularly remember a piece in 2003 about the charity-based 5% scams that were so popular then. I always admired his moral clarity.
Allen C writes: No one saw it? Spare me...These words need to be entered into at least the congressional record. Allen C | 12.07.08 - 12:55 am | #
I posted a comment at the WSJ.com obit for Tanta, urging the WSJ to use some of it's print space to highlight that there were people who predicted our current situation. The WSJ has published a long article with Robert Rubin saying that he isn't too blame for the mess at Citi Group and a letter from Hank Greenberg asking for more favorable terms for AIG, but they just can't seem to find the space to talk about true accountability. What a shame!
Jillayne, that's how the SEC works. They hire lawyers from Wall Street securities firms, who then return to Wall Street securities firms, with better chances at partnership to those who doled out the most favors. And yet, people at the same securities firms frequently complain about government-know-nothings interfering with their transactions as if anything separates the two groups.
"We are increasingly of the mind that the Mortgage Finance Bubble is in the very final stage of terminal reckless excess. As we witnessed with the technology, stock market, and corporate debt Bubbles, ultra-easy money and Credit fuel eventually self-destructive speculation, imbalances, shenanigans and fraud, not to mention the final manic frenzy that entices the last of the remaining buyers. And, once again, the negligent Fed is asleep at the switch. "
It is amazing that so many in MSM knew of and read Tanta.
And they eulogize her and her foresight.
So why the hell didn't they pick and broadcast these ideas when it might have counted. In 2005 and 2006 ??
The way that she laid things out, if you read her you had to at least admit that there could be a validity to her statements. Points which could have, should have been followed up. But to save their jobs they let Rome burn.
They chose to "not-know"
Been reading H.L. Mencken. Who had a rather low view of his (our) country.
Kind of feisty just like Tanta.
Most of us reading CR and Tanta have had our light bulb moments. Since searching the archives is currently fashionable, I found this in my notes from 8/12/2007. It was a Sunday and I had time to reflect on what I saw going on:
The way to sell more sub-prime loans is to fund more sub-prime loans. This means finding people willing to sign for the money and underwriters instructed and willing to approve them. The conventional 30 year fixed rate mortgage is supplanted by exotic loans designs with features like adjustable rates and interest only payment periods. The desire to create high interest loans even triggers a willingness to fund 100% financing on home purchases. These "no down payment" loans depend entirely on the value of the property which in turn drives appraisal inflation. In the real world, no appraiser jeopardizes their lender relationships by reporting back that a property is not worth what someone is willing to pay for it.
Insurance works the same way--former heads of state insurance departments are pretty much guaranteed lucrative lifetime employment at whichever major broker is located in their state. And who's going to complain? The arrangement's in everyone's interest, except for the general public, of course....
There has been a turn of sentiment lately. Just this month the Realtors and LOs are finally starting to get it. Jillayne | Homepage | 12.07.08 - 12:47 am | #
Do they get that they screwed up, or that they are now royally and utterly screwed?
Could warnings such as what Tanta wrote, have helped to STOP the reckless lending that continued on throughout 05, 06, and 07? If so, WHO is sounding the warning alarm today?
NO. There is an inertia to time and events. It is like when you completely commit to applying the brakes to a speeding train. It is still going to take a long time to come to a complete halt.
Here's a quote uttered right around the time Noland wrote that article (November 2002):
On Milton Friedman's ninetieth birthday, November 8, 2002, Bernanke stated: "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve System. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
NO. There is an inertia to time and events. It is like when you completely commit to applying the brakes to a speeding train. It is still going to take a long time to come to a complete halt. $12 Help | 12.07.08 - 1:21 am | #
Except when your jetliner impacts the side of a mountain.
Except when your jetliner impacts the side of a mountain.
Good Point. I thought of that right after in clicked publish. I am pretty sure the crash date was 2/27/2007 when Freddie Mac announced new guidelines on their subprime mortgage purchases. They effectively killed the market in one day.
The dynamic involved here is the professional who finds a conduit or means to vent the truth and not to be complacent with being an otherwise well-compensated individual who is "just doing my job", "just following orders", "just getting by until I can retire", etc., etc. Perhaps her writings and influence will encourage other professionals in business and government to find ways to speak out and not be complacent.
Clearly regulators were asleep at the wheel.
Jillayne | Homepage | 12.07.08 - 12:42 am | #
I am sick to death of reading 'regulators were asleep' it simply is NOT true. The regulators were being coached from the WH/Bush staff. As a former FDIC employee from 1986 until late 2005 I know the FDIC and other banking regulators knew much of what was going on. They simply could not act under the current administration without facing the loss of their jobs and demotions. In addition - regulatory staff was cut to the bone via RIFs, office closings and a host of other procedures to eliminate staff including my own job. Nobody I know was asleep. We knew very well what the fuck was going on.
Could warnings such as what Tanta wrote, have helped to STOP the reckless lending that continued on throughout 05, 06, and 07?
There were plenty of people in the industry sounding similar warnings. As early as '04 it was clear where we were eventually headed.
But it was in everyone's interest to treat those people as crackpots, eccentrics...money was being made hand over fist and why are you trying to ruin it for everybody? etc.
A poorly written article by GM that Tanta would have thoroughly trashed.
It's not clear that GM ever comes to any rational conclusion concerning what was happening at Moody's other than there may have been a profit motive involved (which of course by itself is neither illegal, nor immoral).
The last paragraph of the story is virtually unintelligible and ties nothing at all together. It actually made me wonder why I was reading the article. It could have been a Wikipedia article telling me that there is a history of downgrades in ratings on MBS.
Despite all the self-serving statements by Moody's execs, she can't get a quote on a key point and then assigns it to the industry as a whole, not to the company about which she is supposedly writing: "The agencies maintained that it was not their responsibility to assess the quality of each and every mortgage loan tossed into a pool."
If not, what did "they" do and what did Moody's in particular do that led to the actual ratings Moody's assigned? The entire process remains a complete mystery as if she never inquired concerning how they rated anything.
Even as she gets into what should be the meat of the story, a weird anonymous statement in the passive voice appears: "It elevated ratings several times after Countrywide complained, the people briefed on the matter say."
Okay, I understand no one from Moody's would so comment for attribution. In fact Moody's denies changing ratings without good cause. But who are "the people briefed on the matter" who supposedly said this to GM and why aren't they being identified?
I suppose some vague reference in the article to Congressional testimony was designed to convince me that someone in authority is getting to the bottom of all of this, but I never got a sense of what penalties, if any, might apply in the future or whether they just get to retire with all the many millions they 'earned' by slapping three letters on every complex financial security that crossed their desk.
Nobody I know was asleep. We knew very well what the fuck was going on.
FFDIC | 12.07.08 - 1:31 am | #
Fair enough, FFDIC. There was a similar dynamic in play just about everywhere, I suspect--field employees at the regulators, QC and underwriting staff at the lenders, underwriters at the insurers all knew what was going on but were being overridden or ignored, or worse, by folks higher up.
I am sick to death of reading 'regulators were asleep' it simply is NOT true. The regulators were being coached from the WH/Bush staff. As a former FDIC employee from 1986 until late 2005 I know the FDIC and other banking regulators knew much of what was going on. They simply could not act under the current administration without facing the loss of their jobs and demotions. In addition - regulatory staff was cut to the bone via RIFs, office closings and a host of other procedures to eliminate staff including my own job. Nobody I know was asleep. We knew very well what the fuck was going on. FFDIC | 12.07.08 - 1:31 am | #
do you remember how you got to this site? i'm gathering for myself it was a reference made by setser on his blog back before RGE.
is that right?
From Angry Bear Blog - it was getting too partisan so I was looking for a new home - saw one of CR's guest blog posts and followed it there and never went back.
For a long time it was a steady diet of CR & Setser when the rest of the world could see no evil, hear no evil, speak no evil.
sportsfan | 12.07.08 - 1:37 am | #
I have this vision of Tanta asking God's staff if she can do a little lite writing about the poor lost woman who works for the NYT and God saying, "Not now, my dear child. I need you to focus on less earthly matters."
"How can regulators operate free of a political system?"
That's impossible to do. The differentiation between a regulator and politician (and investment versus speculation) is false.
Schumpeter would probably say this is just part of the transition from capitalism to socialism. Personally, I'm a capitalist, so I find this depressing, but it is probably true.
How can regulators operate free of a political system?
They can't - the only check is to elect responsible leaders to insist & oversee good policy is pursued w/out that we're f'ed totally. There are no 'autopilots' on government.
Not being snarky.....I'm truly interested.
Jillayne | Homepage | 12.07.08 - 1:45 am | #
1. FDIC has to have a credible chair person and Bair is much better than former chair Don Powell.
2. NTEU(union) needs more power. Federal unions are unlike other unions and really have very little power and cannot strike, etc.
3. The FDIC Office of Inspector General is not independent enough and has serious conflicts of interest. It needs an overhaul.
4. Federal whistle blower laws suck and need Congressional attention.
5. Many senators will not second guess the FDIC if you write them with complaints including Barney Frank.
6. Age discrimination is a problem.
7. Race discrimination has been an age old problem.
8. Sexual orientation discrimination is a newer growing problem. DOMA didn't help and should be replealed.
9. Headquarters (DC) does not listen to the field offices.
10. Training needs attention.
11. Contracting is a huge problem.
Would you be able to go public; put a real name on your anon handle, and bring these suggestions to light in a public forum?
Jillayne | Homepage | 12.07.08 - 1:57 am | #
What sort of public forum my dear? I've already lost my job. Not much they can do to me now.
How can regulators operate free of a political system? Jillayne | Homepage | 12.07.08 - 1:45 am | #
Be brave and keep your resume current. Obama's appointment of Gen (ret) Eric Shinsecki as VA Administrator is a big one in the plus column for me--he's the ex Army Chief of Staff that threw himself across the tracks in front of the Rumsfeld Express and told the unvarnished truth on the staggering cost associated with any decision to try and occupy Iraq. He was subsequently marginalized and swept aside, despite being absolutely correct.
Guys like that are what keep regulatory functions working in a political environment. Nothing less.
Regulators are supposed to be independent. Thus, civil service positions survive political administrations.
This is a false assumption. Many civil service positions are lost when agencies are required to close offices, conduct RIFs, force involuntary transfers 2,000 miles or more from home, force downgrades and demotions before allowing transfers to better locations or back home.
John Stark writes:
Here's a quote from the San Francisco Chronicle that gets right down to the bottom line, from Joseph Grundfest at Stanford:
"Part of the unfortunate reality is that if real estate prices are going to re-equilibrate to a lower level that is significantly lower than the peak, it is mathematically impossible to have that happen without having homeowners and lenders lose a lot of wealth. To the extent that people think government policy can prevent that from happening, the only way you can do that is by having the government say, 'OK, you lenders and homeowners, you won't lose the wealth, we the government will lose the wealth.' And that means that all the rest of us will lose the wealth. But the wealth will be lost."
When I read the word 'wealth' my brain inserted the word 'debt'. Grasping that the homeowners 'wealth' is really a debt owed to them by the nameless all of us. To restore the homeowners unearned paper wealth means to place renters present and future in debt and would be a fundamentally evil and immoral thing to do.
He was subsequently marginalized and swept aside, despite being absolutely correct.
Let's not forget Gen. Shinseki was also forced to retire. I don't know whether your 'swept aside' comment was intended to include that or not, but the point is that he was fired by speaking the truth to Congress.
I found this site from Housing Doom, where I'd first gone when things just weren't seeming right.
And I just stayed. Lurked for a long while 'til I got up the nerve.
What I've been pondering this past several days is what appears to be the approaching end game. How do I handle it and discuss with wife because she's going to think that I'm nuts. She's already pretty weirded out by the large bags of rice in the basement. Believes in some of what's happening, but not all.
This past several years, we've gone from watching what companies to short to having the ability via proshares to short entire sectors as the cancer spreads. And now they've got funds set up to short Treasuries - yeah, I'm in for some TBT - and entire currencies (YCL as per MS). The thing has metastisized.
But if I hit the motherlode with a real spike in TBT/PST, then what's the point? The currency is then de facto toast so it appears to be not more than financial/intellectual masturbation. Gee, I got a 60+% return, but 60% of nothing is just nothing.
Spoke w/local coin/PM dealer this AM to do some background work on large purchase if I opt to roll out of my IRA in January. Can he get it and if so, what time frame? He also runs a small insurance captive and is required to keep cash in reserves and back also with LOC. He's spent 8+ months trying to get LOC from different banks for his insurance biz since they're all terrified to work with one another. He's now trying to figure out to move all of his money into foreign currency and if so, what currency (-ies).
Despite what dc1000 says, I still think that the deflation is going to snapback ferociously into inflation. People seem to ignore the larger picture with movement away from dollars and into other currencies or something else. At some point, China and the arabs will stage a de facto buyers strike of treasuries or start shifting heavily away and the currency comes home to roost. Even when I walk through it other ways, I still come back to that.
So it looks like the endgame approach here is to finally cash out an IRA so that about 15% of assets are in physical PM. Then we'll hang out in money market and watch carefully.
And that still leaves the logistical problems of having PM.
But it was in everyone's interest to treat those people as crackpots, eccentrics...money was being made hand over fist and why are you trying to ruin it for everybody? etc.
That's what makes me so cynical -- bad incentives everywhere.
It's human nature to have these cycles, these grand pendulum swings between irrational exuberance and gross despair. When things appear to be going great, the vast majority are NOT interested in anything but keeping the party going.
That's why history rhymes... people just don't change, especially from a "mass psychology" standpoint. Kondratieff (long) waves and Elliot waves are ultimately the repetitive macroeconomic expressions of collective human behavior.
And that still leaves the logistical problems of having PM.
homedad43 | Homepage | 12.07.08 - 2:09 am | #
Your married to a doctor and you don't work. I think it is time for you to get a job at least part time. Home alone too much isn't ideal. I should probably also take this advice dad. Just sayin..
"When I read the word 'wealth' my brain inserted the word 'debt'. "
I wonder if the equity debt/ratio has hit 1-1 in SFRs.
the equity percentage was 80%, I believe, around the time we abandoned real money in 1972, and that consistently fell, of course, under the supply-side regime we've had since Volcker was fired.
This is a false assumption. Many civil service positions are lost when agencies are required to close offices, conduct RIFs, force involuntary transfers 2,000 miles or more from home, force downgrades and demotions before allowing transfers to better locations or back home.
Okay, I stand corrected.
The only time I ever worked for the government, they made me wear green every day, sent me to this god awful hellhole and people tried to kill me.
How bout just making the whistleblower complaints public via a blog entry/ comment format at the websites of the regulatory agencies?
hong konger | 12.07.08 - 2:10 am | #
"o it looks like the endgame approach here is to finally cash out an IRA so that about 15% of assets are in physical PM. Then we'll hang out in money market and watch carefully. And that still leaves the logistical problems of having PM.
homedad43 | Homepage | 12.07.08 - 2:09 am | "
I'm at about 25 percent, homedad, but I suspect I don't have as much money as you. Everything fits nicely in one safe deposit box. Which is a bank I can run to in five minutes.
Speaking of safe deposit boxes. Never use one in a bank if it is located in the bank's basement. They flood. Not pretty. Been there, got the soggy t-shirt...
You're assuming the banks will be open. Read up on Argentina.
Comrade Bear (tj & the bear) | 12.07.08 - 2:16 am | # [kill][hide comment"
I've got my ear to the ground, here and elsewhere. If it starts looking especially dicey, I won't wait around to see what happens. Like I said, five minutes.
Bob Dobbs | Homepage | 12.07.08 - 2:18 am | #
Putting your hairy old ear to the ground Bob will not prepare you very much for a bank holiday declaration or war.
And honestly, while I was pretty good at my profession, it only benefitted a corporation that would willingly sacrifice me in a job cut. She's directly and ultimately responsible for the care of more than 400 dying patients each day. So if what I'm doing helps support that effort, so be it. I couldn't do that job.
But kids? Oy. Raging egocentrism wears after awhile...
a friend writes:
Tanta's words resonate with reason and passion - and probably will for a long time. Hell look at recent sales of Liar's Poker.
35 yrs ago and now don't seem all that different:
...
a friend | 12.07.08 - 1:05 am |
I just picked that up a few weeks ago, along with his newest book "Panic"...it's just a little hard to get through as bedtime reading after hours of reading here. : )
Anecdote from Old Beruit: once anarchy set it, it was pretty obvious to see who had PM in the bank. Shortly after being identified, those folks were robbed and killed on one of their trips to make a withdrawal.
Bottom line is: you'll have to have a backup location to avoid making trips to the bank in public, so why not set one up now and at least spread it around?
But kids? Oy. Raging egocentrism wears after awhile...
homedad43 | Homepage | 12.07.08 - 2:21 am | #
My only kid is 29 now and about to produce my first grandchild a girl (Kimora)in Feb. Mixed emotions for sure but at least I can send this one home to her mom after a while...
Bottom line is: you'll have to have a backup location to avoid making trips to the bank in public, so why not set one up now and at least spread it around?
All eggs in one basket never good.
sportsfan | 12.07.08 - 2:24 am | #
Don't let occupations fool you as to real financial wealth. Physicians usually don't get into the green years until later and for non-specialists, the money isn't what people think.
At an hourly rate, given some hours, it ain't as much as some might think.
Just a little tidbit from Michael Pettis' blog from a few days ago. I think it is significant.
http://mpettis.com/2008/12/is-china-experiencing-dollar-outflows/... At any rate this evening rumors have been swirling through the markets that Novemberâs exports have declined year on year by 7%. One of my former students, now a currency trader in Shanghai, just told me this. I have no idea if it is true, but it gives a sense of how nervous markets are.
The new black just might be executive leadership that values competence, listens to different ideas (rather than firing those who disagree based on the facts), and, yes, values intelligence.
There's been numerous credit expansion/credit contractions in U.S. history in the time of Andrew Jackson and after the Civil War(Panics & silver demonetization), the Roaring 20's/the Great Depression; numerous national currency crashes around the world; the 80's Savings & Loan Crisis; now the New Century deregulated derivatives bubble/crash...
It's not that these destructive cycles have not been documented(including CR) and much analysis throughout history but there's apparently too much money to be made by the Big Investment Wealth Players for Bubble/Bust cycles to go away.
It doesn't matter what you call the political/economic system in 'power'. The periodic crisis cycles always come back because the method or process to play these cycles will always be there in the players that fund the Casino and 'deregulate' and/or control the system with extreme credit contraction/expansion much to the repeated dismay of the public.
I mean knowing what we know from economic/finance histoy we will probably be able to call the next Big Bubble/Bust after we finally get through the pain of this one but that doesn't mean there will be any hope to stop it next time without the political power and will to do that.
Homedad said, 'And now they've got funds set up to short Treasuries.'
The way this historical Boom/Crash credit cycle system is set up...the People can pay for their own demise by bailouts of bank losses while shorting themselves by shorting Government Treasuries. The Govt. is We the People.
In the meantime we can whistle blow each other on the front line of the bubble blowing management & staff(order takers & paperwork processors) while the Big Players are of course unaccountable and deregulated and live offshore or overseas with their wealth holdings fleeced in the last manufactured or at least deregulated/unregulated Bubble/Bust.
Sounds like we have a plan to finish the Crash.
This weekend gives me an uneasy feeling like something is imploding and no one is around to see or hear about it. Perhaps this week? I dunno, but I find it strange there there's no shotgun weddings for the Fed to partake in, nothing requiring a bailout right now... okay I guess automobiles... but its all pretty quiet on the front...
Let's not forget Gen. Shinseki was also forced to retire. I don't know whether your 'swept aside' comment was intended to include that or not, but the point is that he was fired by speaking the truth to Congress. sportsfan | 12.07.08 - 2:08 am | #
What Rumsfeld did to Shinseki was far worse than just forcing him to retire. His staff leaked word of his replacement 15 months in advance, which creates the same sort of leadership split we're seeing between the outgoing and incoming administration now. Leadership from the gutter.
The announced replacement (Gen Bill Keane) ended up turning down the job, and Rumsfeld couldn't find a sitting Army 4-star that'd take the job. He ended up bringing back Gen Pete Schoomaker from retirement.
Jillayne - sorry in advance for this comment, but I can't believe your asking How can regulators operate free of a political system? Do we just put the philosophers in charge? Not being snarky.....I'm truly interested.
It's impossible.
It's not a new issue.
Read Plato's Republic. Heck, read the cliff notes.
There is no mechanical solution.
It is a bit strange feeling to have a weekend go by without some imminent crisis which needs to have some quick resolution involving teeth gnashing and trillions of public dollars.
Maybe this is a bottom, if I'm a proxy for the average investor (and a generally excellent contrary signal all year). I have no urge to ride SSO, UYM, UYG or any of my other recent playmates back up to spx 950, so that probably means we'll close there by new year's.
Smart is not enough. A component of competence must be selling their smart ideas. Selling smartness to idiots is the challenge. I once wanted to be a writer. I was cured of that notion when I began to realize how many books full of good ideas sit moulding away in used book stores. It's sobering to realize that while a handful of people frequent used book stores, millions frequent football stadiums. We've no shortage of good ideas and smart people.
The problem is that good ideas are often bitter medicine. Selling work and saving is never so easy as selling playing and spending. And God, is selling the spending of other people's money easy.
Who, exactly, ever said smartness was a higher virtue than goodness?
One of the hallmarks of stupidity is shortsightedness. Just because you can set the movie theater on fire and make it to the exit safely doesn't necessarily make you a genius.
Perhaps we are talking in two different universes? You seem to be assuming that smartness can be divorced from goodness. I'm thinking that maybe everything that is legal and logical in the sort term, isn't necessarily anything to write home about.
Since CR kindly reminds of Tanta's writings, and Unit472 called her an ultra-liberal, much to his chagrin, I'll repost here one of my favourite bits by her:
"Coda, for this Memorial Day: Tantas grandmas house was built, in part, by the love of Tantas grandmas life, a man who volunteered for service in WWII. He had to; he was too old for the draft. He lost most of his hearing on his tour of duty, but came back, with the recipe for SOS that Tanta still uses to this day. Euelna was a neighbor of grandmas, a founding member of the local chapter of the Air Force Mothers Club. The dead people she talked to included her son, who returned from Vietnam in the wrong part of the transport plane. There were giants in the earth, in those days.
And there are giants still. I want them to have a home to come back to. I want them to come back. Now."
Most of the regulars here skipped right past that brainless remark without comment. I doubt it really deserved a reponse from Isabel or anyone else, but since the subject has been raised, I have a few Qs for Unit472:
What exactly clued you in to Tanta's secret identity as an "ultra liberal"?
Was it her repeated insistence that federal and state regulators... y'know, actually "regulate" once in a while?
Was it her repeated frustration at the general cluelessness and venality of the government, REIC and media at all levels regarding the scale, omplexity and danger of the situation?
Was it her suggestions that competent, intelligent leadership guided by the public good might be better than the institutional fraud, corruption, kleptocracy and rule-by-special-interests so pervasive today?
Since when does expressing any of the above automatically "out" someone as an "ultra liberal"?
Yalt writes, Alertness would cost them future employment opportunities in the industry they regulate.
(I don't actually know to what extent this is true in the banking industry. It's certainly a problem elsewhere.)
This rings true in my line of motor vehicle safety. I've been fired from several jobs and paid well to leave others because I can't keep my mouth shut. My experience is that even as high as the federal inspector general's level, regulators get paid to maintain the status quo and cover their own ass until retirement.
Eliot Spitzer's treatment is typical. We all have skeletons of one size or another in our closets. Any would be government whistle blower has a target on his back from day one. To cast stones he had better be without sin...
From last thread: "Money Man writes - Little insight from the fork lift industry...These are breaking down daily and need maintenance....even if unused. Just a thought about the above post on goods being delivered. There are no goods being delivered. You will go shopping and find shelves barren. That is when Joe 6 pack will start the full on freakout..."
The next "victim" will probably be the Just-In-Time logistic system from A to Z and that is the real killer for J6Ps.
Banks could go bankrupt, many big businesses could fail but that is nothing compared to the failure of daily retail trade logistics countrywide.
That is when even another Great Depression turns into deadly serious mad max world. System wide meltdown straight ahead, probably next spring like Money Man says.
Catching up this morning I found DeepBlue's link to Michael Hudson. Great reading. Let me encourage everyone to read this essay, which might be entitled "Five ways that the Illuminati have fleeced the sheep in the past, with predictions for short and medium term fleecing of Americans."
Reading how the techniques have been used over and over again through history, it gets kind of hard to think that they are not deliberate.
Except when your jetliner impacts the side of a mountain.
So on the black box recording we hear (Tanta) Terrain. Terrain
(Pilot David lereah)Could you shut that damned alarm off?
(Tanta)(whoop)(whoop) pull up!pull up!
(Pilot)I'm out of here, you take the controls!
The problem is that some political administrations are more patently corrupt than most, e.g., the current one.
Well the real difficulty is that we're not really talking about quit pro quo
Jim A
then what are we really talking about? i googled quit pro quo thats you scatch my back ill scatch yours more or less. thats what has been going on for ages. so what are we really talking about?
There were folks who understood the problems in the mortgage industry besides Tanta. But they were also the ones, many times making money on the business either by employment or investment. This is where the grown ups are supposed to step in. Those grown ups would be the regulators or the government.
Many many people including those planning to retire on their investments were looking for investments that pay and those MBSs and the CDOs were all a part of answer they sought.
In the meantime the people are starting to feel the effects of the excesses. They do not like it. It is contained.
In reference to my above post FFDIC points to how the system has been broken. Someone somewhere is sitting on a pot of money taken from the rest of us. But hey that is free market capitalism. aaaarrrgggghhhh there are pirates you see in three piece suits.
Harm & Isabel: I concur. I wondered why no one called him on it.
The label "liberal" puts a person in a box. It assumes a stereotype with which to tar & feather "those people" who do not think as you do.
You may or may not actually be a lefty, but you are definitely "that sort of person" who might disagree with deregulation, high CEO salaries, or corporatist greed & arrogance, for example.
You may also be a person who is intelligent, has generosity of spirit, seasoned with a strong streak of Midwestern fairness & common sense. If that labels Tanta a (gasp!) ultra-liberal, then I'll have some of that.
Knee-jerk drivel which requires little thought!
And Unit, before you get your knickers in a twist, I'm a member of the radical middle. You know, one of those independent thinkers! We are your worst nightmare because "branding" just doesn't work with us. We can jerk to the right on one issue, then veer to the left on another. Of course, we been called the "squishy middle" by the MSM. It's because they can't stuff us in a box & slap a label on it.
Believe me, there's a whole passel of us & we voted heavily in the last election.
The basic idea behind Newspeak is to remove all shades of meaning from language with simple statements like 'the fundamentals of the economy are strong'.
The monied elite, the Bush admin., the MSM, the Wall St crooks were in collusion to perpetuate this financial ponzi scheme because they knew they could privatize the profits and socialize the losses.
Plantagenet writes:
Catching up this morning I found DeepBlue's link to Michael Hudson. Great reading. Let me encourage everyone to read this essay, which might be entitled "Five ways that the Illuminati have fleeced the sheep in the past, with predictions for short and medium term fleecing of Americans."
Reading how the techniques have been used over and over again through history, it gets kind of hard to think that they are not deliberate.
As a recently displaced FIRE employee (self employed, I will now check out what the CA Human Development dept has to offer.
Should be interesting, while my retirement funds still holds out.
Hey, maybe I could do status reports of the problems encountered for all future unemployed...
So what do you all think. Would it be worth the effort?
I know the first think I must do is stiffen my pride/ego for this process...The last time I went thru this process was 1985. I am sure things have changed since then..
@Volker
Do not worry. The problem is contained to toads, alligators and polar bears.
In the totally improbable case of male humans turning hermaphrodites en masse, expect the chemical industry to inject huge quantity of male hormones in drinking water, so as to restore liquidity...
The culture is losing patience with careless people making stupid mistakes who then pass the blame. (whocoodanode?)
Give us smart, competent people!
Smart, competent people can't and won't change a thing. It's the System. All the King's Horses and all the King's Men will not be able to put Humpty Dumpty together again. In fact, they'll only help break old Humpty faster and further....thankfully.
STOCKHOLM, Sweden Nobel economics prize winner Paul Krugman said Sunday that the beleaguered U.S. auto industry will likely disappear.
"It will do so because of the geographical forces that me and my colleagues have discussed," the Princeton University professor and New York Times columnist told reporters in Stockholm. "It is no longer sustained by the current economy." Yahoo! 404 - Page Not Found
About Shinseki - YES! - he exhibited the quality that seems to be the missing 'secret' ingredient...a bone deep integrity.
Hogwash! If he was any kind of a man and had any character and integrity, he would have opposed an invasion of Iraq from the start....even if it meant, and it would have, his career. Instead, he says 300,000 troops versus 150,000. I have news for you, you could have put a million troops on the ground, and the outcome would have been much the same.....because the outcome we now have was the goal. Controlled chaos trumps uncontrolled order.....and it's a boon for defense contractors and oil companies.
It is indeed hard to have the moral backbone to do the right thing when discovering one's source of income requires wading in a cesspool. No one has mentioned another factor that increases the difficulty enormously: having spouse and children. It's one thing to suffer the consequences of righteousness as an individual, but quite another to visit the effects on those one has chosen to be responsible for. Something, I suspect, but can't know for sure, that applies to my own family history. And for some, the internal conflict can be tragic.
Yeah, but I don't want to keep everything here in the house. One good hit and we're wiped out. So, who do I trust?
Trust in a bagged and buried metal box (if in suburbia). Dig and bury under cover of mundane activities (gardening/weeding).
I'm rural. I have no problem here. Currently I am probably ~25% in physical PM but was badly timed and bought when gold was just past peak (and I would very likely be safe in assuming my actual wealth level is a good bit below yours so my 25% is no great shakes). I've lost (currently) ~$200/oz and can only hope on a rebound. What really boils is now that tax time is approaching, I have to consider the prospect of dumping bad money after horrible money by putting more into my IRA. At this point, it seems to me to be nothing more than going outside and dumping a wad of cash into my trashcan - I'd MUCH rather use that same money to buy more PM but there is no tax advantage.
The wife and I don't make enough money to have ever benefitted from Bush's rich-man's tax cuts so we always end up being the turnip to the government's juicer.
Always trying to pound the square peg of facts into your round world view...once again you demonstrate neither reason nor measure - but then, unreasonable consistency may be your defining characteristic...others have said it better than I.
The best lack all conviction, while the worst
Are full of passionate intensity.
In the meantime the people are starting to feel the effects of the excesses. They do not like it. It is contained.
lawn grass | 12.07.08 - 9:08 am | #
The grind goes on, the workers are being hailed as heroes, the company as spineless derivative matter. This is evolution toward the civil unrest, this is where it starts. I am not relieved to hear that Jesse Jackson was coming to support the cause.
"From Angry Bear Blog - it was getting too partisan so I was looking for a new home - saw one of CR's guest blog posts and followed it there and never went back."
I followed the same path to CR. I acually started out at Business Week with Greg Manikow's (SP) column, moved to Angry Bear and RGE then to CR. I have been a daily reader of CR since Dec 05.
Best way to make banking, finance, and wall street regulation free from poisoning influence of political bias or greedy self interest is to hand regulation over to software.
No whining and wheedling with a human "regulator" who can be offered a lucrative position after their term in return for turning a blind eye. A nice, cold, unfeeling and non-negotiable eye of computer software might do the trick as well as can be done.
Do not worry. The problem is contained to toads, alligators and polar bears.
In the totally improbable case of male humans turning hermaphrodites en masse, expect the chemical industry to inject huge quantity of male hormones in drinking water, so as to restore liquidity...
TheFrog | 12.07.08 - 9:50 am | #
I sure hope you're right. But, I have grown a rather perky set of boobs. I'm not complaining, mind you, but there's less and less reason to leave the house.
A number of news sources are commenting that the abrupt drop in unemployment seems to be inconsistent with other indicators that are either coincident or leading to unemployment claims. An example is from FT Weekend below, excerpted from an article by Joanna Chung :
Gabriel Stein, of Lombard Street Research, said that labour market data were a generally lagging indicator but there was a curious dichotomy in the developments. What makes these numbers strange is that we have not yet seen anything like the economic weakness that they would imply.
In earlier recessions, job losses and an unemployment rate change of this magnitude was already associated with significant falls in activity. Yet so far US output growth has weakened, but on a four-quarter basis it remains positive. There were a number of potential explanations, among them that a fall in employment and rise in unemployment had a limited impact. But it may also be that we have still only seen the beginning of labour market carnage and that unemployment is going to get much worse.
Let me first provide context prior to offering a suggestion as to why unemployment appears to be almost 'leading'.
I have been a President or VP of three companies founded by others and have been President and CEO of two companies founded by myself. As a fiscal conservative and a social liberal I prioritized the creation of a diversified work force. The C level suite was populated by middle aged women, the general staff represented by a proportionate minority. Even given this kumbaya approach to business development I did find myself a bit disenchanted by the process, i.e., employees attitudes and work ethics.
So, please take that into consideration when I offer up a possible explanation as to why unemployment claims seem to be coincident or marginally leading to other prognostication runes.
Simply put, employers hate their employees.
The entitlement syndrome exists on both sides of the labor contract. As much as it is reported that employees feel entitled to their positions and compensation and that the worker is forever musing as to what the employer can do for them, the employer sees the employee as an infestation to the pristine business model that delivers not only lucre but affirmation as to the employer's superiority to the huddled masses collected in his (as a male I will limit this to my gender for that is where my antedoctal experience lies) working establishment each morn. There is a disease in small business,and it is what I refer to as the castle syndrome. That is,many small businessmen believe that they are kings prior to their building of the castle and should be afforded the courtesy and respect that all sovereigns are deserving of.
This mentality of 'ownership entitlement' has for the first time with this generation come to a cropper against the reality that there is an economic comeuppance a-rising. In the face of distributing their wealth to their employees versus hoarding for themselves and looking for the exit liferaft, the women and children are seen as dispensable.
Krugman states, "lack of willingness to accept the failure of a large industry in the midst of an economic crisis."
I'm sick & tired of these Ivy League Tower guys. They're the soothsayers who look into crystal balls; graphs and charts and make pronouncements. They aren't looking for answers or solutions, just accolades. I trust my car mechanic's opinion on why the industry is in trouble far more than that guy living in a tower.
Do not worry. The problem is contained to toads, alligators and polar bears.
Not true. It IS a problem in humans. Increasing instances of biased birth ratios, reduced sperm counts. Humans are not magically immune to what ailes any and every other creature on the planet.
Where it matters, there is no significant difference whatsoever between a human and a polar bear.
For those of you who are not conversant with Gen. Shinseki's story, he called bullsh!t on Rumsfeld's estimates of troop requirements for the occupation of Iraq.
Pentagon Contradicts General on Iraq Occupation Force's Size
By Eric Schmitt
New York Times
February 28, 2003
In a contentious exchange over the costs of war with Iraq, the Pentagon's second-ranking official today disparaged a top Army general's assessment of the number of troops needed to secure postwar Iraq. House Democrats then accused the Pentagon official, Paul D. Wolfowitz, of concealing internal administration estimates on the cost of fighting and rebuilding the country.
Mr. Wolfowitz, the deputy defense secretary, opened a two-front war of words on Capitol Hill, calling the recent estimate by Gen. Eric K. Shinseki of the Army that several hundred thousand troops would be needed in postwar Iraq, "wildly off the mark." Pentagon officials have put the figure closer to 100,000 troops. Pentagon Contradicts General on Iraq Occupation Force's Size
Rumsfeld, in wartime, deliberately undermined Shinseki as the chairman of the joint chiefs of staff.
In the tensions existing between the Pentagon and the military, Shinseki seemed a particular target. Explain.
Shinseki's last, say, year and a half in office was a series of apparently calculated and intentional insults from the civilian leadership, especially Donald Rumsfeld. The episode that got the most public attention was when Rumsfeld announced Shinseki's successor as chief of staff, about a year and a half before his term was up. Usually this announcement is made right at the last minute to avoid turning the incumbent into a lame duck. frontline: the invasion of iraq: interviews: james fallows | PBS
So here is a stand up guy, constitutionally sworn to serve the civilian leadership and truthfully answer the questions of the US Congress, doing his duty and adhering to what is clearly a bone deep sense of integrity.
"(I don't actually know to what extent this is true in the banking industry. It's certainly a problem elsewhere.)"
Yalt | 12.07.08 - 1:02 am | #
The folks at the top of the regulatory agencies are well paid with excellent (and fully paid for) retirement benefits. They stay until they retire. So it's not so much that they will move on to industry jobs, it's that the regulatory agencies often are partners in crime in the sense that they support the financial infrastructure, enabling the malfeasance, and don't want to think about the difficulty and/or consequences of reform. Remember, Congress is always there to scream to protect its constituents. Look how Fannie and Freddie were protected for years. Critics in and out of government were vilified and marginalized.
Where is there a solution?......as our "economic war" gets worse, incidents like the Republic Glass situation in Chicago will multiply, the next steps will be "non-peaceful" protestations, police intervention will become more common (the reasoning involved by many will be that an arrest is a bed and a couple meals. I might venture to opine that NEXT year will be more horrendous for MANY. Do a search on Tent Cities - THAT'LL cheer you up!
Let me begin by explaining I wasn't criticizing Tanta with my 'ultra liberal' remark. I just got the impression that was were she sat on the political spectrum.
It makes no difference where one is politically in the detection and analysis of a problem as it exists but it does when it comes to a remedy.
I don't give a fig for a so called homeowner who bought into a house with a tiny downpayment or even none at all and, down the road, defaults on their loan. Typically they bought into the idea they would profit using
other people's money to finance their
risky endeavor.
Tanta took the Barney Frank line that these were just decent folks who needed to be bailed out. Cramdowns etc. I saw most of them as crooks or thieves who falsified loan applications or did equity extractions to game the system.
Rather than modify their mortgages or offer them a cram down I'd like to see them prosecuted along with the mortgage brokers, appraisers and bankers who ripped off this country to the point where TRULY innocent people have lost their retirement funds, their home equity and their jobs because of this most recent iteration of the mortgage scam.
A number of news sources are commenting that the abrupt drop in unemployment seems to be inconsistent with other indicators that are either coincident or leading to unemployment claims.
Do not worry. The problem is contained to toads, alligators and polar bears.
Not true. It IS a problem in humans. Increasing instances of biased birth ratios, reduced sperm counts. Humans are not magically immune to what ailes any and every other creature on the planet.
Where it matters, there is no significant difference whatsoever between a human and a polar bear.
I'm sorry. I'm very bad at irony. I was drawing a parallel with the subprime metdown ("it's all contained").
The part afterwards (about the injection of liquidity) was also supposed to be a clue.
Thanks for the laugh, citizen energyecon. I guess if Yeats said it, it must be true. By the way, the point of that was that, since they lack conviction, they are obviously not the best, just as the worst are not the worst. If only it was that easy, but that's you with your square pegs in round holes, and your biased misinterpretation of a famous poet.
Sinshitti, like all of his colleagues, are nothing more than glorified and honored mercenaries for Oligarchical business interests. They are hired thugs tasked with not only protecting the Plutocracy's investments, but also securing profits from the campaign of terror they are waging around the world.
Sunday, December 7, 2008
Quotes from the Wise : Week ending December 7th
'Early is the new wrong.' - Peter Clarke
'Deflation is a disorder of lending and borrowing. A committment of 8 trillion might not be enough to stop the worldwide margin call. Our leap of faith is that the government won't stop until it discovers what the right number is.' - Jim Grant
'What happened to hedge funds over the past few months was not statistically possible so it is going to be difficult to adjust risk management models to reflect what has happened.' - Michael Brandenberger
'I no longer want to run a short-only hedge fund, as it is very stressful, nerve-wracking and generally not very much fun.' - Bill Fleckenstei
plato wanted philosophers to be kings. Only one I know of was Marcus Aurealius, and tho he did a good job, he couldn't perceive that his son wouldn't, and didn't.
An important article on what happens when fundamentals of the government policy are unclear to business, with interesting parallels between 1930s and 2008 (apologies for a longish quote) Regime Uncertainty in 1937 and 2008 | The Beacon
Regime uncertainty pertains above all to a pervasive uncertainty about the property-rights regime about what private owners can reliably expect the government to do in its actions that affect private owners ability to control the use of their property, to reap the income it yields, and to transfer it to others on voluntarily acceptable terms. Will the government simply take over private property? Will it leave titles in private hands, but strip the owners of real control and profitable use of their properties? These questions fall under the rubric of regime uncertainty.
Between 1935 and 1940, this matter attained prime importance. So many businessmen and investors lost confidence in their ability to forecast the future property-rights regime that few were willing to venture their money in long-term investments. They constantly sought clarification of the governments designs, but President Roosevelt merely continued to rage against economic royalists and to blame a strike of capital for the economys ongoing troubles, including the depression of 1937-38, which played havoc with the general publics confidence in the New Deal. Treasury Secretary Henry Morgenthau tried repeatedly to persuade the president to make a public statement that would reassure investors, and as the president continued to reject his entreaty, Morgenthau became so frustrated that in a 1937 cabinet meeting, he blurted out to his boss: What business wants to know is: are we headed toward Socialism or are we going to continue on a capitalist basis?
(snip) I do not know that the regime uncertainty that an increasing number of commentators and others have perceived recently is comparable to that of the latter 1930s by now theres not much real capitalism left for the government to destroy, in any event. However, it is clear that the governments frantic actions of the past several months have created a situation in which investors have little confidence about the character of future property rights in the United States. The takeovers of Fannie, Freddie, and AIG, the massive interventions into finanancial markets, the huge bailouts of banks and other financial institutions, mixed with letting Lehman Brothers go down and resisting a bailout for the Big Three auto manufacturers (so far, at least) all these actions, and others, imply that a rational investor would do well to attach a huge risk premium to any money he puts into investments even for the intermediate term, not to mention the long term.
One of the clearest expressions of this outlook that I have seen so far was made recently by Lou Jiwei, the chairman and chief executive of the China Investment Corporation, who expressed a lack of confidence in Western financial institutions and said that his giant fund would make no new investments in them in the foreseeable future. As the New York Times reported:
Right now we do not have the courage to invest in financial institutions because we do not know what problems they may have, Mr. Lou said as part of a panel discussion on the second and final day of the Clinton Global Initiative conference [in Hong Kong]. . . . Mr. Lou said that the sheer pace of new initiatives and new rules issued by Western regulatory agencies was disconcerting and made it even harder for him to choose worthwhile investments. If it is changing every week, how can you expect me to have confidence? he asked.
How, indeed?
"...the Barney Frank line that these were just decent folks who needed to be bailed out."
I think it is a spectrum with three distinct types:
1 - The believer: Folks who really believed that housing was a solid investment and that the 3br/2ba rancher really was worth $450 sq/ft
2 - The permabull: The real estate professional who had leveraged into the bubble and was doing great on paper circa '06 and just couldn't stop buying as much as possible
3 - The scam artist: The gas in the tank, true criminals who would use straw men.
The problem is that the reality is never this cut and dry.
I don't agree with everything Unit says, but as Byz Ruins has indicated, he does make some valid points. He is correct that there is exceptionalism at play here. The Banksters should be held to account but those taking the loans are somehow unwitting victims in all of this? Bullshit!! Of course, it's quite ovvious to me that those who want to prosecute the Banksters and pardon the loan recipients are transparently playing politics. There's no other explanation for the exceptionlism.
And ah yes, courageous man of letters that you are - you are making your stand how again - oh yes, with your tin cup out stepping and fetching for the oligarchy...spare us, poseur.
And one other thing (going back hours on this thread to FFIEC' posts):
The Federal Reserve, is the big kahuna among financial regulators, and is independent of any Administration. The board members do read the tea leaves and bend to a certain extent with every political wind. Nevertheless, the structure is in place for any board member, and most especially the chairman, to do whatever they see fit in raising hell to see to it that a problem in financial institutions that they believe is serious is addressed. A board member can always visit the chairman and urge that action be taken. He/she can rally staff to his/her side. He/she can leak to the press. There are ways.
The problem is not the structure, it is the individuals. I've heard a Fed Chairman tell the Secretary of the Treasury that he needed to replace the current Comptroller of the Currency (this was eons ago). It is unimaginable that a reverse phone call of this sort could have/would have taken place. That's the kind of power they possess.
So, much responsibility for the financial fiascos now evident to all sentient beings lies with the inaction of Fed board members over the last 10-15 years. Couldawouldashoulda
More seriously, it seems that the apathy of regulators in the US (sleeping at the helm...) was responsible for a good part of the financial meltdown we've been experiencing.
Is the incompetency/wilful inaction of regulators contained to the financial industry ?
I'm a bit worried about regulators like the NRC (nuclear energy industry) for instance. I was told that the NRC was very reluctant to accept innovative stuff because they don't want to do mistakes. But, on the other hand, I keep on reading that the utilities want to extend up to 80 years the lifetime of nuclear power plants...
Does anybody have any idea?
citizen energyecon, no, you are the poseur campaigning for the "Better War." You, sir, are the warmongerer and supporter of terror....the real progenitor of Terror. There was, and is no "Better War"...or smarter war. It was, and is an illegal and immoral campaign, and to posit that it's just a matter of proper strategy is revealing that you are morally and ethically bankrupt.
Morocco Bama writes:
Sinshitti (ed. Shinseki), like all of his colleagues, are nothing more than glorified and honored mercenaries for Oligarchical business interests. They are hired thugs tasked with not only protecting the Plutocracy's investments, but also securing profits from the campaign of terror they are waging around the world.
Morocco Bama | Homepage | 12.07.08 - 10:44 am
Shades of USMC Major General Smedley D. Butler who at least had the cojones to tell the truth about what he was engaged in. From a 1935 article in Common Sense magazine:
"I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents."
I asserted Gen. Shinseki was a man of integrity. Full stop. Go read the words of the post.
The further editorializing is purely your work, MO - back to pounding things into your worldview, whether truthful or no - like I said, unreasonably consistent.
Here Morocco, the bit where you are walking your talk...oh wait, that is for others! Bravely done conqueror of the hegemons, LOL!
What you fail to realize is that everywhere I go, I sow the seeds of discontent. It takes time for those seeds to germinate and grow to maturity in plentiful enough numbers, but it's the effort that matters.
You can oppose the Beast within the Belly of the Beast...you just have to be clever and resolute....something beyond your current sychophantic skill set.
LOL! Thanks lawyerliz for a voice of reason - the sun is shining and there isn't a cloud in the sky hereabouts - all y'all enjoy the day...gotta go arrange a birthday party, TTFN.
..It has also been my personal experience over the years that the OCC and OTS are not enforcing the old requirements that the people who approve credit policy be insulated from the people who make override bonuses on production volumes...
Excellent point. In a low frequency high severity environment a small number of exceptions can cause a lot of damage. In addition the OCC and OTS auditors are primarily looking for compliance issues not sound financial judgement. They might catch that TIL that went unsigned but they'll let a really toxic 100% neg-am investor loan slip by without a peep.
Amazing how the seeds of discontent come with so much manure.
Do you fail to see your contradiction? I think you do. You're a big CR Fan. You are consistently patting CR and Tanta on the back for their prescient intelligence, and rightfully so, but you appear to have lost the meaning of the message. Nobody was listening to CR and Tanta back when it mattered. Why? Because there was a consensus Group Think at play in the financial and political community, and people like you who were part of that Group Think were deriding and chastizing the likes of CR and Tanta in an effort to perpetuate your Group Think and marginalize any disconfirming information. Can you not see that creating an echo chamber here is no different than the echo chamber that wouldn't allow CR's and Tanta's voice to be heard back when it really mattered?
Somewhere I read as to investing the thing to do is the opposite of what everybody else is doing.
I too thought she was older, since she was so wise.
I came here via Irvine Housing Blog, and I don't remember how I got there.
Didn't lurk for long.
I saw my real estate closing business stop in one day--it was the day a French bank refused to buy one of the evil securities, either Aug 8 or 9th, 2007. (Luckily I do other stuff, so am still there). The mkt stayed high. I read in the fall of 07 that Countrywide had a quarter of a billion dollars (then) in REOs and said to myself, this cannot end well, and got 3/4ths out of the stock mkt.
Had a miser for a grandma, who survived GD I pretty darned well.
The thing of it is we are a born and bred combination of social individuals (herd) with a few raging individualists. So it is HARD for most to go against the herd. The individualists can, and some of the others can force themselves. Thing is there needs to be training for those who are capable of going against the crowd, and the school system, when it isn't in chaos, is set up to breed conformity.
I got away with this in Catholic school religion by saying the answer you want is x, but I think the answer is really y. Got penalized for it only once. I would say most didn't really care, despite the nun's best efforts.
The reason this herd mentality is so strong is because usually, in most circumstances, it is evolutionarily successful. Less so, now, I guess.
That's why I've bought into the Kondratieff Cycle theory. Forget the russian communist bit, it's just simple human nature.
Still know next to nada about Elliot.
K-wave theory has a strong basis in psychology, and you can even argue that it is described in the Bible. Every 50 years (or 2 generations) was a Jubilee year (debts in system unsustainable, so were forgiven to prevent collapse).
As people live longer, K-waves get longer since length of 2 generations gets longer and is now ~80 years due to longer lifespan.
My grandfather lived through Great Depression 1, which influenced how he raised my mother. My mother passed some of his thrifty ways to me, but less so. And now it is time for me to experience what Grandfather went through.
Elliot waves are "data mining run amok", and equivalent to using chicken entrails for market analysis.
Morocco Bama, I think you've provided the incentive for me to finally install Ken's plugin. Thank you.
Jeez, when a guy like Shinsecki and all his colleagues are called mercenaries. Interesting. Every single person in the armed forces sucks?
How do you know he didn't oppose the invasion of Iraq? Because he didn't issue a press release? It's his job to do what he's told (within well written guidelines.)
And please read up on how things would have been different with a 300k plus occupational force. Overwhelming presence does indeed cause stability and in fact, lowers mortality. Rumsfield simply was attempting to teach the generals a lesson that their thoughts about war and occupation were outdated. Rummy was correct about a few things, but on this he was totally wrong.
No, I didn't support the Iraq invasion. Just sayin.
Comrade Kristina writes:
Seriously guys, what good does any of this do unless the CDSs are addressed? Nobody seems to want to talk about them...
Comrade Kristina | 12.07.08 - 11:02 am | #
You know it, that's why Chrysler and GM can't be a credit event .. you may also find this article I recently posted as intersting:
Synthetic CDO 'Slow-motion' Meltdown
By Jane Baird
LONDON, Nov 28 (Reuters) - Around half of the 3,648 synthetic CDO tranches rated by Standard & Poor's worldwide are at risk of ratings downgrades in the near future that could push investors to dump many of them on the market.
What's more, nearly a quarter of the synthetic collateralised debt obligation (CDO) tranches that started with investment-grade credit ratings from S&P have already been cut to "junk", according to data from S&P, which rates around three-quarters of the $600 billion market.
Synthetic CDOs are bundles of between 100 and 150 credit default swaps (CDS) on investment-grade companies -- bets that these companies will honour their debts -- that have been sliced into tranches based on degree of exposure to defaults.
S&P's monthly SROC (Synthetic Rated Overcollateralisation) figures are the key measure the agency uses to determine potential ratings changes.
An SROC of 100 means that a tranche has just enough cushion to absorb the expected defaults and downgrades of companies in the CDO portfolio to justify its current rating.
When the SROC goes below 100, S&P typically puts the tranche on review for a potential downgrade and then makes a decision on whether or not to change the rating within three months.
S&P released its monthly global SROC report for October late last week, showing that 1,951 tranches have SROC numbers below 100. The total includes around 300 tranches already rated at the bottom end at CCC- and D, at which point ratings downgrades are unimportant. "It's the SROC report that is the basis for the downgrades that follow," said Jamie Stuttard, head of pan-European fixed income for Schroders, which had about 18.2 billion pounds ($28.1 billion) of fixed income assets under management at end-September.
"The SROC numbers are critical, and the market is not as clearly focussed on these numbers as it should be, because SROCs are rather arcane," he added.
EFFECT ON CDS MARKET
Schroders does not invest in synthetic CDO tranches, but Stuttard pays attention to the monthly SROC reports as leading indicators of the impact on the credit default swaps (CDS) market of potential CDO downgrades and fears of unwinds.
"The synthetic CDO market has got real problems," he said. "When people put these deals together, they didn't believe that names they viewed as money-good like Lehman and the Icelandic banks would jump straight from investment-grade to default."
Two waves of panic about synthetic CDO unwinds have hit the CDS market so far, helping widen spreads to record levels in February and again in October. More could occur.
As opposed to the effect of market fear, actual unwinds are occurring gradually, dispersed by the wide variety of deals and investors, and are unlikely to take place all at once in a rapid meltdown, analysts and investors say.
In addition, S&P has made a series of adjustments to assumptions on correlations, probabilities of default and industry classifications for sectors such as broker/dealers, insurance companies, real estate companies.
S&P's "approach has been to publish pieces of their new methodology one at a time, and the implementation of the changes is still unclear", JPMorgan credit strategists said in a recent note, adding that S&P rates about $450 billion worth of CDOs in the market.
The SROC report for October consists of more than 100 pages of ratings, with ratings and figures for each of 3,648 tranches. The report did not provide aggregated figures.
Out of all tranches that started off with AAA ratings, around 63 percent are still rated AAA, 22 percent have been downgraded but still hold other investment-grade ratings and 15 percent have fallen to "junk" ratings, an S&P analyst said.
The lower the initial rating, the larger the percentage of tranches that have dropped to "junk". (Click on for a table.)
S&P has already taken some actions following the SROC results for October.
On Nov. 17, the ratings agency placed 260 European synthetic CDO tranches on review for possible downgrades, adding to roughly 500 that were already on CreditWatch negative.
"It is clear that downgrades are occurring, and the sub-par SROCs indicate many more are to come," said Matt Leeming, a credit strategist at Barclays Capital.
"This may increase pressure on ratings-sensitive investors to restructure or unwind transactions," he added.
On Friday, S&P downgraded 61 Japanese synthetic CDO tranches. A further round of downgrades on European synthetic CDOs is likely any day.
Some investors have mandates that may not allow them to hold investments with ratings below AAA or below investment-grade.
Ratings are also important for banks because of ratings-based capital requirements. A downgrade from AAA to junk can force a bank to increase its capital reserves for that investment from less than 1 percent of notional value to as much as 100 percent.
Posted by Anonymous Monetarist at 6:50 AM
Froggie:I'm sorry. I'm very bad at irony. I was drawing a parallel with the subprime metdown ("it's all contained").
Perhaps not. I have poor irony eyesight. Not enough sleep, too much coffee, low sperm count, boobs, all conspire to blind me.
On another note, a question born from the goldbugs. I have been pointed to http://www.professorfekete.com/articles/AEFRedAlert.pdf by a forum note. It posits the "end of life as we know it" due to early December's temporary bacwardation of gold. Now, I am not an end-of-the-worlder goldbug, just a minor gold investor (physical gold) but can higher minds (or am I too complimentary) address what appears to be histrionics to me? A temporary (so it seems) backwardation in gold doesn't portend the "End of Days", am I right? Just one of the many painful needles, an extension of the current economic septic tank beyond the stock market and realestate and nothing more?
Overwhelming presence does indeed cause stability and in fact, lowers mortality.
Tell that to the 3-5 million Vietnamese who lost their lives in the 60's and 70's. Escalation only brought more bloodshed and a more determiend "enemy."
You don't want the Army running foreign policy. Read up on the Roman Empire. Sometimes the Praetorians chose pretty good guys and sometimes they deposed bad ones, and sometimes the Generals made pretty good emperors (Vespasianus & his first son), but as a system, it could have been better.
Sometimes this means someone who passionately disagrees should resign.
Thanks Comrade swan, I'll try and digest that for brunch. I was aware the CDOs were problematic as well but after awhile the Anagrams do me in while reading. Is there any solution to all of this that I'm just not seeing?
With a constructive lens great opportunities await.
Comrade Kristina writes:
Thanks Comrade swan, I'll try and digest that for brunch. I was aware the CDOs were problematic as well but after awhile the Anagrams do me in while reading. Is there any solution to all of this that I'm just not seeing?
Comrade Kristina | 12.07.08 - 11:36 am | #
And then there was a couple of million Cambodians who were killed by commies because we didn't intervene, which we probably shouldn't have. No good choices. I think that maybe this was an overpopulation event that we tend to explain (see Taleb) by a combination of morality, history, hubris, philosophy run amok etc, etc, depending on our tastes. Just because there is a plausible narrative, doesn't mean there is big T truth.
Morocco Bama, the US went in with very few troops and only built up later. duh, but the facts don't seem to get in the way of your ideology and desire to rant.
Not that I would have supported the Vietnam invasion. Just sayin.
And then there was a couple of million Cambodians who were killed by commies because we didn't intervene,
They died precisely because we did intervene...just not an intervention in the conventional sense. Capitalism injected into a largely agrarian, peasant society is literally a poison. It fragmented their social structure and created inequities and inequalities that didn't previously exist. What the Khmer Rouge did was horrible and atrocious, but its goal, to create a peasant paradise, was noble, if not naive. That's what's lost in that tragedy, and rarely spoken about. That anger and animosity towards the Ruling Class in Cambodia was borne of decades of abuse, injustice and inequality....and environment created and facilitated by British, French and ultimately U.S. Imperialism.
I'll give two answers: the goldbug / conspiracy answer, and another answer.
The first is that the Exchange is manipulating again, (vainly) trying to protect itself against the collapse from the organized program of taking external delivery of December gold to drain the warehouses and stop trading on the Exchange, or at least make them provide "real" (ie, higher) level of trading.
By keeping future delivery prices lower, there is less incentive for anyone to take delivery against a resale in a month or two.
Or something like that, is how the goldbugs would state it.
The second answer is that there is no backwardation; it's just falsehood and myth, part and parcel with the current angst among the gold community.
Here's the market, with the first column being the close on Friday, and the other two being the bid/ask pre-session today. If one wanted, they could make something of the 751/98 bid/ask in Dec, but, given that it is a contract in Notice, and there is (orderly, by the way) delivery going on, bid/ask doesn't mean much before opening.
but the facts don't seem to get in the way of your ideology and desire to rant.
Not quite sure what point you're trying to make here. What is my ideology?
My point is that a discussion of the approach to the War on Terror is a cannard. It was illegal and immoral. I've said what I'm going to say about it...to discuss ways we could have approached it "better" and somehow "won" it would be, for me, hypocritical.
It depends on whether the barkwardation is temporary, in my opinion. For most commodities with high flows (gold is a low flow commodity), backwardation provides the holders of commodities profits without risk- they sell today, and rebuy their holding in the near futures at a lower price. If gold goes into near permanent backwardation, then I think Fekete is correct- a lot of the holders of gold won't sell at the spot prices because they don't trust the short sellers to deliver in the future. This signal would be a strong vote of no-confidence in paper money. When that happens, yes- things fall apart- it will the bell ringing on hyperinflation and the death of the dollar.
For what it is worth, I don't see hyperinfation. I think eventually the central banks will bite the bullet and allow deflation to bring about market clearing prices in all goods and services rather than destroy their power base. Fekete disagrees with this belief.
FFDIC writes:
Clearly regulators were asleep at the wheel.
Jillayne | Homepage | 12.07.08 - 12:42 am | #
I am sick to death of reading 'regulators were asleep' it simply is NOT true. The regulators were being coached from the WH/Bush staff. As a former FDIC employee from 1986 until late 2005 I know the FDIC and other banking regulators knew much of what was going on. They simply could not act under the current administration without facing the loss of their jobs and demotions. In addition - regulatory staff was cut to the bone via RIFs, office closings and a host of other procedures to eliminate staff including my own job. Nobody I know was asleep. We knew very well what the fuck was going on.
FFDIC | 12.07.08 - 1:31 am |
FFDIC- Your posts are always refreshing...Bush and Company produced and directed this show...Will we have a sequel?
Eliot Spitzer - Predatory Lenders' Partner in Crime - washingtonpost.com
Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.
Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.
In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.
But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.
Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.
When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.
Morocco - it's because I was in the same position at least from 06, albeit in a different part of the finance game, that I appreciate cassandrine prescience.
The naysaying nabobs of nancy capitalism are at it again.
For folks who have made a living saying that 'it's different this time', that 'we're turning a page'- why they sure have suddenly found a special affinity for history.
As of late, the chattering is on property rights and visiting the Roosevelt age - I have never heard so many right-wingers use the term 'economic royalists' then I have as of late.
This reminds me of when the Dems took the majority in 2006, all the ideolouges in unison lept up and declared 'the subpeonas are going to be flying' to which I retorted 'What's all the concern? Did someone do something wrong?'
The cold hard fact of our age is that the bankrupt ideology of the rich that had greatly succeeded in drafting the inner monolouge of regular folks so that they would vote against their self-interests is colliding head-on with a Mr. Market that is a bit pissed off that we've inflated it out of the business cycle for the last quarter century.
Regular folks who don't as a matter of course lie find it hard to believe that the the lies told over and over again to them are actually lies. It is just hard to process for it is from a place-of privilege and power and entitlement-that is foreign to them.
However, the alarm clock is now starting to ring and people are getting a bit skeptical as to what the nice man on TV is saying.
I have created jobs, have met a payroll for many years, but it was not done by the benefit of an elite education nor the spelling of my last name.
It was done by having a dream, taking action to make that dream a reality, defying all the odds -even when my net worth was in my wallet-, and embracing my failures.
America will survive not by bailouts but by bail-ins. Success not because of government nor in spite of governemt but success oblivious to government.
In America you can accomplish whatever you set your mind towards, if you believe you can, and have the guts to take the chance. By your hands and by your mind you can create the reality you want from clay. That is America.
No government program can give or take away from us that uniquely American quality.
Maybe we need to be collectively punched in the face to understand we can take a punch instead of perpetually gorging at the punch bowl.
REBear writes:
Riots continue across Greece after teen killed by police
>
Pent up demand?
Quick scan of Google News - Riots in Greece, India, Pakistan, Palestine, Thailand, Zimbabwe, Nigeria. (Wars in Irak and Afghanistan do not qualify for riots.) That said, most of these countries have "traditions" of rioting, so maybe it does not mean much.
FFDIC - you could try change.gov. The hiring of Eric Shinsecki gives me some hope that the Obama folks really do want to correct the mistakes of the past.
Several of you need to really read Tanta's first post that was the subject of the Frank Rich piece in the NYT and the comments section for that post. FFDIC also describes some of what happened. Do not think that there will not efforts to continue the same. Think bailouts here people.
I think the real difference between tanta and the bulls/cheerleaders is she was honest. Everyone knew the whole securitization business was a rigged crooked ponzi scheme.
The playas made a ton of $$$ on the way up and most of the way down. I doubt tanta got any of it, because she had integrity.
Truly a great loss.
She had a flaw though. She hung on to a misguided belief that the GSEs were somehow different and defended them even when it was clear after all the chicanery in 03-05. Just as crooked and maybe moreso since the US Taxpayer was on the hook, IMO...
"Seriously guys, what good does any of this do unless the CDSs are addressed?"
I still don't get why this is an issue. The parties involved just need to mark this garbage down to par zero and write it off.
So all the national moneycenter banks go tits-up. How is that a problem? It isn't. New banks (or more conservative ones who took less risks) will take the market share. Throwing multiples of the GDP down the rathole in bernanke bubble debt will not help things in the long term.
the problem is that ben and hank really do think that wall street is an important part of the economy. it isn't. any business that needs to use large-sized debt and leverage to survive is ultimately a liability to everyone. does anyone see steve jobs begging congress for a handout?
Ok bgates, but why is that not being addressed? I would love nothing more than to see Citi, BofA etc. go down faster than a cheap call girl on Hollywood Blvd personally.
\t Austin Tex | \t\t\t\t12.07.08 - 11:59 am --- To pick up on this line of questioning, can you explain the M9 & Q9 (0 is typo or...?) values? I find it odd that there is backwardization in these two months, but none in the other periods.
Also, I'm finding this GHS (Bears' Chat)/Goldbug discussion odd and can someone provide a little history/context for this "The World Is Ending!!!11!" vs. "Same ol', same ol'" dichotomy? While I don't see Gold/Silver as the savior of the future, I do think that not having converted fiat currency into hard/tangible assets rather risky going into the unknown as it is currently playing out...
Tradition of street protest:
Prevalent in cultures where power is not granted (and limited) by the People to their Government but where power belongs to the Sovereign who grants privileges to the People. No real understanding of property rights. Just fights over privileges.
Question for you looking at 2009:
Is your 2009 budget (business or personal) less than your 2008 budget?
Again, those are weekend bid-ask numbers almost 24 hrs from open outcry, and almost 8 hours from electronic trading, so they are all but meaningless. The real series, of course, are the trade prices: the first column.
One of the things I believe is lost in the gold argument is that there really is a difference in exchange gold vs "personal" gold, defining the latter as generally accepted gold coins, 24K jewelry, etc.
Exchange gold is institutional store-of-wealth or industrial gold. Imagine going into your local pawn or coin shop with a 100 oz bar, and trying to get it sold without assay/drilling/validation.
I think that explains a large part of the difference between "Ebay" gold and COMEX gold (if in fact that exists).
A gold coin is a defensive asset, for sure. A 100oz gold bar, unless one is a jeweler or make high grade circuit boards, might be an albatross.
Unit472 writes: Tanta took the Barney Frank line that these were just decent folks who needed to be bailed out. Cramdowns etc. I saw most of them as crooks or thieves who falsified loan applications or did equity extractions to game the system.
Rather than modify their mortgages or offer them a cram down I'd like to see them prosecuted along with the mortgage brokers, appraisers and bankers who ripped off this country to the point where TRULY innocent people have lost their retirement funds, their home equity and their jobs because of this most recent iteration of the mortgage scam.
Tanta favored cramdowns in bankruptcy. because in make the lenders pay more attention to the loans.
lenders mark to model, but if you let them, BK judges will mark to market.
I see it as
If the person can afford the house at market price as determined by a BK judge why kick them out so the bank can try to keep the house on the book at original loan value and the bank managers get a bonus based on the fantasy value.
When Donald Trump and the Cerberus people get prosecuted for their leveraged buyouts I think about prosecuting leveraged home buyers.
it will be interesting if wealthy individuals begin to start taking delivery in Chicago and New York on a significant scale. gold makes a good candidate for the next bubble after treasuries crap out.
You are partially correct. The reason to invest in gold, silver and miners now is not backwardation or the December theory of taking delivery.
Those are interesting to watch. But the real reason to invest here is because of currency debasement all over the world, and especially in the U.S.
You can't deny that gold does have its runs, and they can be pretty spectacular. So, by buying now, you are positioning for a run in the future and you have to be prepared to hold through any short-term downturns or manipulations.
Last year, every major asset class in the world declined (most substantially) except for two: U.S. Treasury bonds and short equities.
A lot of us here were able to see the opportunities in short equities and profit by holding through some very difficult times. In some cases, we were early but made out okay by being patient and sticking to our guns.
Some of us here feel: 1) U.S. Treasury bonds are the worst class to own going forward; and 2) precious metals are one of the best.
--- Frank the Frogwrites: \t Is your 2009 budget (business or personal) less than your 2008 budget? \t Frank the Frog | \t\t\t\t12.07.08 - 1:09 pm --- Yes, and yes. These answers are why I started surfing through the blogosphere these past 3-4 years. I wanted to research to see if it was just me or was I a part of a larger group realizing how the budgetary concerns were getting out-of-whack at a macro level. The answer seems to be that I was not alone in my concern in the past or going into the future. However, the question to me seems to be trending into a greater concern: "Am I going to be able to make my 2009 budget's income side after I have trimmed much back in regards to my expenditures?"
As of now, I'm wondering what my options are besides selling what I own. It is a good short-term stop-gap measure, but having only that option leads me to foresee a future of Okie Travels and to wonder if I'll have the courtesy to cover the latrine outside my lean-to...
"The first step toward creating a more ethical business environment is to refrain from distinguishing environments.
The same guiding principles that work in the most basic relationships in our lives must be courageously used everywhere. People are people -- they like being appreciated everywhere and cheated nowhere. Values such as fairness, honesty, respect and good will should never be reserved for specific arenas; they should be fully activated.
The root word of integrity is "integer" meaning whole, without fraction or fragmentation. We are out of integrity when our values are fractured or fragmented. Integration is the process of bringing the pieces together to make a whole. Our greatest ethical challenge is consistently aligning with our highest values and integrating them with our business practices.
As a sales representative for Procter and Gamble, I was assigned specific accounts to manage. Since the customers already bought the products, my job was primarily to push for greater volume through special promotions, in-store displays and increased shelf space. I was trained to play "the game" of manipulating my customers. Tell the manager he needed twice as much product than he did, and then let him cut the order in half. The predictable outcome never resulted in significant increased purchases.
I decided to practice the same principles in my business environment that I know work in my
personal affairs. I would tell the truth and partner with my customer in getting his needs met.
My new strategy was to suggest to the store manager only the amount of cases I thought he could actually sell based on careful analysis of his sales record, which I was more familiar with than he was. My recommended amount represented a marginal increase above the last similar promotional orders. The automatic response was to cut my proposed order in half. However, the manager would sense the lower amount was suspiciously inadequate. At that point, he would have to turn to me to inform him of his purchasing patterns. Gladly, I would provide the information. The managers' initial concurrence was usually reluctant. Expecting to be misinformed, managers never agreed with the sales representatives.
My next step was to provide the manager with extra service to make certain the product moved. As the managers began to depend on me for accurate information, trust was developed. Each new order had a marginal increase and over a relatively short time period, the sales grew rapidly. This partnership model significantly outperformed the competitive approach.
I used this same telling the truth and non-adversarial approach in my real estate career.
Information is key in residential real estate sales. It is easy to be tempted into hoarding information for advantage. However, the more collegial we are with our so-called competition, the greater resource we can be to one another. Since we share the same market with our competitors, satisfied clients translate into more business for all.
Even as an institutional real estate lender with Prudential, I found the strategy of honesty and partnering with all parties to be extremely effective. Every transaction has "deal points," bottom line parameters that must be met to complete the transaction. It's customary to conceal these points so those in the negotiations never know each other's outer limits. Being honest about my deal points prompted others to be candid about theirs. Appropriate strategic disclosure allowed us to craft something with everyone's best interest at heart, even with transactions in the hundreds of millions of dollars.
We become unethical when we cut corners. Dare to integrate your values with your best practices.
The Rev. Deborah L. Johnson, founding minister of Inner Light Center, has a bachelor's degree in economics from University of Southern California, a master's in business administration from UCLA and a ministerial degree from the Holmes Institute.
But do you mean physical PM or paper PM? Or indirect PM (mining stock)?
Almost everyone believes that if gold were to go to $1,200 or silver to $20, mining stocks would be a triple, at least. You can't manipulate mining stocks easily. They produce the real thing, physical. Higher prices would crank the mines up fast, and stocks would rise in anticipation of the crank.
I am a little wary of the ETFs, GLD and SLV. More so of SLV because it's such a thinner market and more prone to manipulate and squeezes.
Supposedly, SLV has become the world's #1 repository of above-ground silver stocks, with about 213 million ounces. But that's 7 million less than last month. It's the first bullion drawdown in SLV's 2.5 year history. Somebody is swapping SLV shares to draw down bullion stocks.
I figure it would take only about $2-4 billion to buy enough SLV shares and long Comex contracts to do an effective silver bullion squeeze.
"But...it sure makes people's eye go all funny to look upon their stacks of gold bars."
It used to be that one could go on a tour of the gold vaults at the NY Fed (I don't think any longer, though).
I remember going down, and seeing those stacks of thousand and five thousand oz bars, shining on the gray dolomite floor. (That's why they store it there, BTW: Only solid rock can hold the weight)
It was a moment as in the old John Stewart song, Kansas Rain: "Standing in line at the Bank of America, nobody spoke, they were in the house of God."
Yes, I too believe gold will again have its day. Anyone who wants to go against thousands of years of history and the unique properties of the metal is heroic if not foolish.
It's just that the 100 oz bar, here and now, is, to my mind, not a good defensive asset.
Tanta wasn't doing Frank Rich's job because there's no pathway for going from a single parent middle class family to the NY Times. Perhaps Rich should talk to his editors about creating a path for people like her rather than just singing her praises.
We know little about Tanta other than the picture she wanted us to form about herself. Since her passing there's been no comments from anyone who knew her in real life. In short, I'm thankful for the civility around here, but there is a certain Stepford wives quality to it.
--- Austin Texwrites: \tI think that explains a large part of the difference between "Ebay" gold and COMEX gold (if in fact that exists). ... A gold coin is a defensive asset, for sure. A 100oz gold bar, unlessone is a jeweler or make high grade circuit boards, might be analbatross. \t Austin Tex | \t\t\t\t12.07.08 - 1:14 pm --- FD: I'm long silver & gold. (Mostly mint coinage, but some bars)
If COMEX gold exists or if the difference between eBay gold & COMEX gold exists?
--- rich writes: \tThose are interesting to watch. But the real reason to invest here isbecause of currency debasement all over the world, and especially inthe U.S. ... Some of us here feel: 1) U.S. Treasury bonds are the worst class to owngoing forward; and 2) precious metals are one of the best. \t rich | \t\t\t\t12.07.08 - 1:17 pm --- I believe it is what is pasted above that explains my bets. I'm betting on currency debasement from every side, and I want to get hard assets as soon as I can. If things really get furry, I'd imagine that I might blow through my available lines of credit to convert more fiat into more tangibles. I may end up losing "wealth" by performing badly valued trades from fiat->tangibles and vice versa, but I feel that I'm definitely going to lose "wealth" between old USD->new USD (e.g. 90s Mexico). There isn't any other way for this game to play out: Debt is repaid or written off, and as a Prudent Saver, I am going to take it in the shorts either way.
While I don't see sitting on a mountain of gold as a good idea--including exchanging it, protecting it, etc--I am now diversifying between various kinds of assets--food, water, PMs (Coins/Bars), and protective measures. Not only am I concerned about the well-being of me and my own, I'm concerned about the suffering neighbor who may not have my best--or our collective best--interests in mind. I'm not even mentioning TPTB in Washington and other places of financial and political influence. They probably most definitely won't have my best interests in mind...
"There's a good reason Jews have become the world's diamond merchants. "
There was a discussion on this board a few weeks ago about price problems in the diamond market. Someone (maybe me, I don't remember) speculated that demand would ensure that something of value will exist that can be sewn into the lining of clothing and not set off metal detectors.
--- Praedor Atrebates writes: \tMay I suggest a more robust and comfortable alternative to a mere lean-to? Perhaps you might "invest" in a new home: Praedor Atrebates | 12.07.08 - 1:26 pm --- If times weren't trending to "More Tough", I would've laughed out right at that idea. Now, I'm bookmarking that page...
"If COMEX gold exists or if the difference between eBay gold & COMEX gold exists?"
Sorry, badly written on my part: COMEX gold certainly exists; I don't know about the spread between COMEX and the personal gold market; I don't trust most of the anecdotes, and can only assume they are true.
Thank You Isabel - if you dig into the comments you'll actually find Tanta's Grandmother's SOS recipe. Very good but not the same as my Mom's (who of course tried to match what my father ate in WWII).
This was also the source of a lot of the SPAM jokes later on too - WWII culinary culture - and yes my family ate Spam on occasion though not as often as SOS.
Just thought I'd fill in some of the details from that post - remember it well actually.
If times weren't trending to "More Tough", I would've laughed out right at that idea. Now, I'm bookmarking that page...
Yeah. That's how I had it to send. I first found that page after Katrina got me curious. Then I bookmarked it after I was reading bits and peices about new tent cities.
I'd prefer one of these (with stove pipe port in the roof!) to a hastily bought or borrowed REI igloo camping tent.
rich(Unrated) writes:
A Jewish friend of mine said last week:
There's a good reason Jews have become the world's diamond merchants.
Think about it.
rich | 12.07.08 - 1:21 pm | #
I'm not Jewish but I've thought about it plenty - and an added benefit is that many gemstones if not all will pass through metal detectors undetected. X ray machines will spot them though... but there are ways to camouflage them so they don't look like something special as they pass through.
--- Frank the Frog writes: \tIs 2009, 80%, 50% or 20% of 2008?
I am surprised by how many business and personal 2009 budgets in NE are (now) 50% of 2008.
What do you see where you are? \t Frank the Frog | \t\t\t\t12.07.08 - 1:27 pm --- I'll use a parent's professional life as an example.
My father's has worked in car dealerships for almost 30 years. He is definitely a/the canary in the coal mine for the rest of myfamily. He is at the front lines of where we are and where we aregoing. He has seen his after-tax take-home go down 70% from Sept. 08 -> Oct. 08. On what was left, it has gone down another 30% from Oct. 08 -> Nov. 08. Putting some example numbers to it: Sept. 08: $10k -to- Nov. 08 of $2k. Turning on a dime to the tune of 8k USD over the course of 60 days means a personal budgetary cut of 25% as of Nov. 1, and I wouldn't be surprised if he turned that up to 45-65% by Jan. 1 if possible.
As for the professional side, it is absolute carnage at his dealership, and they were one of the top selling dealerships of their brand in the entire state. They have gone from moving 500 units total as of August 2008 to moving 150 units total as of November 2008. Out of those numbers, 2/3 are new units. Out of the new cars being sold, they are making $11/unit before financing & insurance. Between Honda trying to adjust via manufacturing and the dealership trying to adjust via retail, it is a train wreck of huge proportions. They are sitting on 750 new units across 3 large car lots, and Honda is moving another 250 units their way. There is no where to put the new inventory, no way to finance the sales of the existing inventory, and basically no way to avoid the wreck unless you want to jump off of a moving train going over a deep canyon (e.g. No jobs to replace the current one).
We know little about Tanta other than the picture she wanted us to form about herself. Since her passing there's been no comments from anyone who knew her in real life. In short, I'm thankful for the civility around here, but there is a certain Stepford wives quality to it. \t AmuseMe | \t\t\t\t12.07.08 - 1:32 pm | # AmuseMe | 12.07.08 - 1:32 pm | #
Pray tell, why do you consider postings to a blog NOT "real life"?
Have you bothered to read any of Tanta's posts or her comments? She put more sentences together on this forum than most econ departments PhD candidates do in a year. How else is one to get to know someone, other than by what words they put out - and she willingly put them in easily recallable fashion. And to lump the commentors as akin to Stepford wives.... try that on an active thread, please.
--- Austin Tex writes: \tSorry, badly written on my part: COMEX gold certainly exists; I don't know about the spread between COMEX and the personal gold market; I don't trust most of the anecdotes, and can only assume they are true. \t Austin Tex | \t\t\t\t12.07.08 - 1:39 pm --- I've only got "anecdotal" evidence of this trend, and I've started capturing data so I can start sifting through it in a technical manner.
I've only been watching the movement of silver through online stores (e.g. apmex.com) and eBay. When it comes to available inventory, eBay is a better bet, but as for price and comparing those prices to COMEX, etc, I'm not sure that there is any real data on it yet. However, people will buy where and how they can so if they are mainly using eBay it does mean something...
We know little about Tanta other than the picture she wanted us to form about herself. Since her passing there's been no comments from anyone who knew her in real life. In short, I'm thankful for the civility around here, but there is a certain Stepford wives quality to it.
AmuseMe | 12.07.08 - 1:32 pm | #
AmuseMe | 12.07.08 - 1:32 pm | #
AmuseMe, obviously you are not a regular reader. Her sister has posted numerous times.
yagij: However, people will buy where and how they can so if they are mainly using eBay it does mean something...
I favor kitco, though I haven't (tried) to buy from them recently.
I have Krugerrands but as of today:
The following products have been temporarily removed from our Precious Metal Store until further notice due to production and delivery delays that retailers are currently facing; Gold Eagle 1 oz, Gold Maple 1 oz, Special Gold Maple 5 X 9 pure 1 oz, Gold Buffalo 1 oz, Gold Krugerrand 1 oz, Gold Bar 10 oz, Gold Bar 1 oz, Kitco Gold Bar 1 oz, Kitco ChipGold 10 g, Kitco ChipGold 20 g Gold Philharmonic 1 oz, Silver Philharmonic 1 oz, Silver Eagle 1 oz, Silver Maple 1 oz, Silver Bar 100 oz, Platinum Eagle 1 oz, Palladium Maple 1 oz, Silver Maple Olympic Coin 1 oz.
I wish she could have received some of this MSM attention before she passed away. She certainly deserved it.
MLM, she did receive some credit - Krugman mentioned her several times, so did the WSJ and other papers. She was also credited by Fed researchers in a paper.
The real shame is that no one was listening in 2005, 2006 and even for most of 2007. Those comments above are from June 2005 - she clearly understood what was happening - and yet many policy makers didn't understand these issues until 2007 or even this year.
Best Wishes.
Prediction: Smart people will become the new black.
The culture is losing patience with careless people making stupid mistakes who then pass the blame. (whocoodanode?)
Give us smart, competent people!
Tanta was that.
what could possibly be in the current refi pipeline that would cause rates to move higher with a QE policy strategy underway under a nationalized GSE market?
I wish I had know both of you in 2005 when I was here in Washington State teaching predatory lending classes to Realtors. The mortgage brokers were furious with me and many still to this day blame Wall Street and take zero responsibility. It was lonely back then.
Today I blog/teach about loan modification scams....it's predatory lending all over again.
Who is today's Tanta? Who should I/we be reading today?
A Tanta post? Sublime.
From my affection and appreciation of a life well lived, surely CR is not going to shut down economic metaphor muso posting Saturday?!!?? W/ respect??
C
Give us smart, competent people!
I wish the country said that in 2000 and 2004
A voice in the wilderness.
There's another theme amongst the commentators that troubles me: the ability to clearly explain the troubles of the past does not guarantee the ability to solve them.
Somebody ought to print this post, roll it up, and swat Cerberus on the nose with it.
many policy makers didn't understand these issues until 2007 or even this year.
Or even now. Or ever will.
Give us smart, competent people!
...
Give us people of intelligence and common sense with the courage to question the decisions being made around them. Questioning the status quo takes more courage than many of us are willing to put forth. Tanta was special.
Man, Tanta's comments from 05 are still more relevant today than anyone else I've heard from. There's no need for hindsight for any of us who saw this years in the making.
The exhausting prospect is who is the China commentary Tanta?
Too little sleep. Don't know if I can take part in this.
More coffee.
C
Had I read Tanta's earliest writings on the topic ( and I wish I had) I would have dismissed her as a nut!
I mean, living in Marin County, I had long questioned the smug valuations people were telling me their homes were worth and this was in the 1980's.
I just didn't think there was enough income available to support those valuations but I kept being 'proved' wrong. People sold their houses for the putative value. Some said it was
money from Hong Kong as the 'turnover
date approached. They were right, if a bit off geographically and the mechanism by which money from China fueled the boom.
Still it shows the problem of believing your 'lying eyes'.
Tanta was an ultra liberal. The very kind of person that populated Marin in those days. No doubt she would have voted for Barbara Boxer even as Boxer bragged the increase in the conforming loan limit to the then still 'private' GSE's amounted to a subsidy of $150,000 to Marin homeowners while the rest of America got a crummy $600 check. Hell, Tanta
thought NPR was a 'news' channel but what the hell. We all have our blind spots but Tanta could see the fraud and ledgerdemain behind the mortgage/housing scam.
But I still wouldn't have believed her in 2006. My lying eyes would have deceived me.
Jillayne,
Do you have a blog, too? Might be interesting.
In another vein, had another thought...seeing as the commenters are somewhat scattered hither and yon....it might be cool to have an annual "party" for CR regs...same day, but in different major cities?...maybe a "Tanta/CR" party?
Tanta lives..
Here's a quote from the San Francisco Chronicle that gets right down to the bottom line, from Joseph Grundfest at Stanford:
"Part of the unfortunate reality is that if real estate prices are going to re-equilibrate to a lower level that is significantly lower than the peak, it is mathematically impossible to have that happen without having homeowners and lenders lose a lot of wealth. To the extent that people think government policy can prevent that from happening, the only way you can do that is by having the government say, 'OK, you lenders and homeowners, you won't lose the wealth, we the government will lose the wealth.' And that means that all the rest of us will lose the wealth. But the wealth will be lost."
Economy in turmoil and bailout plans adrift
Look for everything Tanta described to continue, relocated to Obama's infrastructure bubble contracts.
[T]here is a bubble. And its great. Not One Cent: Obama=Bush: Infrastructure Alternative-Energy Bubble Economics
Here we go again.
Tanta will certainly be missed.
testing..
A careful study of economic policymaking suggests a positive situational analysis and a grounding for going forward, as parties to the agreement have broadly accepted while awaiting further detail on pragmatic measures which might inform final results and outcomes, of which we all unanimously supportive in their general context, the text in front of the learned committee here today.
We further resolve to meet in 6 (six) months times to review progress and suggest further modifications to the current action program as appropriate.
Global prosperity is imminent.
C
Re: The Brightest Are Not Always the Best
For an article that spoke so highly of Tanta, I thought that was an odd title at first, but I had forgotten the irony attached to David Halberstam's use of the term in his book.
Tanta was among the brightest, but she could never have been considered among "The Best" given her lowly public school education at Illinois State.
As we all know "The Best" come from Harvard, Yale, and so on, but never from Illinois State. (Can't forget the Chicago Business School crowd, either, since they're convinced they belong, too.)
What a shame that, when the Emperor wears no clothes, it takes a kid from the public schools to point that out.
Nearly $8 trillion in federal commitments is already out the door, and half of the $700 billion October rescue package has been spent. The economic downturn is accelerating. And nobody is really in charge
hyperinflation already at work. I thought it was 7 trillion. On friday.
Boy, very impressive. I'm new to this blog, so I only know of Tanta from others' comments. I can understand she must have been extremely distressed by being close to blatant fraud now known to be in the hundreds of billions of dollars. And seeing the elements of the ongoing fraud so clearly. Painful.
Once I was a close observer of another major financial fraud scheme (still going on). I got out. You are hopelessly outgunned (ground into sausage, whatever) if you make waves in the face of people making huge profits.
JohnR,
Its my understanding she was "retired" from the mortgage biz, but was VERY smart, and saw what was comming. I can only imagine what it would be like to see something terrible coming, but unable to do anything, besides "scream" as loudly as possible.
You are hopelessly outgunned (ground into sausage, whatever) if you make waves in the face of people making huge profits.
John R, you had it right with outgunned. They will take you out if you cause problems.
You may be 'out,' but I gather you're also quiet.
"Prices aren't just a matter of what buyers will pay. They're also a matter of what lenders will lend"
This rings sooo true......Regulators take note, please.
@ poster fomerly known as ni
Yes, I blog on raincityguide.com
Jillayne Schlicke | Rain City Guide
Here's the post I did on upfront predatory loan modification fees. The salesmen still stop by from time to time and attempt to rip me a new one.
Predatory Upfront Loan Modification Fees | Rain City Guide
And nobody is really in charge
I have no doubt that actually having someone in charge will make things worse.
Great post CR - I had to go back to a few of those oldies in the archive and some others. Been some water under the bridge.
Many of them there'd be only 4-5 comments spread over a couple days back then. Don't know what your peeps were but they had to be somewhat proportional (much lower than today - y/n?)...
Not hard to see how Tanta & your message wasn't getting mainstream attention back then. You two were all but screaming in the wilderness.
Jillayne,
Thanks...noted it, and will check it out.
The challenge with being a Tanta in real life is that real life gets in the way.
Challenging the people who hold power positions, in a public forum, has consequences such as being blackballed from ever becoming employed again in that same industry. Tanta apparently expressed this sentiment.
Realize that people at the top made billions off the bubble run up and had no patience for people in the trenches who saw what was going on day in and day out.
Perhaps one of the solutions to this mess is to put a whistleblower system in place for people to provide anonymous tips. But to who? Clearly regulators were asleep at the wheel.
dry,
do you remember how you got to this site? i'm gathering for myself it was a reference made by setser on his blog back before RGE.
is that right?
i mean at one point like you said it was CR and a handful.
Dryfly,after coming here from HBB in'05 I assumed the comments were useless for the first few months...then I read some.
The economy, Going Down Slow, if you credit Lightnin Hopkins..
YouTube - LIGHTNIN HOPKINS " GOIN DOWN SLOW"
C
Not only that, but later Tanta was fairly certain that there is no solution. She was too circumspect to state that flatly, because she didn't want to tip the scales. With her understanding of the mortgage market that's pretty scary.
- NY Times
GRETCHEN MORGENSON
Debt Watchdogs: Tamed or Caught Napping?
(CR please consider sending Gretch a complimentary t-shirt from Tanta's fans.)
I was sent to this site by two different people. One of my regular readers sent me the link because the way I write reminded him of Tanta and the other referral came from Seattle Bubble commenters when I asked for them to tell me where I could go to learn more about what was happening. This was at the end of 2006.
The CR website url is on my classroom whiteboard everyday.
I am amazed at how many Realtors and LOs have been absolutely clueless this year.
There has been a turn of sentiment lately. Just this month the Realtors and LOs are finally starting to get it.
Jillayne,
"Challenging the people who hold power positions, in a public forum, has consequences such as being blackballed from ever becoming employed again in that same industry. Tanta apparently expressed this sentiment."
Yeah, being the person that "dives on the grenade" is a "High risk/low payoff" proposition.
@sdtfs
Tanta thought that it would take time
No matter what was tried, the industry simply needs the gift of time to work the bad loans out of the system.
it might be cool to have an annual "party" for CR regs...same day, but in different major cities?.
Sign me up. Which one is Jas gonna be at? I want to get called a B&B Dope in person. And wear my "Light Rail 4Ever" T-shirt in Ventura.
LOL @ sdtfs...THAT would be worth the price of admission...
@poster formerly known as nitpi
unless a person chooses to blog anonymously, which was Tanta's path.
I am grateful that she made that decision.... I wonder what would have happened had she blogged as Doris?
She looks exactly as I expected. A feisty no-nonsense blonde (like the blonde boss in the movie Role Models.) She writes with the wisdom of someone in her 60s so I expected her to be older!
MTHood writes:
Prediction: Smart people will become the new black.
The culture is losing patience with careless people making stupid mistakes who then pass the blame.
Re-read Tanta's comments in the original post, and tell me who was being careless or making stupid mistakes? Everyone involved was behaving quite competently and doing what they were being compensated to do: the people who determine credit policy were loosening credit requirements because their bonuses were based on loan volumes, an arrangement that made sense to their bosses because higher volumes meant bigger profits and the credit risk wasn't a concern because it was being dumped on entities that were too big to fail and in any case they'd be out of town with their bags of cash before it hit the fan, the people running the too-big-to-fail entities made plenty of money on the way to their eventual failure, the people who financed those entities are now being made whole by the government....
Who, exactly, was being stupid? I don't see any of the actors here headed for the poorhouse, no matter how disastrous the eventual social impact of their decisions may have been. Even Dave Duncan was doing precisely what he was being well paid to do.
CR - Take a look at the average duration of unemployment at https://research.stlouisfed.org/fred2/series/UEMPMEAN
It is almost at 20 weeks now. With so many layoffs announced, it is quite likely this metric is on its way to a record high.
With that - good night!
....as a Moving salesPerson, this is my third Housing Bubble in California where I moved many, many people out of CA to lower priced housing States so they could cash out...
in the past two bubbles, the people came back in U-Hauls....
this time, I think they'll come back to CA, or move somewhere else, with whatever they can cram into their SUV.....
...I'll betcha the majority of the people who cashed out their equity and moved to anouther state did not buy a smaller home for cash, but, rather, they bought a bigger home for 30-40% down and now THEY TOO HAVE A
NEGATIVE EQUTIY in thier new locale...
and, as last IN, THEY WILL BE FIRST OUT when their employer announces layoffs..........
very few average people make two smart decisions in a row....they might get lucky and time their first decison perfectly.....but, to exercise great restraint and not BE GREEDY on two straight decisions is not going to happend to the Average Joe, who moved to Colorado to be a teacher, policeman or work from home "on the net...."
Jillayne,
Agreed..I pictured her a MUCH older..based on what/how she wrote....although didn't have much of a mental picture beyond that.
2005...beautiful...
We can't let these people get away with revisionist history. Sorry to copy, but the year 2005 words are amazing. No one saw it? Spare me...These words need to be entered into at least the congressional record.
"The problem with the "why are the lenders stupid" question is not that they aren't stupid, but that the bag is too dispersed to be held by any one particular idiot. The lenders keep making 100% CLTV interest-only loans to borrowers with a 50% debt-to-income ratio on a grossly overpriced property because Fannie Mae will buy the first mortgage and GreenPoint will buy the second mortgage and Radian will write pool insurance for it. Your average bank or S&L believes it is successfully laying off the risk on the Real Deep Pockets who are Too Big To Fail. It has also been my personal experience over the years that the OCC and OTS are not enforcing the old requirements that the people who approve credit policy be insulated from the people who make override bonuses on production volumes."
For those of you not turned on to Doug Nolan at prudentbear (a minority of the readership here), I recommend his writing, and note that he explicitly called this a "credit bubble" in a weekly column dating back to 2000.
Not to detract from Tanta by comparison, of course, she obviously had more brains than the entire fed board of govs combined.
@bgates,
Can you provide the link please?
Thank you for the recommendation.
Just purchased the mortgage pig sweatshirt. Ovarian cancer scares me.
Perhaps one of the solutions to this mess is to put a whistleblower system in place for people to provide anonymous tips. But to who? Clearly regulators were asleep at the wheel.
Jillayne | Homepage | 12.07.08 - 12:42 am | #
The regulators, too, are compensated for being asleep at the wheel. Alertness would cost them future employment opportunities in the industry they regulate.
(I don't actually know to what extent this is true in the banking industry. It's certainly a problem elsewhere.)
Tanta's words resonate with reason and passion - and probably will for a long time. Hell look at recent sales of Liar's Poker.
35 yrs ago and now don't seem all that different:
We'll be fighting in the street
with our children at our feet
And the morals that they worship will be gone
...
And the world looks just the same
And history ain't changed
Cause the banners, they all flown in the last war
...
@Yalt
"The regulators, too, are compensated for being asleep at the wheel. Alertness would cost them future employment opportunities in the industry they regulate."
There should be a rule against this.
But now that you mention it, I have heard of several former bank/mortgage broker regulators being recruited by the same people they once regulated.
404 - Error: 404
for some reason they're only showing the last ten or so commentaries. in any case, he was writing great stuff 8 years ago on the subject, I particularly remember a piece in 2003 about the charity-based 5% scams that were so popular then. I always admired his moral clarity.
Allen C writes:
No one saw it? Spare me...These words need to be entered into at least the congressional record.
Allen C | 12.07.08 - 12:55 am | #
I posted a comment at the WSJ.com obit for Tanta, urging the WSJ to use some of it's print space to highlight that there were people who predicted our current situation. The WSJ has published a long article with Robert Rubin saying that he isn't too blame for the mess at Citi Group and a letter from Hank Greenberg asking for more favorable terms for AIG, but they just can't seem to find the space to talk about true accountability. What a shame!
Jillayne, that's how the SEC works. They hire lawyers from Wall Street securities firms, who then return to Wall Street securities firms, with better chances at partnership to those who doled out the most favors. And yet, people at the same securities firms frequently complain about government-know-nothings interfering with their transactions as if anything separates the two groups.
this is the archive, here's the article I mentioned:
Safe Haven | Nehemiah And The Copycats or 'Non-Profit' But Big Business
december 2002:
"We are increasingly of the mind that the Mortgage Finance Bubble is in the very final stage of terminal reckless excess. As we witnessed with the technology, stock market, and corporate debt Bubbles, ultra-easy money and Credit fuel eventually self-destructive speculation, imbalances, shenanigans and fraud, not to mention the final manic frenzy that entices the last of the remaining buyers. And, once again, the negligent Fed is asleep at the switch. "
It is amazing that so many in MSM knew of and read Tanta.
And they eulogize her and her foresight.
So why the hell didn't they pick and broadcast these ideas when it might have counted. In 2005 and 2006 ??
The way that she laid things out, if you read her you had to at least admit that there could be a validity to her statements. Points which could have, should have been followed up. But to save their jobs they let Rome burn.
They chose to "not-know"
Been reading H.L. Mencken. Who had a rather low view of his (our) country.
Kind of feisty just like Tanta.
Most of us reading CR and Tanta have had our light bulb moments. Since searching the archives is currently fashionable, I found this in my notes from 8/12/2007. It was a Sunday and I had time to reflect on what I saw going on:
The way to sell more sub-prime loans is to fund more sub-prime loans. This means finding people willing to sign for the money and underwriters instructed and willing to approve them. The conventional 30 year fixed rate mortgage is supplanted by exotic loans designs with features like adjustable rates and interest only payment periods. The desire to create high interest loans even triggers a willingness to fund 100% financing on home purchases. These "no down payment" loans depend entirely on the value of the property which in turn drives appraisal inflation. In the real world, no appraiser jeopardizes their lender relationships by reporting back that a property is not worth what someone is willing to pay for it.
@bgates,
I admire moral clarity. Thanks for the link.
Insurance works the same way--former heads of state insurance departments are pretty much guaranteed lucrative lifetime employment at whichever major broker is located in their state. And who's going to complain? The arrangement's in everyone's interest, except for the general public, of course....
@foolonthehill
"So why the hell didn't they pick and broadcast these ideas when it might have counted. In 2005 and 2006??"
Reasons are probably multi-factorial. An anon blogger had zero credibility back then. the MSM didn't even have bloggers on their radar.
CR,
This idea is worth a blog post:
Could warnings such as what Tanta wrote, have helped to STOP the reckless lending that continued on throughout 05, 06, and 07?
If so, WHO is sounding the warning alarm today?
There has been a turn of sentiment lately. Just this month the Realtors and LOs are finally starting to get it.
Jillayne | Homepage | 12.07.08 - 12:47 am | #
Do they get that they screwed up, or that they are now royally and utterly screwed?
cd
If so, WHO is sounding the warning alarm today?
Jillayne | Homepage | 12.07.08 - 1:18 am | #
Give the lady a prize!!
cd
Could warnings such as what Tanta wrote, have helped to STOP the reckless lending that continued on throughout 05, 06, and 07? If so, WHO is sounding the warning alarm today?
NO. There is an inertia to time and events. It is like when you completely commit to applying the brakes to a speeding train. It is still going to take a long time to come to a complete halt.
Dang no one got the dry humor of my two back...
Anyhow we're at the crossroads:
ttp://www.youtube.com/watch?v=Yd60nI4sa9A
Talk tomorrow.
c
Here's a quote uttered right around the time Noland wrote that article (November 2002):
On Milton Friedman's ninetieth birthday, November 8, 2002, Bernanke stated: "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve System. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
NO. There is an inertia to time and events. It is like when you completely commit to applying the brakes to a speeding train. It is still going to take a long time to come to a complete halt.
$12 Help | 12.07.08 - 1:21 am | #
Except when your jetliner impacts the side of a mountain.
US Economy...meet Mount Motherf*****.
cd
Except when your jetliner impacts the side of a mountain.
Good Point. I thought of that right after in clicked publish. I am pretty sure the crash date was 2/27/2007 when Freddie Mac announced new guidelines on their subprime mortgage purchases. They effectively killed the market in one day.
The dynamic involved here is the professional who finds a conduit or means to vent the truth and not to be complacent with being an otherwise well-compensated individual who is "just doing my job", "just following orders", "just getting by until I can retire", etc., etc. Perhaps her writings and influence will encourage other professionals in business and government to find ways to speak out and not be complacent.
Clearly regulators were asleep at the wheel.
Jillayne | Homepage | 12.07.08 - 12:42 am | #
I am sick to death of reading 'regulators were asleep' it simply is NOT true. The regulators were being coached from the WH/Bush staff. As a former FDIC employee from 1986 until late 2005 I know the FDIC and other banking regulators knew much of what was going on. They simply could not act under the current administration without facing the loss of their jobs and demotions. In addition - regulatory staff was cut to the bone via RIFs, office closings and a host of other procedures to eliminate staff including my own job. Nobody I know was asleep. We knew very well what the fuck was going on.
True. Safely employeed is so much more comfortable than correct and broke.
Could warnings such as what Tanta wrote, have helped to STOP the reckless lending that continued on throughout 05, 06, and 07?
There were plenty of people in the industry sounding similar warnings. As early as '04 it was clear where we were eventually headed.
But it was in everyone's interest to treat those people as crackpots, eccentrics...money was being made hand over fist and why are you trying to ruin it for everybody? etc.
FFDIC | 12.07.08 - 12:46 am
A poorly written article by GM that Tanta would have thoroughly trashed.
It's not clear that GM ever comes to any rational conclusion concerning what was happening at Moody's other than there may have been a profit motive involved (which of course by itself is neither illegal, nor immoral).
The last paragraph of the story is virtually unintelligible and ties nothing at all together. It actually made me wonder why I was reading the article. It could have been a Wikipedia article telling me that there is a history of downgrades in ratings on MBS.
Despite all the self-serving statements by Moody's execs, she can't get a quote on a key point and then assigns it to the industry as a whole, not to the company about which she is supposedly writing:
"The agencies maintained that it was not their responsibility to assess the quality of each and every mortgage loan tossed into a pool."
If not, what did "they" do and what did Moody's in particular do that led to the actual ratings Moody's assigned? The entire process remains a complete mystery as if she never inquired concerning how they rated anything.
Even as she gets into what should be the meat of the story, a weird anonymous statement in the passive voice appears:
"It elevated ratings several times after Countrywide complained, the people briefed on the matter say."
Okay, I understand no one from Moody's would so comment for attribution. In fact Moody's denies changing ratings without good cause. But who are "the people briefed on the matter" who supposedly said this to GM and why aren't they being identified?
I suppose some vague reference in the article to Congressional testimony was designed to convince me that someone in authority is getting to the bottom of all of this, but I never got a sense of what penalties, if any, might apply in the future or whether they just get to retire with all the many millions they 'earned' by slapping three letters on every complex financial security that crossed their desk.
Nobody I know was asleep. We knew very well what the fuck was going on.
FFDIC | 12.07.08 - 1:31 am | #
Fair enough, FFDIC. There was a similar dynamic in play just about everywhere, I suspect--field employees at the regulators, QC and underwriting staff at the lenders, underwriters at the insurers all knew what was going on but were being overridden or ignored, or worse, by folks higher up.
I am sick to death of reading 'regulators were asleep' it simply is NOT true. The regulators were being coached from the WH/Bush staff. As a former FDIC employee from 1986 until late 2005 I know the FDIC and other banking regulators knew much of what was going on. They simply could not act under the current administration without facing the loss of their jobs and demotions. In addition - regulatory staff was cut to the bone via RIFs, office closings and a host of other procedures to eliminate staff including my own job. Nobody I know was asleep. We knew very well what the fuck was going on.
FFDIC | 12.07.08 - 1:31 am | #
Please accept the thanks of a grateful nation...
cd
@circling the drain
"Do they get that they screwed up, or that they are now royally and utterly screwed?"
They get that they are now the ones royally and utterly screwed.
They've leveraged their own homes and haven't had a paycheck in many months.
I'm sure there were naysayers back when Glass-Staegall was repealed and even before then.
Circling the Drains -
Mother Sky doesn't like it either:
YouTube - Can: Mother Sky (Soundtracks 1970 Krautrock classic)
C
do you remember how you got to this site? i'm gathering for myself it was a reference made by setser on his blog back before RGE.
is that right?
From Angry Bear Blog - it was getting too partisan so I was looking for a new home - saw one of CR's guest blog posts and followed it there and never went back.
For a long time it was a steady diet of CR & Setser when the rest of the world could see no evil, hear no evil, speak no evil.
sportsfan | 12.07.08 - 1:37 am | #
I have this vision of Tanta asking God's staff if she can do a little lite writing about the poor lost woman who works for the NYT and God saying, "Not now, my dear child. I need you to focus on less earthly matters."
@FFDIC
If the regulators knew what was going on and were powerless under the current administration.....then what do we do now?
How can regulators operate free of a political system?
Do we just put the philosophers in charge?
Not being snarky.....I'm truly interested.
I have this vision of Tanta asking God's staff if she can do a little lite writing
Why, yes, of course. But break it at 4,000 pages and put the read more button in. And, by the way, we have our own version of haloscan.
"How can regulators operate free of a political system?"
That's impossible to do. The differentiation between a regulator and politician (and investment versus speculation) is false.
Schumpeter would probably say this is just part of the transition from capitalism to socialism. Personally, I'm a capitalist, so I find this depressing, but it is probably true.
How can regulators operate free of a political system?
They can't - the only check is to elect responsible leaders to insist & oversee good policy is pursued w/out that we're f'ed totally. There are no 'autopilots' on government.
Not being snarky.....I'm truly interested.
Jillayne | Homepage | 12.07.08 - 1:45 am | #
1. FDIC has to have a credible chair person and Bair is much better than former chair Don Powell.
2. NTEU(union) needs more power. Federal unions are unlike other unions and really have very little power and cannot strike, etc.
3. The FDIC Office of Inspector General is not independent enough and has serious conflicts of interest. It needs an overhaul.
4. Federal whistle blower laws suck and need Congressional attention.
5. Many senators will not second guess the FDIC if you write them with complaints including Barney Frank.
6. Age discrimination is a problem.
7. Race discrimination has been an age old problem.
8. Sexual orientation discrimination is a newer growing problem. DOMA didn't help and should be replealed.
9. Headquarters (DC) does not listen to the field offices.
10. Training needs attention.
11. Contracting is a huge problem.
alright so let's assume we're totally f**ked given I've heard that at least 12,482 times over the past two years.
Only tackling the topic of regulation and politics,
What's next?
ffdic, we hit publish at the same time. let me read what you have provided...
FFDIC,
Would you be able to go public; put a real name on your anon handle, and bring these suggestions to light in a public forum?
FFDIC - thought about this much?
Would you be able to go public; put a real name on your anon handle, and bring these suggestions to light in a public forum?
Jillayne | Homepage | 12.07.08 - 1:57 am | #
What sort of public forum my dear? I've already lost my job. Not much they can do to me now.
How can regulators operate free of a political system?
Regulators are supposed to be independent. Thus, civil service positions survive political administrations.
The problem is that some political administrations are more patently corrupt than most, e.g., the current one.
Then, just as a final FU to America, they loot the Treasury on the way out of town just like the third world tyrants they are.
Who is the Special Inspector General supervising the manner in which Paulson hands out TARP funds? That's right, there isn't one:
Economy -- Pulling The TARP Over Your Eyes
Wanna bet there won't be one until Paulson's TARP account is empty?
FFDIC - thought about this much?
$12 Help | 12.07.08 - 1:57 am | #
Is that a compliment or what? It's late and I've had too much chocolate.
How can regulators operate free of a political system?
Jillayne | Homepage | 12.07.08 - 1:45 am | #
Be brave and keep your resume current. Obama's appointment of Gen (ret) Eric Shinsecki as VA Administrator is a big one in the plus column for me--he's the ex Army Chief of Staff that threw himself across the tracks in front of the Rumsfeld Express and told the unvarnished truth on the staggering cost associated with any decision to try and occupy Iraq. He was subsequently marginalized and swept aside, despite being absolutely correct.
Guys like that are what keep regulatory functions working in a political environment. Nothing less.
cd
Regulators are supposed to be independent. Thus, civil service positions survive political administrations.
This is a false assumption. Many civil service positions are lost when agencies are required to close offices, conduct RIFs, force involuntary transfers 2,000 miles or more from home, force downgrades and demotions before allowing transfers to better locations or back home.
Is that a compliment or what? It's late and I've had too much chocolate.
FFDIC | 12.07.08 - 2:00 am | #
Well, it's not hostile, if that is what you are worried about. It's just that detail implies forethought.
John Stark writes:
Here's a quote from the San Francisco Chronicle that gets right down to the bottom line, from Joseph Grundfest at Stanford:
"Part of the unfortunate reality is that if real estate prices are going to re-equilibrate to a lower level that is significantly lower than the peak, it is mathematically impossible to have that happen without having homeowners and lenders lose a lot of wealth. To the extent that people think government policy can prevent that from happening, the only way you can do that is by having the government say, 'OK, you lenders and homeowners, you won't lose the wealth, we the government will lose the wealth.' And that means that all the rest of us will lose the wealth. But the wealth will be lost."
When I read the word 'wealth' my brain inserted the word 'debt'. Grasping that the homeowners 'wealth' is really a debt owed to them by the nameless all of us. To restore the homeowners unearned paper wealth means to place renters present and future in debt and would be a fundamentally evil and immoral thing to do.
He was subsequently marginalized and swept aside, despite being absolutely correct.
Let's not forget Gen. Shinseki was also forced to retire. I don't know whether your 'swept aside' comment was intended to include that or not, but the point is that he was fired by speaking the truth to Congress.
I found this site from Housing Doom, where I'd first gone when things just weren't seeming right.
And I just stayed. Lurked for a long while 'til I got up the nerve.
What I've been pondering this past several days is what appears to be the approaching end game. How do I handle it and discuss with wife because she's going to think that I'm nuts. She's already pretty weirded out by the large bags of rice in the basement. Believes in some of what's happening, but not all.
This past several years, we've gone from watching what companies to short to having the ability via proshares to short entire sectors as the cancer spreads. And now they've got funds set up to short Treasuries - yeah, I'm in for some TBT - and entire currencies (YCL as per MS). The thing has metastisized.
But if I hit the motherlode with a real spike in TBT/PST, then what's the point? The currency is then de facto toast so it appears to be not more than financial/intellectual masturbation. Gee, I got a 60+% return, but 60% of nothing is just nothing.
Spoke w/local coin/PM dealer this AM to do some background work on large purchase if I opt to roll out of my IRA in January. Can he get it and if so, what time frame? He also runs a small insurance captive and is required to keep cash in reserves and back also with LOC. He's spent 8+ months trying to get LOC from different banks for his insurance biz since they're all terrified to work with one another. He's now trying to figure out to move all of his money into foreign currency and if so, what currency (-ies).
Despite what dc1000 says, I still think that the deflation is going to snapback ferociously into inflation. People seem to ignore the larger picture with movement away from dollars and into other currencies or something else. At some point, China and the arabs will stage a de facto buyers strike of treasuries or start shifting heavily away and the currency comes home to roost. Even when I walk through it other ways, I still come back to that.
So it looks like the endgame approach here is to finally cash out an IRA so that about 15% of assets are in physical PM. Then we'll hang out in money market and watch carefully.
And that still leaves the logistical problems of having PM.
@FFDIC,
"What sort of public forum my dear? I've already lost my job. Not much they can do to me now."
How about this one. Send your ideas to CR. It's a start.
How bout just making the whistleblower complaints public via a blog entry/ comment format at the websites of the regulatory agencies?
But it was in everyone's interest to treat those people as crackpots, eccentrics...money was being made hand over fist and why are you trying to ruin it for everybody? etc.
That's what makes me so cynical -- bad incentives everywhere.
It's human nature to have these cycles, these grand pendulum swings between irrational exuberance and gross despair. When things appear to be going great, the vast majority are NOT interested in anything but keeping the party going.
That's why history rhymes... people just don't change, especially from a "mass psychology" standpoint. Kondratieff (long) waves and Elliot waves are ultimately the repetitive macroeconomic expressions of collective human behavior.
Comrade Bear:
That's why I've bought into the Kondratieff Cycle theory. Forget the russian communist bit, it's just simple human nature.
Still know next to nada about Elliot.
And that still leaves the logistical problems of having PM.
homedad43 | Homepage | 12.07.08 - 2:09 am | #
Your married to a doctor and you don't work. I think it is time for you to get a job at least part time. Home alone too much isn't ideal. I should probably also take this advice dad. Just sayin..
Hi homedad43
Thanks for the recommendation. I think I've visited that blog at least a few times.
"When I read the word 'wealth' my brain inserted the word 'debt'. "
I wonder if the equity debt/ratio has hit 1-1 in SFRs.
the equity percentage was 80%, I believe, around the time we abandoned real money in 1972, and that consistently fell, of course, under the supply-side regime we've had since Volcker was fired.
homedad43,
No logistical problem -- buy a good safe and don't tell anyone about it.
This is a false assumption. Many civil service positions are lost when agencies are required to close offices, conduct RIFs, force involuntary transfers 2,000 miles or more from home, force downgrades and demotions before allowing transfers to better locations or back home.
Okay, I stand corrected.
The only time I ever worked for the government, they made me wear green every day, sent me to this god awful hellhole and people tried to kill me.
How bout just making the whistleblower complaints public via a blog entry/ comment format at the websites of the regulatory agencies?
hong konger | 12.07.08 - 2:10 am | #
Fucking fabulous. It will never happen. Next?
"o it looks like the endgame approach here is to finally cash out an IRA so that about 15% of assets are in physical PM. Then we'll hang out in money market and watch carefully. And that still leaves the logistical problems of having PM.
homedad43 | Homepage | 12.07.08 - 2:09 am | "
I'm at about 25 percent, homedad, but I suspect I don't have as much money as you. Everything fits nicely in one safe deposit box. Which is a bank I can run to in five minutes.
Bob Dobbs,
You're assuming the banks will be open. Read up on Argentina.
Speaking of safe deposit boxes. Never use one in a bank if it is located in the bank's basement. They flood. Not pretty. Been there, got the soggy t-shirt...
"Comrade Bear (tj & the bear) writes:
Bob Dobbs,
You're assuming the banks will be open. Read up on Argentina.
Comrade Bear (tj & the bear) | 12.07.08 - 2:16 am | # [kill][hide comment"
I've got my ear to the ground, here and elsewhere. If it starts looking especially dicey, I won't wait around to see what happens. Like I said, five minutes.
Bob Dobbs | Homepage | 12.07.08 - 2:18 am | #
Putting your hairy old ear to the ground Bob will not prepare you very much for a bank holiday declaration or war.
FFDIC:
Yeah, I do work. Just get no paycheck.
And honestly, while I was pretty good at my profession, it only benefitted a corporation that would willingly sacrifice me in a job cut. She's directly and ultimately responsible for the care of more than 400 dying patients each day. So if what I'm doing helps support that effort, so be it. I couldn't do that job.
But kids? Oy. Raging egocentrism wears after awhile...
a friend writes:
Tanta's words resonate with reason and passion - and probably will for a long time. Hell look at recent sales of Liar's Poker.
35 yrs ago and now don't seem all that different:
...
a friend | 12.07.08 - 1:05 am |
I just picked that up a few weeks ago, along with his newest book "Panic"...it's just a little hard to get through as bedtime reading after hours of reading here. : )
Bob Dobbs,
Anecdote from Old Beruit: once anarchy set it, it was pretty obvious to see who had PM in the bank. Shortly after being identified, those folks were robbed and killed on one of their trips to make a withdrawal.
Bottom line is: you'll have to have a backup location to avoid making trips to the bank in public, so why not set one up now and at least spread it around?
All eggs in one basket never good.
But kids? Oy. Raging egocentrism wears after awhile...
homedad43 | Homepage | 12.07.08 - 2:21 am | #
My only kid is 29 now and about to produce my first grandchild a girl (Kimora)in Feb. Mixed emotions for sure but at least I can send this one home to her mom after a while...
Bottom line is: you'll have to have a backup location to avoid making trips to the bank in public, so why not set one up now and at least spread it around?
All eggs in one basket never good.
sportsfan | 12.07.08 - 2:24 am | #
Bob can keep is cash at my place! Good night...
Bob:
I took mine out of the bank deposit box; our history is that the government isn't beyond posting agents in banks to confiscate gold.
Comrade Bear:
Yeah, but I don't want to keep everything here in the house. One good hit and we're wiped out. So, who do I trust?
This whole thing is immensely saddening. Just saddening.
Sportsfan:
Concur. Absolutely.
So, who do I trust?
And that's taken the biggest hit of all these past few years.
FFDIC:
Congratulations.
FFDIC, following up on 'making it public,' just start writing it up in detail and someday you'll publish it.
homedad/Bear, I wouldn't have just one location at home, either. Be creative. Some basic carpentry skills never hurt either.
And Bob:
Don't let occupations fool you as to real financial wealth. Physicians usually don't get into the green years until later and for non-specialists, the money isn't what people think.
At an hourly rate, given some hours, it ain't as much as some might think.
Suggestion:
How about we start some kind of public whistleblower blog/website/forum in honor of Tanta.
A place where people like FFDIC can post problems and/or recommend solutions without fear of retribution.
Got it covered, guys.
I must reiterate, though, the absolute key is secrecy. If nobody knows it's there then it's not going to be taken. I mean nobody.
Sportsfan:
Carpentry?
Truthfully, an interesting idea.
Just a little tidbit from Michael Pettis' blog from a few days ago. I think it is significant.
http://mpettis.com/2008/12/is-china-experiencing-dollar-outflows/... At any rate this evening rumors have been swirling through the markets that Novemberâs exports have declined year on year by 7%. One of my former students, now a currency trader in Shanghai, just told me this. I have no idea if it is true, but it gives a sense of how nervous markets are.
t is mathematically impossible to have that happen without having homeowners and lenders lose a lot of wealth
yeah, valuation is not wealth.
Only one person in 100 million apparently understands land economics.
We could tax land value to zero and be a lot better off for it.
So, who do I trust?
Tough question. I guess my answer is no one other than your spouse.
One thing I would never do is look for a custodian to hold anything for me.
Good night, folks.
Sorry to rain on the parade.
The new black just might be executive leadership that values competence, listens to different ideas (rather than firing those who disagree based on the facts), and, yes, values intelligence.
Picking Shinseki is a big symbolic move.
I'm out too. Later!
There's been numerous credit expansion/credit contractions in U.S. history in the time of Andrew Jackson and after the Civil War(Panics & silver demonetization), the Roaring 20's/the Great Depression; numerous national currency crashes around the world; the 80's Savings & Loan Crisis; now the New Century deregulated derivatives bubble/crash...
It's not that these destructive cycles have not been documented(including CR) and much analysis throughout history but there's apparently too much money to be made by the Big Investment Wealth Players for Bubble/Bust cycles to go away.
It doesn't matter what you call the political/economic system in 'power'. The periodic crisis cycles always come back because the method or process to play these cycles will always be there in the players that fund the Casino and 'deregulate' and/or control the system with extreme credit contraction/expansion much to the repeated dismay of the public.
I mean knowing what we know from economic/finance histoy we will probably be able to call the next Big Bubble/Bust after we finally get through the pain of this one but that doesn't mean there will be any hope to stop it next time without the political power and will to do that.
I'm out, too. Goodnight, gentlepersons.
I'm still in. Must put more lights on the tree. It's only 1130 pacific time.
Homedad said, 'And now they've got funds set up to short Treasuries.'
The way this historical Boom/Crash credit cycle system is set up...the People can pay for their own demise by bailouts of bank losses while shorting themselves by shorting Government Treasuries. The Govt. is We the People.
In the meantime we can whistle blow each other on the front line of the bubble blowing management & staff(order takers & paperwork processors) while the Big Players are of course unaccountable and deregulated and live offshore or overseas with their wealth holdings fleeced in the last manufactured or at least deregulated/unregulated Bubble/Bust.
Sounds like we have a plan to finish the Crash.
guest, I'm buying $700 a month in Treasuries (actually, Treasury mutual funds), so I guess I'm doing my patriotic duty. Either that or I'm a dumbass.
This weekend gives me an uneasy feeling like something is imploding and no one is around to see or hear about it. Perhaps this week? I dunno, but I find it strange there there's no shotgun weddings for the Fed to partake in, nothing requiring a bailout right now... okay I guess automobiles... but its all pretty quiet on the front...
Let's not forget Gen. Shinseki was also forced to retire. I don't know whether your 'swept aside' comment was intended to include that or not, but the point is that he was fired by speaking the truth to Congress.
sportsfan | 12.07.08 - 2:08 am | #
What Rumsfeld did to Shinseki was far worse than just forcing him to retire. His staff leaked word of his replacement 15 months in advance, which creates the same sort of leadership split we're seeing between the outgoing and incoming administration now. Leadership from the gutter.
The announced replacement (Gen Bill Keane) ended up turning down the job, and Rumsfeld couldn't find a sitting Army 4-star that'd take the job. He ended up bringing back Gen Pete Schoomaker from retirement.
cd
Jillayne - sorry in advance for this comment, but I can't believe your asking
How can regulators operate free of a political system? Do we just put the philosophers in charge? Not being snarky.....I'm truly interested.
It's impossible.
It's not a new issue.
Read Plato's Republic. Heck, read the cliff notes.
There is no mechanical solution.
"Perhaps this week?"
It is a bit strange feeling to have a weekend go by without some imminent crisis which needs to have some quick resolution involving teeth gnashing and trillions of public dollars.
Maybe this is a bottom, if I'm a proxy for the average investor (and a generally excellent contrary signal all year). I have no urge to ride SSO, UYM, UYG or any of my other recent playmates back up to spx 950, so that probably means we'll close there by new year's.
Give us smart, competent people!
I wish the country said that in 2000 and 2004
Smart is not enough. A component of competence must be selling their smart ideas. Selling smartness to idiots is the challenge. I once wanted to be a writer. I was cured of that notion when I began to realize how many books full of good ideas sit moulding away in used book stores. It's sobering to realize that while a handful of people frequent used book stores, millions frequent football stadiums. We've no shortage of good ideas and smart people.
The problem is that good ideas are often bitter medicine. Selling work and saving is never so easy as selling playing and spending. And God, is selling the spending of other people's money easy.
What's a republic?
Who is today's Tanta? Who should I/we be reading today?
Jillayne | Homepage | 12.06.08 - 11:57 pm | #
Try Dr. Michael Hudson, here:
Michael Hudson - financial economist and historian
This guy has been ahead of the curve for years.
Who, exactly, was being stupid?
Who, exactly, ever said smartness was a higher virtue than goodness?
One of the hallmarks of stupidity is shortsightedness. Just because you can set the movie theater on fire and make it to the exit safely doesn't necessarily make you a genius.
Perhaps we are talking in two different universes? You seem to be assuming that smartness can be divorced from goodness. I'm thinking that maybe everything that is legal and logical in the sort term, isn't necessarily anything to write home about.
What's a republic.
The articles look interesting, but man, that is one ugly website. Will try reading a few though. Anyone else up?
Max writes:
many policy makers didn't understand these issues until 2007 or even this year.
Or even now. Or ever will.
"It is difficult to get a man to understand something when his salary depends upon his NOT understanding it."
Upton Sinclair
Since CR kindly reminds of Tanta's writings, and Unit472 called her an ultra-liberal, much to his chagrin, I'll repost here one of my favourite bits by her:
"Coda, for this Memorial Day: Tantas grandmas house was built, in part, by the love of Tantas grandmas life, a man who volunteered for service in WWII. He had to; he was too old for the draft. He lost most of his hearing on his tour of duty, but came back, with the recipe for SOS that Tanta still uses to this day. Euelna was a neighbor of grandmas, a founding member of the local chapter of the Air Force Mothers Club. The dead people she talked to included her son, who returned from Vietnam in the wrong part of the transport plane. There were giants in the earth, in those days.
And there are giants still. I want them to have a home to come back to. I want them to come back. Now."
Reverse Mortgages: An UberNerditorial
cruel, but aussies can be
Bleak's cartoon gallery | The Australian
Unit472 called her an ultra-liberal
Most of the regulars here skipped right past that brainless remark without comment. I doubt it really deserved a reponse from Isabel or anyone else, but since the subject has been raised, I have a few Qs for Unit472:
What exactly clued you in to Tanta's secret identity as an "ultra liberal"?
Was it her repeated insistence that federal and state regulators... y'know, actually "regulate" once in a while?
Was it her repeated frustration at the general cluelessness and venality of the government, REIC and media at all levels regarding the scale, omplexity and danger of the situation?
Was it her suggestions that competent, intelligent leadership guided by the public good might be better than the institutional fraud, corruption, kleptocracy and rule-by-special-interests so pervasive today?
Since when does expressing any of the above automatically "out" someone as an "ultra liberal"?
Yalt writes, Alertness would cost them future employment opportunities in the industry they regulate.
(I don't actually know to what extent this is true in the banking industry. It's certainly a problem elsewhere.)
This rings true in my line of motor vehicle safety. I've been fired from several jobs and paid well to leave others because I can't keep my mouth shut. My experience is that even as high as the federal inspector general's level, regulators get paid to maintain the status quo and cover their own ass until retirement.
Eliot Spitzer's treatment is typical. We all have skeletons of one size or another in our closets. Any would be government whistle blower has a target on his back from day one. To cast stones he had better be without sin...
.
From last thread: "Money Man writes - Little insight from the fork lift industry...These are breaking down daily and need maintenance....even if unused. Just a thought about the above post on goods being delivered. There are no goods being delivered. You will go shopping and find shelves barren. That is when Joe 6 pack will start the full on freakout..."
The next "victim" will probably be the Just-In-Time logistic system from A to Z and that is the real killer for J6Ps.
Banks could go bankrupt, many big businesses could fail but that is nothing compared to the failure of daily retail trade logistics countrywide.
That is when even another Great Depression turns into deadly serious mad max world. System wide meltdown straight ahead, probably next spring like Money Man says.
2 Visitors Online
Me and who?
Catching up this morning I found DeepBlue's link to Michael Hudson. Great reading. Let me encourage everyone to read this essay, which might be entitled "Five ways that the Illuminati have fleeced the sheep in the past, with predictions for short and medium term fleecing of Americans."
Reading how the techniques have been used over and over again through history, it gets kind of hard to think that they are not deliberate.
Standard Schaefer: The Coming Financial Reality, an Interview with Michael Hudson
Except when your jetliner impacts the side of a mountain.
So on the black box recording we hear (Tanta) Terrain. Terrain
(Pilot David lereah)Could you shut that damned alarm off?
(Tanta)(whoop)(whoop) pull up!pull up!
(Pilot)I'm out of here, you take the controls!
As if all this weren't enough, here's just one more thing to help keep the blues close and the bluers closer:
It's official: Men really are the weaker sex -
Science, News - The Independent
The problem is that some political administrations are more patently corrupt than most, e.g., the current one.
Well the real difficulty is that we're not really talking about quit pro quo
Volker - good morning blues... from Leadbelly 1949:
YouTube -
C
good morning everyone
MrM wrote:
Give us smart, competent people! I wish the country said that in 2000 and 2004...or 1932, 1976, or 2008
Circling the Drain | 12.07.08 - 2:00 am | #
About Shinseki - YES! - he exhibited the quality that seems to be the missing 'secret' ingredient...a bone deep integrity.
Jim A
then what are we really talking about? i googled quit pro quo thats you scatch my back ill scatch yours more or less. thats what has been going on for ages. so what are we really talking about?
There were folks who understood the problems in the mortgage industry besides Tanta. But they were also the ones, many times making money on the business either by employment or investment. This is where the grown ups are supposed to step in. Those grown ups would be the regulators or the government.
Many many people including those planning to retire on their investments were looking for investments that pay and those MBSs and the CDOs were all a part of answer they sought.
In the meantime the people are starting to feel the effects of the excesses. They do not like it. It is contained.
Error - washingtonpost.com
In reference to my above post FFDIC points to how the system has been broken. Someone somewhere is sitting on a pot of money taken from the rest of us. But hey that is free market capitalism. aaaarrrgggghhhh there are pirates you see in three piece suits.
HaloScan.com - Comments
Harm & Isabel: I concur. I wondered why no one called him on it.
The label "liberal" puts a person in a box. It assumes a stereotype with which to tar & feather "those people" who do not think as you do.
You may or may not actually be a lefty, but you are definitely "that sort of person" who might disagree with deregulation, high CEO salaries, or corporatist greed & arrogance, for example.
You may also be a person who is intelligent, has generosity of spirit, seasoned with a strong streak of Midwestern fairness & common sense. If that labels Tanta a (gasp!) ultra-liberal, then I'll have some of that.
Knee-jerk drivel which requires little thought!
And Unit, before you get your knickers in a twist, I'm a member of the radical middle. You know, one of those independent thinkers! We are your worst nightmare because "branding" just doesn't work with us. We can jerk to the right on one issue, then veer to the left on another. Of course, we been called the "squishy middle" by the MSM. It's because they can't stuff us in a box & slap a label on it.
Believe me, there's a whole passel of us & we voted heavily in the last election.
Newspeak really took hold in 2001 and got progressively worse because greed trumped everything else.
Newspeak - Wikipedia, the free encyclopedia
The basic idea behind Newspeak is to remove all shades of meaning from language with simple statements like 'the fundamentals of the economy are strong'.
The monied elite, the Bush admin., the MSM, the Wall St crooks were in collusion to perpetuate this financial ponzi scheme because they knew they could privatize the profits and socialize the losses.
Tanta spoke sobering truth to Newspeak.
As Seymour Hersh was to the Viet Nam war, Tanta and CR are to the mortgage meltdown.
In comments to the post referenced by Frank Rich, Tanta refers to discussions about bail outs.
HaloScan.com - Comments
Plantagenet writes:
Catching up this morning I found DeepBlue's link to Michael Hudson. Great reading. Let me encourage everyone to read this essay, which might be entitled "Five ways that the Illuminati have fleeced the sheep in the past, with predictions for short and medium term fleecing of Americans."
Reading how the techniques have been used over and over again through history, it gets kind of hard to think that they are not deliberate.
CounterPunch: Tells the Facts, Names the Names scha...er07122003.html
Plantagenet | 12.07.08 - 7:26 am | #
Good morning!
As a recently displaced FIRE employee (self employed, I will now check out what the CA Human Development dept has to offer.
Should be interesting, while my retirement funds still holds out.
Hey, maybe I could do status reports of the problems encountered for all future unemployed...
So what do you all think. Would it be worth the effort?
I know the first think I must do is stiffen my pride/ego for this process...The last time I went thru this process was 1985. I am sure things have changed since then..
@Volker
Do not worry. The problem is contained to toads, alligators and polar bears.
In the totally improbable case of male humans turning hermaphrodites en masse, expect the chemical industry to inject huge quantity of male hormones in drinking water, so as to restore liquidity...
The option A description of that link is the most concise accurate description of what happened that I have seen. HaloScan.com - Comments
The culture is losing patience with careless people making stupid mistakes who then pass the blame. (whocoodanode?)
Give us smart, competent people!
Smart, competent people can't and won't change a thing. It's the System. All the King's Horses and all the King's Men will not be able to put Humpty Dumpty together again. In fact, they'll only help break old Humpty faster and further....thankfully.
Down goes Humpty!!!
@kidbuck if he's still around and everyone else,
What is smart? You want a leader who is smart, but how do you define it? Ben Bernanke and Tim Geithner and even GW Bush have good resumes.
"Smartness" is a question that has had me thinking for a while. Do you have the ability to judge smartness? Why?
Krugman: US auto industry will probably disappear
STOCKHOLM, Sweden Nobel economics prize winner Paul Krugman said Sunday that the beleaguered U.S. auto industry will likely disappear.
"It will do so because of the geographical forces that me and my colleagues have discussed," the Princeton University professor and New York Times columnist told reporters in Stockholm. "It is no longer sustained by the current economy."
Yahoo! 404 - Page Not Found
About Shinseki - YES! - he exhibited the quality that seems to be the missing 'secret' ingredient...a bone deep integrity.
Hogwash! If he was any kind of a man and had any character and integrity, he would have opposed an invasion of Iraq from the start....even if it meant, and it would have, his career. Instead, he says 300,000 troops versus 150,000. I have news for you, you could have put a million troops on the ground, and the outcome would have been much the same.....because the outcome we now have was the goal. Controlled chaos trumps uncontrolled order.....and it's a boon for defense contractors and oil companies.
It is indeed hard to have the moral backbone to do the right thing when discovering one's source of income requires wading in a cesspool. No one has mentioned another factor that increases the difficulty enormously: having spouse and children. It's one thing to suffer the consequences of righteousness as an individual, but quite another to visit the effects on those one has chosen to be responsible for. Something, I suspect, but can't know for sure, that applies to my own family history. And for some, the internal conflict can be tragic.
homedad43:
Yeah, but I don't want to keep everything here in the house. One good hit and we're wiped out. So, who do I trust?
Trust in a bagged and buried metal box (if in suburbia). Dig and bury under cover of mundane activities (gardening/weeding).
I'm rural. I have no problem here. Currently I am probably ~25% in physical PM but was badly timed and bought when gold was just past peak (and I would very likely be safe in assuming my actual wealth level is a good bit below yours so my 25% is no great shakes). I've lost (currently) ~$200/oz and can only hope on a rebound. What really boils is now that tax time is approaching, I have to consider the prospect of dumping bad money after horrible money by putting more into my IRA. At this point, it seems to me to be nothing more than going outside and dumping a wad of cash into my trashcan - I'd MUCH rather use that same money to buy more PM but there is no tax advantage.
The wife and I don't make enough money to have ever benefitted from Bush's rich-man's tax cuts so we always end up being the turnip to the government's juicer.
Let's say protectionism kicks in full force and it succeeds for a few years. Where do we invest?
No stocks. PE of stocks will be high. Extra expenditure to cope with US employee expenses.
No commodities because demand dies.
Morocco Bama | Homepage | 12.07.08 - 10:09 am | #
Always trying to pound the square peg of facts into your round world view...once again you demonstrate neither reason nor measure - but then, unreasonable consistency may be your defining characteristic...others have said it better than I.
The best lack all conviction, while the worst
Are full of passionate intensity.
W.B. Yeats
In the meantime the people are starting to feel the effects of the excesses. They do not like it. It is contained.
lawn grass | 12.07.08 - 9:08 am | #
The grind goes on, the workers are being hailed as heroes, the company as spineless derivative matter. This is evolution toward the civil unrest, this is where it starts. I am not relieved to hear that Jesse Jackson was coming to support the cause.
"From Angry Bear Blog - it was getting too partisan so I was looking for a new home - saw one of CR's guest blog posts and followed it there and never went back."
I followed the same path to CR. I acually started out at Business Week with Greg Manikow's (SP) column, moved to Angry Bear and RGE then to CR. I have been a daily reader of CR since Dec 05.
Best way to make banking, finance, and wall street regulation free from poisoning influence of political bias or greedy self interest is to hand regulation over to software.
No whining and wheedling with a human "regulator" who can be offered a lucrative position after their term in return for turning a blind eye. A nice, cold, unfeeling and non-negotiable eye of computer software might do the trick as well as can be done.
Do not worry. The problem is contained to toads, alligators and polar bears.
In the totally improbable case of male humans turning hermaphrodites en masse, expect the chemical industry to inject huge quantity of male hormones in drinking water, so as to restore liquidity...
TheFrog | 12.07.08 - 9:50 am | #
I sure hope you're right. But, I have grown a rather perky set of boobs. I'm not complaining, mind you, but there's less and less reason to leave the house.
Save the silver first
A number of news sources are commenting that the abrupt drop in unemployment seems to be inconsistent with other indicators that are either coincident or leading to unemployment claims. An example is from FT Weekend below, excerpted from an article by Joanna Chung :
Gabriel Stein, of Lombard Street Research, said that labour market data were a generally lagging indicator but there was a curious dichotomy in the developments. What makes these numbers strange is that we have not yet seen anything like the economic weakness that they would imply.
In earlier recessions, job losses and an unemployment rate change of this magnitude was already associated with significant falls in activity. Yet so far US output growth has weakened, but on a four-quarter basis it remains positive. There were a number of potential explanations, among them that a fall in employment and rise in unemployment had a limited impact. But it may also be that we have still only seen the beginning of labour market carnage and that unemployment is going to get much worse.
Let me first provide context prior to offering a suggestion as to why unemployment appears to be almost 'leading'.
I have been a President or VP of three companies founded by others and have been President and CEO of two companies founded by myself. As a fiscal conservative and a social liberal I prioritized the creation of a diversified work force. The C level suite was populated by middle aged women, the general staff represented by a proportionate minority. Even given this kumbaya approach to business development I did find myself a bit disenchanted by the process, i.e., employees attitudes and work ethics.
So, please take that into consideration when I offer up a possible explanation as to why unemployment claims seem to be coincident or marginally leading to other prognostication runes.
Simply put, employers hate their employees.
The entitlement syndrome exists on both sides of the labor contract. As much as it is reported that employees feel entitled to their positions and compensation and that the worker is forever musing as to what the employer can do for them, the employer sees the employee as an infestation to the pristine business model that delivers not only lucre but affirmation as to the employer's superiority to the huddled masses collected in his (as a male I will limit this to my gender for that is where my antedoctal experience lies) working establishment each morn. There is a disease in small business,and it is what I refer to as the castle syndrome. That is,many small businessmen believe that they are kings prior to their building of the castle and should be afforded the courtesy and respect that all sovereigns are deserving of.
This mentality of 'ownership entitlement' has for the first time with this generation come to a cropper against the reality that there is an economic comeuppance a-rising. In the face of distributing their wealth to their employees versus hoarding for themselves and looking for the exit liferaft, the women and children are seen as dispensable.
Cynical? Perhaps. Accurate? Oh hell yes.
Krugman states, "lack of willingness to accept the failure of a large industry in the midst of an economic crisis."
I'm sick & tired of these Ivy League Tower guys. They're the soothsayers who look into crystal balls; graphs and charts and make pronouncements. They aren't looking for answers or solutions, just accolades. I trust my car mechanic's opinion on why the industry is in trouble far more than that guy living in a tower.
Do not worry. The problem is contained to toads, alligators and polar bears.
Not true. It IS a problem in humans. Increasing instances of biased birth ratios, reduced sperm counts. Humans are not magically immune to what ailes any and every other creature on the planet.
Where it matters, there is no significant difference whatsoever between a human and a polar bear.
For those of you who are not conversant with Gen. Shinseki's story, he called bullsh!t on Rumsfeld's estimates of troop requirements for the occupation of Iraq.
Pentagon Contradicts General on Iraq Occupation Force's Size
By Eric Schmitt
New York Times
February 28, 2003
In a contentious exchange over the costs of war with Iraq, the Pentagon's second-ranking official today disparaged a top Army general's assessment of the number of troops needed to secure postwar Iraq. House Democrats then accused the Pentagon official, Paul D. Wolfowitz, of concealing internal administration estimates on the cost of fighting and rebuilding the country.
Mr. Wolfowitz, the deputy defense secretary, opened a two-front war of words on Capitol Hill, calling the recent estimate by Gen. Eric K. Shinseki of the Army that several hundred thousand troops would be needed in postwar Iraq, "wildly off the mark." Pentagon officials have put the figure closer to 100,000 troops.
Pentagon Contradicts General on Iraq Occupation Force's Size
Rumsfeld, in wartime, deliberately undermined Shinseki as the chairman of the joint chiefs of staff.
In the tensions existing between the Pentagon and the military, Shinseki seemed a particular target. Explain.
Shinseki's last, say, year and a half in office was a series of apparently calculated and intentional insults from the civilian leadership, especially Donald Rumsfeld. The episode that got the most public attention was when Rumsfeld announced Shinseki's successor as chief of staff, about a year and a half before his term was up. Usually this announcement is made right at the last minute to avoid turning the incumbent into a lame duck.
frontline: the invasion of iraq: interviews: james fallows | PBS
So here is a stand up guy, constitutionally sworn to serve the civilian leadership and truthfully answer the questions of the US Congress, doing his duty and adhering to what is clearly a bone deep sense of integrity.
"(I don't actually know to what extent this is true in the banking industry. It's certainly a problem elsewhere.)"
Yalt | 12.07.08 - 1:02 am | #
The folks at the top of the regulatory agencies are well paid with excellent (and fully paid for) retirement benefits. They stay until they retire. So it's not so much that they will move on to industry jobs, it's that the regulatory agencies often are partners in crime in the sense that they support the financial infrastructure, enabling the malfeasance, and don't want to think about the difficulty and/or consequences of reform. Remember, Congress is always there to scream to protect its constituents. Look how Fannie and Freddie were protected for years. Critics in and out of government were vilified and marginalized.
Where is there a solution?......as our "economic war" gets worse, incidents like the Republic Glass situation in Chicago will multiply, the next steps will be "non-peaceful" protestations, police intervention will become more common (the reasoning involved by many will be that an arrest is a bed and a couple meals. I might venture to opine that NEXT year will be more horrendous for MANY. Do a search on Tent Cities - THAT'LL cheer you up!
...btw, "Morning......
Comrade Swan, excellent synopsis.
Let me begin by explaining I wasn't criticizing Tanta with my 'ultra liberal' remark. I just got the impression that was were she sat on the political spectrum.
It makes no difference where one is politically in the detection and analysis of a problem as it exists but it does when it comes to a remedy.
I don't give a fig for a so called homeowner who bought into a house with a tiny downpayment or even none at all and, down the road, defaults on their loan. Typically they bought into the idea they would profit using
other people's money to finance their
risky endeavor.
Tanta took the Barney Frank line that these were just decent folks who needed to be bailed out. Cramdowns etc. I saw most of them as crooks or thieves who falsified loan applications or did equity extractions to game the system.
Rather than modify their mortgages or offer them a cram down I'd like to see them prosecuted along with the mortgage brokers, appraisers and bankers who ripped off this country to the point where TRULY innocent people have lost their retirement funds, their home equity and their jobs because of this most recent iteration of the mortgage scam.
A number of news sources are commenting that the abrupt drop in unemployment seems to be inconsistent with other indicators that are either coincident or leading to unemployment claims.
Was this done to get the auto bailout rolling?
Do not worry. The problem is contained to toads, alligators and polar bears.
Not true. It IS a problem in humans. Increasing instances of biased birth ratios, reduced sperm counts. Humans are not magically immune to what ailes any and every other creature on the planet.
Where it matters, there is no significant difference whatsoever between a human and a polar bear.
I'm sorry. I'm very bad at irony. I was drawing a parallel with the subprime metdown ("it's all contained").
The part afterwards (about the injection of liquidity) was also supposed to be a clue.
Thanks for the laugh, citizen energyecon. I guess if Yeats said it, it must be true. By the way, the point of that was that, since they lack conviction, they are obviously not the best, just as the worst are not the worst. If only it was that easy, but that's you with your square pegs in round holes, and your biased misinterpretation of a famous poet.
Sinshitti, like all of his colleagues, are nothing more than glorified and honored mercenaries for Oligarchical business interests. They are hired thugs tasked with not only protecting the Plutocracy's investments, but also securing profits from the campaign of terror they are waging around the world.
Unit:
When in a hole stop digging.
I have read every Tanta post since 2005 and you my friend aren't qualified to comment.
You are grasping at straws and certainly don't know Tanta.
"Paradigm Lost writes:
Harm & Isabel: I concur. I wondered why no one called him on it."
Ever since unit blamed Head Start for rising prison populations, I've whizzed by his posts without reading.
Sunday, December 7, 2008
Quotes from the Wise : Week ending December 7th
'Early is the new wrong.' - Peter Clarke
'Deflation is a disorder of lending and borrowing. A committment of 8 trillion might not be enough to stop the worldwide margin call. Our leap of faith is that the government won't stop until it discovers what the right number is.' - Jim Grant
'What happened to hedge funds over the past few months was not statistically possible so it is going to be difficult to adjust risk management models to reflect what has happened.' - Michael Brandenberger
'I no longer want to run a short-only hedge fund, as it is very stressful, nerve-wracking and generally not very much fun.' - Bill Fleckenstei
plato wanted philosophers to be kings. Only one I know of was Marcus Aurealius, and tho he did a good job, he couldn't perceive that his son wouldn't, and didn't.
And philosophers were heavier on the ground then.
An important article on what happens when fundamentals of the government policy are unclear to business, with interesting parallels between 1930s and 2008 (apologies for a longish quote) Regime Uncertainty in 1937 and 2008 | The Beacon
Regime uncertainty pertains above all to a pervasive uncertainty about the property-rights regime about what private owners can reliably expect the government to do in its actions that affect private owners ability to control the use of their property, to reap the income it yields, and to transfer it to others on voluntarily acceptable terms. Will the government simply take over private property? Will it leave titles in private hands, but strip the owners of real control and profitable use of their properties? These questions fall under the rubric of regime uncertainty.
Between 1935 and 1940, this matter attained prime importance. So many businessmen and investors lost confidence in their ability to forecast the future property-rights regime that few were willing to venture their money in long-term investments. They constantly sought clarification of the governments designs, but President Roosevelt merely continued to rage against economic royalists and to blame a strike of capital for the economys ongoing troubles, including the depression of 1937-38, which played havoc with the general publics confidence in the New Deal. Treasury Secretary Henry Morgenthau tried repeatedly to persuade the president to make a public statement that would reassure investors, and as the president continued to reject his entreaty, Morgenthau became so frustrated that in a 1937 cabinet meeting, he blurted out to his boss: What business wants to know is: are we headed toward Socialism or are we going to continue on a capitalist basis?
(snip) I do not know that the regime uncertainty that an increasing number of commentators and others have perceived recently is comparable to that of the latter 1930s by now theres not much real capitalism left for the government to destroy, in any event. However, it is clear that the governments frantic actions of the past several months have created a situation in which investors have little confidence about the character of future property rights in the United States. The takeovers of Fannie, Freddie, and AIG, the massive interventions into finanancial markets, the huge bailouts of banks and other financial institutions, mixed with letting Lehman Brothers go down and resisting a bailout for the Big Three auto manufacturers (so far, at least) all these actions, and others, imply that a rational investor would do well to attach a huge risk premium to any money he puts into investments even for the intermediate term, not to mention the long term.
One of the clearest expressions of this outlook that I have seen so far was made recently by Lou Jiwei, the chairman and chief executive of the China Investment Corporation, who expressed a lack of confidence in Western financial institutions and said that his giant fund would make no new investments in them in the foreseeable future. As the New York Times reported:
Right now we do not have the courage to invest in financial institutions because we do not know what problems they may have, Mr. Lou said as part of a panel discussion on the second and final day of the Clinton Global Initiative conference [in Hong Kong]. . . . Mr. Lou said that the sheer pace of new initiatives and new rules issued by Western regulatory agencies was disconcerting and made it even harder for him to choose worthwhile investments. If it is changing every week, how can you expect me to have confidence? he asked.
How, indeed?
"...the Barney Frank line that these were just decent folks who needed to be bailed out."
I think it is a spectrum with three distinct types:
1 - The believer: Folks who really believed that housing was a solid investment and that the 3br/2ba rancher really was worth $450 sq/ft
2 - The permabull: The real estate professional who had leveraged into the bubble and was doing great on paper circa '06 and just couldn't stop buying as much as possible
3 - The scam artist: The gas in the tank, true criminals who would use straw men.
The problem is that the reality is never this cut and dry.
I don't agree with everything Unit says, but as Byz Ruins has indicated, he does make some valid points. He is correct that there is exceptionalism at play here. The Banksters should be held to account but those taking the loans are somehow unwitting victims in all of this? Bullshit!! Of course, it's quite ovvious to me that those who want to prosecute the Banksters and pardon the loan recipients are transparently playing politics. There's no other explanation for the exceptionlism.
Morocco Bama | Homepage | 12.07.08 - 10:44 am | #
And ah yes, courageous man of letters that you are - you are making your stand how again - oh yes, with your tin cup out stepping and fetching for the oligarchy...spare us, poseur.
And one other thing (going back hours on this thread to FFIEC' posts):
The Federal Reserve, is the big kahuna among financial regulators, and is independent of any Administration. The board members do read the tea leaves and bend to a certain extent with every political wind. Nevertheless, the structure is in place for any board member, and most especially the chairman, to do whatever they see fit in raising hell to see to it that a problem in financial institutions that they believe is serious is addressed. A board member can always visit the chairman and urge that action be taken. He/she can rally staff to his/her side. He/she can leak to the press. There are ways.
The problem is not the structure, it is the individuals. I've heard a Fed Chairman tell the Secretary of the Treasury that he needed to replace the current Comptroller of the Currency (this was eons ago). It is unimaginable that a reverse phone call of this sort could have/would have taken place. That's the kind of power they possess.
So, much responsibility for the financial fiascos now evident to all sentient beings lies with the inaction of Fed board members over the last 10-15 years. Couldawouldashoulda
HaloScan.com - Comments
Here Morocco, the bit where you are walking your talk...oh wait, that is for others! Bravely done conqueror of the hegemons, LOL!
More seriously, it seems that the apathy of regulators in the US (sleeping at the helm...) was responsible for a good part of the financial meltdown we've been experiencing.
Is the incompetency/wilful inaction of regulators contained to the financial industry ?
I'm a bit worried about regulators like the NRC (nuclear energy industry) for instance. I was told that the NRC was very reluctant to accept innovative stuff because they don't want to do mistakes. But, on the other hand, I keep on reading that the utilities want to extend up to 80 years the lifetime of nuclear power plants...
Does anybody have any idea?
Seriously guys, what good does any of this do unless the CDSs are addressed? Nobody seems to want to talk about them...
citizen energyecon, no, you are the poseur campaigning for the "Better War." You, sir, are the warmongerer and supporter of terror....the real progenitor of Terror. There was, and is no "Better War"...or smarter war. It was, and is an illegal and immoral campaign, and to posit that it's just a matter of proper strategy is revealing that you are morally and ethically bankrupt.
Morocco Bama writes:
Sinshitti (ed. Shinseki), like all of his colleagues, are nothing more than glorified and honored mercenaries for Oligarchical business interests. They are hired thugs tasked with not only protecting the Plutocracy's investments, but also securing profits from the campaign of terror they are waging around the world.
Morocco Bama | Homepage | 12.07.08 - 10:44 am
Shades of USMC Major General Smedley D. Butler who at least had the cojones to tell the truth about what he was engaged in. From a 1935 article in Common Sense magazine:
"I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents."
Huh?
I asserted Gen. Shinseki was a man of integrity. Full stop. Go read the words of the post.
The further editorializing is purely your work, MO - back to pounding things into your worldview, whether truthful or no - like I said, unreasonably consistent.
PS
You are a flaming hypocrite, enjoy your crawl through corporate life!
Here Morocco, the bit where you are walking your talk...oh wait, that is for others! Bravely done conqueror of the hegemons, LOL!
What you fail to realize is that everywhere I go, I sow the seeds of discontent. It takes time for those seeds to germinate and grow to maturity in plentiful enough numbers, but it's the effort that matters.
You can oppose the Beast within the Belly of the Beast...you just have to be clever and resolute....something beyond your current sychophantic skill set.
Those early comments were simply brilliant and prescient.
Keep telling yourself that, MO, keep telling yourself that...
Why oh why does disagreement repeatedly turn into name calling??
Maybe a little estrogen in the water supply suppressing the testosterone is a good thing, so long as there is still enough sperm left?
LOL! Thanks lawyerliz for a voice of reason - the sun is shining and there isn't a cloud in the sky hereabouts - all y'all enjoy the day...gotta go arrange a birthday party, TTFN.
Amazing how the seeds of discontent come with so much manure.
C
..It has also been my personal experience over the years that the OCC and OTS are not enforcing the old requirements that the people who approve credit policy be insulated from the people who make override bonuses on production volumes...
Excellent point. In a low frequency high severity environment a small number of exceptions can cause a lot of damage. In addition the OCC and OTS auditors are primarily looking for compliance issues not sound financial judgement. They might catch that TIL that went unsigned but they'll let a really toxic 100% neg-am investor loan slip by without a peep.
Great stuff.
In that last quote, Tanta meant to say Doug Duncan, not David Duncan.
Amazing how the seeds of discontent come with so much manure.
Do you fail to see your contradiction? I think you do. You're a big CR Fan. You are consistently patting CR and Tanta on the back for their prescient intelligence, and rightfully so, but you appear to have lost the meaning of the message. Nobody was listening to CR and Tanta back when it mattered. Why? Because there was a consensus Group Think at play in the financial and political community, and people like you who were part of that Group Think were deriding and chastizing the likes of CR and Tanta in an effort to perpetuate your Group Think and marginalize any disconfirming information. Can you not see that creating an echo chamber here is no different than the echo chamber that wouldn't allow CR's and Tanta's voice to be heard back when it really mattered?
Somewhere I read as to investing the thing to do is the opposite of what everybody else is doing.
I too thought she was older, since she was so wise.
I came here via Irvine Housing Blog, and I don't remember how I got there.
Didn't lurk for long.
I saw my real estate closing business stop in one day--it was the day a French bank refused to buy one of the evil securities, either Aug 8 or 9th, 2007. (Luckily I do other stuff, so am still there). The mkt stayed high. I read in the fall of 07 that Countrywide had a quarter of a billion dollars (then) in REOs and said to myself, this cannot end well, and got 3/4ths out of the stock mkt.
Had a miser for a grandma, who survived GD I pretty darned well.
The thing of it is we are a born and bred combination of social individuals (herd) with a few raging individualists. So it is HARD for most to go against the herd. The individualists can, and some of the others can force themselves. Thing is there needs to be training for those who are capable of going against the crowd, and the school system, when it isn't in chaos, is set up to breed conformity.
I got away with this in Catholic school religion by saying the answer you want is x, but I think the answer is really y. Got penalized for it only once. I would say most didn't really care, despite the nun's best efforts.
The reason this herd mentality is so strong is because usually, in most circumstances, it is evolutionarily successful. Less so, now, I guess.
homedad43 writes:
Comrade Bear:
That's why I've bought into the Kondratieff Cycle theory. Forget the russian communist bit, it's just simple human nature.
Still know next to nada about Elliot.
K-wave theory has a strong basis in psychology, and you can even argue that it is described in the Bible. Every 50 years (or 2 generations) was a Jubilee year (debts in system unsustainable, so were forgiven to prevent collapse).
As people live longer, K-waves get longer since length of 2 generations gets longer and is now ~80 years due to longer lifespan.
My grandfather lived through Great Depression 1, which influenced how he raised my mother. My mother passed some of his thrifty ways to me, but less so. And now it is time for me to experience what Grandfather went through.
Elliot waves are "data mining run amok", and equivalent to using chicken entrails for market analysis.
Morocco Bama, I think you've provided the incentive for me to finally install Ken's plugin. Thank you.
Jeez, when a guy like Shinsecki and all his colleagues are called mercenaries. Interesting. Every single person in the armed forces sucks?
How do you know he didn't oppose the invasion of Iraq? Because he didn't issue a press release? It's his job to do what he's told (within well written guidelines.)
And please read up on how things would have been different with a 300k plus occupational force. Overwhelming presence does indeed cause stability and in fact, lowers mortality. Rumsfield simply was attempting to teach the generals a lesson that their thoughts about war and occupation were outdated. Rummy was correct about a few things, but on this he was totally wrong.
No, I didn't support the Iraq invasion. Just sayin.
Comrade Kristina writes:
Seriously guys, what good does any of this do unless the CDSs are addressed? Nobody seems to want to talk about them...
Comrade Kristina | 12.07.08 - 11:02 am | #
You know it, that's why Chrysler and GM can't be a credit event .. you may also find this article I recently posted as intersting:
Synthetic CDO 'Slow-motion' Meltdown
By Jane Baird
LONDON, Nov 28 (Reuters) - Around half of the 3,648 synthetic CDO tranches rated by Standard & Poor's worldwide are at risk of ratings downgrades in the near future that could push investors to dump many of them on the market.
What's more, nearly a quarter of the synthetic collateralised debt obligation (CDO) tranches that started with investment-grade credit ratings from S&P have already been cut to "junk", according to data from S&P, which rates around three-quarters of the $600 billion market.
Synthetic CDOs are bundles of between 100 and 150 credit default swaps (CDS) on investment-grade companies -- bets that these companies will honour their debts -- that have been sliced into tranches based on degree of exposure to defaults.
S&P's monthly SROC (Synthetic Rated Overcollateralisation) figures are the key measure the agency uses to determine potential ratings changes.
An SROC of 100 means that a tranche has just enough cushion to absorb the expected defaults and downgrades of companies in the CDO portfolio to justify its current rating.
When the SROC goes below 100, S&P typically puts the tranche on review for a potential downgrade and then makes a decision on whether or not to change the rating within three months.
S&P released its monthly global SROC report for October late last week, showing that 1,951 tranches have SROC numbers below 100. The total includes around 300 tranches already rated at the bottom end at CCC- and D, at which point ratings downgrades are unimportant. "It's the SROC report that is the basis for the downgrades that follow," said Jamie Stuttard, head of pan-European fixed income for Schroders, which had about 18.2 billion pounds ($28.1 billion) of fixed income assets under management at end-September.
"The SROC numbers are critical, and the market is not as clearly focussed on these numbers as it should be, because SROCs are rather arcane," he added.
EFFECT ON CDS MARKET
Schroders does not invest in synthetic CDO tranches, but Stuttard pays attention to the monthly SROC reports as leading indicators of the impact on the credit default swaps (CDS) market of potential CDO downgrades and fears of unwinds.
"The synthetic CDO market has got real problems," he said. "When people put these deals together, they didn't believe that names they viewed as money-good like Lehman and the Icelandic banks would jump straight from investment-grade to default."
Two waves of panic about synthetic CDO unwinds have hit the CDS market so far, helping widen spreads to record levels in February and again in October. More could occur.
As opposed to the effect of market fear, actual unwinds are occurring gradually, dispersed by the wide variety of deals and investors, and are unlikely to take place all at once in a rapid meltdown, analysts and investors say.
In addition, S&P has made a series of adjustments to assumptions on correlations, probabilities of default and industry classifications for sectors such as broker/dealers, insurance companies, real estate companies.
S&P's "approach has been to publish pieces of their new methodology one at a time, and the implementation of the changes is still unclear", JPMorgan credit strategists said in a recent note, adding that S&P rates about $450 billion worth of CDOs in the market.
The SROC report for October consists of more than 100 pages of ratings, with ratings and figures for each of 3,648 tranches. The report did not provide aggregated figures.
Out of all tranches that started off with AAA ratings, around 63 percent are still rated AAA, 22 percent have been downgraded but still hold other investment-grade ratings and 15 percent have fallen to "junk" ratings, an S&P analyst said.
The lower the initial rating, the larger the percentage of tranches that have dropped to "junk". (Click on for a table.)
S&P has already taken some actions following the SROC results for October.
On Nov. 17, the ratings agency placed 260 European synthetic CDO tranches on review for possible downgrades, adding to roughly 500 that were already on CreditWatch negative.
"It is clear that downgrades are occurring, and the sub-par SROCs indicate many more are to come," said Matt Leeming, a credit strategist at Barclays Capital.
"This may increase pressure on ratings-sensitive investors to restructure or unwind transactions," he added.
On Friday, S&P downgraded 61 Japanese synthetic CDO tranches. A further round of downgrades on European synthetic CDOs is likely any day.
Some investors have mandates that may not allow them to hold investments with ratings below AAA or below investment-grade.
Ratings are also important for banks because of ratings-based capital requirements. A downgrade from AAA to junk can force a bank to increase its capital reserves for that investment from less than 1 percent of notional value to as much as 100 percent.
Posted by Anonymous Monetarist at 6:50 AM
Froggie:I'm sorry. I'm very bad at irony. I was drawing a parallel with the subprime metdown ("it's all contained").
Perhaps not. I have poor irony eyesight. Not enough sleep, too much coffee, low sperm count, boobs, all conspire to blind me.
On another note, a question born from the goldbugs. I have been pointed to http://www.professorfekete.com/articles/AEFRedAlert.pdf by a forum note. It posits the "end of life as we know it" due to early December's temporary bacwardation of gold. Now, I am not an end-of-the-worlder goldbug, just a minor gold investor (physical gold) but can higher minds (or am I too complimentary) address what appears to be histrionics to me? A temporary (so it seems) backwardation in gold doesn't portend the "End of Days", am I right? Just one of the many painful needles, an extension of the current economic septic tank beyond the stock market and realestate and nothing more?
@Morocco Bama 11:25 am - I have to agree with that. Confirmation bias is tough to fight and gratifying to yield to.
Confirmation bias - Wikipedia, the free encyclopedia
Overwhelming presence does indeed cause stability and in fact, lowers mortality.
Tell that to the 3-5 million Vietnamese who lost their lives in the 60's and 70's. Escalation only brought more bloodshed and a more determiend "enemy."
You don't want the Army running foreign policy. Read up on the Roman Empire. Sometimes the Praetorians chose pretty good guys and sometimes they deposed bad ones, and sometimes the Generals made pretty good emperors (Vespasianus & his first son), but as a system, it could have been better.
Sometimes this means someone who passionately disagrees should resign.
Sometimes they come back. Hurrah!
Thanks Comrade swan, I'll try and digest that for brunch. I was aware the CDOs were problematic as well but after awhile the Anagrams do me in while reading. Is there any solution to all of this that I'm just not seeing?
Morocco Bama writes:
"Smart, competent people can't and won't change a thing. It's the System."
Well, shit, then there's NOTHING we can do. Cynics and fatalists win. There are no good people -- just a stew of shit.
I'm with you, Morocco. Thanks for setting me straight.
You're insight is truly Tanta-esque.
We need to take our medicine.
With a constructive lens great opportunities await.
Comrade Kristina writes:
Thanks Comrade swan, I'll try and digest that for brunch. I was aware the CDOs were problematic as well but after awhile the Anagrams do me in while reading. Is there any solution to all of this that I'm just not seeing?
Comrade Kristina | 12.07.08 - 11:36 am | #
Comrade swan, while I agree we need to take our medicine, who will do the dosing? I would hate to see the patient flat line from an overdose...
And then there was a couple of million Cambodians who were killed by commies because we didn't intervene, which we probably shouldn't have. No good choices. I think that maybe this was an overpopulation event that we tend to explain (see Taleb) by a combination of morality, history, hubris, philosophy run amok etc, etc, depending on our tastes. Just because there is a plausible narrative, doesn't mean there is big T truth.
True of mainstream media headlines, also.
Where can I find the Shnaptser omnibus?
Anyone in Goverment Service who has BALLS to buck the system is a friend of mine. Spineless will hide and watch.
Morocco Bama, the US went in with very few troops and only built up later. duh, but the facts don't seem to get in the way of your ideology and desire to rant.
Not that I would have supported the Vietnam invasion. Just sayin.
Time for me to hit the beach. Have fun y'all.
And then there was a couple of million Cambodians who were killed by commies because we didn't intervene,
They died precisely because we did intervene...just not an intervention in the conventional sense. Capitalism injected into a largely agrarian, peasant society is literally a poison. It fragmented their social structure and created inequities and inequalities that didn't previously exist. What the Khmer Rouge did was horrible and atrocious, but its goal, to create a peasant paradise, was noble, if not naive. That's what's lost in that tragedy, and rarely spoken about. That anger and animosity towards the Ruling Class in Cambodia was borne of decades of abuse, injustice and inequality....and environment created and facilitated by British, French and ultimately U.S. Imperialism.
We're going to miss her for sure!!
Re: The gold "backwardation."
I'll give two answers: the goldbug / conspiracy answer, and another answer.
The first is that the Exchange is manipulating again, (vainly) trying to protect itself against the collapse from the organized program of taking external delivery of December gold to drain the warehouses and stop trading on the Exchange, or at least make them provide "real" (ie, higher) level of trading.
By keeping future delivery prices lower, there is less incentive for anyone to take delivery against a resale in a month or two.
Or something like that, is how the goldbugs would state it.
The second answer is that there is no backwardation; it's just falsehood and myth, part and parcel with the current angst among the gold community.
Here's the market, with the first column being the close on Friday, and the other two being the bid/ask pre-session today. If one wanted, they could make something of the 751/98 bid/ask in Dec, but, given that it is a contract in Notice, and there is (orderly, by the way) delivery going on, bid/ask doesn't mean much before opening.
GCZ8 \t750.50 \t751 \t798 \t
GCF9 \t750.90 \t754.6 \t755.4 \t
GCG9 \t752.20 \t755.2 \t757 \t
GCJ9 \t753.70 \t757.4 \t758.2 \t
GCM9 \t755.20 \t740 \t773.3 \t
GCQ9 \t756.80 \t0 \t770 \t
GCV9 \t758.70 \t762 \t764.5 \t
GCZ9 \t760.80 \t760 \t855.9 \t
GCG10 \t762.80 \t765.4 \t780.2
Z = Dec, F=Jan, G=Fed, J=Apr
M = Jun, Q=Aug, V=Oct
but the facts don't seem to get in the way of your ideology and desire to rant.
Not quite sure what point you're trying to make here. What is my ideology?
My point is that a discussion of the approach to the War on Terror is a cannard. It was illegal and immoral. I've said what I'm going to say about it...to discuss ways we could have approached it "better" and somehow "won" it would be, for me, hypocritical.
Just Sayin...bwahahahaha.
Praedor,
It depends on whether the barkwardation is temporary, in my opinion. For most commodities with high flows (gold is a low flow commodity), backwardation provides the holders of commodities profits without risk- they sell today, and rebuy their holding in the near futures at a lower price. If gold goes into near permanent backwardation, then I think Fekete is correct- a lot of the holders of gold won't sell at the spot prices because they don't trust the short sellers to deliver in the future. This signal would be a strong vote of no-confidence in paper money. When that happens, yes- things fall apart- it will the bell ringing on hyperinflation and the death of the dollar.
For what it is worth, I don't see hyperinfation. I think eventually the central banks will bite the bullet and allow deflation to bring about market clearing prices in all goods and services rather than destroy their power base. Fekete disagrees with this belief.
Yesterday one of the many Kohl's store in NJ
3 big lines.
2 lines had customers trying to take advantage of a 2 day sale.
1 line for returns.
When do they revise those thanksgiving day sale numbers?
Thus the equation
capitalism + murder = fascism
FFDIC writes:
Clearly regulators were asleep at the wheel.
Jillayne | Homepage | 12.07.08 - 12:42 am | #
I am sick to death of reading 'regulators were asleep' it simply is NOT true. The regulators were being coached from the WH/Bush staff. As a former FDIC employee from 1986 until late 2005 I know the FDIC and other banking regulators knew much of what was going on. They simply could not act under the current administration without facing the loss of their jobs and demotions. In addition - regulatory staff was cut to the bone via RIFs, office closings and a host of other procedures to eliminate staff including my own job. Nobody I know was asleep. We knew very well what the fuck was going on.
FFDIC | 12.07.08 - 1:31 am |
FFDIC- Your posts are always refreshing...Bush and Company produced and directed this show...Will we have a sequel?
Eliot Spitzer - Predatory Lenders' Partner in Crime - washingtonpost.com
Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.
Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.
In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.
But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.
Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.
When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.
Morocco - it's because I was in the same position at least from 06, albeit in a different part of the finance game, that I appreciate cassandrine prescience.
C
Riots continue across Greece after teen killed by police
Sunday, December 7, 2008
Nancy capitalists
The naysaying nabobs of nancy capitalism are at it again.
For folks who have made a living saying that 'it's different this time', that 'we're turning a page'- why they sure have suddenly found a special affinity for history.
As of late, the chattering is on property rights and visiting the Roosevelt age - I have never heard so many right-wingers use the term 'economic royalists' then I have as of late.
This reminds me of when the Dems took the majority in 2006, all the ideolouges in unison lept up and declared 'the subpeonas are going to be flying' to which I retorted 'What's all the concern? Did someone do something wrong?'
The cold hard fact of our age is that the bankrupt ideology of the rich that had greatly succeeded in drafting the inner monolouge of regular folks so that they would vote against their self-interests is colliding head-on with a Mr. Market that is a bit pissed off that we've inflated it out of the business cycle for the last quarter century.
Regular folks who don't as a matter of course lie find it hard to believe that the the lies told over and over again to them are actually lies. It is just hard to process for it is from a place-of privilege and power and entitlement-that is foreign to them.
However, the alarm clock is now starting to ring and people are getting a bit skeptical as to what the nice man on TV is saying.
I have created jobs, have met a payroll for many years, but it was not done by the benefit of an elite education nor the spelling of my last name.
It was done by having a dream, taking action to make that dream a reality, defying all the odds -even when my net worth was in my wallet-, and embracing my failures.
America will survive not by bailouts but by bail-ins. Success not because of government nor in spite of governemt but success oblivious to government.
In America you can accomplish whatever you set your mind towards, if you believe you can, and have the guts to take the chance. By your hands and by your mind you can create the reality you want from clay. That is America.
No government program can give or take away from us that uniquely American quality.
Maybe we need to be collectively punched in the face to understand we can take a punch instead of perpetually gorging at the punch bowl.
If you beleive you can you will.
If you beleive you can't you won't.
How do you get it done?
Just do it.
Why?
Because you can.
When?
Right now.
Posted by Anonymous Monetarist
REBear writes:
Riots continue across Greece after teen killed by police
Quick scan of Google News - Riots in Greece, India, Pakistan, Palestine, Thailand, Zimbabwe, Nigeria. (Wars in Irak and Afghanistan do not qualify for riots.) That said, most of these countries have "traditions" of rioting, so maybe it does not mean much.
MrM good point, wake me up when they're rioting in Manhatten...Now that I can get behind.
Take the Bread & Circuses away and you won't be able to put out the fires.
MrM,
most of these countries have "traditions" of rioting
Add Iceland, China to the mix and all in the space of a month...
FFDIC - you could try change.gov. The hiring of Eric Shinsecki gives me some hope that the Obama folks really do want to correct the mistakes of the past.
Several of you need to really read Tanta's first post that was the subject of the Frank Rich piece in the NYT and the comments section for that post. FFDIC also describes some of what happened. Do not think that there will not efforts to continue the same. Think bailouts here people.
Bob_in_MA on has it right . I see that this will be a huge waste based on my professional experience .
Addendum to gold post above @11:59
December open interest now stands at 1,557 contracts, or 155,700 ounces. Deliverable inventory close Friday was 2,918,028 ounces.
Even if all contracts resulted in external delivery, looks like the COMEX will open tomorrow. Maybe we can try again next month to shut it down.
Lionel: Yep! Guess we handed him the shovel. Will just shuffle along next time (even tho I was tempted to add to Sunsetbeach's comment.)
Sometimes I wonder, have they really read Tanta's posts? Maybe it's those rosy-red ideological filters they got on their specs.
JohnR: How about "cooda-wooda-shooda-node"?
I think the real difference between tanta and the bulls/cheerleaders is she was honest. Everyone knew the whole securitization business was a rigged crooked ponzi scheme.
The playas made a ton of $$$ on the way up and most of the way down. I doubt tanta got any of it, because she had integrity.
Truly a great loss.
She had a flaw though. She hung on to a misguided belief that the GSEs were somehow different and defended them even when it was clear after all the chicanery in 03-05. Just as crooked and maybe moreso since the US Taxpayer was on the hook, IMO...
"Seriously guys, what good does any of this do unless the CDSs are addressed?"
I still don't get why this is an issue. The parties involved just need to mark this garbage down to par zero and write it off.
So all the national moneycenter banks go tits-up. How is that a problem? It isn't. New banks (or more conservative ones who took less risks) will take the market share. Throwing multiples of the GDP down the rathole in bernanke bubble debt will not help things in the long term.
the problem is that ben and hank really do think that wall street is an important part of the economy. it isn't. any business that needs to use large-sized debt and leverage to survive is ultimately a liability to everyone. does anyone see steve jobs begging congress for a handout?
Ok bgates, but why is that not being addressed? I would love nothing more than to see Citi, BofA etc. go down faster than a cheap call girl on Hollywood Blvd personally.
---
Austin Tex writes:
\tRe: The gold "backwardation."
...bid/ask doesn't mean much before opening.
GCM9 \t755.20 \t740 \t773.3 \t
GCQ9 \t756.80 \t0 \t770 \t
\t Austin Tex | \t\t\t\t12.07.08 - 11:59 am
---
To pick up on this line of questioning, can you explain the M9 & Q9 (0 is typo or...?) values? I find it odd that there is backwardization in these two months, but none in the other periods.
Also, I'm finding this GHS (Bears' Chat)/Goldbug discussion odd and can someone provide a little history/context for this "The World Is Ending!!!11!" vs. "Same ol', same ol'" dichotomy? While I don't see Gold/Silver as the savior of the future, I do think that not having converted fiat currency into hard/tangible assets rather risky going into the unknown as it is currently playing out...
"Ok bgates, but why is that not being addressed? "
well, obviously the market is addressing it in terms of BSC, C, PLD, GSG, LEH, AIG et alia.
Every taxpayer has involuntarily borrowed a quarter million bucks to buy shares in the worst hedge fund ever.
I believe gold backwardized in early 2002. maybe it means it's a great time to buy stocks!
Tradition of street protest:
Prevalent in cultures where power is not granted (and limited) by the People to their Government but where power belongs to the Sovereign who grants privileges to the People. No real understanding of property rights. Just fights over privileges.
Question for you looking at 2009:
Is your 2009 budget (business or personal) less than your 2008 budget?
good ole GM has an article up in today's times, "Debt Watchdogs: Tamed or Caught Napping?" on the rating agency Moody's
RE the June/Aug bid-asks in GC gold.
Again, those are weekend bid-ask numbers almost 24 hrs from open outcry, and almost 8 hours from electronic trading, so they are all but meaningless. The real series, of course, are the trade prices: the first column.
One of the things I believe is lost in the gold argument is that there really is a difference in exchange gold vs "personal" gold, defining the latter as generally accepted gold coins, 24K jewelry, etc.
Exchange gold is institutional store-of-wealth or industrial gold. Imagine going into your local pawn or coin shop with a 100 oz bar, and trying to get it sold without assay/drilling/validation.
I think that explains a large part of the difference between "Ebay" gold and COMEX gold (if in fact that exists).
A gold coin is a defensive asset, for sure. A 100oz gold bar, unless one is a jeweler or make high grade circuit boards, might be an albatross.
Unit472 writes:
Tanta took the Barney Frank line that these were just decent folks who needed to be bailed out. Cramdowns etc. I saw most of them as crooks or thieves who falsified loan applications or did equity extractions to game the system.
Rather than modify their mortgages or offer them a cram down I'd like to see them prosecuted along with the mortgage brokers, appraisers and bankers who ripped off this country to the point where TRULY innocent people have lost their retirement funds, their home equity and their jobs because of this most recent iteration of the mortgage scam.
Tanta took the line that we shouldnt be upset per se about attempting workouts. It probably wont do much good but there was no reason not to try.
See
Calculated Risk: FDIC Mod Plan: Welcome to the Real World
and
Calculated Risk: IndyMac-FDIC Mortgage Modification Plan: Still in the Real World
And she didnt that just because somebody was decent and kind they should be bailed out.
See
Calculated Risk: How Not to Write a Hardship Letter
Tanta favored cramdowns in bankruptcy. because in make the lenders pay more attention to the loans.
lenders mark to model, but if you let them, BK judges will mark to market.
I see it as
If the person can afford the house at market price as determined by a BK judge why kick them out so the bank can try to keep the house on the book at original loan value and the bank managers get a bonus based on the fantasy value.
When Donald Trump and the Cerberus people get prosecuted for their leveraged buyouts I think about prosecuting leveraged home buyers.
"might be an albatross"
it will be interesting if wealthy individuals begin to start taking delivery in Chicago and New York on a significant scale. gold makes a good candidate for the next bubble after treasuries crap out.
Tex:
A gold coin is a defensive asset, for sure. A 100oz gold bar, unless one is a jeweler or make high grade circuit boards, might be an albatross.
But...it sure makes people's eye go all funny to look upon their stacks of gold bars. Do you REALLY think Kelly's Heros was bogus?
No way!
You are partially correct. The reason to invest in gold, silver and miners now is not backwardation or the December theory of taking delivery.
Those are interesting to watch. But the real reason to invest here is because of currency debasement all over the world, and especially in the U.S.
You can't deny that gold does have its runs, and they can be pretty spectacular. So, by buying now, you are positioning for a run in the future and you have to be prepared to hold through any short-term downturns or manipulations.
Last year, every major asset class in the world declined (most substantially) except for two: U.S. Treasury bonds and short equities.
A lot of us here were able to see the opportunities in short equities and profit by holding through some very difficult times. In some cases, we were early but made out okay by being patient and sticking to our guns.
Some of us here feel: 1) U.S. Treasury bonds are the worst class to own going forward; and 2) precious metals are one of the best.
That's all.
A run up in gold would not necessarily be a bubble.
It would be a true flight to quality as all paper assets break down. It would be a return to normalcy, not a bubble.
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Frank the Frogwrites:
\t
Is your 2009 budget (business or personal) less than your 2008 budget?
\t Frank the Frog | \t\t\t\t12.07.08 - 1:09 pm
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Yes, and yes. These answers are why I started surfing through the blogosphere these past 3-4 years. I wanted to research to see if it was just me or was I a part of a larger group realizing how the budgetary concerns were getting out-of-whack at a macro level. The answer seems to be that I was not alone in my concern in the past or going into the future. However, the question to me seems to be trending into a greater concern:
"Am I going to be able to make my 2009 budget's income side after I have trimmed much back in regards to my expenditures?"
As of now, I'm wondering what my options are besides selling what I own. It is a good short-term stop-gap measure, but having only that option leads me to foresee a future of Okie Travels and to wonder if I'll have the courtesy to cover the latrine outside my lean-to...
rich: Some of us here feel: 1) U.S. Treasury bonds are the worst class to own going forward; and 2) precious metals are one of the best.
But do you mean physical PM or paper PM? Or indirect PM (mining stock)?
A Jewish friend of mine said last week:
There's a good reason Jews have become the world's diamond merchants.
Think about it.
" It would be a return to normalcy, not a bubble."
these things are relative. getting back to 1-10 gold/djia is a good start, but 1-1 probably means that gold is overpriced and equities are not.
It's Sunday, why not a sermon? On business ethics? It kind of applies to ...everything going on here.
Lifted this from the local paper,from an ex-businesswoman turned clergy who started an extremely successful church locally.
Deborah L. Johnson, Ask the Expert: Honesty is the best policy: Values that work everywhere - Santa Cruz Sentinel
"The first step toward creating a more ethical business environment is to refrain from distinguishing environments.
The same guiding principles that work in the most basic relationships in our lives must be courageously used everywhere. People are people -- they like being appreciated everywhere and cheated nowhere. Values such as fairness, honesty, respect and good will should never be reserved for specific arenas; they should be fully activated.
The root word of integrity is "integer" meaning whole, without fraction or fragmentation. We are out of integrity when our values are fractured or fragmented. Integration is the process of bringing the pieces together to make a whole. Our greatest ethical challenge is consistently aligning with our highest values and integrating them with our business practices.
As a sales representative for Procter and Gamble, I was assigned specific accounts to manage. Since the customers already bought the products, my job was primarily to push for greater volume through special promotions, in-store displays and increased shelf space. I was trained to play "the game" of manipulating my customers. Tell the manager he needed twice as much product than he did, and then let him cut the order in half. The predictable outcome never resulted in significant increased purchases.
I decided to practice the same principles in my business environment that I know work in my
personal affairs. I would tell the truth and partner with my customer in getting his needs met.
My new strategy was to suggest to the store manager only the amount of cases I thought he could actually sell based on careful analysis of his sales record, which I was more familiar with than he was. My recommended amount represented a marginal increase above the last similar promotional orders. The automatic response was to cut my proposed order in half. However, the manager would sense the lower amount was suspiciously inadequate. At that point, he would have to turn to me to inform him of his purchasing patterns. Gladly, I would provide the information. The managers' initial concurrence was usually reluctant. Expecting to be misinformed, managers never agreed with the sales representatives.
My next step was to provide the manager with extra service to make certain the product moved. As the managers began to depend on me for accurate information, trust was developed. Each new order had a marginal increase and over a relatively short time period, the sales grew rapidly. This partnership model significantly outperformed the competitive approach.
I used this same telling the truth and non-adversarial approach in my real estate career.
Information is key in residential real estate sales. It is easy to be tempted into hoarding information for advantage. However, the more collegial we are with our so-called competition, the greater resource we can be to one another. Since we share the same market with our competitors, satisfied clients translate into more business for all.
Even as an institutional real estate lender with Prudential, I found the strategy of honesty and partnering with all parties to be extremely effective. Every transaction has "deal points," bottom line parameters that must be met to complete the transaction. It's customary to conceal these points so those in the negotiations never know each other's outer limits. Being honest about my deal points prompted others to be candid about theirs. Appropriate strategic disclosure allowed us to craft something with everyone's best interest at heart, even with transactions in the hundreds of millions of dollars.
We become unethical when we cut corners. Dare to integrate your values with your best practices.
The Rev. Deborah L. Johnson, founding minister of Inner Light Center, has a bachelor's degree in economics from University of Southern California, a master's in business administration from UCLA and a ministerial degree from the Holmes Institute.
yagij:
leads me to foresee a future of Okie Travels and to wonder if I'll have the courtesy to cover the latrine outside my lean-to...
May I suggest a more robust and comfortable alternative to a mere lean-to? Perhaps you might "invest" in a new home:
Refugee Tents, Relief Tents, Manufacturer, Disaster, Emergency, Shelter, temporary housing, Afghanistan, Africa
Almost everyone believes that if gold were to go to $1,200 or silver to $20, mining stocks would be a triple, at least. You can't manipulate mining stocks easily. They produce the real thing, physical. Higher prices would crank the mines up fast, and stocks would rise in anticipation of the crank.
I am a little wary of the ETFs, GLD and SLV. More so of SLV because it's such a thinner market and more prone to manipulate and squeezes.
Supposedly, SLV has become the world's #1 repository of above-ground silver stocks, with about 213 million ounces. But that's 7 million less than last month. It's the first bullion drawdown in SLV's 2.5 year history. Somebody is swapping SLV shares to draw down bullion stocks.
I figure it would take only about $2-4 billion to buy enough SLV shares and long Comex contracts to do an effective silver bullion squeeze.
Stay tuned!
"But...it sure makes people's eye go all funny to look upon their stacks of gold bars."
It used to be that one could go on a tour of the gold vaults at the NY Fed (I don't think any longer, though).
I remember going down, and seeing those stacks of thousand and five thousand oz bars, shining on the gray dolomite floor. (That's why they store it there, BTW: Only solid rock can hold the weight)
It was a moment as in the old John Stewart song, Kansas Rain: "Standing in line at the Bank of America, nobody spoke, they were in the house of God."
Yes, I too believe gold will again have its day. Anyone who wants to go against thousands of years of history and the unique properties of the metal is heroic if not foolish.
It's just that the 100 oz bar, here and now, is, to my mind, not a good defensive asset.
yagij et al.: Comparing 2009 to 2008 Budgets as a percent of 2008:
Is 2009, 80%, 50% or 20% of 2008?
I am surprised by how many business and personal 2009 budgets in NE are (now) 50% of 2008.
What do you see where you are?
I just don't understand why more people didn't heed the warnings such as Tanta's that were being discussed at the time.
Would have saved everyone from so much misery.
Tanta wasn't doing Frank Rich's job because there's no pathway for going from a single parent middle class family to the NY Times. Perhaps Rich should talk to his editors about creating a path for people like her rather than just singing her praises.
We know little about Tanta other than the picture she wanted us to form about herself. Since her passing there's been no comments from anyone who knew her in real life. In short, I'm thankful for the civility around here, but there is a certain Stepford wives quality to it.
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Austin Tex writes:
\tI think that explains a large part of the difference between "Ebay" gold and COMEX gold (if in fact that exists).
...
A gold coin is a defensive asset, for sure. A 100oz gold bar, unlessone is a jeweler or make high grade circuit boards, might be analbatross.
\t Austin Tex | \t\t\t\t12.07.08 - 1:14 pm
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FD: I'm long silver & gold. (Mostly mint coinage, but some bars)
If COMEX gold exists or if the difference between eBay gold & COMEX gold exists?
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rich writes:
\tThose are interesting to watch. But the real reason to invest here isbecause of currency debasement all over the world, and especially inthe U.S.
...
Some of us here feel: 1) U.S. Treasury bonds are the worst class to owngoing forward; and 2) precious metals are one of the best.
\t rich | \t\t\t\t12.07.08 - 1:17 pm
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I believe it is what is pasted above that explains my bets. I'm betting on currency debasement from every side, and I want to get hard assets as soon as I can. If things really get furry, I'd imagine that I might blow through my available lines of credit to convert more fiat into more tangibles. I may end up losing "wealth" by performing badly valued trades from fiat->tangibles and vice versa, but I feel that I'm definitely going to lose "wealth" between old USD->new USD (e.g. 90s Mexico). There isn't any other way for this game to play out: Debt is repaid or written off, and as a Prudent Saver, I am going to take it in the shorts either way.
While I don't see sitting on a mountain of gold as a good idea--including exchanging it, protecting it, etc--I am now diversifying between various kinds of assets--food, water, PMs (Coins/Bars), and protective measures. Not only am I concerned about the well-being of me and my own, I'm concerned about the suffering neighbor who may not have my best--or our collective best--interests in mind. I'm not even mentioning TPTB in Washington and other places of financial and political influence. They probably most definitely won't have my best interests in mind...
"There's a good reason Jews have become the world's diamond merchants. "
There was a discussion on this board a few weeks ago about price problems in the diamond market. Someone (maybe me, I don't remember) speculated that demand would ensure that something of value will exist that can be sewn into the lining of clothing and not set off metal detectors.
Your point is taken.
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Praedor Atrebates writes:
\tMay I suggest a more robust and comfortable alternative to a mere lean-to? Perhaps you might "invest" in a new home:
Praedor Atrebates | 12.07.08 - 1:26 pm
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If times weren't trending to "More Tough", I would've laughed out right at that idea. Now, I'm bookmarking that page...
"If COMEX gold exists or if the difference between eBay gold & COMEX gold exists?"
Sorry, badly written on my part: COMEX gold certainly exists; I don't know about the spread between COMEX and the personal gold market; I don't trust most of the anecdotes, and can only assume they are true.
@ Isabel | 12.07.08 - 5:31 am | #
Thank You Isabel - if you dig into the comments you'll actually find Tanta's Grandmother's SOS recipe. Very good but not the same as my Mom's (who of course tried to match what my father ate in WWII).
This was also the source of a lot of the SPAM jokes later on too - WWII culinary culture - and yes my family ate Spam on occasion though not as often as SOS.
Just thought I'd fill in some of the details from that post - remember it well actually.
yagij:
If times weren't trending to "More Tough", I would've laughed out right at that idea. Now, I'm bookmarking that page...
Yeah. That's how I had it to send. I first found that page after Katrina got me curious. Then I bookmarked it after I was reading bits and peices about new tent cities.
I'd prefer one of these (with stove pipe port in the roof!) to a hastily bought or borrowed REI igloo camping tent.
rich(Unrated) writes:
A Jewish friend of mine said last week:
There's a good reason Jews have become the world's diamond merchants.
Think about it.
rich | 12.07.08 - 1:21 pm | #
I'm not Jewish but I've thought about it plenty - and an added benefit is that many gemstones if not all will pass through metal detectors undetected. X ray machines will spot them though... but there are ways to camouflage them so they don't look like something special as they pass through.
Try that with gold or silver.
New Thread.
JAL:
New thread...The prudentbear site isn't typical of sites I usually frequent in layout. WHERE is the new thread?
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Frank the Frog writes:
\tIs 2009, 80%, 50% or 20% of 2008?
I am surprised by how many business and personal 2009 budgets in NE are (now) 50% of 2008.
What do you see where you are?
\t Frank the Frog | \t\t\t\t12.07.08 - 1:27 pm
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I'll use a parent's professional life as an example.
My father's has worked in car dealerships for almost 30 years. He is definitely a/the canary in the coal mine for the rest of myfamily. He is at the front lines of where we are and where we aregoing. He has seen his after-tax take-home go down 70% from Sept. 08 -> Oct. 08. On what was left, it has gone down another 30% from Oct. 08 -> Nov. 08. Putting some example numbers to it: Sept. 08: $10k -to- Nov. 08 of $2k. Turning on a dime to the tune of 8k USD over the course of 60 days means a personal budgetary cut of 25% as of Nov. 1, and I wouldn't be surprised if he turned that up to 45-65% by Jan. 1 if possible.
As for the professional side, it is absolute carnage at his dealership, and they were one of the top selling dealerships of their brand in the entire state. They have gone from moving 500 units total as of August 2008 to moving 150 units total as of November 2008. Out of those numbers, 2/3 are new units. Out of the new cars being sold, they are making $11/unit before financing & insurance. Between Honda trying to adjust via manufacturing and the dealership trying to adjust via retail, it is a train wreck of huge proportions. They are sitting on 750 new units across 3 large car lots, and Honda is moving another 250 units their way. There is no where to put the new inventory, no way to finance the sales of the existing inventory, and basically no way to avoid the wreck unless you want to jump off of a moving train going over a deep canyon (e.g. No jobs to replace the current one).
rich - Which mining stocks do you like?
We know little about Tanta other than the picture she wanted us to form about herself. Since her passing there's been no comments from anyone who knew her in real life. In short, I'm thankful for the civility around here, but there is a certain Stepford wives quality to it.
\t AmuseMe | \t\t\t\t12.07.08 - 1:32 pm | #
AmuseMe | 12.07.08 - 1:32 pm | #
Pray tell, why do you consider postings to a blog NOT "real life"?
Have you bothered to read any of Tanta's posts or her comments? She put more sentences together on this forum than most econ departments PhD candidates do in a year. How else is one to get to know someone, other than by what words they put out - and she willingly put them in easily recallable fashion. And to lump the commentors as akin to Stepford wives.... try that on an active thread, please.
I was poking through the archives this morning and found this from Tanta:
Calculated Risk: Dr. Goolsbee: I’ll Stop Impersonating an Economist If You Quit Underwriting Mortgage Loans
I remembered reading that article from Tanta when Obama announced Goolsbee would lead his economic advisory board.
I guess it doesn't matter. But for cryin' out loud, let's not make this the theme song of the Obama administration.
YouTube -
Sigh.
DOH! Nevermind...I am viewing two sites at the same time and got cornfused.
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Austin Tex writes:
\tSorry, badly written on my part: COMEX gold certainly exists; I don't know about the spread between COMEX and the personal gold market; I don't trust most of the anecdotes, and can only assume they are true.
\t Austin Tex | \t\t\t\t12.07.08 - 1:39 pm
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I've only got "anecdotal" evidence of this trend, and I've started capturing data so I can start sifting through it in a technical manner.
I've only been watching the movement of silver through online stores (e.g. apmex.com) and eBay. When it comes to available inventory, eBay is a better bet, but as for price and comparing those prices to COMEX, etc, I'm not sure that there is any real data on it yet. However, people will buy where and how they can so if they are mainly using eBay it does mean something...
We know little about Tanta other than the picture she wanted us to form about herself. Since her passing there's been no comments from anyone who knew her in real life. In short, I'm thankful for the civility around here, but there is a certain Stepford wives quality to it.
AmuseMe | 12.07.08 - 1:32 pm | #
AmuseMe | 12.07.08 - 1:32 pm | #
AmuseMe, obviously you are not a regular reader. Her sister has posted numerous times.
yagij:
However, people will buy where and how they can so if they are mainly using eBay it does mean something...
I favor kitco, though I haven't (tried) to buy from them recently.
I have Krugerrands but as of today:
The following products have been temporarily removed from our Precious Metal Store until further notice due to production and delivery delays that retailers are currently facing; Gold Eagle 1 oz, Gold Maple 1 oz, Special Gold Maple 5 X 9 pure 1 oz, Gold Buffalo 1 oz, Gold Krugerrand 1 oz, Gold Bar 10 oz, Gold Bar 1 oz, Kitco Gold Bar 1 oz, Kitco ChipGold 10 g, Kitco ChipGold 20 g Gold Philharmonic 1 oz, Silver Philharmonic 1 oz, Silver Eagle 1 oz, Silver Maple 1 oz, Silver Bar 100 oz, Platinum Eagle 1 oz, Palladium Maple 1 oz, Silver Maple Olympic Coin 1 oz.
Sheesh.
Kitco did have Gold Pandas (china) not too long ago. Not even listed in the unavailable list now.