I think we know where the banks are parking all that TARP money - in three month treasuries!
Does anyone remember the interest paid on the TARP money? (I have 5% in my head, but can't locate the link.) I fail to see how 3 month treasuries is going to produce positive cash flow with these numbers.
Wait - banks are being handed money, and turning around and parking it in instruments that effectively yield zero? Instruments that come from the same source as the financing they are using to purchase them?
This is financial engineering at its full blossom, a wonder to behold.
Or it is surrealism at a level of artistic perfection that few can appreciate.
Or, more prosaically, it is the end of the world as we know it. Much like the gold confiscation was the end of the world as those who experienced in the 1930s knew it. Though that confiscation did happen to occur after the failure of thousands of banks holding significant amount of the savings of a nation.
Luckily, we were too smart to make that Depression era mistake of having savings - instead, we just have debt, which is much less painful to walk away from than savings, right?
I do sometimes feel paranoid by having a bunch of food and now 100 gallons of freshwater storage in my home. But last year everyone who thought i was paranoid about the stock markets now wants me to manage their money. I'm worried I might be right again. I really don't want to every have to be drinking from my storage tanks.
I would have another take on this. The banks/people dont trust the banking system but they do trust the American governments ability to make good on its promise to provide currency upon the expiry date of the treasury.
It could be worse.
At some point the government will become the direct banker to those who need it and the failed banks will be no more.
Luckily, we were too smart to make that Depression era mistake of having savings
I enjoy today's egotistical assumptions that Smoot-Hawley was "a mistake" and that the Feds "won't repeat the mistakes of the 1930s".
It's interesting to watch this from this from an information strategy perspective. In my 2006 Defcon presentation, I put forward the concept of biodiversity would be a driver for how information would evolve but I didn't anticipate the "dark pool" developments.
But they're completely in line with the concept.
When information is treated as a single, global commodity, it's far too susceptible to manipulation.
You can define system behavior within certain parameters if you make a couple of assumptions. The most interesting part of any system is how it accepts & filters inputs -
1) Any system which promiscously accepts any input can be manipulated (that's CR comments section right now, by the way)
2) Any system which can be forced to block all input can be manipulated
3) Any system which is relatively new can be manipulated through relatively simple changes in its environment.
4) Any system which is based on a "cult" or singular concept can be manipulated by infectious exposure to new concepts.
It's only systems which have endured long periods of darwanian exposure and possess many layers of filters which are somewhat trustworthy.
Even then, there's a lot of question about who controls it and for what purpose.
loanshark to borrower: if you don't give me my 1.25 cents vig on the c note I loaned you 3 months ago I'm going to have to worry your kneecaps with this lead pipe I brought along
Yeah, that was me in the Patterson footage. I wearing a gorilla suit though and walking funny to throw him off. Ah, old crazy Patterson - I used to f-ck with him all the time.
The Market Ticker - Entries from December 2008
"That $12 trillion--in falsely juiced GDP--can either be removed via defaults (which will be very painful) or we can continue to grow that amount via compound interest (which will make it even more painful and cause even more constraint on productive output by diverting more and more of it towards interest, ultimately resulting in a catastrophic failure to service that debt.)"
Unexceptional volume and down; all sellers, only one buyer (PPT).
Hilarious how all the action is in the last five minutes.
For the third day in a row, there's been a heavy pump on stocks right at the end of the day.
Flight to quality? In bonds for sure.
In stocks? Not at all. Not yet. Zero separation this week between the worst stocks (that are going bankrupt) and big solid companies that will produce earnings and don't need to borrow. It tells you the indexes are being bought indiscriminately across the board.
Phew, that 3pm anti-pump was kind. I was starting to get nervous about the QID calls I picked up yesterday.
I don't understand how Citadel can be losing so much money. Do they only know how to take long positions? With all their big brains and computer wizardry, I'd think they could squeeze lots of profit out of this volatility? I must be missing something.
a) They, not the US, decided to intervene heavily and in sustained way to hold their exchange rate down, a policy that necessarily implies financial losses for China. China is effectively overpaying for financial assets (dollar reserves) that it doesnÂ’t need in order to support its export sector. There is no way the US can guarantee China against losses on its holdings of dollars.
b) Investors in highly leveraged financial institutions risk large losses. ChinaÂ’s discomfort with its current losses suggests it never should have bought large stakes in major financial institutions. One of the concerns Larry Summers raised about sovereign wealth fund investments in large financial institutions is such investments would turn the always difficult decision to wipe out the equity of a failed financial institution into a foreign policy decision. That rings true.
c) Given how much the US imports from China, it is hard to see how the US can increase its savings (and reduce its trade deficit) without putting pressure on ChinaÂ’s export sector. Indeed, right now the US consumer seems to be following PBoC governor ZhouÂ’s advice to save more - that is one reason why ChinaÂ’s exports have slowed. And that hardly has made Chinese policy makers happy. Right now a smaller US fiscal deficit would imply even bigger falls in global demand for ChinaÂ’s products."
It looks to me that US consumers are starting to make the necessary adjustments. Like AllenM said, now might be a good time for China to offload some of its Treasury stash...but they are paralyzed, trying to keep the good times rolling by doing the same old routine. Maybe the PBoc could issue credit cards to American households directly...with balance transfer options:)
Let's say we give them the bailout? How will it be paid for? By taxpayers and private corporations getting their taxes jacked up. What will happen? Jobs will be lost!
So I don't buy this alarm that if we don't bail them out, hundreds of thousands of jobs will be lost. I submit, that if we do bail them out, hundreds of thousands of jobs will be lost to pay for the bailout, so if someone's going to lose their job, shouldn't the culprit industry pay the piper?
Sentiment matters. Mr. Market wants to fool the most people the most often in the least amount of time. Too much bearishness on T-bonds, too much bullishness on oil. I really wonder where this sentiment reverses. T-bond at 200? Crdue at $2?
I believe the multiplier effect puts it between 5-10 million jobs after the fall-out.
So, in essence, choose from the crap-bag (put on blind-fold) and decide which of an array of distasteful choices you choose...oh, the choice has been made for you, never mind, now try to wash the ick off your hands...
Forget shorting the market for now. Too many buyers are in now. look for 9600 before we see below 7400. Heck I give Obama a 100 days before the market really tanks. Once hope is gone we can see a real bottom. Also look for the bond collapse to before we see any big movements to the down side.
The myth, as expounded by regulators, bankers and their various service providers, is that we were hit by a perfect storm, a 1,000-year flood so unpredictable that we could not possibly be held accountable for it. An act of God, rather than the folly of man.
Or as the excellent financial blog Calculated Risk - located at Calculated Risk - puts it: "Hoocoodanode?"
Its gonna get kinda difficult to see the difference between a retired boomer and a laid off SOB... they'll both be broke and lookin' for work. Dagum teenieboppers won't be able to get a job at ol' McDonalds.
Sen Tester questioning the Big 3 CEOs. 3 minutes in he is interrupted by protesters demanding money for food banks and people. Did this ever happen during Paulson/Bernanke testifying on the TARP? I question if this wasn't staged. Caught the story on NPR as well.
I think I get your point, but to be fair, the market has really tanked, and yes, it will continue to do so. I guess that's the problem, that those pumping money in don't believe it has really tanked, and will continue to do so...you know, it's a market, it goes up and down (but mostly up right? right?)
.../sounds of crickets
.../tumble weed blows across computer desk
LOL
I understand, I am just going with the fact people still have hope, er go nothing that comes will throw them off. Now 2Q numbers and 100 days after the obama effect we will see hope fade for good. then lookout below. But for the moment the bond market holds, the hope is on and the bailouts are still flowing.
Am I the only one that thinks the whole Big 3 dog and pony show is another "Look over there" ploy? Remember the 700 billion dollar bailout everyone was up in arms about, all the while B and H were ciphoning Trillions out the back door...Why not scapegoat the Unions? We can get the plebes fighting amongst themselves while we rob them, it's been working forever, why change now?
My husband just locked us into a 5% refi on our house. I am confused b/c they say rates might go lower, but perhaps not on refis. I also wonder if we are not better off selling into this next small wave of buying that may result from these low rates. We would have to rent, though, and that is not necessarily cheaper.
"Honda have put their Formula One team up for sale and will close it down if no buyer is found by the end of the year, a senior source at a rival team told Reuters on Thursday."
Not that surprising, given that Japanese automakers are getting killed by yen strength. Could auto racing as a major commercial enterprise disappear? Possibly.
Professional sports generally is going to take a big hit, I think. There is one NBA owner who is extremely exposed to two sectors: autos and sports entertainment. The owner of the Utah Jazz's core business is auto dealerships; and he just finished building a giant new F1 grade raceway in Utah a couple of years ago. Since it is all privately held, it is hard to say how vulnerable he is to debt issues. I think he is pretty exposed.
GM the interruption occurred just after Tester said he couldn't believe the banks got all that money without hard questioning, so it wasn't clear whether the chants of "The bailout is a sellout" was directed at TARP or the big 3 plea.
America, what a country! The only country in the world that would pull the plug on it's manufacturing sector while force feeding the money changers. The other manufacturing nations of the world are laughing their asses off at us.
So, assumin' this automobile bailout thingamajig passes.... If we add up all of the US automobile employees and them bankers we bailed out and all those people at AIG... what kinda big number do we get? Does it look anything like the New Deal? 'cept different of course... maybe we can call it "The Bad Deal".
Am I the only one that thinks the whole Big 3 dog and pony show is another "Look over there" ploy?
Hmmm, let's see. CEO says that they need $4B or they can't last until jan 20th (where the shareholders will probably get pummeled with a bailout). But somehow, it doesn't occur to anybody that furloughs might be a good idea to reduce cash burn.
I don't see a reason to believe a word outta their freakin mouths.
Bush's post-White House Preston Hollow home lost $300k since its Oct 3 purchase, and over $1.3 million sice 2007, according to Zillow.
The Bush's confirmed today the purchase of 10141 Daria Place, Dallas TX, whose zestimated value has fallen from a peak of $3.34 million in mid-2007 to just over $2 million today, makes the Bush's direct beneficiaries of the collapsing housing bubble.
Bush's White House lease ends on Jan 20, making the President de facto bubble sitter.
Bush said in 2006 when asked about the housing bubble, "If houses get too expensive, people will stop buying them Â… Economies should cycle," and ignored repeated warnings about the mortgage markets. Bush's largest campaign contributor was Roland E. Arnall, the former CEO of the largest subprime lender in the U.S., Ameriquest, now bankrupt. Bush nominated Arnall (deceased) as the U.S. Ambassador to the Netherlands.
I've come to the conclusion the rally everyone is waiting for, because the market is "oversold", is occurring now. The market has held up for the for the last week on unremittingly horrible news.
I think that might have been the rally.
Once Obama is sworn in, the euphoria and expectations will get ratcheted down each day he doesn't perform a miracle.
Anyone notice the Federal Funds hit .06% today? I sure hope the Fed cuts rates!
Hmmm.. I've got two morgages. one at 6.75% and the other at 6.25%. I am not sure but I thought is was a good idea to refi if you could get 1.5% or greater reduction.
My point about about the rally to nowhere is that the indices can hit the 30, or 50, day moving average either by jumping up, or merely trading sideways for awhile.
"Can someone please confirm what the rate on 1 Mo. TBills is?"
It is more or less Zero or the same thing as USD cash.
The banks need to have reserves to be compliant and treasuries are currency equivalents. I think the message this board is telling us is that many banks are nowhere near being compliant as so many of their reserves were expanded at the levered rate to loans that have been destroyed. So they are therefore attempting to become compliant by selling what they can until their position is one of sufficient reserves to the size of their loan book. They cant loan out legally until this happens. They cant begin to loan out prudently until this happens and some more
Hey, I haven't seen any comments about COF's purchase of Chevy Chase. How outrageous is this, using TARP money to buy up another institution at a time when they themselves are on the brink and likely to go under making the cleanup effort that much more costly. How much in bonuses and stock awards were part of this US Taxpayer funded orgy was dispensed under the watchful eyes of our regulators ?
Go look at the Krugman fear post. Does anyone see what's wrong with this picture? He's a grown up. He is an extremely influential economist (maybe the most, in a PR sense) who was awarded the big prize to establish the ultimate cred. He has a very big well oiled brain. So WTF is he giving us weekly "I'm scared" posts for?
In a crisis, the leaders are not permitted to show fear. Those that do are not qualified to lead (even public opinion in our case). So that's it. Krugman, we're done. You are a very nice, funny guy, but for whatever reason you are doing what you are doing -- fearmongering -- it is not acceptable. More than that, it's criminal, or should be interpreted that way. Fear leads to chaos and chaos leads to a search for strong leaders and we all know where that road leads, don't we. Excuse yourself, please. Step down off the dais and leave now and take all your jelly donut charm with you.
It would not shock me at this point to see a tidal wave of public anger arise directed at a bailout of the Big 3.
If these companies are going to survive, they all three need to be put into a conservatorship, like Fannie and Freddie, at least for a time.
They need competent new management that can look at the whole U.S. domestic car manufacturing industry afresh, downsize and consolidate appropriately, and salvage something lasting at minimum taxpayer cost and risk.
The late-day action in GM and F (until the PPT stepped in) may have said as much.
The votes may not be there for what the Big Three want. And time may be running out for them faster than they let on.
The Big 3 will get their money after Jan 20th. Right now this is the Democrats way of keeping the remaining 350 billion of TARP money out of Paulson's hands. By making a big deal out of 34 billion dollars it allows them an easy out to say no to dispersing the TARP money without pissing off their big financial donors(owners).
@Yogi, caught a second video of the protesters. All black, peaceful and walking towards the door chanting slogans. Definitely a set up but it looks like it was the Democrats creating more arguments against releasing any funds until after the inauguration.
"The bailout is a sellout." Somebody gets it.
Some days I truly believe this entire debacle is the Republican elite poisoning the well for the Democratic elite. The poor suffer.
Some Brit just told Maria the yeilds are so low on the 30 because we are heading into a depression. She stuttered and stammered then said "so you're in bonds right?"
Three cheers to the MBA for reading his Adam Smith. May I remind you the long run only matters if you live to see it.
(was) Worried before we 'met': Are you insinuating that our banks, the trusted backbone of our financial system collectively lied to us? That JPM, C, WFC, BOA, USB all underdisclosed the quality of their assets to investing public and the OCC? And that Merideth Whitney and the entire OCC establishment let it happen? Say it isn't so!
It's astonishing that the bankruptcy procedures for Lehman Brothers are not factored into your analysis.
Once Lehman entered Chapter 11 all over her liabilities are frozen and partitioned into bucketsÂ… or tranchesÂ… of creditor classes.
The legal spadework to determine just who gets what and when is not quick.
In the meantime, all of LehmanÂ’s assets mature or spin off cash. The typical Administrator is not going to dump assets at fire sale prices. He has no incentive to do so. Instead, he's held to account for getting full value for the creditors. Everything is slow in bankruptcy proceedings.
There is only one place the Bankruptcy Court will permit the proceeds to flow: Treasury Bills or their equivalent. As a practical matter, itÂ’s going to be 100% T Bills.
This amount surges each and every day as the pile of near term assets matures.
No matter how much the Treasury pumps into the system the cash ends up right back at Lehman Brothers: in their T Bill position.
It is the RELENTLESS purchase of T Bills by the bankruptcy administrator that is skewing the yield curve. Every purchase is a forced buyÂ… interest rate be damned.
How much is involved? Lehman entered Chapter 11 with over 600 Billion dollars of assetsÂ… market to market.
Their face value is much higher.
Since only a minority of mortgage debt has soured, which has already been factored into the asset valuations, one must imagine that by now Lehman Brothers has a staggering cash horde.
Such disbursements that the Court will permit ( legal fees and operating expenses) are trivial by comparison.
Tying up this much cash is staggeringly deflationary. This cash drain operates like a black hole sucking in liquidity system wide.
Oklahoma's NBA team used to be in Seattle...if I had the resources I'd be shorting a lot of Seattle-based companies. Boeing in particular...they have totally screwed up the 787.
I suspect a lot of luxury box contracts are not going to be renewed in the next couple of years. Bankruptcy judges and creditors' committees don't look too kindly on that kind of expense.
You may be right, Robert, about this being the bottom.
The Elliott Wave folks predicted a good down day today, and it came to pass. Tomorrow should be another down day, based on my read of last night's forecast.
We'll see how Friday and Monday play out.
Me, I'm standing pat, holding my shorts. My hunch is that tomorrow's job destruction number will be ugly, and will continue to darken mood on Friday and Monday and Tuesday.
Of course it was "staged". One person interrupting is just passed off as a kook. This isn't Tiannanmen Square. But not a ploy. Don't forget: there is growing alienation of the left with the Democratic establishment.
You will triple (at least) your money in 2-4(if not sooner) yrs. buying GM @ $4.My $ is where my mouth is
Hey thanks!! Good insights. Very valuable info. I'll buy some GM stock just as soon as the funds get transferred from this Nigerian king dude. He's putting a whole bunch of money into my account. Apparently he has a pile of cash, but he can't open an account since he isn't a citizen.
"Why not scapegoat the Unions? We can get the plebes fighting amongst themselves while we rob them, it's been working forever, why change now?"
--Comrade Kristina
A lot of union *ss got kissed today in the hearings. Either the pols are engaging their usual vote-pandering, or the unions are getting set up to take some medicine. Maybe both.
~~~
"It would not shock me at this point to see a tidal wave of public anger arise directed at a bailout of the Big 3."
--rich
You could see it today at the hearings. Several of the senators must have gotten an earful while they were home for turkey day. The one from Tennessee (forget his name) was pretty scathing, and several appeared to at least be making a show of delivering a pounding to the auto execs.
It's worth noting that they had an economist testifying on the same panel: Mark Zandi. In his testimony, he estimated the cost the auto bailout at between $75 and $125 billion. So this is no simple little bridge loan.
Hey thanks!! Good insights. Very valuable info. I'll buy some GM stock just as soon as the funds get transferred from this Nigerian king dude. He's putting a whole bunch of money into my account. Apparently he has a pile of cash, but he can't open an account since he isn't a citizen.
Gavshire Hathaway
The one from Tennessee (forget his name) was pretty scathing, and several appeared to at least be making a show of delivering a pounding to the auto execs.
The dwarf Sen. Corker(R-TN.) was for the bailout until GM spoke of dumping Saturn into the pit.
Some guy is on CNBC saying he is up 40% this year on government bonds.
That wouldn't be Hugh Hendry, would it? Love that guy.
The answer to your question is "compounding".
Consider a 30-year zero-coupon (i.e. no interest) bond with a face value of $10,000. In other words, it pays you $10,000 in 30 years.
If the interest rate is 4%, then the current price is $10000 / (1.04 ^ 30) = $3083.
If the interest rate is 3%, then the current price is $10000 / (1.03 ^ 30) = $4120.
So if he bought when the interest rate was 4% and sold when it was 3%, he made 35%.
Given the actual numbers are something like 4.5% and 3.1% for the U.S. -- and possibly more extreme for other countries -- a 40% gain is not at all impossible this year.
It's worth noting that they had an economist testifying on the same panel: Mark Zandi. In his testimony, he estimated the cost the auto bailout at between $75 and $125 billion.
Damn, I hadn't heard that. That, plus the fact they haven't apparently gotten any of the concessions from labor, etc., in writing makes this seem like a nonstarter.
"Some guy is on CNBC saying he is up 40% this year on government bonds."
Earlier this year, the 30 yr Treas future (think of it as an index in this case) was under 110. Even at the end of Oct, it was 113. It closed 6 minutes ago over 132.
Add a little leverage, and 110 to 132, there it is.
dude on systemsand your defcon analysis...the CR comments section is the filtering system and a learning one -- the best kind. Go back to the drawing board
as for nascar -- it will only enhance the appeal as the major corproates recede and the teams are forced to apply good old fashion American creativity - think hedge rows in WWII
Citadel wants to be the arbitor of CDS...go figure
Does anyone have an idea how these treasury yields work themselves out. Obviously these rates are "too" low. I understand they can remain too low for longer than I can remain in business but this is odd.
At a point foreigners should be selling and taking gains. I understand most people think they need us but they don't. They have the advantage because they are the low cost producers and they are willing to work for less. That is a huge advantage. Their standard of living can only really improve - our can decline.
I have been long gold and though it has performed ok it hasn't been that great. Maybe I want the market to 'work' to quickly, but these treasury yields are odd.
So, I guess Yahoo! is going to die. I wonder if Qi Lu sold all has Yahoo! stock before defecting.
Dec. 4 (Bloomberg) -- Microsoft Corp., the world's biggest software company, hired Qi Lu, a former Yahoo! Inc. executive, as president of the company's Online Services Group as it struggles to catch up to Google Inc.
Wouldn't it be a good idea for car companies to ask the medical insurers / medical industry for some concessions? Lower the medical premiums, costs, etc.
125 billion for the Big 3. So what. AIG is over 150 billion and they are doubling wages for their management. Ford and GM CEO's said they would reduce their salaries to $1 and cut salaries of management. What does AIG provide for our country? Bad management and taking idiotic positions in the CDS market causing billions in losses for the potential gain of a few hundred million? Sheer genius.
We need these jobs and manufacturing to stay in the USA. Unions are necessary to keep working class wages livable. See your fellow citizens as people and not impediments to you making some extra profit on the corporate balance sheet. Is a few extra pennies on the dividend worth hardship for the workers?
Tying up this much cash is staggeringly deflationary. This cash drain operates like a black hole sucking in liquidity system wide.
blert | 12.04.08 - 5:01 pm | #
I dont get this. Surely if the treasuries are yielding close to 0 due to Lehmans being the only forced buyer , the government can provide an equal amount to the forced bought treasuries to anybody who wants them no matter how many are forcing the purchase?
If people want treasuries for no good reason then the government can simply direct the proceeds straight back into the market surely?
Is it not true that at the moment the government can drop Treasuries from helicopters in order to drive up the yield if the yield is something that is of any importance?
Instead as presumably you dont have a one billion usd cash currency bill and as cash and treasuries are equivalents as reserves, people are seeking treasuries as reserves.
Surely this makes the governments position strong rather than weak? At the current rate the whole indebtedness of the US government and its people can be refinanced at once in a lifetime lows.
there are no net 'people', i.e., individual investors that want them, in my speculative opinion.
this is just a function of hundreds of billions in TARP cash being created on a weekly basis - treasury positions, whether real or synthetic, are the way hank and ben sterilize the xeroxdollars.
Let me just add this - on a very simple level if the solution to our problems was the government printing money, buying treasuries, forcing mortgage rates down or bailing out everyone - then history would show it working. Obviously history is filled with government intervention failures so why would it be different this time.
On a common sense level it doesn't make sense. We can't just print money to pay our debts or keep our housing values inflated. Yet why isn't the market reacting?
I still like free market capitalism. We just don't practice it. It was always my understanding that companies that can no longer operate declare bankruptcy. I don't see what the problem is.
bgates(Unrated) writes:
"there are no net 'people', i.e., individual investors that want them, in my speculative opinion."
Certainly no sane investor would buy them for the yield. My speculative opinion is that a lot of dollars are going to be vaporized when rates inevitably run up again. I sure wish I knew when that is going to happen.
Zandi's a moron. He's been on the wrong side of housing, stocks, bonds all year."
--Anonymous
So do you think his estimate is low or high?
sm_landlord
I have no idea. He has zero cred. As stated, he says, does, walks and talks how his handlers tell him. Wall St. will make a small fortune off a GM BK. They need the money so they support it.
GM writes: We need these jobs and manufacturing to stay in the USA. Unions are necessary to keep working class wages livable. See your fellow citizens as people and not impediments to you making some extra profit on the corporate balance sheet. Is a few extra pennies on the dividend worth hardship for the workers?
GM | 12.04.08 - 5:19 pm | #
What would you say a livable working class wage is?
Good news for you, FF. That means you won't have to arm up to ward off intruders. The SS will do it for you. Also, the nearby groceries will always be well stocked.
FFDIC, will you have them over for a 'Welcome to the neighborhood dinner'?
If you do, please tell Bush that he killed the Republican Party, and ask him to tell his goofball brother -- married to a sales tax cheat and father of a druggie daughter -- to save his ill-gotten money and drop his pointless Senate run.
Ah, and a new post now. Just when the Treasury issue discussion was getting started. And, I believe, what is happening to the T-curve, and why, is THE story of the last month.
If people want treasuries for no good reason then the government can simply direct the proceeds straight back into the market surely?
I'm having the same problem. I understand that if investors are piling into UST's then those investors are not allocating their cash to other opportunities (e.g. equities, VC). However, once the investors purchase the UST, then the USG now has the cash to inject into the real economy, unless there's a bottleneck somewhere else.
In keeping with the above request--i'm in the deflation camp--are there any safe places (besides a remote mountain abode with clear sight lines, game and water, and maybe Pocahantas) to make money, get a job, start a business??
are we really just back to the stone age, even with the technological advances we've made since 1830, 1871, 1929, pick your favorite depression era? is there really no way out but to start from scratch?
Gareth G writes:
"NASCAR is toast, for you all Bubbahs out there."
Gareth G | 12.04.08 - 4:41 pm | #
Only the overblown 2008 version that everyone sees on TV. The original NASCAR grew out of good ol' boys, dirt tracks, and home garages. No reason to believe that kind of activity will cease. It might even expand with a lot of blue-collar men with nothing to do.
I know one mechanic who's rebuilding a 1958 Singer. Beautiful.
"Free Market capitalism can only exist as a theory, an idea. The greed of human nature does not allow it to truely exist"
The same goes for socialism. I guess we shouldn't have stopped digging for grubs and shying stones at rabbits.
Actually, since no one has more than an approximate idea of how to govern a large economy, I'm waiting for AI governors to take over. Give it a few decades.
PSgirl writes:
GM--$20.00 or so per hour seems reasonable to me, but I thought part of the problem is that the auto workers are making way more than that.
And, I agree. CEO pay is obscene.
PSgirl | 12.04.08 - 5:47 pm | #
I watched the hearings today, I believe $28/hr was tossed around. Another figure (from a follow up phone call on cspan from a UAW member) said that they had settled on a two tier system last year where wages were $14 for new hires and they weren't entitled to all the benefits of grandfathered workers. Not the exact wording but I can't remember which benefits he mentioned.
8300 bounce, or hot knife through butter?
Many everyday investors that I know are looking to add to their portfolios.
Very little true fear in my circle.
I think we know where the banks are parking all that TARP money - in three month treasuries!
Does anyone remember the interest paid on the TARP money? (I have 5% in my head, but can't locate the link.) I fail to see how 3 month treasuries is going to produce positive cash flow with these numbers.
What happen to the bad news rally?
Egads?!?! 2.57 yield on the Ten?
Mr. Beach,
If any of those investors as indexing, they are toast.
Individual stocks, yes, sure. Funds, not so much.
Also, if this is in fact a systemic failure, then the good will drown at the clutches of the bad.
Collateral damage. Radioactivity.
Prepare for 25 years of investing to get back your the nut you invested today. Not a good investment.
Still no ability to borrow on reasonable (or any) terms for anything the slightest bit illiquid in hedge fund land.
What happen to the bad news rally?
Saving it for tomorrow.
I wonder if Citadel is circling the drain?
Again I ask in a respectful and honestly seeking voice; what do we learn from all these that we don't learn from the A2/P2 alone?
I'm searching for the pullcord on this backpack
Maria is so retarded.....
"GM's in the DOW, that's part of this downturn".
B-i-m-b-o.
Wait - banks are being handed money, and turning around and parking it in instruments that effectively yield zero? Instruments that come from the same source as the financing they are using to purchase them?
This is financial engineering at its full blossom, a wonder to behold.
Or it is surrealism at a level of artistic perfection that few can appreciate.
Or, more prosaically, it is the end of the world as we know it. Much like the gold confiscation was the end of the world as those who experienced in the 1930s knew it. Though that confiscation did happen to occur after the failure of thousands of banks holding significant amount of the savings of a nation.
Luckily, we were too smart to make that Depression era mistake of having savings - instead, we just have debt, which is much less painful to walk away from than savings, right?
Right?
Hot Knife!
Dammit Eric now I can't get the BINGO song out of my head...B-I-M-B-O...
flight to quality, merde
I mean, I watch the DOW since that's what BubbleVision reports on, but it's such a poorly constructed index.
And of course the BubbleHeads have no clue.
More and more people are concluding that the government can't bailout everyone.
All the government can do is take from someone and give to someone else.
In the end, most will be worse off.
I'm with Mr. Beach. Very little true fear yet.
I do sometimes feel paranoid by having a bunch of food and now 100 gallons of freshwater storage in my home. But last year everyone who thought i was paranoid about the stock markets now wants me to manage their money. I'm worried I might be right again. I really don't want to every have to be drinking from my storage tanks.
Nasdaq is taking it on the chin...just think where it would be without the AMZN pop (due to hilarious Kindle story!).
It's all in the velocity, right? As long as the music keeps playing, everyone is dancing, and no one needs seats.
Or yields.
After all, funding your debt at 0% is like having no debt at all, right?
Right?
The Bottom Is In. Buy Now or be priced out Forever!
The Bottom Is In. Buy Now or be priced out Forever!
Looking to buy..... but man those puts are expensive!!!
Why the hell don't the loaded banks lend the money to the big 3?
It's the same money! And it's not being used proactively. Who's arrogant here?
6 Gunmen shot dead at airport in India...breaking news...
"funding your debt at 0% is like having no debt at all, right?"
exactly,....until it's due, that is the one flaw in an otherwise perfect pla
0.005% Let's just call it zero! ~CR
LOL!
A hundred dollars three months later gets you 1.25 cents! Dios mio....
.................
http://acrossthecurve.com/?p=2232
Interesting read on people piling in...
......
Going to UNCH on the day.....
I would have another take on this. The banks/people dont trust the banking system but they do trust the American governments ability to make good on its promise to provide currency upon the expiry date of the treasury.
It could be worse.
At some point the government will become the direct banker to those who need it and the failed banks will be no more.
I've been hearing rumors that Websters Dictionary is going to change the definition of the word "retirement."
An outdated construct of previous generations wherein older people .....
Luckily, we were too smart to make that Depression era mistake of having savings
I enjoy today's egotistical assumptions that Smoot-Hawley was "a mistake" and that the Feds "won't repeat the mistakes of the 1930s".
It's interesting to watch this from this from an information strategy perspective. In my 2006 Defcon presentation, I put forward the concept of biodiversity would be a driver for how information would evolve but I didn't anticipate the "dark pool" developments.
But they're completely in line with the concept.
When information is treated as a single, global commodity, it's far too susceptible to manipulation.
You can define system behavior within certain parameters if you make a couple of assumptions. The most interesting part of any system is how it accepts & filters inputs -
1) Any system which promiscously accepts any input can be manipulated (that's CR comments section right now, by the way)
2) Any system which can be forced to block all input can be manipulated
3) Any system which is relatively new can be manipulated through relatively simple changes in its environment.
4) Any system which is based on a "cult" or singular concept can be manipulated by infectious exposure to new concepts.
It's only systems which have endured long periods of darwanian exposure and possess many layers of filters which are somewhat trustworthy.
Even then, there's a lot of question about who controls it and for what purpose.
Tuh-duh, the IRX chart reads zero for the 13 weeks.
hey, the man from nantucket, just how many deer are there on that island where people are out hunting them?
loanshark to borrower: if you don't give me my 1.25 cents vig on the c note I loaned you 3 months ago I'm going to have to worry your kneecaps with this lead pipe I brought along
Shhhh beee vwerry vwerry qwiet. The mawkwets are about to open.
i'm not from nantucket, it's just a nickname from an old, inappropriate song
As for T yields, so much for "climbing the mountain"
AL FRANKEN TAKES THE LEAD BY TEN VOTES
56,000 left to be counted
He opposed the bailout, his opponent voted for it. Oh, that feels good.
I should've known, I'm not really in the 12th Percentile either. I got crowded out of the lower ranks by Bill Miller and a bunch of hedgies
Mr. Market getting kicked in the nads.
batsign near the close
Gunfire reported at Delhi international
airport
"I have a genuine Abraham Lincoln medallion that I will sell to you for only $5"
One of Al Franken's many classic SNL skits.
Ciao
MS
Cant break 8300 today boys - not a good sign - seems to be a big buyer there.
seems to be a big buyer there.
yeap i see that vertical stick at 8300. Wonder who that buyer could be.
big foot:
so you do exist? why all the evasive behavior for the past few hundred years? and was that really you in the Patterson footage?
If I hear/read the word crisis one more time I will give them zero hour.
People haven't seen crisis, yet. But they will.
CNN Money now running daily job cut totals. That isn't encouraging.
Lots of orders at the close with the name...TARP, LLC with the intials HP on the trades, not sure who that was...
The banks/people dont trust the banking system but they do trust the American governments ability to make good on its promise
A secondary construct of delusion.
It's amazing to watch it happen.
I still can't get over Bernanke and Paulson. What the HELL are they thinking? Just keep up the illusion in hopes of "restoring confidence"?
Even if they buy everyone back into The Game, it just fails again in a couple of years with 10X more force behind it.
Wow.
it's just unreal.
Yeah, that was me in the Patterson footage. I wearing a gorilla suit though and walking funny to throw him off. Ah, old crazy Patterson - I used to f-ck with him all the time.
Will we still need automobiles after we all get our free ponies?
Citadel now down almost 50% on the year...ahh, the best and brightest (only in bull markets)
Citadel's Losses Add to Mr. Griffin's Pain - WSJ.com
Executive Summary:
In other words, SNAFU.
Cordially,
Килгор Траут
The Market Ticker - Entries from December 2008
"That $12 trillion--in falsely juiced GDP--can either be removed via defaults (which will be very painful) or we can continue to grow that amount via compound interest (which will make it even more painful and cause even more constraint on productive output by diverting more and more of it towards interest, ultimately resulting in a catastrophic failure to service that debt.)"
So the 1 Mo. TBills are yielding 0.05% ?
Unexceptional volume and down; all sellers, only one buyer (PPT).
Hilarious how all the action is in the last five minutes.
Terrible.
I blame the innocent.
I wonder if our friend from China is starting to sell his bond collection.
Now would be an outstanding time to satisfy the immense flight to safety taking place.
Nothing like yet another bubble to watch the fools get clipped again.
Someday this war's gonna end...
Frank: More rules on mortgage securitizations
Says House should reject $350 billion to Treasury without loan modificatio
For the third day in a row, there's been a heavy pump on stocks right at the end of the day.
Flight to quality? In bonds for sure.
In stocks? Not at all. Not yet. Zero separation this week between the worst stocks (that are going bankrupt) and big solid companies that will produce earnings and don't need to borrow. It tells you the indexes are being bought indiscriminately across the board.
Whoever replaces Timmy at the PPT better be trigger happy.
rich,
it's robotic-buying. Still lots of 401ks on auto-pilot. index index index...
Phew, that 3pm anti-pump was kind. I was starting to get nervous about the QID calls I picked up yesterday.
I don't understand how Citadel can be losing so much money. Do they only know how to take long positions? With all their big brains and computer wizardry, I'd think they could squeeze lots of profit out of this volatility? I must be missing something.
This has to be just ruinous for so many near or in retirement.
All because wall street needed to generate commissions and the fed needed to see credit expansion.
CONgress was in on the sham too. They looked the other way and cheered the bubbles.
We need a class action suit against wall street and the fed.
This has been the biggest financial swindle in history.
Setser seems relevant:
China is starting to sound like a normal creditor country
"I hope that Chinese policy makers recognize:
a) They, not the US, decided to intervene heavily and in sustained way to hold their exchange rate down, a policy that necessarily implies financial losses for China. China is effectively overpaying for financial assets (dollar reserves) that it doesnÂ’t need in order to support its export sector. There is no way the US can guarantee China against losses on its holdings of dollars.
b) Investors in highly leveraged financial institutions risk large losses. ChinaÂ’s discomfort with its current losses suggests it never should have bought large stakes in major financial institutions. One of the concerns Larry Summers raised about sovereign wealth fund investments in large financial institutions is such investments would turn the always difficult decision to wipe out the equity of a failed financial institution into a foreign policy decision. That rings true.
c) Given how much the US imports from China, it is hard to see how the US can increase its savings (and reduce its trade deficit) without putting pressure on ChinaÂ’s export sector. Indeed, right now the US consumer seems to be following PBoC governor ZhouÂ’s advice to save more - that is one reason why ChinaÂ’s exports have slowed. And that hardly has made Chinese policy makers happy. Right now a smaller US fiscal deficit would imply even bigger falls in global demand for ChinaÂ’s products."
It looks to me that US consumers are starting to make the necessary adjustments. Like AllenM said, now might be a good time for China to offload some of its Treasury stash...but they are paralyzed, trying to keep the good times rolling by doing the same old routine. Maybe the PBoc could issue credit cards to American households directly...with balance transfer options:)
angry saver,
I believe class action in this case involves pitch-forks.
Nardelli is a tool.
Let's say we give them the bailout? How will it be paid for? By taxpayers and private corporations getting their taxes jacked up. What will happen? Jobs will be lost!
So I don't buy this alarm that if we don't bail them out, hundreds of thousands of jobs will be lost. I submit, that if we do bail them out, hundreds of thousands of jobs will be lost to pay for the bailout, so if someone's going to lose their job, shouldn't the culprit industry pay the piper?
Sentiment matters. Mr. Market wants to fool the most people the most often in the least amount of time. Too much bearishness on T-bonds, too much bullishness on oil. I really wonder where this sentiment reverses. T-bond at 200? Crdue at $2?
"I really wonder where this sentiment reverses."
probably 5 minutes after equities finally capitulate.
TM,
I believe the multiplier effect puts it between 5-10 million jobs after the fall-out.
So, in essence, choose from the crap-bag (put on blind-fold) and decide which of an array of distasteful choices you choose...oh, the choice has been made for you, never mind, now try to wash the ick off your hands...
Forget shorting the market for now. Too many buyers are in now. look for 9600 before we see below 7400. Heck I give Obama a 100 days before the market really tanks. Once hope is gone we can see a real bottom. Also look for the bond collapse to before we see any big movements to the down side.
Bankers, risk and warnings unheeded - The New York Times
The myth, as expounded by regulators, bankers and their various service providers, is that we were hit by a perfect storm, a 1,000-year flood so unpredictable that we could not possibly be held accountable for it. An act of God, rather than the folly of man.
Or as the excellent financial blog Calculated Risk - located at Calculated Risk
- puts it: "Hoocoodanode?"
Its gonna get kinda difficult to see the difference between a retired boomer and a laid off SOB... they'll both be broke and lookin' for work. Dagum teenieboppers won't be able to get a job at ol' McDonalds.
Brother can you spare a dime...
Deaco
Sen Tester questioning the Big 3 CEOs. 3 minutes in he is interrupted by protesters demanding money for food banks and people. Did this ever happen during Paulson/Bernanke testifying on the TARP? I question if this wasn't staged. Caught the story on NPR as well.
Video - CNBC.com
Robert,
I think I get your point, but to be fair, the market has really tanked, and yes, it will continue to do so. I guess that's the problem, that those pumping money in don't believe it has really tanked, and will continue to do so...you know, it's a market, it goes up and down (but mostly up right? right?)
.../sounds of crickets
.../tumble weed blows across computer desk
Can someone please confirm what the rate on 1 Mo. TBills is?
0.05% or 0.5% ?
LOL
I understand, I am just going with the fact people still have hope, er go nothing that comes will throw them off. Now 2Q numbers and 100 days after the obama effect we will see hope fade for good. then lookout below. But for the moment the bond market holds, the hope is on and the bailouts are still flowing.
Am I the only one that thinks the whole Big 3 dog and pony show is another "Look over there" ploy? Remember the 700 billion dollar bailout everyone was up in arms about, all the while B and H were ciphoning Trillions out the back door...Why not scapegoat the Unions? We can get the plebes fighting amongst themselves while we rob them, it's been working forever, why change now?
My husband just locked us into a 5% refi on our house. I am confused b/c they say rates might go lower, but perhaps not on refis. I also wonder if we are not better off selling into this next small wave of buying that may result from these low rates. We would have to rent, though, and that is not necessarily cheaper.
Honda given a month to sell F1 team or close
"Honda have put their Formula One team up for sale and will close it down if no buyer is found by the end of the year, a senior source at a rival team told Reuters on Thursday."
Not that surprising, given that Japanese automakers are getting killed by yen strength. Could auto racing as a major commercial enterprise disappear? Possibly.
Professional sports generally is going to take a big hit, I think. There is one NBA owner who is extremely exposed to two sectors: autos and sports entertainment. The owner of the Utah Jazz's core business is auto dealerships; and he just finished building a giant new F1 grade raceway in Utah a couple of years ago. Since it is all privately held, it is hard to say how vulnerable he is to debt issues. I think he is pretty exposed.
.05
GM the interruption occurred just after Tester said he couldn't believe the banks got all that money without hard questioning, so it wasn't clear whether the chants of "The bailout is a sellout" was directed at TARP or the big 3 plea.
Hey Orange what bank gave you that rate? Cause I just called my bank and they are still above 5.5%
America, what a country! The only country in the world that would pull the plug on it's manufacturing sector while force feeding the money changers. The other manufacturing nations of the world are laughing their asses off at us.
So, assumin' this automobile bailout thingamajig passes.... If we add up all of the US automobile employees and them bankers we bailed out and all those people at AIG... what kinda big number do we get? Does it look anything like the New Deal? 'cept different of course... maybe we can call it "The Bad Deal".
Deaco
Am I the only one that thinks the whole Big 3 dog and pony show is another "Look over there" ploy?
Hmmm, let's see. CEO says that they need $4B or they can't last until jan 20th (where the shareholders will probably get pummeled with a bailout). But somehow, it doesn't occur to anybody that furloughs might be a good idea to reduce cash burn.
I don't see a reason to believe a word outta their freakin mouths.
Bush's post-White House Preston Hollow home lost $300k since its Oct 3 purchase, and over $1.3 million sice 2007, according to Zillow.
The Bush's confirmed today the purchase of 10141 Daria Place, Dallas TX, whose zestimated value has fallen from a peak of $3.34 million in mid-2007 to just over $2 million today, makes the Bush's direct beneficiaries of the collapsing housing bubble.
Bush's White House lease ends on Jan 20, making the President de facto bubble sitter.
Bush said in 2006 when asked about the housing bubble, "If houses get too expensive, people will stop buying them Â… Economies should cycle," and ignored repeated warnings about the mortgage markets. Bush's largest campaign contributor was Roland E. Arnall, the former CEO of the largest subprime lender in the U.S., Ameriquest, now bankrupt. Bush nominated Arnall (deceased) as the U.S. Ambassador to the Netherlands.
There's an article for you, CR.
So the tarp money has come out of one gov't pocket and gone into another gov't pocket. Doesn't strke me as inflationary, but what do I know.
orange,
with all due respect don't ask for financial advice on whether you should sell a house v. rent v. refi...
You may however form your own opinion and argue strenuously.
NASCAR is toast, for you all Bubbahs out there.
try Suntrust.
I've come to the conclusion the rally everyone is waiting for, because the market is "oversold", is occurring now. The market has held up for the for the last week on unremittingly horrible news.
I think that might have been the rally.
Once Obama is sworn in, the euphoria and expectations will get ratcheted down each day he doesn't perform a miracle.
Anyone notice the Federal Funds hit .06% today? I sure hope the Fed cuts rates!
I blame you!
Hmmm.. I've got two morgages. one at 6.75% and the other at 6.25%. I am not sure but I thought is was a good idea to refi if you could get 1.5% or greater reduction.
any thoughts...
After fielding phone calls and poring over charts and graphs all day, I have concluded that in the long run, we're all dead.
Ancient Chinese Secret - The new NBA team in OK is owned by the CEO of CHK...he and his company are on the verge of f'n collapse...good riddance
My point about about the rally to nowhere is that the indices can hit the 30, or 50, day moving average either by jumping up, or merely trading sideways for awhile.
"Can someone please confirm what the rate on 1 Mo. TBills is?"
It is more or less Zero or the same thing as USD cash.
The banks need to have reserves to be compliant and treasuries are currency equivalents. I think the message this board is telling us is that many banks are nowhere near being compliant as so many of their reserves were expanded at the levered rate to loans that have been destroyed. So they are therefore attempting to become compliant by selling what they can until their position is one of sufficient reserves to the size of their loan book. They cant loan out legally until this happens. They cant begin to loan out prudently until this happens and some more
That is at least my take on this.
Nice day to toy with SRS.
Hey, I haven't seen any comments about COF's purchase of Chevy Chase. How outrageous is this, using TARP money to buy up another institution at a time when they themselves are on the brink and likely to go under making the cleanup effort that much more costly. How much in bonuses and stock awards were part of this US Taxpayer funded orgy was dispensed under the watchful eyes of our regulators ?
Disgusting.
Oklahoma has an NBA team? How can I short that?
Go look at the Krugman fear post. Does anyone see what's wrong with this picture? He's a grown up. He is an extremely influential economist (maybe the most, in a PR sense) who was awarded the big prize to establish the ultimate cred. He has a very big well oiled brain. So WTF is he giving us weekly "I'm scared" posts for?
In a crisis, the leaders are not permitted to show fear. Those that do are not qualified to lead (even public opinion in our case). So that's it. Krugman, we're done. You are a very nice, funny guy, but for whatever reason you are doing what you are doing -- fearmongering -- it is not acceptable. More than that, it's criminal, or should be interpreted that way. Fear leads to chaos and chaos leads to a search for strong leaders and we all know where that road leads, don't we. Excuse yourself, please. Step down off the dais and leave now and take all your jelly donut charm with you.
Humbly, The Little Uncle That Could
Source for India airport shoot-out, please.
Source for India airport shoot-out, please
http://www.radionz.co.nz/news/stories/2008/12/05/12438518a7ae
I heard it on CNN but they said it hadn't been confirmed.
It would not shock me at this point to see a tidal wave of public anger arise directed at a bailout of the Big 3.
If these companies are going to survive, they all three need to be put into a conservatorship, like Fannie and Freddie, at least for a time.
They need competent new management that can look at the whole U.S. domestic car manufacturing industry afresh, downsize and consolidate appropriately, and salvage something lasting at minimum taxpayer cost and risk.
The late-day action in GM and F (until the PPT stepped in) may have said as much.
The votes may not be there for what the Big Three want. And time may be running out for them faster than they let on.
BBC says its nothing.
rich writes:
It would not shock me at this point to see a tidal wave of public anger arise directed at a bailout of the Big 3.
Nor would it shock me to see a tidal wave of public anger arise if the Big 2 1/2 aren't bailed out.
The Big 3 will get their money after Jan 20th. Right now this is the Democrats way of keeping the remaining 350 billion of TARP money out of Paulson's hands. By making a big deal out of 34 billion dollars it allows them an easy out to say no to dispersing the TARP money without pissing off their big financial donors(owners).
@Yogi, caught a second video of the protesters. All black, peaceful and walking towards the door chanting slogans. Definitely a set up but it looks like it was the Democrats creating more arguments against releasing any funds until after the inauguration.
"The bailout is a sellout." Somebody gets it.
Some days I truly believe this entire debacle is the Republican elite poisoning the well for the Democratic elite. The poor suffer.
Video - CNBC.com
Some Brit just told Maria the yeilds are so low on the 30 because we are heading into a depression. She stuttered and stammered then said "so you're in bonds right?"
"BBC says its nothing."
One important lesson learned from reading comboxes: Carefully check for and confirm sources.
Rich,
Insert the word banks for the Big 3 in your comment and I agree completely.
Is it PC to PANIC YET !
Three cheers to the MBA for reading his Adam Smith. May I remind you the long run only matters if you live to see it.
(was) Worried before we 'met': Are you insinuating that our banks, the trusted backbone of our financial system collectively lied to us? That JPM, C, WFC, BOA, USB all underdisclosed the quality of their assets to investing public and the OCC? And that Merideth Whitney and the entire OCC establishment let it happen? Say it isn't so!
You will triple (at least) your money in 2-4(if not sooner) yrs. buying GM @ $4.My $ is where my mouth is
Buying guns and basic survival supplies is fun. I kinda feel like I am getting ready to go camping.
It's astonishing that the bankruptcy procedures for Lehman Brothers are not factored into your analysis.
Once Lehman entered Chapter 11 all over her liabilities are frozen and partitioned into bucketsÂ… or tranchesÂ… of creditor classes.
The legal spadework to determine just who gets what and when is not quick.
In the meantime, all of LehmanÂ’s assets mature or spin off cash. The typical Administrator is not going to dump assets at fire sale prices. He has no incentive to do so. Instead, he's held to account for getting full value for the creditors. Everything is slow in bankruptcy proceedings.
There is only one place the Bankruptcy Court will permit the proceeds to flow: Treasury Bills or their equivalent. As a practical matter, itÂ’s going to be 100% T Bills.
This amount surges each and every day as the pile of near term assets matures.
No matter how much the Treasury pumps into the system the cash ends up right back at Lehman Brothers: in their T Bill position.
It is the RELENTLESS purchase of T Bills by the bankruptcy administrator that is skewing the yield curve. Every purchase is a forced buyÂ… interest rate be damned.
How much is involved? Lehman entered Chapter 11 with over 600 Billion dollars of assetsÂ… market to market.
Their face value is much higher.
Since only a minority of mortgage debt has soured, which has already been factored into the asset valuations, one must imagine that by now Lehman Brothers has a staggering cash horde.
Such disbursements that the Court will permit ( legal fees and operating expenses) are trivial by comparison.
Tying up this much cash is staggeringly deflationary. This cash drain operates like a black hole sucking in liquidity system wide.
You will triple (at least) your money in 2-4(if not sooner) yrs. buying GM @ $4.My $ is where my mouth is
Signed: "Anonymous"
Any advice on penny stocks?
I blame haloscan!
Anonymous writes:
You will triple (at least) your money in 2-4(if not sooner) yrs. buying GM @ $4.My $ is where my mouth is
People rode the market all the way down during the Great Depression. GM is a dinosaur with Creationists at the helm.
Oklahoma's NBA team used to be in Seattle...if I had the resources I'd be shorting a lot of Seattle-based companies. Boeing in particular...they have totally screwed up the 787.
I suspect a lot of luxury box contracts are not going to be renewed in the next couple of years. Bankruptcy judges and creditors' committees don't look too kindly on that kind of expense.
Some guy is on CNBC saying he is up 40% this year on government bonds.
How can that be?
Any advice on penny stocks?
Bob_in_MA
Avoid
You will triple (at least) your money in 2-4(if not sooner) yrs. buying GM @ $4.My $ is where my mouth is
You are brave or crazy. I got out at $4.55.
You may be right, Robert, about this being the bottom.
The Elliott Wave folks predicted a good down day today, and it came to pass. Tomorrow should be another down day, based on my read of last night's forecast.
We'll see how Friday and Monday play out.
Me, I'm standing pat, holding my shorts. My hunch is that tomorrow's job destruction number will be ugly, and will continue to darken mood on Friday and Monday and Tuesday.
Of course it was "staged". One person interrupting is just passed off as a kook. This isn't Tiannanmen Square. But not a ploy. Don't forget: there is growing alienation of the left with the Democratic establishment.
You will triple (at least) your money in 2-4(if not sooner) yrs. buying GM @ $4.My $ is where my mouth is
Signed: "Anonymous"
Puttin' money in your mouth is gross and unsanitary. I would rather see you pledge your life, your fortune and your sacred honor...
Deaco
Some guy is on CNBC saying he is up 40% this year on government bonds.
How can that be?
Anonymous
How can it be that anyone still watches that channel of crap?
Beats me.
Flim Flam writes:
Anonymous writes:
You will triple (at least) your money in 2-4(if not sooner) yrs. buying GM @ $4.My $ is where my mouth is
People rode the market all the way down during the Great Depression. GM is a dinosaur with Creationists at the helm.
Flim Flam
I admit to having loss orders in place
Anonymous writes:
You will triple (at least) your money in 2-4(if not sooner) yrs. buying GM @ $4.My $ is where my mouth is
Hey thanks!! Good insights. Very valuable info. I'll buy some GM stock just as soon as the funds get transferred from this Nigerian king dude. He's putting a whole bunch of money into my account. Apparently he has a pile of cash, but he can't open an account since he isn't a citizen.
Puttin' money in your mouth is gross and unsanitary. I would rather see you pledge your life, your fortune and your sacred honor...
Deacon
Deacon
Money in my mouth is gross and unsanitary. I was in Thailand in 1988 and I met this club girl. After a few drinks I...never mind
"Why not scapegoat the Unions? We can get the plebes fighting amongst themselves while we rob them, it's been working forever, why change now?"
--Comrade Kristina
A lot of union *ss got kissed today in the hearings. Either the pols are engaging their usual vote-pandering, or the unions are getting set up to take some medicine. Maybe both.
~~~
"It would not shock me at this point to see a tidal wave of public anger arise directed at a bailout of the Big 3."
--rich
You could see it today at the hearings. Several of the senators must have gotten an earful while they were home for turkey day. The one from Tennessee (forget his name) was pretty scathing, and several appeared to at least be making a show of delivering a pounding to the auto execs.
It's worth noting that they had an economist testifying on the same panel: Mark Zandi. In his testimony, he estimated the cost the auto bailout at between $75 and $125 billion. So this is no simple little bridge loan.
We're looking at 115+ bps on the long bond in approx the last 15 trading days.
Glad I sold my F, but sold SRS too soon--I am a wimp.
Bushes confirm purchase of Dallas home in Preston Hollow |
News for Dallas, Texas | Dallas Morning News
| Latest News
Bushes confirm purchase of Dallas home in Preston Hollow
(2 mi. from me)
Hey thanks!! Good insights. Very valuable info. I'll buy some GM stock just as soon as the funds get transferred from this Nigerian king dude. He's putting a whole bunch of money into my account. Apparently he has a pile of cash, but he can't open an account since he isn't a citizen.
Gavshire Hathaway
Don't mention it.
Anonymous: God forgives.
Deaco
The one from Tennessee (forget his name) was pretty scathing, and several appeared to at least be making a show of delivering a pounding to the auto execs.
The dwarf Sen. Corker(R-TN.) was for the bailout until GM spoke of dumping Saturn into the pit.
Some guy is on CNBC saying he is up 40% this year on government bonds.
That wouldn't be Hugh Hendry, would it? Love that guy.
The answer to your question is "compounding".
Consider a 30-year zero-coupon (i.e. no interest) bond with a face value of $10,000. In other words, it pays you $10,000 in 30 years.
If the interest rate is 4%, then the current price is $10000 / (1.04 ^ 30) = $3083.
If the interest rate is 3%, then the current price is $10000 / (1.03 ^ 30) = $4120.
So if he bought when the interest rate was 4% and sold when it was 3%, he made 35%.
Given the actual numbers are something like 4.5% and 3.1% for the U.S. -- and possibly more extreme for other countries -- a 40% gain is not at all impossible this year.
blert...fantastic analysis. I totally agree, and your point is one that has been under the radar.
It's worth noting that they had an economist testifying on the same panel: Mark Zandi. In his testimony, he estimated the cost the auto bailout at between $75 and $125 billion.
Damn, I hadn't heard that. That, plus the fact they haven't apparently gotten any of the concessions from labor, etc., in writing makes this seem like a nonstarter.
"Some guy is on CNBC saying he is up 40% this year on government bonds."
Earlier this year, the 30 yr Treas future (think of it as an index in this case) was under 110. Even at the end of Oct, it was 113. It closed 6 minutes ago over 132.
Add a little leverage, and 110 to 132, there it is.
....the beatings will continue, until morale improves".
Louie: until morale improves or the blood stops flowing..
Deaco
dude on systemsand your defcon analysis...the CR comments section is the filtering system and a learning one -- the best kind. Go back to the drawing board
as for nascar -- it will only enhance the appeal as the major corproates recede and the teams are forced to apply good old fashion American creativity - think hedge rows in WWII
Citadel wants to be the arbitor of CDS...go figure
Zandi's a moron. He's been on the wrong side of housing, stocks, bonds all year.
Lou: After all, there is no good in beating a dead horse.
Deaco
Does anyone have an idea how these treasury yields work themselves out. Obviously these rates are "too" low. I understand they can remain too low for longer than I can remain in business but this is odd.
At a point foreigners should be selling and taking gains. I understand most people think they need us but they don't. They have the advantage because they are the low cost producers and they are willing to work for less. That is a huge advantage. Their standard of living can only really improve - our can decline.
I have been long gold and though it has performed ok it hasn't been that great. Maybe I want the market to 'work' to quickly, but these treasury yields are odd.
Anyone have any ideas? Thank you.
SR
...if this aint one hell of a mess, if will do until the mess gets here.
Zandi's a moron.
~~~
Zandi is whatever his corporate handlers tell him to be ...
Interesting stuff, Blert.
So, I guess Yahoo! is going to die. I wonder if Qi Lu sold all has Yahoo! stock before defecting.
Dec. 4 (Bloomberg) -- Microsoft Corp., the world's biggest software company, hired Qi Lu, a former Yahoo! Inc. executive, as president of the company's Online Services Group as it struggles to catch up to Google Inc.
Deacon, these guys are like a bucket of assholes, with the good ones thrown out.
Wouldn't it be a good idea for car companies to ask the medical insurers / medical industry for some concessions? Lower the medical premiums, costs, etc.
we are being subjected to the tyranny of the minority.
Wouldn't it be a good idea for car companies to ask the medical insurers / medical industry for some concessions?
~~~~
Some sectors are sacred ... finance, health inc. ...
125 billion for the Big 3. So what. AIG is over 150 billion and they are doubling wages for their management. Ford and GM CEO's said they would reduce their salaries to $1 and cut salaries of management. What does AIG provide for our country? Bad management and taking idiotic positions in the CDS market causing billions in losses for the potential gain of a few hundred million? Sheer genius.
We need these jobs and manufacturing to stay in the USA. Unions are necessary to keep working class wages livable. See your fellow citizens as people and not impediments to you making some extra profit on the corporate balance sheet. Is a few extra pennies on the dividend worth hardship for the workers?
"Some sectors are sacred ... finance, health inc. ..."
funny how those sectors have produced recently-minted senators and apparatchiks like hanky panky
GM writes:
125 billion for the Big 3. So what. AIG is over 150 billion and they are doubling wages for their management.
Amen, GM.
Tying up this much cash is staggeringly deflationary. This cash drain operates like a black hole sucking in liquidity system wide.
blert | 12.04.08 - 5:01 pm | #
I dont get this. Surely if the treasuries are yielding close to 0 due to Lehmans being the only forced buyer , the government can provide an equal amount to the forced bought treasuries to anybody who wants them no matter how many are forcing the purchase?
If people want treasuries for no good reason then the government can simply direct the proceeds straight back into the market surely?
Is it not true that at the moment the government can drop Treasuries from helicopters in order to drive up the yield if the yield is something that is of any importance?
Instead as presumably you dont have a one billion usd cash currency bill and as cash and treasuries are equivalents as reserves, people are seeking treasuries as reserves.
Surely this makes the governments position strong rather than weak? At the current rate the whole indebtedness of the US government and its people can be refinanced at once in a lifetime lows.
Please explain how i am wrong as i must be!
"Zandi's a moron. He's been on the wrong side of housing, stocks, bonds all year."
--Anonymous
So do you think his estimate is low or high?
I think Zandi is high....
"If people want treasuries for no good reason"
there are no net 'people', i.e., individual investors that want them, in my speculative opinion.
this is just a function of hundreds of billions in TARP cash being created on a weekly basis - treasury positions, whether real or synthetic, are the way hank and ben sterilize the xeroxdollars.
On the bright side. Reaganomics, "voodoo economics", supply side, free market capitalism, Laffer curve are dead, dead I tell you. Dead.
Let me just add this - on a very simple level if the solution to our problems was the government printing money, buying treasuries, forcing mortgage rates down or bailing out everyone - then history would show it working. Obviously history is filled with government intervention failures so why would it be different this time.
On a common sense level it doesn't make sense. We can't just print money to pay our debts or keep our housing values inflated. Yet why isn't the market reacting?
SR
I still like free market capitalism. We just don't practice it. It was always my understanding that companies that can no longer operate declare bankruptcy. I don't see what the problem is.
bgates(Unrated) writes:
"there are no net 'people', i.e., individual investors that want them, in my speculative opinion."
Certainly no sane investor would buy them for the yield. My speculative opinion is that a lot of dollars are going to be vaporized when rates inevitably run up again. I sure wish I knew when that is going to happen.
....given enough rope, the greedy bastards will hang themselves.
Zandi's a moron. He's been on the wrong side of housing, stocks, bonds all year."
--Anonymous
So do you think his estimate is low or high?
sm_landlord
I have no idea. He has zero cred. As stated, he says, does, walks and talks how his handlers tell him. Wall St. will make a small fortune off a GM BK. They need the money so they support it.
GM writes: We need these jobs and manufacturing to stay in the USA. Unions are necessary to keep working class wages livable. See your fellow citizens as people and not impediments to you making some extra profit on the corporate balance sheet. Is a few extra pennies on the dividend worth hardship for the workers?
GM | 12.04.08 - 5:19 pm | #
What would you say a livable working class wage is?
The Treasury auctions T Bills to meet the needs of the Federal Budget.
That's what sets the size of the offerings.
Moving short term rates up and down is the Federal Reserve's game.
Much of what the Fed is doing is a feeble attempt at getting the markets to lend long.
They're pushing on a string.
"there are no net 'people', i.e., individual investors that want them, in my speculative opinion."
I am an inflationist and i could be totally wrong but
If you believe deflation of all assetts including gold is coming then it makes perfect sense.
Only if you are an inflationist and cant believe this is possible does it not make sense.
I think people need to begin their answers with either:
FFDIC writes:
Dallas News, Sports, Weather and Traffic from The Dallas Morning News shared...n1.129bae9.html
"Bushes confirm purchase of Dallas home in Preston Hollow
(2 mi. from me)"
FFDIC | 12.04.08 - 5:07 pm | #
Good news for you, FF. That means you won't have to arm up to ward off intruders. The SS will do it for you. Also, the nearby groceries will always be well stocked.
"What would you say a livable working class wage is?"
--PSgirl
That is a whole thread in itself !!!
I have seen "living wage" advocates demanding $12-14 per hour for janitors and maids here in SoCal. One data point, anyway.
.
Free Market capitalism can only exist as a theory, an idea. The greed of human nature does not allow it to truely exist
FFDIC, will you have them over for a 'Welcome to the neighborhood dinner'?
If you do, please tell Bush that he killed the Republican Party, and ask him to tell his goofball brother -- married to a sales tax cheat and father of a druggie daughter -- to save his ill-gotten money and drop his pointless Senate run.
Buck Fush.
Ah, and a new post now. Just when the Treasury issue discussion was getting started. And, I believe, what is happening to the T-curve, and why, is THE story of the last month.
If people want treasuries for no good reason then the government can simply direct the proceeds straight back into the market surely?
I'm having the same problem. I understand that if investors are piling into UST's then those investors are not allocating their cash to other opportunities (e.g. equities, VC). However, once the investors purchase the UST, then the USG now has the cash to inject into the real economy, unless there's a bottleneck somewhere else.
In keeping with the above request--i'm in the deflation camp--are there any safe places (besides a remote mountain abode with clear sight lines, game and water, and maybe Pocahantas) to make money, get a job, start a business??
are we really just back to the stone age, even with the technological advances we've made since 1830, 1871, 1929, pick your favorite depression era? is there really no way out but to start from scratch?
Some plebes buy treasuries, even 13-week bills. I think they're more concerned with "safety" than yield.
Comrade-Dope jg (jg) writes:
FFDIC, will you have them over for a 'Welcome to the neighborhood dinner'?
If so, Waterboard his fake "tough guy" punk ass
Austin Tex--so he was buying futures, not the actual bonds?
Nemo--yes, that was Hugh Hendry. He has done very well I would say.
Gareth G writes:
"NASCAR is toast, for you all Bubbahs out there."
Gareth G | 12.04.08 - 4:41 pm | #
Only the overblown 2008 version that everyone sees on TV. The original NASCAR grew out of good ol' boys, dirt tracks, and home garages. No reason to believe that kind of activity will cease. It might even expand with a lot of blue-collar men with nothing to do.
I know one mechanic who's rebuilding a 1958 Singer. Beautiful.
Livable wage? I live well on $25 an hour. A family of four with both parents working, at current CPI, could survive at $15 an hour.
"Free Market capitalism can only exist as a theory, an idea. The greed of human nature does not allow it to truely exist"
The same goes for socialism. I guess we shouldn't have stopped digging for grubs and shying stones at rabbits.
Actually, since no one has more than an approximate idea of how to govern a large economy, I'm waiting for AI governors to take over. Give it a few decades.
The next question that should be asked is what is the maximum a CEO should be allowed to earn?
GM--$20.00 or so per hour seems reasonable to me, but I thought part of the problem is that the auto workers are making way more than that.
And, I agree. CEO pay is obscene.
GM workers now start at 14 per hour with healthcare benefits. When figuring "living" wage are we including benefits in the price tag?
I live comfortably on $1,000,000+ per year. I have never lived comfortably.
Robert writes: Hey Orange what bank gave you that rate? Cause I just called my bank and they are still above 5.5%
An officer at Bank of America today claimed she could get me into a 30-yr fixed at 5.1%. Didn't ask how many points.
PSgirl writes:
GM--$20.00 or so per hour seems reasonable to me, but I thought part of the problem is that the auto workers are making way more than that.
And, I agree. CEO pay is obscene.
PSgirl | 12.04.08 - 5:47 pm | #
I watched the hearings today, I believe $28/hr was tossed around. Another figure (from a follow up phone call on cspan from a UAW member) said that they had settled on a two tier system last year where wages were $14 for new hires and they weren't entitled to all the benefits of grandfathered workers. Not the exact wording but I can't remember which benefits he mentioned.
..."The next question that should be asked is what is the maximum a CEO should be allowed to earn?
"....
Did I wake up in another country?...
..."allowed to earn"???
Did anyone talk about the possibility of making better cars as a viable future solution?
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