when i read this, it's like watching larry david in curb your enthusiasm. it's an awful feeling, i feel horrible for him, but i mean... come on, you're doing it to yourself man!
I hate being fair to someone like Paulson, but it could also be a "Stormcrow" effect--Paulson is only out speaking when he sees something pointing to big trouble coming down the pike.
Bernanke is doing the same thing that the Bank of Japan did starting in 2001. He's employing the now-customary quantitative easing playbook for the present deflationary situation.
I expect that we will get similar results as Japan has had. Most likely, Bernanke's actions will reduce some short-term pain in exchange for long-term stagnation. Buying up Fannie and Freddie debt with printed money did knock down mortgate rates last week, which will no doubt ease some of the pain in the housing market.
The price for easing that pain will be felt when we start to come out of this recession. When that happens, the Fed will have to mop up the excess liquidity to prevent runaway inflation. That likely means that the Fed Funds rate will have to be raised more than it would have but for all this money printing. Which of course means slower economic growth in the future.
Welcome to stagnation- it will be with us for years to come since we have no tolerance for pain.
So it was my understanding that the Fed has already engaged in Q.E., buying long-term Treasuries (by sketchy means through GS)...it would seem like Ben has announced that Q.E. is now official policy and the Fed will buy directly? Why not go the direct route to begin with?
California Governor Arnold Schwarzenegger, saying his state is going broke, declared a fiscal emergency and ordered the incoming class of lawmakers into a special session to fix a widening $11 billion deficit.
when i read this, it's like watching larry david in curb your enthusiasm. it's an awful feeling, i feel horrible for him, but i mean... come on, you're doing it to yourself man!
matt | 12.01.08 - 4:20 pm | #
Watching him I don't feel terrible for him - I feel terrible for me and my would be some day retirement.
REUNIFICATION OPERATIONS IN NEW DELTLAND
(FORMERLY THE U.K.) ARE PROCEEDING APACE.
SOON WE WILL INITIATE ADVANCED NAVAL
OPERATIONS AGAINST THE WESTERN USURPERS.
ICELAND IS BEING MONITORED TO PREPARE FOR TAKEOVER AND TO ESTABLISH A MID-ATLANTIC SUBMARINE AND GEOPHYSICAL WEAPON OPERATIONS BASE AGAINST NORTH AMERICA.
i know exactly what you mean, but i just couldn't imagine having to go out there at this stage of the game and blabber words that you know have little to no meaning and then walk off. the man must have his own opinion he is just dying to share.
Of course correlation is not causation but it's a running joke around my office that any time either Paulson or Bush speaks the market crashes...When a bunch of people who pretty much don't follow the stock market start noticing, you gotta wonder...
Just get this over with. Commute (?) everyone's mortgage down to zero. Debt forgiveness across the board.
Then start building again from the ground up. Because trying to patch and glue and tie with strings is just going to end in failure anyway. And cost the same in the long run. Or more.
after the NPR interview, I concluded that Paulson may be evil too, but he is also stupid and filled to the brim with pride, and out of touch and arrogant.
I wrote my congressman and Sentors before the bailout votes and now I send them a note about once a week thanking them for not listening to the masses they "represent".
"In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of."
Confucius
Would the bone dust of Confucius be better at dealing with this than the living Ben and Paul?
after the NPR interview, I concluded that Paulson may be evil too, but he is also stupid and filled to the brim with pride, and out of touch and arrogant.
--
and he tastes salty and goes soggy in the microwave. screw him.
Paulson knows. The Treasury needs as much money these days as possible. He knows. He's shaking the other markets herding the money into his treasuries.... And like sheep.....
We need to force all financial institutions to admit their full loses immediately. If it means a wholesale nationalization of the financial system so be it.
Equity & preferreds get wiped out and bond holders take hair cuts.
It's the best way restart the system efficiently and fairly. An inflationary scheme will help the wealthy but impoverish the majority forever.
Equity & preferreds get wiped out and bond holders take hair cuts.
It is that wiping out and taking of hair cuts - and follow-on effects in the derivatives markets - that is going to bring the whole thing down around us. Hence, the dance.
The Maximum Power Principle (Odum, Lotka) posits that all open systems (ecosystems, people, societies, etc.) evolve to degrade the most energy they can while allowing for continued existence of the larger systems they are part of. As systems move from equilibrium they will take advantage of any means necessary to resist externally imposed reductions in power. (In this case we percieve it as social power that our brains associate with money - at least for now). So instead of reducing reserve requirements, investing in basic industry infrastructure and building solid longer term foundations, we will add cheap gas and credit make the coming conflagration bigger. I wish it were otherwise.
-- Nate
Security_Prison_21 writes: I'm with the Angry Saver. The time for tough medicine is now.
That's what we said before the TARP and we were told the alternatives were too dreadful to conscience.
Now that they've squandered a king's ransom on it, you can rest assured good money will follow bad until non-policy constraints force a cutback in the burn rate.
Do Paulson/Bernanke have unlimited power? Are they the new Cheney? Will Obama take over with any money left in the bank? Can a financial soap opera ever have an up day? How can the US still be considered a democracy since all its money is controlled by 2 pieces of shit?
I think Nemo noted it above, but the drop in equities, commodities, etc today had much more to do with the Fed declaring quantitative easing as actual policy now.
Think about it. The largest balance sheet in the world, which can become even larger, seemingly without limits (though surely they do exist), states that it will buy something, and in large enough quantities to move the market.
Why in the world would an investor get in the way of this train? Or to put it better, who would not jump aboard? Long end treasuries are going to be purchased with a limitless supply of dollars - as an investor, that deal is better than anything else. Period.
Until it stops - then watch out.
Or until the dollar is no longer THE DOLLAR. Then look out.
If the fed said it would buy S&P futures in quantities large enough to move the market - what do you think would happen to equities? and to the long bond?
The ride would be much smoother without Paulson near the controls. Rich, if you looked ahead to Paulson's speech time, we can't give you any credit for that.
crispy&cole writes:
I was out to lunch today...can someone summarize all 5,288 comments in the last three posts?
crispy&cole | Homepage | 12.01.08 - 4:43 pm | #
Shortly after the election Letterman had a comment in his opening monologue 'does anybody object if Obama starts early' - while originally a joke it isn't a joke any longer in my view.
Not only is that the plutocrats' solution for the rest of us, it won't work.
My wife and I both work, we both need to. I'm in okay shape so far; she's got hearing problems, leukemia (not causing problems yet), a bum knee, and epilepsy (sorta under control; we've agreed she won't drive). She's sixty years old and soldiering on.
But when she can't? Our income drops in half, our expenses probably rise.
My point is, there comes a time when more and more people can't work, and even for people who've "done everything right," that starts in the 60s for some. And that is why there will be valid retirement strategies in place for all Americans. Or "this sucker" (meaning society) really is going down.
Dec. 1 (Bloomberg) -- Countrywide Financial Corp., the home lender acquired by Bank of America Corp., was sued by Greenwich Financial Services Fund over claims an agreement to reduce payments on mortgages by $8.4 billion would hurt investors.
The hedge fund claims investors will be harmed by Bank of Americas settlement, reached on behalf of Countrywide, with 15 state attorneys general. The value of trusts that bought 400,000 mortgages will decline under the deal, the fund said.
In the proposed class action, or group lawsuit, the Greenwich, Connecticut-based fund demands a declaration that Countrywide must purchase at par every mortgage loan that it sold to any of the 374 securitization trusts, David Grais, a lawyer for the fund said today in an e-mailed statement. Grais said Countrywide could owe $80 billion to the trusts.
Countrywide plans not to absorb the $8.4 billion reduction in mortgage payments itself, even though it was Countrywides own conduct of which the attorneys general complained, the fund said in the complaint filed today in New York State Supreme Court in Manhattan. Under the settlement, the mortgage lender would pass most or all of that reduction on to the trusts that purchased mortgage loans from Countrywide, the fund said in the complaint.
LawyerLiz,
I know Paulson's bald head gets a lot of snarky comments, but I get more creeped out by his pointy ears. (I'm a woman). Do you think his parents confused him with a doberman pup when he was a child & clipped them? .
A society that treats people as disposable widgets cannot function at a high level- it just withers away and everyone starts looking out for themselves. Ultimately it implodes and people revolt.
Bob Dobbs writes:
Ummmmm... work 'til you die?
Not only is that the plutocrats' solution for the rest of us, it won't work.
My wife and I both work, we both need to. I'm in okay shape so far; she's got hearing problems, leukemia (not causing problems yet), a bum knee, and epilepsy (sorta under control; we've agreed she won't drive). She's sixty years old and soldiering on.
But when she can't? Our income drops in half, our expenses probably rise.
My point is, there comes a time when more and more people can't work, and even for people who've "done everything right," that starts in the 60s for some. And that is why there will be valid retirement strategies in place for all Americans. Or "this sucker" (meaning society) really is going down.
Bob Dobbs | 12.01.08 - 4:52 pm | #
I think Nemo noted it above, but the drop in equities, commodities, etc today had much more to do with the Fed declaring quantitative easing as actual policy now.
Think about it. The largest balance sheet in the world, which can become even larger, seemingly without limits (though surely they do exist), states that it will buy something, and in large enough quantities to move the market.
Don't forget that Mr. Bernanke believes that "signaling" is an instrument of monetary policy. After making his announcement today, yields went lower, as he probably had hoped. He doesn't have to act until the market calls his bluff and yields begin to increase. IMHO.
when will these guys get it through their thick heads and as Ted Turner put it so well yesterday "we spent money we didn't have and now we have to pay the price"
The only choice is and has always been nationalize the failing banks write down the assets-mortgages, commercial real estate, corporate loans. Lending will only begin once folks think the worst is behind us not while they are wondering how bad it is going to get.
After the '04 election, I thought at some time in the second term a mob with pitchforks and torches would be chasing him out of town. A few weeks ago I thought there was not enough time for the mob development. Now, I think there's plenty of time left.
States Seek Aid as Budget Gaps May Hit $200 Billion (Update1)
By William Selway
Dec. 1 (Bloomberg) -- U.S. states budget shortfalls may be as much as $200 billion this year and next, Pennsylvania Governor Ed Rendell said, as officials press the federal government to boost construction spending and aid cash-strapped states. States Seek Aid as Budget Gaps May Hit $200 Billion (Update1) - Bloomberg.com
But with a one week delay? WTF. Are you saying that the market is stupider than usual?
I think it is just sinking in. Today Obama announced more of his administration and further solidified it as Clinton II. Then there is the rising criticism of Rubin who was formerly the Clinton treasury sec. Then add to that Obama's new neo-conservative leaning announcements and you have Clinton/Bush II
notice how many of the new administration are from the same elite schools. It feels like there is little new economic thinking between them. Probably because they all were schooled by a small number of academics.
I agree that doing nothing is the best action right now. Not sure if that small TBT action I made is right or not if Uncle Sam will buy from himself. Just going to sit back and watch for awhile. Uncertainty is getting annoying.
Well, apparently life in a stable democracy was just to boring for a majority of Americans.
Let's think of a way it could be better (I could be rich), dramatic (terroists could be out to destroy my way of life), financially titillating (check the stock market every day).
Well now they have their real excitement. They actually have something potentially devastating to worry about.
"MPinCO writes:
Obama recreates Clinton II and market notices"
O has impressed with early steps and decisions. I would be all for skipping the next month and half and letting him in early as suggested. We can thank him for much of the last 5 days appreciation prior to today.
Too much going on today for anyone to stand in front of:
*Recession confirmation,
*terrorist attacks and rising tensions between India and Pakistan,
*then the normal horrible daily business/economic news thrown in
*with a Paulson appearance reminding us he's still around with some control.
Add in Trump's woes that make it crystal clear that even our country's best and brightest weren't immune to this crisis.
"It's time to sit down at the piano for a while with a cigar and some scotch."
mp | 12.01.08 - 5:03 pm
You used to post some fine choices in jazz for our enjoyment.
"With economies from the U.S. to Japan in recession, Wei and the other 2.8 billion people in Brazil, Russia, India and China may provide the consumer demand needed to counter the slump."
HARM(Unrated) writes:
1 currency soon [yogi] writes:
Spent $330,000,000,000, got 20 left for homeowners.
I'm still shocked he has not been forced to resign.
Apparently you haven't been paying attention the last 8 years, have you?
I have, and I'm STILL shocked. Gonzalez had to resign over mild cronyism. Maybe there's more to that bazooka business. Where's cranky Jim Bunning, anyway?
with BB buying Treasuries and forcing an even bigger pileon into the same, he seems to be wanting to force down mortgage rates as part of his effort to stabilize housing.
Seems to me though that there is a rather limited upside to that maneuver, even if rates went from say 5.5% to 3% for a 30 year - that's only going to change your monthly nut so much.
And at the same time, the downpayment needed is going to go to 20% easy if not higher.
But worse still, by destroying the economy along with the markets he undercuts the ability to pay the nut as incomes are wiped out, and the ability to have a DP as everyone's savings are demolished.
So WTF exactly is he thinking?
I really see no way out of this but a very long and deep recession. And if BB and HP keep blowing it the way they are now, we'll get our GD2.
It REALLY worried me when BB said today, "put that out of your mind" when talking about the economy being as bad as the last depression. Well duh, yeh, it doesnt go from boom to depression in a day, but if you wanted to paint a picture of the road to it, Id think the sketch theyve laid out so far in pencil just needs some oil layered upon it to make a masterpiece.
Dec. 1 (Bloomberg) -- Demand for Treasuries has reached the bubble phase seen among technology stocks in 2000 and real estate six years later, according to David Rosenberg, chief North American economist at Merrill Lynch & Co.
The 10-year note yield is now firmly below the 3 percent threshold and this next leg down in yield will undoubtedly represent the classic mania-turn-to-bubble phase that quite plausibly sees an overshoot to or even through the April 1954 lows of 2.3 percent, New York-based Rosenberg said in a research note today. ...
Can we replace Paulson with Gono? He has already devastated one economy,so he has experience,he would work for a lot less $,and outsourcing is a good thing for the economy.Where is the downside?
"The purpose of the meeting is to discuss monetary control matters on possible changes in the treatment of corporate debt as collateral and possible ways to enhance flexibility in funds-supplying operations collateralized by corporate debt, the BOJ said"
There are plenty of technicians on Wall St. The fact is, none of them end up in management. Salespeople become management. They might have MBAs or PhDs, but at heart they are salespeople.
Paulson is a pure salesperson. He is focused on message and presentation, but clearly has no plan.
I have great respect for the talents of salespeople, but that's just not what's needed in Paulson's position right now. I hope he just spends the remainder of his term signing one dollar bills. We'll need them.
Andrew Foland writes:
I hate being fair to someone like Paulson, but it could also be a "Stormcrow" effect--Paulson is only out speaking when he sees something pointing to big trouble coming down the pike.
Andrew Foland | 12.01.08 - 4:20 pm | #
I know the problems are more complex, but after a few months of hardly anything, I've been noticing a small surge in foreclosures in the Sacramento area. Seems that 3 month wait/work out period is coming to an end for many people. At some point next year we're due for another big flood of foreclosures, like we had at the begining of this year. That'll be ugly. And if the last wave of foreclosures could inflict so much damage, the next wave should be interesting.
I just find those halt actions to be a pure political kick the can. Do they really think that a month is going to do anything for the number of workouts? And at what cost? They keep announcing these things with the hope that it will lift confidence, but when it turns out to be yet another scam, it only sinks confidence that much further. When will they stop this BS?
I still say we could reduce consumption in the US by 10% and not feel the slightest pinch. Just pay attention to the details, Tanta style. Turn off lights. Use compact fluorescents. Ride a bike more...
How did Paulson ever rise to the top of GS? Ascendancy based on tenure, not talent? More like a professor. This guy is a clown. I used to think GS as the real masterminds of finance; I guess I am the clown for believing this...
Wipe out all national debts and convert to a one world monitary system...Tin Foil Hat is required attire at the dinner party following the meeting. Cheers....
The U.S. military expects to have 20,000 uniformed troops inside the United States by 2011 trained to help state and local officials respond to a nuclear terrorist attack or other domestic catastrophe, according to Pentagon officials.
The crowding into treasuries helps the government finance all the bail outs. There might be method to this madness.
This is very dangerous policy. The problem is that we are creating a treasury bubble and it's accompanying bubble, the dollar bubble.
Once they inevitably burst, the worst of all worlds will likely happen - a dollar collapse with a U.S. debt collapse. Not a fun prospect. Enjoy it while it lasts...
Countrywide appears to be trying to pass the costs of a legal settlement onto the bondholders. Bondholders are calling BS. I wonder what Tanta would made of this?
"carmichael writes:
How did Paulson ever rise to the top of GS? Ascendancy based on tenure, not talent? More like a professor. This guy is a clown. I used to think GS as the real masterminds of finance; I guess I am the clown for believing this..."
Paulson did make some nice connections early on which may (or may not) have helped succeed beyond his abilities.
"Paulson was Staff Assistant to the Assistant Secretary of Defense at The Pentagon from 1970 to 1972.[7] He then worked for the administration of U.S. President Richard Nixon, serving as assistant to John Ehrlichman from 1972 to 1973, during the events of the Watergate scandal for which Ehrlichman was convicted, and sentenced to prison."
anyone else think that Bernanke mentioning buying long-dated Treasuries is just a way to get the herd of short term traders to do most of the Fed's quantitative easing work without having to print as much money? Next step is to telegraph that they are buying investment grade corporates and presto, the throng gets ahead of the Fed. I wish the effer would just come out and announce the overt purchase of S&P 500 futures so that we can get to the end of this nonsense sooner than later.
I'm no fan of Paulson or his TARP but when the Senate Majority Leader admitted "no one knows what to do" it was pretty clear no one had any better
idea or Reid would have been all over it simply for the partisan political advantage opposing of being against the "Bush" plan on election eve.
It may well be that 'stimulus' just won't work in the developed world anymore. People are pretty satiated materially and it is easy to retrench
without undue discomfort.
I hate to say it but we might do better by 'helicoptering' money to the third world where there are enormous unmet material needs. If Americans don't want to buy another Jeep or Silverado you can bet there are lots of folks in the third world who not only want one but need one.
A new Marshal plan for the third world
might be the best way to stimulate out economy as the 'aid' can be tied to US produced goods and Americans would feel more secure receiving 'income' even if purchased via government debt than getting rebates or other one off stimulus packages.
Interesting article I read on the use of processors in cars and the manufacturing of them. GM buys 2 million a year from a company in Texas.
From one of the comments
He sez according to Matthias Kaestner, an Atmel marketing executive who declined to be more specific. Nonetheless, he noted that the company is somewhat shielded from the Big Threes woes because it sells many of its chips to European carmakers, which do not appear to be in as dire shape. If hes talking about any of GMs sub divisions I got news for the guy. GMs products world wide use the same electronic modules based on common designs. (ie Opel,Holden etc dont do their own electronic modules anymore) Their commonly used in most cases not to leverage the economies of scale and minimize the volume of duplicate engineering. If hes talking Bosch,Siemens,Denso or Hitachi they are all Tier 1 suppliers to GM and I garuntee you Ford and Chrysler.
The automakers presentation to Congress on how they plan to be good doobies and make money; so please give us some, has been rescheduled to Thursday and Friday.
Asian markets are saying does this suck as much as it seems, gee, guess I'll pile out of equities and about godamned time. Take that to the bank. If you can find one that'll be around in a couple of years.
Currency markets absurdly responding to AUD and NZD and muttering by CBs of further rate cuts.
This should be a huge indicator...I locked in my permanent mortgage today. I went long my house. I'm trying to figure out how to short my neighbors though.
Yes, nova? Oh, that was snark, I should probably put a snark indicator in my posts. Sometimes my humor is a bit dry. Besides, I'm angry today for some reason, I suppose it's Tanta, the market, Conjure's clock, my husband still not employed, my mortgage getting ready to reset and my drink being empty...LOL
Ah haha Counter...of course they are...Bernanke removed all doubt today when he said there is no comparison between todays crisis and the GD, everything is coming up roses...The problem is the fertilizer they keep spreading all over...
Nova, it's just that constant feeling of unease. Impending doom around the corner is constantly in the back of my mind to the point of distraction. I can't remember what it is like to just be "normal". Not that I mind, I'd rather see the train coming personally.
Regarding the earlier post today about lines of credit being cut off: I just heard from my sister that the lines of credit on her boss' business credit cards have been systematically being cut. Every time her boss makes a payment, the company drops the credit limit to how much remaining is owed. (There have been no late payments) If they have a $10K line of credit and pay off $2K, the line of credit gets reduced to $8K (exactly what they owe). She said this has happened all the way down to a $500 balance on AmEx but the other cards are now doing it too.
Which basically means they have no credit. They have had to lay off employees this week.
I tried to tell co-workers and some offshore operations on Friday EST that the rally was doomed, ran through some indices, pointed to fractures in various markets, and was basically regarded as leper bear.
Tonight am serving slices of crow to the Asia-Pac team.
Eat up, and half a pound of wasabi and sichuan pepper is not going to take that taste away.
mp, great analogy as usual. I don't know that much about you, I'm a late comer to the CR party (last six months or so) but I enjoy your cutting incite, put forth in succinct form. I think my awakening came about eight years ago when my Dad was dying. Many tragedies followed but that seems to be my turning point. It's grown deeper over the years, as I've studied diligently.
Wasabi - the crisis is contained, short, sharp extreme burn, confident it will be over soon with a serious cleansing of the sinuses. Hmm yum, could do that again.
Sichuan pepper and bird's eye chillis - numbing, slow-burn, massive breakout, followed by excessive choking, reddening, sweating, grasping for water to alleviate, which won't work as chilli is not soluble in water, followed by falling on the floor, retching and heaving, with groans of agony. Aarrgghh, never again, and now we have IBS.
Back to meat and potatoes?
Now, in a policy sense, where are the Fed and Paulson? Where are the markets? Answers on the back on an envelope please.
Got to love the Japanese. Toyota announces that 5000 managers are getting their bonuses cut by 10% on the eve (postponed?) of Detroit's trip to Washington. I'm sure Shelby will rub that in their faces.
"The financial sector itself has been building for many decades into the largest single element of the American economy. We have moved to a world where far too many of us seemingly no longer make anything; were merely trading pieces of paper, swapping stocks and bonds back and forth with one another, and paying our financial croupiers a veritable fortune. In the process, we have inevitably added even more costs by creating ever more complex financial derivatives, in which huge and unfathomable risks have been built into the financial system." - John Bogle, Vanguard Founder.
Thanks nova, my husband tells me the same thing regularly. It's like watching a train wreck in slow motion and screaming at people that can't hear you to "get out of the way". Dreamlike almost...
ova - this calls for "Into The Void" off of Masters of Reality..if you dont know it, learn it!
and on another note, a bankruptcy I couldnt be happier about. Wanna know why? Read the comments about this atrocity. It symbolizes everything wrong since 2001. Greed, pomposity, debt, absurd spending.
I didn't make it past the first sentence without puking: Copia, the ambitious food, wine and art museum in Napa
To me, this has the hallmarks of "charity fundraisers" that are basically tax-deductible soirees that the "privileged" and nouveau riche organize as penance for all the filth that the shovel on top of the plebs.
Basel Too - I just hope they can kill that stinking rotting corpse and bulldoze the thing, or turn it into a homeless shelter. Anything but what it is, a testament to how revolting much of the area has become since I first visited twenty years ago.
El Cliffo - reckon it's the continuation of the trend line, not big enough to show material movement on either of the irresponsible statements by government officials today.
I don't know what it's called when all of 2-30 year bonds offer yields of less than even core reported inflation, but I think it starts with Not Very Good Really.
OK...enough with all the class envy and wealth bashing. Can I have coinz so I can be rich too? .....Chane is coming.....from dollar denominations to COINZ!
The Chinese in the US are the cream of the crop skimmed from 1.3 billion people.....Now that is Larry the Cable Guy funny....I don't care who ya' are. Quote of the Day!
Yeah...I been bad. Guess I get a lump o' coal, worthless T bills, or Citi Stock certificates in my stocking this year. The Fat Cat in the red suit better watch out because I will be spiking his cookies with x-lax and will be icing up the roof to make the stay unplesant for Rudolph this year. Bah Bernankie!
I think EHP is probably taking a timeout, like many others. This has been a strangely heavy blow for many of us, and each deals in his or her own way. Id not be surprised to see some people away for a while. But I hope they will be back, especially EHP, who has been a great recent addition to the community.
Their therapist....sorry for anyones losses but I couldn't resist. Anyone in this market needs a damn good therapist or balls of steel. My apologies..ladies.
They are planning, and achieving, the permanent strategic destruction of U.S. industrial capability.
What better way to squick the last remaining U.S. manufacturers by becoming even more of "low cost outsource center" during a horrible recession?
When a manufacturer goes bankrupt, unlike a bank, it is nearly impossible to replace. There is so much engineering and physical knowledge and capital which just dissipates into entropy. Supply agreements, customer validation of parts, etc.
I see recovery, if it comes, as a multi-step process that will extend over a period of years. (Ten, maybe?) By that time, the current architects who receive such criticism here will be long gone.
First, financial deleveraging of the "shadow" banks and their opaque instruments; then similar deleveraging of bank holding company-owned banks. Coupled with some kind of large-scale mortgage refinancing scheme to keep at least some over-leveraged homeowners in their overpriced homes. At the same time, Paulson/Bernanke (or Geithner/Bernanke/Summerstake your pick) will be trying every trick in the book (flea flicker, end around, triple reverses) to make the necessary deleveraging process less painful. Result: massive deficits and a prolongation of the financial unwinding.
At the same time, people who have jobs naturally are scared, turning cautious, pulling back on spending, and declining to use whatever credit is available, (even though part of the financial recovery program is designed to make credit available again to people who are close to underwater). We are moving to a cash-only society in the main.
So what happens to employment? Outside of health care, I don't see any growth; On the other hand, there are areas of the economy too numerous to mention that will be shedding jobs as business slows. People who have jobs not spending. Lots of unemployment. Minimal corporate profits, if any. State and local governments bankrupt. And, oh, yes, taxes will be going up; energy becomes more expensive.
Maybe there's a genius who will turn up in the Obama Administration who can limit the fallout from what will happen.
Can we also use TARP funds to pay for default insurance on the TARP funds?
The joke about the TARP funds is that they represent less than 10% of the total bail-out. The companies that "borrowed" 8.5 trillion have to pay it back eventually- yeah, right.
Redchimney,
They all were sellers today. The people who bought on Friday were mostly the automatic 401(k) folks.
People really believe that buy and hold is great strategy as the market will eventually start to go back up again. I think we won't see capitulation unless it naturally goes down below 7000...
drchaos - you are so right about fractures in manufacturing, they take ages to repair if at all. My concern is global fractures in the supply chain, of which the US situation is symptom, but in part cause. I'm just trying to think through the problems of a JIT supply chain when the trade finance picture is looking grim, the intermediate inputs and production are under stress, and end demand is sharply contracted.
Now, taking your point about domestic fracture and damage, what are we to make of the international trading system heading the same way?
Not a pretty picture with hearts and flowers, I reckon.
If drchaos wants further discussion about entropy economics and the credit system, by all means let me know. I'm up for that.
It appears to me, many are still in denial. I will say it's shifted from complete denial, to an angry denial followed by mumbling now. I guess that's progress...
When a manufacturer goes bankrupt, unlike a bank, it is nearly impossible to replace.
Better to say it takes a long time. Learning by doing and all that. And it depends on the industry. That's one reason I think at least one of the Detroit 3 will be saved - the barriers to entry in developed country's auto markets are enormous.
Hong Kong hearts Ben and Hank! Pushing 5% down on most boards:
INDEX\tVALUE\tCHANGE\t%CHANGE\tTIME
HANG SENG INDEX\t13,477.84\t-631.00\t-4.47%\t22:37
HANG SENG COMPOSITE INDX\t1,833.40\t-77.45\t-4.05%\t22:37
S&P/HKEx LargeCap Index\t16,797.34\t-755.68\t-4.31%\t22:37
S&P/HKEx GEM Index\t351.05\t-2.52\t-0.71%\t22:37
HS FREEFLOAT COMP INDEX\t1,903.65\t-86.09\t-4.33%\t22:37
HANG SENG HK FREEFLT IX\t1,392.06\t-66.68\t-4.57%\t22:37
HANG SENG CHINA ENT INDX\t7,061.82\t-329.87\t-4.46%\t22:37
HANG SENG CHINA AFF.CRP\t2,945.53\t-117.02\t-3.82%\t22:37
HS MAINLAND FREEFLOAT IX\t3,849.18\t-160.00\t-3.99%\t22:37
HANG SENG 50 INDEX\t1,886.55\t-89.02\t-4.51%\t22:37
HANG SENG HK 25 INDEX\t1,345.35\t-64.72\t-4.59%\t22:37
HANG SENG MAINLAND25 IX\t4,607.12\t-210.79\t-4.38%\t22:37
HANG SENG H-FINANCIALS\t9,316.37\t-420.09\t-4.31%\t22:37
Let's see, choose between:
1. paulson speaks and the market reacts instantly
2. obama chooses his financial team and the market takes a week.
Hmmm. That is CERTAINLY a head scratcher. Hmmmm.
JP | 12.01.08 - 5:15 pm | #
Yes, and I love how Goldman Sachs is privy to all sorts of financial information before everyone else is. It's becoming a massive scheme to rob 401k's and pensions. People will never realize it- they'd rather take it out on Bush and vote for Clinton II. If the people really knew what was going on, there would be an instantaneous revolution that not even 20000 soldiers could stop. Brutal violence is the only solution to greed, corruption, and hate. History repeats itself.
Duarte writes:
...If the people really knew what was going on, there would be an instantaneous revolution that not even 20000 soldiers could stop.
lots of americans do know what is going on. problem is, they are either in on it, or quickly look away for fear of having to actually accept that theyve been robbed. repeatedly.
America will starve silently, im afraid. the revolution has gone out of us, and there is no one left willing to stand up.
Hey, at least I'm not Evil Paulson. I think to myself about all of the people on my old street in CA who are underwater by 100k on their mortgages, and it will not "recover" in 20 years, if ever. Many have no financial incentive to keep paying...certainly nothing that a hit on their credit rating will stop. FICO scores are just about the last thing that people are holding on to.
"Is this a bubble, or just the result of Bernanke's posturing today, or earnest anticipation of Depression squared?"
To blow the mortgage bubble, it took a builder, a banker, a broker, a buyer, plus congress, the administration, and wall st.
Where is that thundering herd here chasing higher bond values and creating another bubble? All of my family members and friends bought and/or refied their way into the housing bubble and negative equity, and none of them can fathom my ZIRP bond scenario, a depression with no dividends and no investment yields, and 30 year USG bonds yielding a guaranteed 2% and trading at 225. So if it's a bond bubble, I must be moving in the wrong circles.
PeakVT(Unrated) writes:
When a manufacturer goes bankrupt, unlike a bank, it is nearly impossible to replace.
Better to say it takes a long time. Learning by doing and all that. And it depends on the industry. That's one reason I think at least one of the Detroit 3 will be saved - the barriers to entry in developed country's auto markets are enormous.
PeakVT | 12.01.08 - 11:03 pm | #
This may sound crazy but the supply chain is often times more strategically important than the OEMs themselves... the OEs are 'marketers & financiers' but it's the supply chain that builds the engines, trannies, interiors, etc. And increasingly they even DESIGN them after given a loose concept from the OEs.
But the way the markets & supply chains are 'segmented' if the domestic OEs go down so do almost all the domestic supply chains & their 'institutional knowledge' is lost - not good.
I believe if you off'ed GM-Ford-Chrysler but saved the supply chains (Delphi, TRW, Tower - etc.) you could reconfigure a new & competitive car builder quickly (assuming the supply chain partners got their heads out their asses - some are as clueless as their OE masters)... Regardless if the supply chains continue to crumble there won't be any reason to save the OEs - they'll be 'foreign built' anyway even if 'assembled' here.
Not many folks understand the intricacies of the auto world - I just understand a little myself - but that much is pretty well understood by ALL insiders.
dryfly,
Nice insights. I think it would take a week of hour-long news specials to explain that concept to America, so most likely our great leaders will just end up throwing money at the "Big 3" and say "If we don't do this it will lead to depression and millions of Americans will lose their jobs."
I hate how the wisdom on here and other parts of the Internet is beyond our leaders. I don't even think anyone in this country is a good leader... they all just take what they can for themselves.
Drudge had an interesting article on American teenagers and how much they lie, cheat, and steal. The article was a bunch of hand wringing about the next generation, but in truth I think it says a lot about the people who the next generation are learning from. Of course the article didn't make any explanation how our youth came to conclude this was acceptable behavior.
Check out the recent correlations in the CDO markets, e.g. ABX-HE-AAA 07-2 and CMBX-NA-AAA 5. These bond markets also crashed again today, to near lows, in what appears to be a good correlation with recent swings in equity prices.
dryfly - I was actually validating your position and I'm very concerned about sectoral chaos, taking into account OEM, and vertically integrated industries.
Just seems to me if the order book is looking thin, and the banks are closing in (routine credit, rollover, ops, payroll, let alone new efforts), then it's about time to admit to shareholders there might be a wee problem or two with the balance sheet.
I don't know - but my guess is the auto industry worldwide needs to 'right size' itself for a rate of production about half of what it currently produces for a period of something like five years minimum - then never quite returning to the heyday of the SUV. During that time they will need to bootstrap a whole new platform of models matched to a new and less opulent future - people will not lease & churn new autos every four years.
Fewer vehicles produced, fewer vehicles owned per family - each vehicle produced lasting longer & more affordable from a total cost of ownership perspective (including financing).
Daunting task ahead of them - they should all ask to be fully nationalized this Friday. It would be easier & less painful.
Thanks. I had forgotten how much engineering has been pushed out into the supply chain. However, the "platform" is still the province of the manufacturer (AFAIK - and so are engines even if assembly has been outsourced) and to design one that meets crash requirements, has tolerable NVH characteristics, and doesn't weigh too much is still quite a task. This is the knowledge/IP I am worried about floating away in a full meltdown of Detroit. I doubt Congress would allow all 3 to go down, but it's not something to be considered casually.
There's a longer post under my homepage that tries to pull all the BK issues together.
The head of a new Congressional panel set up to monitor the gigantic federal bailout says the government still does not seem to have a coherent strategy for easing the financial crisis, despite the billions it has already spent in that effort.
Elizabeth Warren, the chairwoman of the oversight panel, said in an interview Monday that the government instead seemed to be lurching from one tactic to the next without clarifying how each step fits into an overall plan. ...
If the market crashes in the forest, and Paulson is not there to bail it out, will the dollar make a sound?
Nemo, no, but the bazooka would.
P.S. Correlation does not imply causation. Post hoc ergo propter hoc and all that
I'm glad to see someone is going to pick up the mantle from Shrub.
In a perfect world, Paulson's hands would be cut off.
Spent $330,000,000,000, got 20 left for homeowners.
I'm still shocked he has not been forced to resign.
Nemo(Unrated) writes:
P.S. Correlation does not imply causation. Post hoc ergo propter hoc and all that
Nemo | Homepage | 12.01.08 - 4:16 pm | #
LOL - I was going to suggest that. Maybe CR will 'Update' the post with all the proper caveats.
The important question is, what is the CRVIX forecast this afternoon?
The man's reputation will be that he was shortsighted and inept. There is not much he can do now to change that.
I honestly think today's "unlubricated" Dow action has more to do with the disaster that is the bond market than with anything Paulson said.
Interesting night assured in asia....
god, imagine being him??
when i read this, it's like watching larry david in curb your enthusiasm. it's an awful feeling, i feel horrible for him, but i mean... come on, you're doing it to yourself man!
I hate being fair to someone like Paulson, but it could also be a "Stormcrow" effect--Paulson is only out speaking when he sees something pointing to big trouble coming down the pike.
Bernanke is doing the same thing that the Bank of Japan did starting in 2001. He's employing the now-customary quantitative easing playbook for the present deflationary situation.
I expect that we will get similar results as Japan has had. Most likely, Bernanke's actions will reduce some short-term pain in exchange for long-term stagnation. Buying up Fannie and Freddie debt with printed money did knock down mortgate rates last week, which will no doubt ease some of the pain in the housing market.
The price for easing that pain will be felt when we start to come out of this recession. When that happens, the Fed will have to mop up the excess liquidity to prevent runaway inflation. That likely means that the Fed Funds rate will have to be raised more than it would have but for all this money printing. Which of course means slower economic growth in the future.
Welcome to stagnation- it will be with us for years to come since we have no tolerance for pain.
dryfly --
Not to mention "past performance is no guarantee of future results"
heh heh
Whether it equals causation or not, isn't it helpful just for predictability purposes?
The rooster crowing doesn't make the sun come up, but is a pretty good indicator that it's about to...
So it was my understanding that the Fed has already engaged in Q.E., buying long-term Treasuries (by sketchy means through GS)...it would seem like Ben has announced that Q.E. is now official policy and the Fed will buy directly? Why not go the direct route to begin with?
Schwarzenegger Cites Fiscal Emergency, Orders Special Session
Schwarzenegger Calls Fiscal Emergency in California (Update2) - Bloomberg.com
California Governor Arnold Schwarzenegger, saying his state is going broke, declared a fiscal emergency and ordered the incoming class of lawmakers into a special session to fix a widening $11 billion deficit.
when i read this, it's like watching larry david in curb your enthusiasm. it's an awful feeling, i feel horrible for him, but i mean... come on, you're doing it to yourself man!
matt | 12.01.08 - 4:20 pm | #
Watching him I don't feel terrible for him - I feel terrible for me and my would be some day retirement.
RIP Tanta
she could be harsh but I liked her. CR know this is a blog for tomorrow lets get a better picture and maybe an obituary. Just a suggestion.
Did I call it or what?
I said the bull market rally would end today at 2:43.
I was four minutes off.
You can set your watch by Paulson.
Ministry of Truth writes:
Schwarzenegger Cites Fiscal Emergency, Orders Special Session
They need to start with a high school level econ class....
Does more volume come in tomorrow? Up or Down.
REPORT FROM THE FRONT
FROM: GENERAL FULDA
TO: CENTRAL COMMAND
REUNIFICATION OPERATIONS IN NEW DELTLAND
(FORMERLY THE U.K.) ARE PROCEEDING APACE.
SOON WE WILL INITIATE ADVANCED NAVAL
OPERATIONS AGAINST THE WESTERN USURPERS.
ICELAND IS BEING MONITORED TO PREPARE FOR TAKEOVER AND TO ESTABLISH A MID-ATLANTIC SUBMARINE AND GEOPHYSICAL WEAPON OPERATIONS BASE AGAINST NORTH AMERICA.
FULDA OUT.
Can I haz a new version of 4 Bears Chart plz?
CSS: Jesus! I just checked myself....all commodites were hammered today. So where did the money flee to? More Treasuries?
Wow, Now we need shrub to speak.
Toommorow, I think the auto makers get to shine on the hill.
dryfly, lol, would be maybe kinda hopin' some how
i know exactly what you mean, but i just couldn't imagine having to go out there at this stage of the game and blabber words that you know have little to no meaning and then walk off. the man must have his own opinion he is just dying to share.
unless of course... he's pure evil.
Rich,
I owe you a beer. Any time you're in Seattle.
Gee the MSM seems to be willing to consider that the poor didn't bitch slap Fannie and Freddie into giving them mortgages:
Yahoo! 404 - Page Not Found
WTF, Hank. You said you and Ben would flip the TARP, FRE, FNM, AIG, etc. for a taxpayer profit.
CONgress fell for the oldest (and basically only) wall street trick - the promise of easy profits.
What a sham(e).
Of course correlation is not causation but it's a running joke around my office that any time either Paulson or Bush speaks the market crashes...When a bunch of people who pretty much don't follow the stock market start noticing, you gotta wonder...
CONJURE'S GLOBAL DEPRESSION CLOCK
The time is:
11:59:46
Oh for goodness' sake.
Just get this over with. Commute (?) everyone's mortgage down to zero. Debt forgiveness across the board.
Then start building again from the ground up. Because trying to patch and glue and tie with strings is just going to end in failure anyway. And cost the same in the long run. Or more.
after the NPR interview, I concluded that Paulson may be evil too, but he is also stupid and filled to the brim with pride, and out of touch and arrogant.
mp, how does Conjure's time map to our mortal time? 1 second for 1 year?
in the sky tonight..a celesial event
Tonight | EarthSky
Tanta enjoy the view and can't wait for your ubernerd post on being an angel...I'm hoping I get to read it at the gate....
Asun, Conjure's clock is event driven.
I wrote my congressman and Sentors before the bailout votes and now I send them a note about once a week thanking them for not listening to the masses they "represent".
"In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of."
Confucius
Would the bone dust of Confucius be better at dealing with this than the living Ben and Paul?
You guys better hope Tanta is chanelling Geithner.
(Or is that suppposed to be the other way around.)
mp,
surely Conjure doesn't consider the comings and goings and hot air of the clowns in power "events"?
after the NPR interview, I concluded that Paulson may be evil too, but he is also stupid and filled to the brim with pride, and out of touch and arrogant.
--
and he tastes salty and goes soggy in the microwave. screw him.
Oh, goddess mp, couldn't you have given us at least 15 minutes to midnite, like the atomic scientists?
Paulson knows. The Treasury needs as much money these days as possible. He knows. He's shaking the other markets herding the money into his treasuries.... And like sheep.....
mp, so about another 14 events before we're all staring at the abyss? What count as event these days? Paulson opening his mouth?
mp writes:
Asun, Conjure's clock is event driven.
mp | 12.01.08 - 4:31 pm
Are we 14-16 very negative or outright bad events away from D-Day?
If I understand this correctly, Paulson is going to throw bailout money at every problem until the USD goes into free fall.
I hope I'm wrong.
No I will not screw him. I like a man with hair. On his head.
mp writes:
CONJURE'S GLOBAL DEPRESSION CLOCK
What moved it forward, Tresuries purchase plans going public?
We need to force all financial institutions to admit their full loses immediately. If it means a wholesale nationalization of the financial system so be it.
Equity & preferreds get wiped out and bond holders take hair cuts.
It's the best way restart the system efficiently and fairly. An inflationary scheme will help the wealthy but impoverish the majority forever.
"surely Conjure doesn't consider the comings and goings and hot air of the clowns in power "events"?"
Absolutely. Just like Mr. Market and Mr. and Mrs. Consumer do.
"Oh, goddess mp, couldn't you have given us at least 15 minutes to midnite, "
Liz, Conjure did that on the meltdown clock, giving the authorities some slack.
The slack is out of the system this time around. According to Conjure, there's no more room for error.
Sorry.
No I will not screw him. I like a man with hair. On his head.
--
wow.
Equity & preferreds get wiped out and bond holders take hair cuts.
It is that wiping out and taking of hair cuts - and follow-on effects in the derivatives markets - that is going to bring the whole thing down around us. Hence, the dance.
"mp, so about another 14 events before we're all staring at the abyss? "
Asun, all I know is that Conjure seconds have no linear relationship. Some events are one second, some more.
If memory serves, Conjure's meltdown clock jumped five minutes once last year.
Security_Prison_21 writes:
Would the bone dust of Confucius be better at dealing with this than the living Ben and Paul?
The Great Teacher was never granted a ministry.
Han Fei Tze would be considerably better. Or at least considerably better at running the successor state(s).
I'm with the Angry Saver. The time for tough medicine is now.
The Maximum Power Principle (Odum, Lotka) posits that all open systems (ecosystems, people, societies, etc.) evolve to degrade the most energy they can while allowing for continued existence of the larger systems they are part of. As systems move from equilibrium they will take advantage of any means necessary to resist externally imposed reductions in power. (In this case we percieve it as social power that our brains associate with money - at least for now). So instead of reducing reserve requirements, investing in basic industry infrastructure and building solid longer term foundations, we will add cheap gas and credit make the coming conflagration bigger. I wish it were otherwise.
-- Nate
Note that the market topped around November of 2007, about the date at which the recession started (per CR, my authority).
For those who forgot to draw the conclusion, the market did not anticipate anything. It has been a coincident indicator.
Matt said: "wow."
LawyerLiz has a sense of humor, and that's appreciated today!
Security_Prison_21 writes:
I'm with the Angry Saver. The time for tough medicine is now.
That's what we said before the TARP and we were told the alternatives were too dreadful to conscience.
Now that they've squandered a king's ransom on it, you can rest assured good money will follow bad until non-policy constraints force a cutback in the burn rate.
No one can retire now, everyone needs a job......wait there are no more jobs!!!
I was out to lunch today...can someone summarize all 5,288 comments in the last three posts?
"Note that the market topped around November of 2007, about the date at which the recession started (per CR, my authority)."
You'll note that Conjure also called the end of the bull market in equities on November 22, 2007.
U.S Recession Clock says => 12:53
I was out to lunch today...can someone summarize all 5,288 comments in the last three posts?
crispy&cole | Homepage | 12.01.08 - 4:43 pm | #
"This sucker is going down"
girlbear writes:
No one can retire now, everyone needs a job......wait there are no more jobs!!!
girlbear | 12.01.08 - 4:42 pm | #
Yes, since when was "keep working" thing was the worst scenario.
Do Paulson/Bernanke have unlimited power? Are they the new Cheney? Will Obama take over with any money left in the bank? Can a financial soap opera ever have an up day? How can the US still be considered a democracy since all its money is controlled by 2 pieces of shit?
No Obama was on CNBC and everyone said sell.
I think Nemo noted it above, but the drop in equities, commodities, etc today had much more to do with the Fed declaring quantitative easing as actual policy now.
Think about it. The largest balance sheet in the world, which can become even larger, seemingly without limits (though surely they do exist), states that it will buy something, and in large enough quantities to move the market.
Why in the world would an investor get in the way of this train? Or to put it better, who would not jump aboard? Long end treasuries are going to be purchased with a limitless supply of dollars - as an investor, that deal is better than anything else. Period.
Until it stops - then watch out.
Or until the dollar is no longer THE DOLLAR. Then look out.
His last act will be to take the Treasury private and sell it to himself at 1000 to 1 leverage.
If the fed said it would buy S&P futures in quantities large enough to move the market - what do you think would happen to equities? and to the long bond?
Or to put it better, who would not jump aboard?
I guess all is fine until the Saudis decide that they don't want to dance anymore. How close are we to energy independence?
The ride would be much smoother without Paulson near the controls. Rich, if you looked ahead to Paulson's speech time, we can't give you any credit for that.
You called it well though.
Some one tell Hankie to take the Bazooka out of his pocket before he fires next time.
crispy&cole writes:
I was out to lunch today...can someone summarize all 5,288 comments in the last three posts?
We're f**ked.
Monday, December 1, 2008
Do you remember the 1st of December?
S&P down 8.93% today.
Per Jason Roney at Minyanville:
The worst one day performance in December for the S&P 500 was -5.41% in 1929.
The worst first day of the month EVER for the S&P 500 was -4.76% in June 1931.
Joe 6 pack probably got back in last week, bahahaha...joe6pack=sucker!
crispy&cole writes:
I was out to lunch today...can someone summarize all 5,288 comments in the last three posts?
crispy&cole | Homepage | 12.01.08 - 4:43 pm | #
--
google "carlin" and "seven words"
tyaresun writes:
Some one tell Hankie to take the Bazooka out of his pocket before he fires next time
He's trying to rival Plaxico.... ROFLOL
lol!!!
crispy&cole writes:
I was out to lunch today...can someone summarize all 5,288 comments in the last three posts?
Here you go...
Down goes Frazier.
I honestly think today's "unlubricated" Dow action has more to do with the disaster that is the bond market than with anything Paulson said.
Nemo
Concur
Viewer on FBN wrote in and asked if Paulson could be placed on "office arrest" until Jan 20th. hehehe
"Some one tell Hankie to take the Bazooka out of his pocket before he fires next time"
Conjure says, "BWAHAHAHA!"
"Right."
Shortly after the election Letterman had a comment in his opening monologue 'does anybody object if Obama starts early' - while originally a joke it isn't a joke any longer in my view.
Ummmmm... work 'til you die?
Not only is that the plutocrats' solution for the rest of us, it won't work.
My wife and I both work, we both need to. I'm in okay shape so far; she's got hearing problems, leukemia (not causing problems yet), a bum knee, and epilepsy (sorta under control; we've agreed she won't drive). She's sixty years old and soldiering on.
But when she can't? Our income drops in half, our expenses probably rise.
My point is, there comes a time when more and more people can't work, and even for people who've "done everything right," that starts in the 60s for some. And that is why there will be valid retirement strategies in place for all Americans. Or "this sucker" (meaning society) really is going down.
I think Glodman Sucks might have received the advance numbers for Friday...those guys are good! 375k+ job loss and UE to 7%?
Dec. 1 (Bloomberg) -- Countrywide Financial Corp., the home lender acquired by Bank of America Corp., was sued by Greenwich Financial Services Fund over claims an agreement to reduce payments on mortgages by $8.4 billion would hurt investors.
The hedge fund claims investors will be harmed by Bank of Americas settlement, reached on behalf of Countrywide, with 15 state attorneys general. The value of trusts that bought 400,000 mortgages will decline under the deal, the fund said.
In the proposed class action, or group lawsuit, the Greenwich, Connecticut-based fund demands a declaration that Countrywide must purchase at par every mortgage loan that it sold to any of the 374 securitization trusts, David Grais, a lawyer for the fund said today in an e-mailed statement. Grais said Countrywide could owe $80 billion to the trusts.
Countrywide plans not to absorb the $8.4 billion reduction in mortgage payments itself, even though it was Countrywides own conduct of which the attorneys general complained, the fund said in the complaint filed today in New York State Supreme Court in Manhattan. Under the settlement, the mortgage lender would pass most or all of that reduction on to the trusts that purchased mortgage loans from Countrywide, the fund said in the complaint.
Paulson and Bernanke have more bailout plans than there are people in the U.S.
LawyerLiz,
.
I know Paulson's bald head gets a lot of snarky comments, but I get more creeped out by his pointy ears. (I'm a woman). Do you think his parents confused him with a doberman pup when he was a child & clipped them?
That is why people revolt!
A society that treats people as disposable widgets cannot function at a high level- it just withers away and everyone starts looking out for themselves. Ultimately it implodes and people revolt.
Bob Dobbs writes:
Ummmmm... work 'til you die?
Not only is that the plutocrats' solution for the rest of us, it won't work.
My wife and I both work, we both need to. I'm in okay shape so far; she's got hearing problems, leukemia (not causing problems yet), a bum knee, and epilepsy (sorta under control; we've agreed she won't drive). She's sixty years old and soldiering on.
But when she can't? Our income drops in half, our expenses probably rise.
My point is, there comes a time when more and more people can't work, and even for people who've "done everything right," that starts in the 60s for some. And that is why there will be valid retirement strategies in place for all Americans. Or "this sucker" (meaning society) really is going down.
Bob Dobbs | 12.01.08 - 4:52 pm | #
Nemo, Barley..agreed. It's the bond market, and it stinks.
I won't mind being Crazy Paul because on Jan 20-09 he's out of a job, but has 100s of millions from the good old gs days.
monta's ankle(Unrated) writes:
I think Nemo noted it above, but the drop in equities, commodities, etc today had much more to do with the Fed declaring quantitative easing as actual policy now.
Think about it. The largest balance sheet in the world, which can become even larger, seemingly without limits (though surely they do exist), states that it will buy something, and in large enough quantities to move the market.
Don't forget that Mr. Bernanke believes that "signaling" is an instrument of monetary policy. After making his announcement today, yields went lower, as he probably had hoped. He doesn't have to act until the market calls his bluff and yields begin to increase. IMHO.
when will these guys get it through their thick heads and as Ted Turner put it so well yesterday "we spent money we didn't have and now we have to pay the price"
The only choice is and has always been nationalize the failing banks write down the assets-mortgages, commercial real estate, corporate loans. Lending will only begin once folks think the worst is behind us not while they are wondering how bad it is going to get.
Add a little insult to injury......
Bloomberg.com
After the '04 election, I thought at some time in the second term a mob with pitchforks and torches would be chasing him out of town. A few weeks ago I thought there was not enough time for the mob development. Now, I think there's plenty of time left.
Mr. Bernanke believes that "signaling" is an instrument of monetary policy.
--
So true. The effect never fails to amaze me, even though it is often temporary. Even my dog would have wised up by now (a big dumb rotti).
Bernanke is Doctor Octopus!
This is all so very sad, more so because it was so very predictable.
It's time to sit down at the piano for a while with a cigar and some scotch.
Conjure will play the bass line.
Obama recreates Clinton II and market notices
Pitchforks are gonna be the implement of choice, that or garden rakes
He doesn't have to act until the market calls his bluff and yields begin to increase. IMHO.
Curious
Bond bubble. Wait 'till spring when the world passes on 30 Y T's at 3.23%
Russia raised thier rates to keep money in their markets.
Obama recreates Clinton II and market notices
But with a one week delay? WTF. Are you saying that the market is stupider than usual?
Curious - absolutely you are correct
problem is that unless you have a death wish, discounting Bernanke's words coul be hazardous to your financial health.
he is a signaller, but whehter you love him or hate him, he has also been a busy little buy (and i'm talking works, not just faith)
mp - I would like to thank you.
Your words have influenced my inaction more than anyone else.
I am still 80% cash thanks to you.
The 20% that I have been "playing" with is doing very well considering the relative market conditions.
Doing nothing really was the best advice of 2008.
busy little bee - but buy must have been a Paulsonian slip...
TSX got hammered today. I'm now looking at bank/financial ETFs...suggestions...
Bond bubble. Wait 'till spring when the world passes on 30 Y T's at 3.23%
Barley | 12.01.08 - 5:05 pm | #
Nothing more than gut hunch, but I don't think we have that long...what was it lawyerliz said a thread or so back?
Anyways, feels like something big is going to pop, maybe a couple somethings...
1 currency soon [yogi] writes:
Spent $330,000,000,000, got 20 left for homeowners.
I'm still shocked he has not been forced to resign.
Apparently you haven't been paying attention the last 8 years, have you?
Bet that estimate doubles in the next year...
States Seek Aid as Budget Gaps May Hit $200 Billion (Update1)
By William Selway
Dec. 1 (Bloomberg) -- U.S. states budget shortfalls may be as much as $200 billion this year and next, Pennsylvania Governor Ed Rendell said, as officials press the federal government to boost construction spending and aid cash-strapped states.
States Seek Aid as Budget Gaps May Hit $200 Billion (Update1) - Bloomberg.com
JP writes:
Obama recreates Clinton II and market notices
But with a one week delay? WTF. Are you saying that the market is stupider than usual?
I think it is just sinking in. Today Obama announced more of his administration and further solidified it as Clinton II. Then there is the rising criticism of Rubin who was formerly the Clinton treasury sec. Then add to that Obama's new neo-conservative leaning announcements and you have Clinton/Bush II
mp writes:
This is all so very sad, more so because it was so very predictable.
It's time to sit down at the piano for a while with a cigar and some scotch.
A Balvenie 20 YO Port and a cigar may well be in order....
I agree that doing nothing is the best action right now. Not sure if that small TBT action I made is right or not if Uncle Sam will buy from himself. Just going to sit back and watch for awhile. Uncertainty is getting annoying.
Well, apparently life in a stable democracy was just to boring for a majority of Americans.
Let's think of a way it could be better (I could be rich), dramatic (terroists could be out to destroy my way of life), financially titillating (check the stock market every day).
Well now they have their real excitement. They actually have something potentially devastating to worry about.
MPinCO = ditto head?
or even worse the man himself?
"MPinCO writes:
Obama recreates Clinton II and market notices"
O has impressed with early steps and decisions. I would be all for skipping the next month and half and letting him in early as suggested. We can thank him for much of the last 5 days appreciation prior to today.
Too much going on today for anyone to stand in front of:
*Recession confirmation,
*terrorist attacks and rising tensions between India and Pakistan,
*then the normal horrible daily business/economic news thrown in
*with a Paulson appearance reminding us he's still around with some control.
Add in Trump's woes that make it crystal clear that even our country's best and brightest weren't immune to this crisis.
I think it is just sinking in.
Let's see, choose between:
1. paulson speaks and the market reacts instantly
2. obama chooses his financial team and the market takes a week.
Hmmm. That is CERTAINLY a head scratcher. Hmmmm.
It is an interesting bit of trivia that the market has fallen this far without ever tripping a circuit breaker.
RE writes:
MPinCO = ditto head?
No. Don't have time to listen to Rush. I have a job.
No. Don't have time to listen to Rush. I have a job.
Then it's o.k....
"It's time to sit down at the piano for a while with a cigar and some scotch."
mp | 12.01.08 - 5:03 pm
You used to post some fine choices in jazz for our enjoyment.
CNBC: Karen talks to the math literate and the other chimps do a dumb-down translation/reiteration. How can I get that kind of work?
"With economies from the U.S. to Japan in recession, Wei and the other 2.8 billion people in Brazil, Russia, India and China may provide the consumer demand needed to counter the slump."
BRIC Shoppers Will ‘Rescue World’ Goldman Sachs Says (Update1) - Bloomberg.com
There was a time when I thought GS was a cut above, but with this kind of despirate and delusional drivel, them seem more on a WaMu level.
"MPinCO writes:
Obama recreates Clinton II and market notices"
Why dont' you just say it. You're right, always right, even when you're wrong, you're right. Even when you're grossly misinformed you're right.
Yawwwwwnnnnnnnnnn.
93 bottles of Yen on the wall
93 bottles of Yen
If one of those bottles should happen to fall
92 bottles of Yen on the wall
(Who coined the phrase "Yentervention"? Because that's just brilliant.)
It is an interesting bit of trivia that the market has fallen this far without ever tripping a circuit breaker.
Not really.
They're so wide now it just almost can't happen.
(trying to jinx it here.... GO, Puts, GO!!)
Nice article title, sir!
This deserves an award for the best spin of the year. Today on the cnn money website:
"Paulson: Feds to expand rescue"
Dow Jones, Nasdaq, S&P 500, stock market data - CNNMoney.com
......."the beatings will continue, until morale improves".
Nemo | Homepage | 12.01.08 - 5:33 pm | #
thankew, thankew! that would be me
"Yentervention"
Awesome, that would be right up there with "Hu's your daddy?"
HARM(Unrated) writes:
1 currency soon [yogi] writes:
Spent $330,000,000,000, got 20 left for homeowners.
I'm still shocked he has not been forced to resign.
Apparently you haven't been paying attention the last 8 years, have you?
I have, and I'm STILL shocked. Gonzalez had to resign over mild cronyism. Maybe there's more to that bazooka business. Where's cranky Jim Bunning, anyway?
"The rooster crowing doesn't make the sun come up, but is a pretty good indicator that it's about to..."
But what does the rooster think?
with BB buying Treasuries and forcing an even bigger pileon into the same, he seems to be wanting to force down mortgage rates as part of his effort to stabilize housing.
Seems to me though that there is a rather limited upside to that maneuver, even if rates went from say 5.5% to 3% for a 30 year - that's only going to change your monthly nut so much.
And at the same time, the downpayment needed is going to go to 20% easy if not higher.
But worse still, by destroying the economy along with the markets he undercuts the ability to pay the nut as incomes are wiped out, and the ability to have a DP as everyone's savings are demolished.
So WTF exactly is he thinking?
I really see no way out of this but a very long and deep recession. And if BB and HP keep blowing it the way they are now, we'll get our GD2.
It REALLY worried me when BB said today, "put that out of your mind" when talking about the economy being as bad as the last depression. Well duh, yeh, it doesnt go from boom to depression in a day, but if you wanted to paint a picture of the road to it, Id think the sketch theyve laid out so far in pencil just needs some oil layered upon it to make a masterpiece.
Administration's anti regulation ideology and hardball lobbying doomed us :
The article requested is no longer available.
(and only NOW the story comes out? Uh, where you guys been???)
This is all the fault of President Obama, and his policies these past 8 years.
Treasuries In Bubble Phase, Merrills Rosenberg Says
Treasuries In Bubble Phase, Merrill’s Rosenberg Says (Update1) - Bloomberg.com
Dec. 1 (Bloomberg) -- Demand for Treasuries has reached the bubble phase seen among technology stocks in 2000 and real estate six years later, according to David Rosenberg, chief North American economist at Merrill Lynch & Co.
The 10-year note yield is now firmly below the 3 percent threshold and this next leg down in yield will undoubtedly represent the classic mania-turn-to-bubble phase that quite plausibly sees an overshoot to or even through the April 1954 lows of 2.3 percent, New York-based Rosenberg said in a research note today. ...
"Who could have imagined planes flying into buildings." - King george, 2001
"Who could have imagined the U.S. economy melting down." - King george, 2008
THIS JUST IN: Paulson seen picking his ass with is left hand, rather than his right. DOW down 300 points.
This is ridiculous.
How is my house in Paraguay coming along?
Can we replace Paulson with Gono? He has already devastated one economy,so he has experience,he would work for a lot less $,and outsourcing is a good thing for the economy.Where is the downside?
Here is some great OT from The Oildrum blog on how the credit crunch is playing out in the energy sector...
Impact of Credit Crisis on the Energy Industry - Where Are We Now?
The Oil Drum | Impact of Credit Crisis on the Energy Industry - Where Are We Now?
Market drops day by day.
Death by 1000 cuts, instead of black xxxday.
Damn...Tarp-ed AGAIN! ARGGGGGG....
Bank of Japan calls unscheduled monetary policy meeting
"The purpose of the meeting is to discuss monetary control matters on possible changes in the treatment of corporate debt as collateral and possible ways to enhance flexibility in funds-supplying operations collateralized by corporate debt, the BOJ said"
There are plenty of technicians on Wall St. The fact is, none of them end up in management. Salespeople become management. They might have MBAs or PhDs, but at heart they are salespeople.
Paulson is a pure salesperson. He is focused on message and presentation, but clearly has no plan.
I have great respect for the talents of salespeople, but that's just not what's needed in Paulson's position right now. I hope he just spends the remainder of his term signing one dollar bills. We'll need them.
Andrew Foland writes:
I hate being fair to someone like Paulson, but it could also be a "Stormcrow" effect--Paulson is only out speaking when he sees something pointing to big trouble coming down the pike.
Andrew Foland | 12.01.08 - 4:20 pm | #
I know the problems are more complex, but after a few months of hardly anything, I've been noticing a small surge in foreclosures in the Sacramento area. Seems that 3 month wait/work out period is coming to an end for many people. At some point next year we're due for another big flood of foreclosures, like we had at the begining of this year. That'll be ugly. And if the last wave of foreclosures could inflict so much damage, the next wave should be interesting.
Yup, noticed that too Shibbo. That foreclosure waiting plan will turn out to be about as effective as the temporary ban on shorting.
Fannie and FHA halted ALL foreclosures for December....Look out for the January effect....YIKES!
I just find those halt actions to be a pure political kick the can. Do they really think that a month is going to do anything for the number of workouts? And at what cost? They keep announcing these things with the hope that it will lift confidence, but when it turns out to be yet another scam, it only sinks confidence that much further. When will they stop this BS?
The crowding into treasuries helps the government finance all the bail outs. There might be method to this madness.
I still say we could reduce consumption in the US by 10% and not feel the slightest pinch. Just pay attention to the details, Tanta style. Turn off lights. Use compact fluorescents. Ride a bike more...
I am surprised that BMcB has not brought this up.
China's currency falls by record against U.S. dollar
Decline may signal official policy shift towards devaluation, analysts say
BW-3 is only a few months away.
How did Paulson ever rise to the top of GS? Ascendancy based on tenure, not talent? More like a professor. This guy is a clown. I used to think GS as the real masterminds of finance; I guess I am the clown for believing this...
How bout' "Bretton get out azzez out of the Woods?"....
AB, do you or anyone you know have some clue what BW-3 should look like? All I see is problems without answers.
lama is dead on.
Saw the same within GE which is why Immelt is now just standing there, smilling, with no pants on, while a once great company fades into the fog.
Wipe out all national debts and convert to a one world monitary system...Tin Foil Hat is required attire at the dinner party following the meeting. Cheers....
Wipe out all national debts and convert to a one world monitary system..
Yes, I'm sure the rest of the world will let the world's greatest creditor off the hook.
Only 244 Visitors online? Where is everybody?
Basel Too --
Yes, I'm sure the rest of the world will let the world's greatest creditor off the hook.
Well... What would they do about it, exactly? Invade?
Pentagon to Detail Troops to Bolster Domestic Security
Pentagon to Detail Troops to Bolster Domestic Security
The U.S. military expects to have 20,000 uniformed troops inside the United States by 2011 trained to help state and local officials respond to a nuclear terrorist attack or other domestic catastrophe, according to Pentagon officials.
P.S. I think you meant "debtor", not "creditor".
Yes, I'm sure the rest of the world will let the world's greatest creditor off the hook.
Basel Too
Let us off the hook, otherwise we'll sneeze, and give you a case of Captain Trips like you've never seen before. aka The Stand.
Well... What would they do about it, exactly? Invade?
Sorry, meant to say debtor.
Dunno, ramifications would probably start with an oil embargo; hopefully, it doesn't escalate to anything worse.
The crowding into treasuries helps the government finance all the bail outs. There might be method to this madness.
This is very dangerous policy. The problem is that we are creating a treasury bubble and it's accompanying bubble, the dollar bubble.
Once they inevitably burst, the worst of all worlds will likely happen - a dollar collapse with a U.S. debt collapse. Not a fun prospect. Enjoy it while it lasts...
One world currency is coming, like it or not, after debts are settled in the giant workout.
It will be based on my meta-index finger.
CNNMoney.com: 404 Page Not Found
Report: Bond investors sue Countrywide - Atlanta Business Chronicle:
Countrywide appears to be trying to pass the costs of a legal settlement onto the bondholders. Bondholders are calling BS. I wonder what Tanta would made of this?
"carmichael writes:
How did Paulson ever rise to the top of GS? Ascendancy based on tenure, not talent? More like a professor. This guy is a clown. I used to think GS as the real masterminds of finance; I guess I am the clown for believing this..."
Paulson did make some nice connections early on which may (or may not) have helped succeed beyond his abilities.
"Paulson was Staff Assistant to the Assistant Secretary of Defense at The Pentagon from 1970 to 1972.[7] He then worked for the administration of U.S. President Richard Nixon, serving as assistant to John Ehrlichman from 1972 to 1973, during the events of the Watergate scandal for which Ehrlichman was convicted, and sentenced to prison."
Henry Paulso - Wikipedia, the free encyclopedia
Hmm. Didn't know that individual bondholders could sue directly; thought that's what the indenture trustee was for.
anyone else think that Bernanke mentioning buying long-dated Treasuries is just a way to get the herd of short term traders to do most of the Fed's quantitative easing work without having to print as much money? Next step is to telegraph that they are buying investment grade corporates and presto, the throng gets ahead of the Fed. I wish the effer would just come out and announce the overt purchase of S&P 500 futures so that we can get to the end of this nonsense sooner than later.
I am surprised that BMcB has not brought this up.
China's currency falls by record against U.S. dollar
Decline may signal official policy shift towards devaluation, analysts say
BW-3 is only a few months away.
Smells like desperation from China to me. Selling us more stuff ?
This is also how trade wars start.
Dear China: You are our Bitches. Thank you for being so stupid and gullible.
And I thought the Chinese were supposed to be intelligent. What a bunch of maroons.
I hope Tanta got a laugh from the "Lets all email her our nude jpgs."
Can someone reality check me please?
Bonds
Paulson buys lots of long treasuries. This makes the yield or return drop to nothing.
This in turn makes people go short term so they can make some money. This supplies money to the economy. People start buying, lending etc.
Bad
Why lend long term? Like houses and such? Then also short term comes up for payment and gov has to pay them off.
Is that about it?
WHEEEEEEEEEEEEEEEE
Another exciting day at the dog track.
I'm no fan of Paulson or his TARP but when the Senate Majority Leader admitted "no one knows what to do" it was pretty clear no one had any better
idea or Reid would have been all over it simply for the partisan political advantage opposing of being against the "Bush" plan on election eve.
It may well be that 'stimulus' just won't work in the developed world anymore. People are pretty satiated materially and it is easy to retrench
without undue discomfort.
I hate to say it but we might do better by 'helicoptering' money to the third world where there are enormous unmet material needs. If Americans don't want to buy another Jeep or Silverado you can bet there are lots of folks in the third world who not only want one but need one.
A new Marshal plan for the third world
might be the best way to stimulate out economy as the 'aid' can be tied to US produced goods and Americans would feel more secure receiving 'income' even if purchased via government debt than getting rebates or other one off stimulus packages.
Interesting article I read on the use of processors in cars and the manufacturing of them. GM buys 2 million a year from a company in Texas.
From one of the comments
He sez according to Matthias Kaestner, an Atmel marketing executive who declined to be more specific. Nonetheless, he noted that the company is somewhat shielded from the Big Threes woes because it sells many of its chips to European carmakers, which do not appear to be in as dire shape. If hes talking about any of GMs sub divisions I got news for the guy. GMs products world wide use the same electronic modules based on common designs. (ie Opel,Holden etc dont do their own electronic modules anymore) Their commonly used in most cases not to leverage the economies of scale and minimize the volume of duplicate engineering. If hes talking Bosch,Siemens,Denso or Hitachi they are all Tier 1 suppliers to GM and I garuntee you Ford and Chrysler.
Silicon Valley Won't Save Detroit, Detroit Dragging Down Silicon Valley | The Truth About Cars
The automakers presentation to Congress on how they plan to be good doobies and make money; so please give us some, has been rescheduled to Thursday and Friday.
Why? And how long can GM go on without gov money?
Asian markets are saying does this suck as much as it seems, gee, guess I'll pile out of equities and about godamned time. Take that to the bank. If you can find one that'll be around in a couple of years.
Currency markets absurdly responding to AUD and NZD and muttering by CBs of further rate cuts.
Erm, fundamentals, anyone?
[sound of crickets]
C
C
Did you ever read anything more about the Chinese Traade Minister flying back home as soon as he got there?
The fundamentals are strong...what's wrong with you counterpointer?
I was panicking. Nobody here.
Anony - Trade Min or Finance Min?
C
C, it twas me. The guy who flew to SA, then turned around and flew 36 hours back.
You are a sino expert?
This should be a huge indicator...I locked in my permanent mortgage today. I went long my house. I'm trying to figure out how to short my neighbors though.
Comrade Kristina?
Nobody is a sino expert, at least no one who has it on their cv. China is the sea that turns all rivers to salt.
It was the Fin Min at APEC had to get back for face, ie. gei lien, reasons for the stim package. All pageantry. Nicely choreographed.
C
anyone have the cajones to go long TBT tomorrow morning?
Yes, nova? Oh, that was snark, I should probably put a snark indicator in my posts. Sometimes my humor is a bit dry. Besides, I'm angry today for some reason, I suppose it's Tanta, the market, Conjure's clock, my husband still not employed, my mortgage getting ready to reset and my drink being empty...LOL
Kristina - I assume anything that mentions fundamentals and strong in the same word cloud is snarking at Olympic grade.
As in: "the fundamentals of the bailout are strong".
C
Ah haha Counter...of course they are...Bernanke removed all doubt today when he said there is no comparison between todays crisis and the GD, everything is coming up roses...The problem is the fertilizer they keep spreading all over...
With demand dropping on energy (frankly everything), what are the reasonable guesses as to where oil bottoms? I am comfortable buying in the mid 40's.
With the issues in Europe and Asia, where would investors flee the dollar and run to exactly?
Comrade Kristina | 12.01.08 - 8:24 pm |
You have your plate full. Yeah. I have been weirded out all day. Woke up in the middle of the night. Dog has been fussing since yesterday.
GiezCubed - CHF?
Bwahahahahahaha.
They're so skrood.
C
Nova, it's just that constant feeling of unease. Impending doom around the corner is constantly in the back of my mind to the point of distraction. I can't remember what it is like to just be "normal". Not that I mind, I'd rather see the train coming personally.
Regarding the earlier post today about lines of credit being cut off: I just heard from my sister that the lines of credit on her boss' business credit cards have been systematically being cut. Every time her boss makes a payment, the company drops the credit limit to how much remaining is owed. (There have been no late payments) If they have a $10K line of credit and pay off $2K, the line of credit gets reduced to $8K (exactly what they owe). She said this has happened all the way down to a $500 balance on AmEx but the other cards are now doing it too.
Which basically means they have no credit. They have had to lay off employees this week.
I tried to tell co-workers and some offshore operations on Friday EST that the rally was doomed, ran through some indices, pointed to fractures in various markets, and was basically regarded as leper bear.
Tonight am serving slices of crow to the Asia-Pac team.
Eat up, and half a pound of wasabi and sichuan pepper is not going to take that taste away.
C
Wasabi...Isn't that Asian for...Your ass soon be on fire!
MMM I love Wasabi, my husband tried it for the first time the other night at a sushi joint. He likes hot but even he took pause...
I'd like to think that Mr.Market wept for Tanta's loss today.
Kristina- I can't remember what it is like to just be "normal".
I can. It was a long time ago and felt comfortable. It was before the army, before a "real" job, before a family.
I like to think of it as the time before I really became aware of reality.
mp, great analogy as usual. I don't know that much about you, I'm a late comer to the CR party (last six months or so) but I enjoy your cutting incite, put forth in succinct form. I think my awakening came about eight years ago when my Dad was dying. Many tragedies followed but that seems to be my turning point. It's grown deeper over the years, as I've studied diligently.
Vladimir Makovsky (1846-1920), The Bank Failure, 1881
History at Williams College
Metaphors?
Wasabi - the crisis is contained, short, sharp extreme burn, confident it will be over soon with a serious cleansing of the sinuses. Hmm yum, could do that again.
Sichuan pepper and bird's eye chillis - numbing, slow-burn, massive breakout, followed by excessive choking, reddening, sweating, grasping for water to alleviate, which won't work as chilli is not soluble in water, followed by falling on the floor, retching and heaving, with groans of agony. Aarrgghh, never again, and now we have IBS.
Back to meat and potatoes?
Now, in a policy sense, where are the Fed and Paulson? Where are the markets? Answers on the back on an envelope please.
C
C, I don't have to put any money in the envelope, do I? I'm a little strapped right now after the beans, rice and ammo shopping spree...
Got to love the Japanese. Toyota announces that 5000 managers are getting their bonuses cut by 10% on the eve (postponed?) of Detroit's trip to Washington. I'm sure Shelby will rub that in their faces.
I like to think of it as the time before I really became aware of reality.
mp | 12.01.08 - 9:02 pm | #
Ah, mp you capture the heart of the matter - when was the last time any of us were carefree?
Detroit has never won in Washington in the entire history of the National Football League.
Nikkei down 385 in morning trading...Looks like they got the news...
"Nikkei down 385 in morning trading...Looks like they got the news..."
Glad to see the mail is still being delivered. It's not all bad.
"The financial sector itself has been building for many decades into the largest single element of the American economy. We have moved to a world where far too many of us seemingly no longer make anything; were merely trading pieces of paper, swapping stocks and bonds back and forth with one another, and paying our financial croupiers a veritable fortune. In the process, we have inevitably added even more costs by creating ever more complex financial derivatives, in which huge and unfathomable risks have been built into the financial system." - John Bogle, Vanguard Founder.
The Financial Industry Takes Too Much : Information Security Resources
interesting news:
Yahoo! 404 - Page Not Found
Bush said he's sorry?
Okay.
All is forgiven, George!
Pffffftttttt! ya wanker...
Comrade Kristina,
I know of what you write about. Cut yourself some slack. You got a lot of worries.
I know people say its no big deal but if GM goes under then the Conjurse clock shout go to 11:59:56
Thanks nova, my husband tells me the same thing regularly. It's like watching a train wreck in slow motion and screaming at people that can't hear you to "get out of the way". Dreamlike almost...
Damn, I am tired. Plugged in a played some Foghat and Sabbath, poorly but loudly.
Insted of bank failure Friday we can have automaker failure friday?
I really can't spell.
ova - this calls for "Into The Void" off of Masters of Reality..if you dont know it, learn it!
and on another note, a bankruptcy I couldnt be happier about. Wanna know why? Read the comments about this atrocity. It symbolizes everything wrong since 2001. Greed, pomposity, debt, absurd spending.
Copia Files for Chapter 11 - Diner’s Journal Blog - NYTimes.com
T-Bonds
coupon: 4.500
maturity: 05/15/2038
price: 124-16+
yield : 3.21
price change: +4-30'
yield change: -.23
Is this a bubble, or just the result of Bernanke's posturing today, or earnest anticipation of Depression squared?
Geoff:
I didn't make it past the first sentence without puking:
Copia, the ambitious food, wine and art museum in Napa
To me, this has the hallmarks of "charity fundraisers" that are basically tax-deductible soirees that the "privileged" and nouveau riche organize as penance for all the filth that the shovel on top of the plebs.
Dear China: You are our Bitches. Thank you for being so stupid and gullible.
And I thought the Chinese were supposed to be intelligent. What a bunch of maroons.
King george
One can be smart and also naive about capitalism. Just my opinion.
Also, there's a lot of average Hu's (Joe's)in China, like anywhere. The Chinese in the US are the cream of the crop skimmed from 1.3 billion people.
Basel Too - I just hope they can kill that stinking rotting corpse and bulldoze the thing, or turn it into a homeless shelter. Anything but what it is, a testament to how revolting much of the area has become since I first visited twenty years ago.
El Cliffo - reckon it's the continuation of the trend line, not big enough to show material movement on either of the irresponsible statements by government officials today.
I don't know what it's called when all of 2-30 year bonds offer yields of less than even core reported inflation, but I think it starts with Not Very Good Really.
The Manic Depression continues.
C
OK...enough with all the class envy and wealth bashing. Can I have coinz so I can be rich too?
.....Chane is coming.....from dollar denominations to COINZ!
No, Money Man, you've been naughty and your spelling is off. No ponies.
Kids these days.
C
The Chinese in the US are the cream of the crop skimmed from 1.3 billion people.....Now that is Larry the Cable Guy funny....I don't care who ya' are. Quote of the Day!
Counter, I can haz novaz pony?
Money Man - do you want timeout? Hmmm? A little sit in your room? Because that's the way you're heading mister.
C
Yeah...I been bad. Guess I get a lump o' coal, worthless T bills, or Citi Stock certificates in my stocking this year. The Fat Cat in the red suit better watch out because I will be spiking his cookies with x-lax and will be icing up the roof to make the stay unplesant for Rudolph this year. Bah Bernankie!
Psychodave commented today that I hadn't put up any music in a long time.
Here's "My Funny Valentine" by Richard Rodgers. Lyrics by Larry Hart, with improvisation by my favorite improviser, pianistaitaliano.
It seems strangely appropriate. Hope you enjoy it.
YouTube - My Funny Valentine
Anyone know where EHP is?
I think EHP is probably taking a timeout, like many others. This has been a strangely heavy blow for many of us, and each deals in his or her own way. Id not be surprised to see some people away for a while. But I hope they will be back, especially EHP, who has been a great recent addition to the community.
I noticed an abscense of many regulars today. I think Geoff is correct, they need some time. I lost my Mom two years ago and I can fully understand.
China Fears Restive Migrants As Jobs Disappear in Cities: China Fears Restive Migrants As Jobs Disappear in Cities - WSJ.com
Well...so does all of America. The natives get restless and it goes straight to hell in a handbasket. Has anyone seen that dang basket?
so, does anyone know where all of last week's buyers disappeared to today?
Their therapist....sorry for anyones losses but I couldn't resist. Anyone in this market needs a damn good therapist or balls of steel. My apologies..ladies.
The Chinese plan is not so unintelligent.
They are planning, and achieving, the permanent strategic destruction of U.S. industrial capability.
What better way to squick the last remaining U.S. manufacturers by becoming even more of "low cost outsource center" during a horrible recession?
When a manufacturer goes bankrupt, unlike a bank, it is nearly impossible to replace. There is so much engineering and physical knowledge and capital which just dissipates into entropy. Supply agreements, customer validation of parts, etc.
I see recovery, if it comes, as a multi-step process that will extend over a period of years. (Ten, maybe?) By that time, the current architects who receive such criticism here will be long gone.
First, financial deleveraging of the "shadow" banks and their opaque instruments; then similar deleveraging of bank holding company-owned banks. Coupled with some kind of large-scale mortgage refinancing scheme to keep at least some over-leveraged homeowners in their overpriced homes. At the same time, Paulson/Bernanke (or Geithner/Bernanke/Summerstake your pick) will be trying every trick in the book (flea flicker, end around, triple reverses) to make the necessary deleveraging process less painful. Result: massive deficits and a prolongation of the financial unwinding.
At the same time, people who have jobs naturally are scared, turning cautious, pulling back on spending, and declining to use whatever credit is available, (even though part of the financial recovery program is designed to make credit available again to people who are close to underwater). We are moving to a cash-only society in the main.
So what happens to employment? Outside of health care, I don't see any growth; On the other hand, there are areas of the economy too numerous to mention that will be shedding jobs as business slows. People who have jobs not spending. Lots of unemployment. Minimal corporate profits, if any. State and local governments bankrupt. And, oh, yes, taxes will be going up; energy becomes more expensive.
Maybe there's a genius who will turn up in the Obama Administration who can limit the fallout from what will happen.
Can we also use TARP funds to pay for default insurance on the TARP funds?
The joke about the TARP funds is that they represent less than 10% of the total bail-out. The companies that "borrowed" 8.5 trillion have to pay it back eventually- yeah, right.
I went longer TBT today. Just hedging as usual.
Redchimney,
They all were sellers today. The people who bought on Friday were mostly the automatic 401(k) folks.
People really believe that buy and hold is great strategy as the market will eventually start to go back up again. I think we won't see capitulation unless it naturally goes down below 7000...
drchaos - you are so right about fractures in manufacturing, they take ages to repair if at all. My concern is global fractures in the supply chain, of which the US situation is symptom, but in part cause. I'm just trying to think through the problems of a JIT supply chain when the trade finance picture is looking grim, the intermediate inputs and production are under stress, and end demand is sharply contracted.
Now, taking your point about domestic fracture and damage, what are we to make of the international trading system heading the same way?
Not a pretty picture with hearts and flowers, I reckon.
If drchaos wants further discussion about entropy economics and the credit system, by all means let me know. I'm up for that.
C
It appears to me, many are still in denial. I will say it's shifted from complete denial, to an angry denial followed by mumbling now. I guess that's progress...
Money Man writes:
Fannie and FHA halted ALL foreclosures for December....Look out for the January effect....YIKES!
Money Man | 12.01.08 - 6:22 pm | #
I read that it was only 16000. There are over 1000 per day in California alone. Then I laughed to myself.
Duarte - you big meanie.
But you're right.
C
When a manufacturer goes bankrupt, unlike a bank, it is nearly impossible to replace.
Better to say it takes a long time. Learning by doing and all that. And it depends on the industry. That's one reason I think at least one of the Detroit 3 will be saved - the barriers to entry in developed country's auto markets are enormous.
Hong Kong hearts Ben and Hank! Pushing 5% down on most boards:
INDEX\tVALUE\tCHANGE\t%CHANGE\tTIME
HANG SENG INDEX\t13,477.84\t-631.00\t-4.47%\t22:37
HANG SENG COMPOSITE INDX\t1,833.40\t-77.45\t-4.05%\t22:37
S&P/HKEx LargeCap Index\t16,797.34\t-755.68\t-4.31%\t22:37
S&P/HKEx GEM Index\t351.05\t-2.52\t-0.71%\t22:37
HS FREEFLOAT COMP INDEX\t1,903.65\t-86.09\t-4.33%\t22:37
HANG SENG HK FREEFLT IX\t1,392.06\t-66.68\t-4.57%\t22:37
HANG SENG CHINA ENT INDX\t7,061.82\t-329.87\t-4.46%\t22:37
HANG SENG CHINA AFF.CRP\t2,945.53\t-117.02\t-3.82%\t22:37
HS MAINLAND FREEFLOAT IX\t3,849.18\t-160.00\t-3.99%\t22:37
HANG SENG 50 INDEX\t1,886.55\t-89.02\t-4.51%\t22:37
HANG SENG HK 25 INDEX\t1,345.35\t-64.72\t-4.59%\t22:37
HANG SENG MAINLAND25 IX\t4,607.12\t-210.79\t-4.38%\t22:37
HANG SENG H-FINANCIALS\t9,316.37\t-420.09\t-4.31%\t22:37
C
JP writes:
I think it is just sinking in.
Let's see, choose between:
1. paulson speaks and the market reacts instantly
2. obama chooses his financial team and the market takes a week.
Hmmm. That is CERTAINLY a head scratcher. Hmmmm.
JP | 12.01.08 - 5:15 pm | #
Yes, and I love how Goldman Sachs is privy to all sorts of financial information before everyone else is. It's becoming a massive scheme to rob 401k's and pensions. People will never realize it- they'd rather take it out on Bush and vote for Clinton II. If the people really knew what was going on, there would be an instantaneous revolution that not even 20000 soldiers could stop. Brutal violence is the only solution to greed, corruption, and hate. History repeats itself.
Also,
I had targeted SDS @ 90 but didn't have the balls to turn the trade one. Ended up buying some SDS and SRS this morning after they both went up.
crispy&cole - can I, y'know, borrow?
Down goes Frazier!
Down goes Frazier!
In early trade ASX said thusly:
INDEX\tVALUE\tCHANGE\t%CHANGE\tTIME
S&P/ASX 200 INDEX\t3,562.50\t-118.70\t-3.22%\t22:52
S&P/ASX 300 INDEX\t3,542.30\t-117.60\t-3.21%\t22:52
ALL ORDINARIES INDX\t3,505.70\t-113.30\t-3.13%\t22:52
Duarte writes:
...If the people really knew what was going on, there would be an instantaneous revolution that not even 20000 soldiers could stop.
lots of americans do know what is going on. problem is, they are either in on it, or quickly look away for fear of having to actually accept that theyve been robbed. repeatedly.
America will starve silently, im afraid. the revolution has gone out of us, and there is no one left willing to stand up.
.
Counterpointer writes:
Duarte - you big meanie.
But you're right.
C
Counterpointer | 12.01.08 - 11:00 pm | #
Hey, at least I'm not Evil Paulson. I think to myself about all of the people on my old street in CA who are underwater by 100k on their mortgages, and it will not "recover" in 20 years, if ever. Many have no financial incentive to keep paying...certainly nothing that a hit on their credit rating will stop. FICO scores are just about the last thing that people are holding on to.
"Is this a bubble, or just the result of Bernanke's posturing today, or earnest anticipation of Depression squared?"
To blow the mortgage bubble, it took a builder, a banker, a broker, a buyer, plus congress, the administration, and wall st.
Where is that thundering herd here chasing higher bond values and creating another bubble? All of my family members and friends bought and/or refied their way into the housing bubble and negative equity, and none of them can fathom my ZIRP bond scenario, a depression with no dividends and no investment yields, and 30 year USG bonds yielding a guaranteed 2% and trading at 225. So if it's a bond bubble, I must be moving in the wrong circles.
Just my idea.
PeakVT(Unrated) writes:
When a manufacturer goes bankrupt, unlike a bank, it is nearly impossible to replace.
Better to say it takes a long time. Learning by doing and all that. And it depends on the industry. That's one reason I think at least one of the Detroit 3 will be saved - the barriers to entry in developed country's auto markets are enormous.
PeakVT | 12.01.08 - 11:03 pm | #
This may sound crazy but the supply chain is often times more strategically important than the OEMs themselves... the OEs are 'marketers & financiers' but it's the supply chain that builds the engines, trannies, interiors, etc. And increasingly they even DESIGN them after given a loose concept from the OEs.
But the way the markets & supply chains are 'segmented' if the domestic OEs go down so do almost all the domestic supply chains & their 'institutional knowledge' is lost - not good.
I believe if you off'ed GM-Ford-Chrysler but saved the supply chains (Delphi, TRW, Tower - etc.) you could reconfigure a new & competitive car builder quickly (assuming the supply chain partners got their heads out their asses - some are as clueless as their OE masters)... Regardless if the supply chains continue to crumble there won't be any reason to save the OEs - they'll be 'foreign built' anyway even if 'assembled' here.
Not many folks understand the intricacies of the auto world - I just understand a little myself - but that much is pretty well understood by ALL insiders.
Here's "My Funny Valentine" by Richard Rodgers. Lyrics by Larry Hart, with improvisation by my favorite improviser, pianistaitaliano.
It seems strangely appropriate. Hope you enjoy it.
mp | 12.01.08 - 10:19 pm | #
Thank you, mp. That was beautiful.
dryfly,
Nice insights. I think it would take a week of hour-long news specials to explain that concept to America, so most likely our great leaders will just end up throwing money at the "Big 3" and say "If we don't do this it will lead to depression and millions of Americans will lose their jobs."
I hate how the wisdom on here and other parts of the Internet is beyond our leaders. I don't even think anyone in this country is a good leader... they all just take what they can for themselves.
Drudge had an interesting article on American teenagers and how much they lie, cheat, and steal. The article was a bunch of hand wringing about the next generation, but in truth I think it says a lot about the people who the next generation are learning from. Of course the article didn't make any explanation how our youth came to conclude this was acceptable behavior.
Article is here
In short, kids learn from their parents.
mp - It ain't necessarily so:
YouTube -
I prefer My Bloody Valentine to your suggestion, but that's just me.
C
CR,
Check out the recent correlations in the CDO markets, e.g. ABX-HE-AAA 07-2
and CMBX-NA-AAA 5 
. These bond markets also crashed again today, to near lows, in what appears to be a good correlation with recent swings in equity prices.
dryfly - I was actually validating your position and I'm very concerned about sectoral chaos, taking into account OEM, and vertically integrated industries.
Just seems to me if the order book is looking thin, and the banks are closing in (routine credit, rollover, ops, payroll, let alone new efforts), then it's about time to admit to shareholders there might be a wee problem or two with the balance sheet.
Hmm. How long can this last?
C
It's peak litigation as creditors try to recoup. Perot, Trump, UBS, GS, Countrywide, ...all huge defendants. Not long before you hit a trillion.
Stratonovich - the link said one bond issue was going to wait until April 09 - unless I've misread.
WTF?
C
ikkei stuck at 8000.01 Cute.
Hmm. How long can this last?
I don't know - but my guess is the auto industry worldwide needs to 'right size' itself for a rate of production about half of what it currently produces for a period of something like five years minimum - then never quite returning to the heyday of the SUV. During that time they will need to bootstrap a whole new platform of models matched to a new and less opulent future - people will not lease & churn new autos every four years.
Fewer vehicles produced, fewer vehicles owned per family - each vehicle produced lasting longer & more affordable from a total cost of ownership perspective (including financing).
Daunting task ahead of them - they should all ask to be fully nationalized this Friday. It would be easier & less painful.
dryfly | 12.01.08 - 11:17 pm
Thanks. I had forgotten how much engineering has been pushed out into the supply chain. However, the "platform" is still the province of the manufacturer (AFAIK - and so are engines even if assembly has been outsourced) and to design one that meets crash requirements, has tolerable NVH characteristics, and doesn't weigh too much is still quite a task. This is the knowledge/IP I am worried about floating away in a full meltdown of Detroit. I doubt Congress would allow all 3 to go down, but it's not something to be considered casually.
There's a longer post under my homepage that tries to pull all the BK issues together.
I'm partial to Stan Getz and Chet Baker on My Funny Valentine Myself. But I loved the piano version.
YouTube -
Bailout Monitor Sees Lack of a Coherent Plan
Bailout Monitor Sees Lack of a Coherent Plan - NY Times
The head of a new Congressional panel set up to monitor the gigantic federal bailout says the government still does not seem to have a coherent strategy for easing the financial crisis, despite the billions it has already spent in that effort.
Elizabeth Warren, the chairwoman of the oversight panel, said in an interview Monday that the government instead seemed to be lurching from one tactic to the next without clarifying how each step fits into an overall plan. ...