I am pleased. This is great news. The TARP only buys asets at par. Don't you all see? The new par is 26% less than the old valuations. The next $350 billion will go much further.
Can someone please explain to me how what our government is dong to our country is different from what Mugabee did to Zimbabewe or what Chavez is currently doing to Venezula (taking over the oil business from private control)??
Our future is grim...
reality is the American class structure isn't going to change all that much. There will just be fewer in the "near the top of the heap" layer - and much better tee times at the club.
It won't change. There will be no revolution - just a downward adjustment for the nouveaux riches.
"CBO calls its a "subsidy cost", others call it a "loss"."
You must be confused... The President, Secretary of the Treasury and Chairman of the Fed have explained in public that the taxpayer would probably make a profit because the TARP program was a temporary support for institutions while the 'problem' assets - which were grossly undervalued - return to a fair value. But don't believe me - it is all on video.
These three individuals are basically the CEO and CFOs of our country. Don't you think they'd know, and care, what the truth is?
American taxpayers pick up $64 Billion tab ( so far ) for TARP.
Nice to see that Socialism for the rich, the well connected, Congressitters, and Wall Street is alive and well. But this is socialism where profits are privatized and losses are socialized with the US tax-payer.
The Fed, Treasury, Congress, Wall St are all culpable.
98% of Americans had better get a new dream and fast !
If financials don't turn around there's no way the market keeps going up anything more than a few days. BAC and WFC down 20% would argue against anything more than a short-term spike in the market.
WFC alone indicates another titan is about to fall.
Guys, this is just temporary. Everyone knows there are costs to be eaten in any new venture. If we give up now it will all be wasted effort. All I'm asking is that you give us time and the rest of the money. Looking forward I see no reason why TARP won't be successful. Although it appears that 700 billion won't be enough,...you might want to start thinking about voting in another few hundred billion. Yeah, two maybe three hundred billion more should just about do it. You wouldn't want to waste all the money you put in when success is so close now, would you?
Oh, and don't worry about the lack of accountability we'll clear it all up when we're finished. Really.
Don't worry, I'm sure the MSM will get the work out about this outrage and the engaged citizenry will rise up and demand the criminals are persecuted, damages repaid, and refroms enacted.
Jan. 16 (Bloomberg) -- General Electric Co.s finance arm may cut 7,500 to 11,000 jobs, or at least 10 percent of its workforce, because of the global financial slump, people familiar with the companys plans said.
The reductions are part of GE Capitals announced plan to reduce expenses by $2 billion this year, said the people, who didnt want to be identified because the numbers arent public. The savings goal also includes expenses such as office closings.
Rob Dawg - have you received a new list of appropriate terminology from Central Communitariat yet? I think that "subsidy cost" is going to be one that really catches on.
surprised they didn't call it "down-climb" hadn't heard that one for some time.
Regarding that Senate bill on taking paper gold vs. currency......so you sell the paper gold and are left with what???? The same thing as if you took the original option of currency...
I don't know. 150k layoffs alone today sounds mighty deflationary to me.
But I forgot. Benny boy said he's gonna inflate. Forget the proof, he says so and he's the master on the depression so I'm sure it's gonna all work out as planned.
To those flippantly suggesting that the taxpayer will be the lender of last resort, I ask you this:
What if the taxpayer lacks the savings AND it also becomes apparent that future income prospects are insufficient?
I humbly suggest that the trend of ever-increasing government largesse will be reversed. By necessity, existing programs and future promises will be canceled and broken.
Rob Dawg - have you received a new list of appropriate terminology from Central Communitariat yet? I think that "subsidy cost" is going to be one that really catches on. Mr. Sparkle | Homepage | 01.16.09 - 3:14 pm | # LOL. My own snark used against me. Good one.
carrying some threads over -
[deflationary jane]Mish had a great piece on this a couple of days ago. The fed may try like crazy to pump inflation but if no one buys in, you have deflation whether you like it or not.
Mish, of all people, should know better than to use a rational expectations model. We've just had a acid test of rational expectations with the housing bubble, and rational expectations got an F-minus with special demerits. There's no expectation more irrational than rational expectations. If consumers have money, they will spend it.
Angry Saver - I remember your link, and I agree it suggested strongly the Fed would purchase the MBS with printed money. But it wasn't definitive, and even now I find it hard to believe Bernanke would commit a blunder of that magnitude. If he actually goes through with it, he'll almost double actual MZM from last year (ignoring the distortions from interest on reserves) and that will produce 100% cumulative inflation over a few years - an absolute nightmare on a worldwide scale. The dollar is, after all, still the reserve currency. So I'm hoping somebody has figured out exactly what asset the Fed is actually using to buy the MBS, so we can start planning for the effect.
Regarding that Senate bill on taking paper gold vs. currency......so you sell the paper gold and are left with what???? The same thing as if you took the original option of currency...
The bill is not well crafted. It has provisions that suggest a person could recieve physical gold
See, you have to stop trying to read what is posted in order to make an intelligent comment. Once you see the new post, just do like I do and put a 'doh!' then come back and read it.
Can someone please explain to me how what our government is dong to our country is different from what Mugabee did to Zimbabewe or what Chavez is currently doing to Venezula (taking over the oil business from private control)??
girlbear | 01.16.09 - 3:02 pm | #
The first rule of Wall Street is, you do not talk about the PPT.
The second rule of Wall Street is, you DO NOT talk about the PPT.
Third rule -- If someone says "sell" or goes limp, taps out, don't listen, the bear market is over.
Fourth Rule -- Only two 2 brown noses to an ass.
Fifth Rule -- One TARP at a time.
Sixth Rule -- No shorts, No selling on bad news.
Seventh Rule -- Shorting bans will go on as long as they have to.
and the 8th and final rule...
If this is your first day on Wall Street, you have to buy GS or C.
So like the CEO's does Benny and Hanky work for a dollar a year now? Do they get a golden parachute or open up a consulting business and except phony payments for past favors?
"Mish had a great piece on this a couple of days ago. The fed may try like crazy to pump inflation but if no one buys in, you have deflation whether you like it or not."
I don't believe Mish was talking about consumers. American born and bred dope consumers have shown that they will spend whatever you throw at them.
When Mish talks about no-one buying in he means private purchasers of credit. TIPs still show that the market does not believe that inflation is coming. If that is so then they don't believe the bailout bill will solve the underlying issues.
There are limits to how much capital the government can supply. At some point private markets need to start supplying again.
So far private big debt market money is sitting on the sidelines because the recession is just getting started.
I'm waiting for the feed a man a fish for a day parable for the stimulus package.
Anonymous | 01.16.09 - 3:24 pm | #
Is that in the Torah? The more we study the Torah, learn to chant it on Shabbat and weekdays, dance with it on Simchat Torah, and most of all..make its mitzvoth the center of our lives, the more we will honor it and its forebears and the less time to worry about Rubin, Greenspan, Madoff, and that klutz Kudlow...
Man I'm worn out. Eventually somewhere, somehow the last mistake will be made and there won't be a last resort, a lender, a printer, a con left with anything to feed the MSM.
Instead of it happening in drips over the next five years, I'd just like it to happen now. I'm tired of waiting, let's get on with it.
Paulson and Bair working on a Bad Bank of the USA deal....
Jan. 16 (Bloomberg) -- The heads of the U.S. Treasury and Federal Deposit Insurance Corp. gave further momentum to the idea of a new government-backed bank to remove toxic assets from lenders balance sheets.
A lot of work has been done on an aggregator bank and other ways of using the $700 billion financial-rescue fund to let it go further when it comes to dealing with illiquid assets, Treasury Secretary Henry Paulson told reporters today in Washington. FDIC Chairman Sheila Bair praised the idea in an interview on CNBC, saying it might have some merit.
So far private big debt market money is sitting on the sidelines because the recession is just getting started. Pissed Off In California | 01.16.09 - 3:28 pm | #
Or it turns out that it isn't their capital to allocate. $20t at 10:1 is less than $10t at 30:1. Delevering works up the food chain as well.
There is a great deal of evidence that the fair value of market assets is below the economic value of the assets.
The most important mitigating factor is the fact that these bailouts have stabilized the market, at least in comparison to what it would have been otherwise. This is immeasurable, of course, but in the aftermath of the Lehman non-bailout it is clear that letting big banks go causes a great deal of market disruption.
If letting AIG and Merrill and Citi go would have caused another 1% unemployment for a year, you can deduct the cost of that from the $64billion.
We'll see. I've been wrong before on this board, but I strongly believe that the gov't will make money, at least in nominal terms (not risk adjusted), on the TARP.
"Mish had a great piece on this a couple of days ago. The fed may try like crazy to pump inflation but if no one buys in, you have deflation whether you like it or not."
Here's the thing: are there 'laws' of economics or is it all just a manipulatable game? Experience tends to prove that governments do not control reality... but I think economists today really believe they can.
I don't believe Mish was talking about consumers. American born and bred dope consumers have shown that they will spend whatever you throw at them.
When Mish talks about no-one buying in he means private purchasers of credit. TIPs still show that the market does not believe that inflation is coming. If that is so then they don't believe the bailout bill will solve the underlying issues.
If the money gets printed, it will get spent. When the shelves clear out, the stores will go take inventory loans, which will in turn will fire up the shipping companies, advertising, and production, and so on. The low interest rates will also drive house purchases - when you can borrow on a mortgage to buy corporate bonds, and make a substantial gain, a lot of people will start feeling good about buying a house. Apart from Asian Central Banks, few are foolish enough to accumulate huge piles of green pieces of paper.
Yes, it takes a while for the credit markets to notice (irrational expectations). Hence the 12-18 month delay. But the process is quite reliable. Can you name any case where a large increase in the money supply didn't produce inflation? It just doesn't happen.
"The most important mitigating factor is the fact that these bailouts have stabilized the market, at least in comparison to what it would have been otherwise."
That is a very loose definition of stabilize. Kind of like she is pretty if you keep your eyes closed and think of a pretty girl.
"Yes, it takes a while for the credit markets to notice (irrational expectations). Hence the 12-18 month delay. But the process is quite reliable. Can you name any case where a large increase in the money supply didn't produce inflation? It just doesn't happen."
"Important life lesson: snorting miso soup up your nose while laughing hurts much less then coffee or wine. Read CR during lunch >; )"
--deflationary jane
Conversely, never never read CR while sipping scotch. I though I was going to stop breathing one evening last month.
Japan has been printing for 18 years and has just about managed to pull off a double-dip depression from the looks of the economic data coming out.
Now you can argue all you want about what the reasons were for this (savings versus consuming) but they sure tried like hell to increase the money supply with pretty substandard results.
Moody's pts Citigroup ratings for possible downgrade.
Sure took them long enough.
Anonymous | 01.16.09 - 3:37 pm | #
The Feds are telling Moody's when to downgrade Citi just before it comes to the rescue probably this long MLK wkend to prevent a run. It is all being orchestrated now for panic prevention.
Go back to the source of the surreal:
Dada Economics.
Marcel Janco: We had lost confidence in our culture. Everything had to be demolished. We would begin again after the "tabula rasa". At the Cabaret Voltaire we began by shocking common sense, public opinion, education, institutions, museums, good taste, in short, the whole prevailing order.
We are clearly facing massive deflationary forces. Attitudes about debt are changing too. But a determined central banker with a printing press is a spooky thing. Gideon Gono proved that.
Both the inflationists and deflationists make convincing arguments. I think either is possible and both are likely (stagflation). Either way I see tough times ahead.
The one thing I don't see is prosperity. Prosperity took early retirement, now the baby busters can't.
"The most important mitigating factor is the fact that these bailouts have stabilized the market"
Bailouts?
Would your conclusion change if you called them "postponements" instead of "bailouts"? Cuz it is evident that is what they were. See Bernanke's remarks of last Monday.
or what Chavez is currently doing to Venezula (taking over the oil business from private control)??
Our future is grim...
girlbear | 01.16.09 - 3:02 pm | #
It is the exact opposite of what Chavez has done with the oil companies.
Pissed Off In California writes:
Japan has been printing for 18 years and has just about managed to pull off a double-dip depression from the looks of the economic data coming out.
Pissed Off In California | 01.16.09 - 3:40 pm | #
And don't forget. Stocks have been cheap there on a relative basis because the yield on the JGB is so low.
Sound familiar? Relative value in US stocks seems to be a popular mantra these days. Ha.
The right way to stabilize the markets would be for the FDIC to seize banks that don't meet objective, fair-model-based capitalization requirements; zero out the equity and issue warrants to the debt holders, fire the management, and keep the banks operating. That would have fixed the indicators immediately, because the only banks left would be solvent ones and the government. It would have been far more effective than bailing out the crooks, and much cheaper to boot.
Morocco Bama | 01.16.09 - 3:42 pm | #
You can actually tour that home with a charitable donation. It's been in the media a lot lately. We should get up a CR tour thang?
Angry Saver. I don't doubt we will get inflation. I'm just of the opinion it will be much further down the road than anyone wants to admit and in a form other than what is expected by the FED. These things never go according to plan and the results of the bailouts so far prove my point.
I find an odd religious fervor to many inflationists, s well as some deflationist. No middle ground thinking by either camp.
Japan printed less in 15 years than Bernanke (apparently) wlll print in one. If Bernanke intended to drag this MBS purchase out S L O W L Y until 2024 I'd agree we'd see little inflation.
In reality, money does not get printed, Bernanke comments to the contrary. Money gets created by the promise of future exchange of value. Therefore there must be some believable future value before money can exist. You can print markers for that value, just like casinos can manufacture chips... but markers are not money - only the future value is. Accept that and the problems today make a lot more sense.
"...probably this long MLK wkend to prevent a run.It is all being orchestrated now for panic prevention.
FFDIC"
Makes perfect sense. I can see MLK saying thsi:
"In a sense we've come to our nation's capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all banks - yes, investment banks as well as ordianry banks - would be guaranteed the unalienable rights of life, liberty and the pursuit of happiness. It is obvious today that America has defaulted on this promissory note, insofar as Lehman is concerned. Instead of honoring this sacred obligation, America has given the Lehman a bad check, a check which has come back marked 'insufficient funds.'"
I find an odd religious fervor to many inflationists, s well as some deflationist. No middle ground thinking by either camp. Pissed Off In California | 01.16.09 - 3:45 pm | # Errr, there's a sizable camp here on CR that yes a big Yes! to both. I think Dryfly's the leader of that pack.
I sick of all this constant propaganda of "to big to fail...what a bunch of BS. If two people were drowning and one weighed 150 pounds and the either weighed 250 pounds...who would you save???
This myth of to big to fail, is a fricken joke. There is such a thing as "to big to save"
You can actually tour that home with a charitable donation. It's been in the media a lot lately. We should get up a CR tour thang?
FFDIC | 01.16.09 - 3:44 pm | #
I'm in. Haven't been to Dallas in five years. Wouldn't mind going there, taking that tour, mooning George and Laura and then getting smashed. When I lived there in the early eighties, Greenville was the spot. I'm sure the nightlife has changed locations. I've been there on and off over the years and it seems like the West End in downtown really became party central.
Conversely, never never read CR while sipping scotch. I though I was going to stop breathing one evening last month. \t sm_landlord | Homepage | 01.16.09 - 3:39 pm | #
Agreed, and a certain amount of printing could get swallowed up by deleveraging. That's probably what happened in Japan. If Bernanke reins in the press now I'm not so sure about the outcome. I could see a 15% increase getting swallowed. But doubling the money supply? That's going to inflate, if it happens.
All Fall Down writes:
And last year we couldn't find enough to fund projected future SS and medicare shortfalls? Just print some more.
All Fall Down | 01.16.09 - 3:07 pm | #
forget that there wasn't enough money for SCHIP $6 billion. Though I guess all this TARP money could be considered as Obama making good on his health care promise- would be tragic if some of these guys decided to jump out windows. US life expectancy increased!!!
George W Bush 01/20/05 -68.5 -0.65%
01/20/01 -9.35 -0.09%
Bill Clinton 01/20/97 10.77 0.16%
01/20/93 -14.04 -0.43%
George H W Bush 01/20/89 -3.75 -0.17%
Ronald Reagan 01/20/85 34.01 2.77%
01/20/81 -20.31 -2.09%
Jimmy Carter 01/20/77 -9.64 -1.00%
Gerald Ford 08/09/74 -7.59 -0.97%
Richard Nixon 01/20/73 -7.38 -0.72%
"Japan printed less in 15 years than Bernanke (apparently) wlll print in one. If Bernanke intended to drag this MBS purchase out S L O W L Y until 2024 I'd agree we'd see little inflation."
The 600B MBS is another mirage like many others that Bernanke has performed. On multiple occasions he has jaw-boned to push rates down and the bond market has front-run him.
You can find plenty of evidence by many knowledgeable bond traders that Bernanke is simply moving the 600b in MBS from one pocket to another and the out of pocket expense is less than 5B per year.
I don't deny that there some "printing" going on and the replacement of treasuries for toxic assets is another form of stealth printing.
But the level of printing is nowhere near the level that the inflationist crowd likes to crow about.
Bernanke is attempting to convince everyone that inflation is coming so that money moves into crap assets.
So far the bond market and currency market is not biting. And they have proven historically to be a bit more intelligent than the stock market when it comes to these things.
10T in leveraged wealth has disappeared. 2T in consumer credit is disappearing as we speak. What the government has spent has barely dented the deleveraging so far.
There is a lot more deleveraging ahead before inflation kicks in barring a bond-market collapse which hasn't happened yet.
so if there isn't an inflationary consequence to all the bailouts and stimulus (due to lack of velocity etc), it's a win-win for everyone right? banks get solvent, savers are protected, gov't saves the day
but if there is an inflationary consequence, everyone's debts are wiped out, nominal profits go back into the black, who saves anyways so screw them, and again the gov't saves the day
am I missing something or is all this too good to be true?
Jan. 16 (Bloomberg) -- The heads of the U.S. Treasury and Federal Deposit Insurance Corp. gave further momentum to the idea of a new government-backed bank to remove toxic assets from lenders balance sheets.
As usual they have it ass backwards. They should be removing the good assets and leaving the toxic crap behind/
When I lived there in the early eighties, Greenville was the spot. I'm sure the nightlife has changed locations. Morocco Bama | 01.16.09 - 3:48 pm | #
I lived there in the mid 80's and Greenville was the place. Had enuf of the yuppies and their leased BMWs though, so I moved to Austin..cutoffs and sandals rather than coats and ties. Much nicer, but the summers got too hot for too long.
I find an odd religious fervor to many inflationists, s well as some deflationist. No middle ground thinking by either camp.
Pissed Off In California | 01.16.09 - 3:45 pm | #
I'm believe religiously in both. The switch from one to the other will almost Hobbesian hence my addiction to read econ blogs.
"so if there isn't an inflationary consequence to all the bailouts and stimulus (due to lack of velocity etc), it's a win-win for everyone right? banks get solvent, savers are protected, gov't saves the day
but if there is an inflationary consequence, everyone's debts are wiped out, nominal profits go back into the black, who saves anyways so screw them, and again the gov't saves the day
am I missing something or is all this too good to be true?
manja_cake | 01.16.09 - 3:53 pm | # "
If it worked every country would have printed their way to prosperity.
They haven't. Government debt spending is already starting to crowd out capital from the private market.
You simply believe that inflationary pressures are 6 months down the road, I don't. I think this recession will be much worse than many believe.
The problem will most likely come when the economy starts picking up and short-term borrowing costs explode. I think that's atleast another year off in the future.
Barley: "I thought we were talking about free markets - the whole Adam Smith thingy."
The markets are now ersatz. Unfortunately you will be reported to Homeland Security if you don't refer to them as "free markets". The American Dream is not a dream anymore as well, but don't tell anyone.
I lived there in the mid 80's and Greenville was the place. Had enuf of the yuppies and their leased BMWs though, so I moved to Austin..cutoffs and sandals rather than coats and ties. Much nicer, but the summers got too hot for too long.
Baca | 01.16.09 - 3:57 pm | #
I hear you on the yuppies. Austin's great...love that city.
Hehe. I'll be happy to show you the inventory. Maybe we can work something out while I am still breathing. sm_landlord | Homepage | 01.16.09 - 3:56 pm | #
Let's see... At 80¢/sf/mo for the next few years... I figure you'd owe me... ;-) Heck, throw in some avionics and we'll call it even.
A few years ago, an old paramour of Ruth's from high school, Donny Rosenzweig, called the Madoff home to ask about getting into the fund. Bernie turned him down, saying it was full, then put Ruth on the phone. The pair reminisced about old times Ruth was known in school as "a poised and chatty blonde with an updo and a winning smile" then Bernie asked to speak to Don again.
And he got back on the phone and said, Look, Donny, we go back a long way, Ill get you into the fund.
He told Mr. Rosenzweig that the minimum investment was $2 million. That was more than Mr. Rosenzweig had, so he asked family members to pitch in. Ultimately, his mother, brother, sister, sister-in-law and brother-in-law and an 83-year-old uncle all contributed.
Wow. He must have been simmering when listening to that chatty phone call. There's a lesson here, folks, one that applies to us all: Never invest with your ex's husband, even if it has been sixty years.
Sure, she lost billions of dollars in Bernie Madoff's Ponzi scheme and may have had to go into hiding from the Russian oligarchs whose money it was, but is not Sonja Kohn, the feisty founder of Vienna's Bank Medici, kind of a feminist hero? Quoth the Journal: "Ms. Kohn, who was raised in Vienna, spent the 1970s and 1980s between Milan and Zurich. Her official U.S. stock brokerage employment history states that during that time Ms. Kohn was a 'domestic engineer, or housewife.'"
Here's the thing: are there 'laws' of economics or is it all just a manipulatable game? Experience tends to prove that governments do not control reality... but I think economists today really believe they can. \t wally | \t \t \t \t01.16.09 - 3:34 pm | # wally | 01.16.09 - 3:34 pm | #
There are rules, but as soon as everyone knows the rules, the rules change. Govt's. can control our perception of reality, until they can't.
Purchases will be financed through the creation of additional bank reserves.
Ah, but reserves of what? They could issue T-bills and call them "reserves". I distrust statements from the Oracle of Obfuscation.
You can find plenty of evidence by many knowledgeable bond traders that Bernanke is simply moving the 600b in MBS from one pocket to another and the out of pocket expense is less than 5B per year.
Well, I can't. I want to know what Bernanke is actually doing, and I haven't seen any facts yet. I suppose we'll get a balance sheet analysis from Setser in a few weeks.
In terms of inflation/deflation, I agree we've got a period of deflation ahead of us, probably about a year. Perhaps more; inflationary expectations speed up the printing -> inflation process so I should think deflation could slow it down. But big time printing will lead to big time inflation.
We are clearly facing massive deflationary forces. Attitudes about debt are changing too. But a determined central banker with a printing press is a spooky thing.
I think Mish is right: We're on the back side of Credit Peak. A multi-generational change in social attitudes.
Wally, can I archive (on another site, with attribution) that comment of yours about what money really is? I've been looking for something like that for months and I think you hit the nail more squarely on the head than anything else I've seen.
House isn't big enuf, Bama.
lawyerliz | 01.16.09 - 4:10 pm | #
That's what I thought. Also, maybe the CR Tour is not such a great idea. I don't think Comrade Kristina and Bond Girl would be able to keep their hands off me.
wally wrote: "Here's the thing: are there 'laws' of economics or is it all just a manipulatable game?"
Both. There are solid economic laws, but they only apply in theoretical situations that do not (and can not) actually occur in the world; for example, that all participants in a market have complete information and behave rationally. In the real world, economics is a division of politics, or possibly vice-versa, and so is routinely manipulated.
Re-Reading his doctoral thesis to see if he missed anything. He was always told he's such a clever boy...Must have missed a knob or switch or something...cuz his Keynsian navel gazing profs said it was brilliant.
"You can find plenty of evidence by many knowledgeable bond traders that Bernanke is simply moving the 600b in MBS from one pocket to another and the out of pocket expense is less than 5B per year.
Well, I can't. I want to know what Bernanke is actually doing, and I haven't seen any facts yet. I suppose we'll get a balance sheet analysis from Setser in a few weeks."
There is a post on tickerforum.org by somone called MtgSpy who went through in intricate detail exactly what is being done in this case.
He's very conversant in MBS as that is what he deals in for a living.
Brad Setser balance sheet will not show exactly what is being done in this case. Assets are being moved from FNM/FRE to the FED using banks as intermediaries who take a standard point on the loan as they always do before selling it.
The point is that this is not 600B in new loans. This is 600b in existing loans that are being taken off FNM/FRE balance sheet to reduce their leverage. Once again it is being portrayed by MSNBC and the government as something that it is not. It is at a cost to the government of the difference between t-bill rates and gse debt which comes to 5B per year.
"Also, maybe the CR Tour is not such a great idea. I don't think Comrade Kristina and Bond Girl would be able to keep their hands off me.
Morocco Bama"
If there is a CR Tour I hope the tour bus is a Marathon Coach.
That's what I thought. Also, maybe the CR Tour is not such a great idea. I don't think Comrade Kristina and Bond Girl would be able to keep their hands off me.
Morocco Bama
I know at least one person that would have a hard time keeping his fists off you
I'm with Fair on this one.....it's still creating value where none existed previously...see repo. process.
Same thing IMO"
I agree fully with the above statement. But creating value to allow a controlled detonation of the credit market is very different from creating value in a functioning credit market.
Global leverage is coming down to 10:1 from 30:1 and staying there for many decades to come. That's 10's of trillions of potential credit gone permanently.
Add to that increased government spending, downstream inflationary pressures from this spending and on top of that reduce total credit available to the private market and you have the makings of a horrible mix.
Regardless of what happens to inflation there are plenty of asset classes that will stay depressed for years to come.
SACRAMENTO, Calif. (AP) - California's controller says he will begin a 30-day delay on tax refunds and other payments starting Feb. 1 because the state is running out of money.
Controller John Chiang said Friday he must delay $3.7 billion in payments
Chiang says his office must continue education and debt payments but will defer money for tax refunds, student aid, social services and mental health programs.
A severe drop in revenue has left the state's main bank account depleted. The state had been relying on borrowing from special funds and Wall Street investors; those options are no longer available.
Ouch...30 day delay - I.O.U.
For sure 2nd half tarp will be ready, other states will be jumping all over this.
Noticed today that the market seems to have soured on bankster bailouts. Seems to me that a lot of inflation might make those assets worth more than our gov't paid for them. We're gonna be rich!
CBO calls its a "subsidy cost", others call it a "loss".
It's not a "loss" because the securities were yielding a below market rate when they were purchased. It was an instantaneous, intended subsidy. What would have been more helpful would be to compare the "value" of the securities at purchase, and compare that to their current value.
It also looks like they used 10-year trading history to value the warrants, which I think undervalues the warrants because current volatility in these stocks is much higher than it has been for the last 10 years.
Jan. 16 (Bloomberg) -- Until a few months ago, Amit Singh dreamed of buying a car. Now, with S$75,000 ($50,100) in the bank, the lawyer is holding back, saying hell continue to make the one-hour commute to work on the Singapore subway.
In these bad times, the buzzword is save, not spend, says Singh, 34. Its not the right economic climate to be lavish or to have a luxurious lifestyle.
Singapore is asking its citizens, the worlds third- wealthiest adjusted for purchasing power, to be prudent as analysts predict the worst economic slump in the nations 43- year history. In speeches, pamphlets and ads, the government is advising people to switch to cheaper frozen meats, take shorter showers and skip the top-of-the-line mobile phone.
The islands strategy contrasts with that of other countries such as Japan and Taiwan, which are trying to boost consumer spending to spur economic growth as exports falter. Singapore, whose 4.8 million population is one of Asias smallest, doesnt have a big enough home market to make up for falling sales overseas, so officials are not even going to try to tell people to spend more, says Vishnu Varathan, an economist at Forecast Singapore Pte.
"It's not a "loss" because the securities were yielding a below market rate when they were purchased."
Totally false...they have a market rate and have had for some time. It's because the holder's didn't and don't like the input prices they get from the market. The entire reason this was done.
A side note on a Friday - after close - I challenge the notion that this economic catastrophy will cause the collapse of the dollar, our nation or even our class structure. I agree with Conjure in saying I want indictments - chit, I want heads on pikes. But I know that won't happen.
The market has moved far - further if you were early to see the change - - - however - - - look around you and ask yourself - - which one of these guys will be swept out to sea - - and which one perceives a change of tide
"In speeches, pamphlets and ads, the government is advising people to switch to cheaper frozen meats, take shorter showers and skip the top-of-the-line mobile phone."
I hope they didn't forget "if it is yellow let it mello and, if it is brown, flush it down. That with shorter showers and frozen rodent is great advice.
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning" - Henry Ford
Can someone please explain to me how what our government is dong to our country is different from what Mugabee did to Zimbabewe or what Chavez is currently doing to Venezula (taking over the oil business from private control)?? Our future is grim... girlbear | 01.16.09 - 3:02 pm | #
Ya we're different - we have the reserve currency so we can borrow in our own currency and then print to pay off.
THe analysis is correct if one was looking at current value. However, it values the preferred by immediately discunting them to the same interest rate as ones on the market instead of making the assumption that they will be held until redeemed at face value, which is the intent of the program. Its instead uses current value. Since the preferred were set up to pay the government 5% for the first 5 years and since other preferred (BAC for example are paying 11%) the value for the Government ones be listed as being 45 cents on the dollar. Now the Government is not planning to sell them, but instead holding them until they are redeemed at face value. As a result the analysis, while correct in terms of present value, does not properly represent to ending costs to the government.
Not good at all,
thought someone earlier posted... all Cali 250k state employees layed off for 1 year equals less than half of the 46 Billion shortfall
Totally false...they have a market rate and have had for some time. It's because the holder's didn't and don't like the input prices they get from the market. The entire reason this was done.
I think you misunderstood me. The whole reason there is a "loss" is because the preferred securities are paying a below market rate. 5% is not the market yield on bank preferred right now (and neither is 9%).
But that was one of the intents of the program. Hence it was a "subsidy".
I found this site about 8 months ago and have used the information gathered to save my retired mother the rest of her retirement fund. (She lost 20K before finally listening to me).
Now I am seeking some fiscal guidance. I'm mid-30's, seemingly stable fulltime-job, part-time internet-only hobby that pays well(affiliate marketing) and the wife works in medical field. We're renting and saving our money bigtime right now.
I have RRSP's and stock options with work. It's all self-directed but I am wondering what I should do to protect my money for the next 3-5 years while things hit the fan up in Vancouver, Canada.
So..Do I take all our money out and put it in the matress? I'm thinking that parking it in Money markets is okay, but, what are money markets really? If the worldwide economy is going bankrupt, will MM's be safe?
We're happily renting as the Vancouver housing market tanks and know that we'll probably buy in 2012 after the Olympics fiasco has screwed everyone over. Not to prey on the weak, but hey, I want to be like my great grandparents who made out like bandits because they had a lot of cash during the Depression and were able to buy when things were low, low, low.
ANy idea of where to put my money so that it is still worth something in 3-5 years?
Add to that increased government spending, downstream inflationary pressures from this spending and on top of that reduce total credit available to the private market and you have the makings of a horrible mix.
Regardless of what happens to inflation there are plenty of asset classes that will stay depressed for years to come.
Pissed Off In California | 01.16.09 - 4:22 pm | #
Keep on with this logic. Very low employment levels, etc.? I'd like to read more.
I believe that we will have both inflation and deflation at the same time. We will have deflation of housing and wages (yes) while suffering through inflation of all consumables because of the printing press approach to bankruptcy financing when you are the reserve currency.....18 months (or less) and counting to total meltdown.
Where i am going wrong? One automobile comany loan for 4 Billion, subsidy cost is 3 billion and they get 63% rate? Isn't 3/4 75% maybe we have a problem at CBO
"Why help train them? Just deport them to Canada.
Elvis"
I think we should leave Canada alone. They are the only semi-ally we have left.
By the way, who are the "trainers"? And who's paying for them?
How much explanation does a shovel need?
Government Considers New Bailout Plans
WSJ * JANUARY 16, 2009, 5:58 P.M. ET
WASHINGTON -- The U.S. government, recognizing that the banking crisis is larger than originally thought, is laying the groundwork for a second phase of its rescue attempt with plans to tackle the toxic assets gumming up the system.
Officials at the Treasury, Federal Reserve and Federal Deposit Insurance Corp., in consultation with the incoming Obama administration, are discussing a range of options, according to government and transition officials. One plan would create a government bank that would buy up bad assets. Another would standardize efforts to have the ...
We have credit unions here. Are they "safe"? I'd assume deposits are protected up to a certain amount. I'll look in to that.
BigDawg | Homepage |
I'd thoroughly investigate any credit union before moving money into it. I know of at least two that failed in California in 2008. Sterlent was one of them, I can't think of the name of the other off the top of my head.
On the Ca. IOU tax refunds for 2008 taxes (since it's 2009 y'all), I wonder if you could either claim exempt or double digit deductions on state income taxes for a few months and then apply your 2008 refund towards your 2009 future tax bill. I seem to always owe the Feds a bit but I get most of it back from the state but my tax situation is a little unusual. I simply don't want to pour more of my money into state coffers while they are already holding my 2008 overpayment as ransom...especially while I am reading blog comments posted by state employees while they are "on the clock".
This state needs a good PR person, it's unbelievable that the state treasurer won't agree to furlough his staff two days a month to help balance the budget, but he'll hold onto money the state isn't entitled to from taxpayers. Thank glod it's sunny and 70 degrees here today or I'd threaten to move to Oregon where I'd be met at the border by pitchforks and torches. (kidding)
Only $64B? That's a blinding success by Bush Administration standards.
...but when we sell these back at a profit like was promised...
Of course taxpayers will make a profit when the assets reach maturity.. right right?
Third!
Only $64 billion SO FAR, with a little more than a third of the money spent being completely unaccounted for.
Still a blinding success by Bush Administration standards.
Rats. 4th and 6th.
Split strike strategy. Works great in any ponzi eCONomy.
So the biggest winner of the gov intervention is a private equity firm. Makes sense to me.
USA = Wall Streets bitch
Besides, this is essentially just "mark-to-market". We taxpayers are clearly holding this... stuff... to maturity.
Who cares... market going up.
lies, lies and/or damn lies.
I am pleased. This is great news. The TARP only buys asets at par. Don't you all see? The new par is 26% less than the old valuations. The next $350 billion will go much further.
God help us if the US government suffers a funding crisis like what the banks are (have been) facing.
Who will be the lender of last resort for the government?
Eric writes:
Who cares... market going up.
It is gold that is going up
So, when is The Treasury/Fed planning it's IPO? Looks like the only game in town.
It is gold that is going up
Only paper gold.
Now is a great time to buy or sell a stock.
comrade dope albrt --
Only $64 billion SO FAR, with a little more than a third of the money spent being completely unaccounted for.
Well sure, but any losses from here on out are clearly Obama's fault.
Shortcourage,
You.
Can someone please explain to me how what our government is dong to our country is different from what Mugabee did to Zimbabewe or what Chavez is currently doing to Venezula (taking over the oil business from private control)??
Our future is grim...
It won't change. There will be no revolution - just a downward adjustment for the nouveaux riches.
"CBO calls its a "subsidy cost", others call it a "loss"."
You must be confused... The President, Secretary of the Treasury and Chairman of the Fed have explained in public that the taxpayer would probably make a profit because the TARP program was a temporary support for institutions while the 'problem' assets - which were grossly undervalued - return to a fair value. But don't believe me - it is all on video.
These three individuals are basically the CEO and CFOs of our country. Don't you think they'd know, and care, what the truth is?
Anonymous writes:
It is gold that is going up
Only paper gold.
Anonymous | 01.16.09 - 3:01 pm
Nope. Paper and Physical Spot going up.
American taxpayers pick up $64 Billion tab ( so far ) for TARP.
Nice to see that Socialism for the rich, the well connected, Congressitters, and Wall Street is alive and well. But this is socialism where profits are privatized and losses are socialized with the US tax-payer.
The Fed, Treasury, Congress, Wall St are all culpable.
98% of Americans had better get a new dream and fast !
Who will be the lender of last resort for the government?
Taxpayers. Only it'll be "Lend me a few years of hard labor" lending.
Nope. Paper and Physical Spot going up.
And so it will come down tomorrow, as it always does.
3 PM pump job?
And last year we couldn't find enough to fund projected future SS and medicare shortfalls? Just print some more.
really?
damn.
and this whole time i thought the gold market was closed on saturday...
Film, Porn Shoots Sought by Los Angeles Homeowners Hit by Slump
Billions...Trilions...?
As an exercise to demonstrate what they mean in more relatable terms, let's convert these numbers into cost per household, by dividing by 100,000,000.
So $64B is $640/household. There went last year's stimulus payment, hope you didn't spend it already.
If financials don't turn around there's no way the market keeps going up anything more than a few days. BAC and WFC down 20% would argue against anything more than a short-term spike in the market.
WFC alone indicates another titan is about to fall.
The next $350 billion will go much further.
dollar-cost averaging. As the Guinness brewmeisters would exclaim..."Brilliant!"
No a bad loss, only $64 billion in about 3 months, Paulson should take 2 and 20.
Guys, this is just temporary. Everyone knows there are costs to be eaten in any new venture. If we give up now it will all be wasted effort. All I'm asking is that you give us time and the rest of the money. Looking forward I see no reason why TARP won't be successful. Although it appears that 700 billion won't be enough,...you might want to start thinking about voting in another few hundred billion. Yeah, two maybe three hundred billion more should just about do it. You wouldn't want to waste all the money you put in when success is so close now, would you?
Oh, and don't worry about the lack of accountability we'll clear it all up when we're finished. Really.
So Chris Dodd is more sold out than Barney Frank?
Apparently Dodd is against even minimal accountability for Tarp funds.
Open Left:: Dodd Will Not Mirror Frank's Bailout Bill
This does not count the growing federal salaries & contractors paid to support the various programs.
Pissed Off -
I completely agree - I'm outta here before the bell & tightening my trailing stops.
Don't worry, I'm sure the MSM will get the work out about this outrage and the engaged citizenry will rise up and demand the criminals are persecuted, damages repaid, and refroms enacted.
OT but newsworthy....GE to layoff up to 11k
Jan. 16 (Bloomberg) -- General Electric Co.s finance arm may cut 7,500 to 11,000 jobs, or at least 10 percent of its workforce, because of the global financial slump, people familiar with the companys plans said.
The reductions are part of GE Capitals announced plan to reduce expenses by $2 billion this year, said the people, who didnt want to be identified because the numbers arent public. The savings goal also includes expenses such as office closings.
OT but newsworthy....GE to layoff up to 11k
fried | 01.16.09 - 3:13 pm | #
Eh, priced in.
whoa. maybe barclays got a bailout. someone just jumped in.
Rob Dawg - have you received a new list of appropriate terminology from Central Communitariat yet? I think that "subsidy cost" is going to be one that really catches on.
If that sh*t is only worth $64B less than Uncle Sugar paid for it, why did the Foolish Uncle buy it...that's market salable.
No...take the total and just write it all off. Fresh crap ain't worth much. Adding water to the dry stuff just brings back the stink.
Nostrovia,
this is clearly deflationary
Mayor Bloomberg: NYC to help train laid-off Wall Streeters for career switch.
Your Circuit City lower lifes grab a shovel and get busy.
Was it priced in when the mkt was flirting with 12,000?
Mayor Bloomberg: NYC to help train laid-off Wall Streeters for career switch.
So they can fuck up other industries with their untrammeled genius.
surprised they didn't call it "down-climb" hadn't heard that one for some time.
Regarding that Senate bill on taking paper gold vs. currency......so you sell the paper gold and are left with what???? The same thing as if you took the original option of currency...
What am I missing here?
Ciao
MS
Was it priced in when the mkt was flirting with 12,000?
lawyerliz | 01.16.09 - 3:15 pm | #
It's always priced in, when we're going up.
When we're going down, it's just those fucking commie short-sellers spreading baseless rumors.
But I thought Steve Liesman said a few weeks ago that we the taxpayer have already made money off of the bailouts? I remember laughing watching that.
I don't know. 150k layoffs alone today sounds mighty deflationary to me.
But I forgot. Benny boy said he's gonna inflate. Forget the proof, he says so and he's the master on the depression so I'm sure it's gonna all work out as planned.
To those flippantly suggesting that the taxpayer will be the lender of last resort, I ask you this:
What if the taxpayer lacks the savings AND it also becomes apparent that future income prospects are insufficient?
I humbly suggest that the trend of ever-increasing government largesse will be reversed. By necessity, existing programs and future promises will be canceled and broken.
Then watch out for some true change.
The upcoming TARP profit is the mustard seed.
Monday is Holiday, Will dow be closed?
So any lift in dow today will be on Bush's watch, last time, Tuesday O's watch.
km4,
"NYC to help train laid-off Wall Streeters for career switch."
They already know loan sharking and grand larceny...what else are they gonna get trained for? Running numbers? Pimp? Protection Racket?
Nostrovia,
So any lift in dow today will be on Bush's watch, last time, Tuesday O's watch.
AP'Shadow | 01.16.09 - 3:18 pm | #
Nope, if we go circuit breaker before noon on Tuesday, that's on W.
what else are they gonna get trained for?
Waste management consulting.
Rob Dawg - have you received a new list of appropriate terminology from Central Communitariat yet? I think that "subsidy cost" is going to be one that really catches on.
Mr. Sparkle | Homepage | 01.16.09 - 3:14 pm | #
LOL. My own snark used against me. Good one.
how do you go beyond surreal?
CBO calls its a "subsidy cost", others call it a "loss".
I'd call it a lie - who is doing the mark to market?
That's the $64 billion question.
If we could get out of this with a mere $64 billion loss, we'd be doing great. My guess is that it's more like $164 billion loss.
what else are they gonna get trained for? Running numbers? Pimp? Protection Racket?
Well, those ARE government jobs.
how do you go beyond surreal?
LSD is starting to sound relevant agai
I told my wife this morning. We're closing up minimum 200 regardless of the news.
Got'a change my P&l statement forthright to subsidy cost.
Irs will know what I mean, right.
I can haz martinys ?
Thank god they put on the stop loss at $70 billion.
carrying some threads over -
[deflationary jane]Mish had a great piece on this a couple of days ago. The fed may try like crazy to pump inflation but if no one buys in, you have deflation whether you like it or not.
Mish, of all people, should know better than to use a rational expectations model. We've just had a acid test of rational expectations with the housing bubble, and rational expectations got an F-minus with special demerits. There's no expectation more irrational than rational expectations. If consumers have money, they will spend it.
Angry Saver - I remember your link, and I agree it suggested strongly the Fed would purchase the MBS with printed money. But it wasn't definitive, and even now I find it hard to believe Bernanke would commit a blunder of that magnitude. If he actually goes through with it, he'll almost double actual MZM from last year (ignoring the distortions from interest on reserves) and that will produce 100% cumulative inflation over a few years - an absolute nightmare on a worldwide scale. The dollar is, after all, still the reserve currency. So I'm hoping somebody has figured out exactly what asset the Fed is actually using to buy the MBS, so we can start planning for the effect.
Love this fake rally. So predictable in the final hour.
Speed-
Move the decimal over to the left two places and change the "b" to a "t".
That's just for start...
Ciao
MS
"Mayor Bloomberg: NYC to help train laid-off Wall Streeters for career switch."
Why help train them? Just deport them to Canada.
Regarding that Senate bill on taking paper gold vs. currency......so you sell the paper gold and are left with what???? The same thing as if you took the original option of currency...
The bill is not well crafted. It has provisions that suggest a person could recieve physical gold
Rats. 4th and 6th.
lawyerliz | 01.16.09 - 2:56 pm | #
See, you have to stop trying to read what is posted in order to make an intelligent comment. Once you see the new post, just do like I do and put a 'doh!' then come back and read it.
I'm waiting for the feed a man a fish for a day parable for the stimulus package.
Can someone please explain to me how what our government is dong to our country is different from what Mugabee did to Zimbabewe or what Chavez is currently doing to Venezula (taking over the oil business from private control)??
girlbear | 01.16.09 - 3:02 pm | #
The US Dollar is the world's reserve currency.
The first rule of Wall Street is, you do not talk about the PPT.
The second rule of Wall Street is, you DO NOT talk about the PPT.
Third rule -- If someone says "sell" or goes limp, taps out, don't listen, the bear market is over.
Fourth Rule -- Only two 2 brown noses to an ass.
Fifth Rule -- One TARP at a time.
Sixth Rule -- No shorts, No selling on bad news.
Seventh Rule -- Shorting bans will go on as long as they have to.
and the 8th and final rule...
If this is your first day on Wall Street, you have to buy GS or C.
"LSD is starting to sound relevant again
irreverent"
Again? When was it ever irrelevant except for about three months after Jerry Garcia died?
The new transparency. Sweet!
Fair,
"Mish, of all people, should know better than to use a rational expectations model."
He doesn't, and the author of the recent deflation piece was Denninger.
Nostrovia,
So like the CEO's does Benny and Hanky work for a dollar a year now? Do they get a golden parachute or open up a consulting business and except phony payments for past favors?
"Mish had a great piece on this a couple of days ago. The fed may try like crazy to pump inflation but if no one buys in, you have deflation whether you like it or not."
I don't believe Mish was talking about consumers. American born and bred dope consumers have shown that they will spend whatever you throw at them.
When Mish talks about no-one buying in he means private purchasers of credit. TIPs still show that the market does not believe that inflation is coming. If that is so then they don't believe the bailout bill will solve the underlying issues.
There are limits to how much capital the government can supply. At some point private markets need to start supplying again.
So far private big debt market money is sitting on the sidelines because the recession is just getting started.
..........and I'm out - thank you Mr. Market. Thanks especially for allowing me to double up.
I'm waiting for the feed a man a fish for a day parable for the stimulus package.
Anonymous | 01.16.09 - 3:24 pm | #
Is that in the Torah? The more we study the Torah, learn to chant it on Shabbat and weekdays, dance with it on Simchat Torah, and most of all..make its mitzvoth the center of our lives, the more we will honor it and its forebears and the less time to worry about Rubin, Greenspan, Madoff, and that klutz Kudlow...
This place is down right bubbly today. Must be a Friday.
I'm waiting for the feed a man a fish for a day parable for the stimulus package.
There's this one: "If you set a taxpayer on fire he will be warm for the rest of his life."
Man I'm worn out. Eventually somewhere, somehow the last mistake will be made and there won't be a last resort, a lender, a printer, a con left with anything to feed the MSM.
Instead of it happening in drips over the next five years, I'd just like it to happen now. I'm tired of waiting, let's get on with it.
Guns and ammo. Here, now.
Paulson and Bair working on a Bad Bank of the USA deal....
Jan. 16 (Bloomberg) -- The heads of the U.S. Treasury and Federal Deposit Insurance Corp. gave further momentum to the idea of a new government-backed bank to remove toxic assets from lenders balance sheets.
A lot of work has been done on an aggregator bank and other ways of using the $700 billion financial-rescue fund to let it go further when it comes to dealing with illiquid assets, Treasury Secretary Henry Paulson told reporters today in Washington. FDIC Chairman Sheila Bair praised the idea in an interview on CNBC, saying it might have some merit.
Looks like your regularly scheduled stock market crash has been rescheduled for next week.
Who in Gods name wants to own these companies before they report earnings? I've never seen such little transparency into earnings....
barkingtribe writes:
Guns and ammo. Here, now.
.... personally, it's my bet it all ends in a whimper.
Citi and BofA crash land in Hudson. No boats come out to make rescue.
"There's this one: "If you set a taxpayer on fire he will be warm for the rest of his life."
"FDIC Chairman Sheila Bair praised the idea in an interview on CNBC, saying it might have some merit.
fried
So far private big debt market money is sitting on the sidelines because the recession is just getting started.
Pissed Off In California | 01.16.09 - 3:28 pm | #
Or it turns out that it isn't their capital to allocate. $20t at 10:1 is less than $10t at 30:1. Delevering works up the food chain as well.
off topic but...
is it just me, or does the Bloomberg news service have an extremely anti-gold bias?
today headline after an $40 increase over 24 hours reluctantly admits "Gold futures rise for first day in five as dollar falls"
FDIC Chairman Sheila Bair praised the idea in an interview on CNBC, saying it might have some merit.
fried | 01.16.09 - 3:31 pm | #
She has a FDIC task force working on it!
There is a great deal of evidence that the fair value of market assets is below the economic value of the assets.
The most important mitigating factor is the fact that these bailouts have stabilized the market, at least in comparison to what it would have been otherwise. This is immeasurable, of course, but in the aftermath of the Lehman non-bailout it is clear that letting big banks go causes a great deal of market disruption.
If letting AIG and Merrill and Citi go would have caused another 1% unemployment for a year, you can deduct the cost of that from the $64billion.
We'll see. I've been wrong before on this board, but I strongly believe that the gov't will make money, at least in nominal terms (not risk adjusted), on the TARP.
There's this one: "If you set a taxpayer on fire he will be warm for the rest of his life."
Anonymous | 01.16.09 - 3:30 pm | #
Important life lesson: snorting miso soup up your nose while laughing hurts much less then coffee or wine. Read CR during lunch >; )
"Mish had a great piece on this a couple of days ago. The fed may try like crazy to pump inflation but if no one buys in, you have deflation whether you like it or not."
Here's the thing: are there 'laws' of economics or is it all just a manipulatable game? Experience tends to prove that governments do not control reality... but I think economists today really believe they can.
Popeye writes:
..........and I'm out - thank you Mr. Market. Thanks especially for allowing me to double up.
nice you appear to have caught it from near yesterday's lows to today's high
.... wow, did I sell at the top ? Make that two olives.
Sciurus,
It was luck - I assure you.
a can of spinache for pops
I don't believe Mish was talking about consumers. American born and bred dope consumers have shown that they will spend whatever you throw at them.
When Mish talks about no-one buying in he means private purchasers of credit. TIPs still show that the market does not believe that inflation is coming. If that is so then they don't believe the bailout bill will solve the underlying issues.
If the money gets printed, it will get spent. When the shelves clear out, the stores will go take inventory loans, which will in turn will fire up the shipping companies, advertising, and production, and so on. The low interest rates will also drive house purchases - when you can borrow on a mortgage to buy corporate bonds, and make a substantial gain, a lot of people will start feeling good about buying a house. Apart from Asian Central Banks, few are foolish enough to accumulate huge piles of green pieces of paper.
Yes, it takes a while for the credit markets to notice (irrational expectations). Hence the 12-18 month delay. But the process is quite reliable. Can you name any case where a large increase in the money supply didn't produce inflation? It just doesn't happen.
Moody's pts Citigroup ratings for possible downgrade.
Sure took them long enough.
"The most important mitigating factor is the fact that these bailouts have stabilized the market, at least in comparison to what it would have been otherwise."
That is a very loose definition of stabilize. Kind of like she is pretty if you keep your eyes closed and think of a pretty girl.
"Yes, it takes a while for the credit markets to notice (irrational expectations). Hence the 12-18 month delay. But the process is quite reliable. Can you name any case where a large increase in the money supply didn't produce inflation? It just doesn't happen."
Japan perhaps?
Subsidy cost....you betcha!!
Treasury loans Chrysler Financial $1.5 billion - Jan. 16, 2009
It's ok with me if you guys take back the top thing.... a few moments of glory is enuf.
well almost the top (23.87 this AM versus 23.63 just before 3:30)
"Important life lesson: snorting miso soup up your nose while laughing hurts much less then coffee or wine. Read CR during lunch >; )"
--deflationary jane
Conversely, never never read CR while sipping scotch. I though I was going to stop breathing one evening last month.
"Can you name any case where a large increase in the money supply didn't produce inflation? It just doesn't happen."
OMG! I'm not the only inflationist here!
Japan has been printing for 18 years and has just about managed to pull off a double-dip depression from the looks of the economic data coming out.
Now you can argue all you want about what the reasons were for this (savings versus consuming) but they sure tried like hell to increase the money supply with pretty substandard results.
Moody's pts Citigroup ratings for possible downgrade.
Sure took them long enough.
Anonymous | 01.16.09 - 3:37 pm | #
The Feds are telling Moody's when to downgrade Citi just before it comes to the rescue probably this long MLK wkend to prevent a run. It is all being orchestrated now for panic prevention.
Pavel and Rob Dawg, I left some good urban hawk dining shots at the end of last thread.
They have come back strong here in NYC. Lots of good eating on squirrel, pigeon and rat.
"OMG! I'm not the only inflationist here!"
--manja_cake
You will be shouted down soon. I learned to stop talking about it.
manja_cake writes:
how do you go beyond surreal?
Go back to the source of the surreal:
Dada Economics.
Marcel Janco:
We had lost confidence in our culture. Everything had to be demolished. We would begin again after the "tabula rasa". At the Cabaret Voltaire we began by shocking common sense, public opinion, education, institutions, museums, good taste, in short, the whole prevailing order.
What time does the market open today ?
Fair Economist, POIC,
We are clearly facing massive deflationary forces. Attitudes about debt are changing too. But a determined central banker with a printing press is a spooky thing. Gideon Gono proved that.
Both the inflationists and deflationists make convincing arguments. I think either is possible and both are likely (stagflation). Either way I see tough times ahead.
The one thing I don't see is prosperity. Prosperity took early retirement, now the baby busters can't.
We're thinking about buying this house, but wanted to run it by you guys first to see what you think.
SHOPPING Blog | The Dallas Morning News
"The most important mitigating factor is the fact that these bailouts have stabilized the market"
Bailouts?
Would your conclusion change if you called them "postponements" instead of "bailouts"? Cuz it is evident that is what they were. See Bernanke's remarks of last Monday.
though I was going to stop breathing one evening last month.
sm_landlord | Homepage | 01.16.09 - 3:39 pm | #
There are a few bloggers where it would be nice if they stopped breathing but no you.
or what Chavez is currently doing to Venezula (taking over the oil business from private control)??
Our future is grim...
girlbear | 01.16.09 - 3:02 pm | #
It is the exact opposite of what Chavez has done with the oil companies.
Sciurius,
True, but I doubled up @ 22.62 ..... and practically forgot this morning had happend. It's been a fun ride though.
Pissed Off In California writes:
Japan has been printing for 18 years and has just about managed to pull off a double-dip depression from the looks of the economic data coming out.
Pissed Off In California | 01.16.09 - 3:40 pm | #
And don't forget. Stocks have been cheap there on a relative basis because the yield on the JGB is so low.
Sound familiar? Relative value in US stocks seems to be a popular mantra these days. Ha.
The right way to stabilize the markets would be for the FDIC to seize banks that don't meet objective, fair-model-based capitalization requirements; zero out the equity and issue warrants to the debt holders, fire the management, and keep the banks operating. That would have fixed the indicators immediately, because the only banks left would be solvent ones and the government. It would have been far more effective than bailing out the crooks, and much cheaper to boot.
Morocco Bama | 01.16.09 - 3:42 pm | #
You can actually tour that home with a charitable donation. It's been in the media a lot lately. We should get up a CR tour thang?
Angry Saver. I don't doubt we will get inflation. I'm just of the opinion it will be much further down the road than anyone wants to admit and in a form other than what is expected by the FED. These things never go according to plan and the results of the bailouts so far prove my point.
I find an odd religious fervor to many inflationists, s well as some deflationist. No middle ground thinking by either camp.
Japan perhaps?
Japan printed less in 15 years than Bernanke (apparently) wlll print in one. If Bernanke intended to drag this MBS purchase out S L O W L Y until 2024 I'd agree we'd see little inflation.
haven't had a decent pump in a while
"If the money gets printed"
In reality, money does not get printed, Bernanke comments to the contrary. Money gets created by the promise of future exchange of value. Therefore there must be some believable future value before money can exist. You can print markers for that value, just like casinos can manufacture chips... but markers are not money - only the future value is. Accept that and the problems today make a lot more sense.
"...probably this long MLK wkend to prevent a run.It is all being orchestrated now for panic prevention.
FFDIC"
Makes perfect sense. I can see MLK saying thsi:
"In a sense we've come to our nation's capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all banks - yes, investment banks as well as ordianry banks - would be guaranteed the unalienable rights of life, liberty and the pursuit of happiness. It is obvious today that America has defaulted on this promissory note, insofar as Lehman is concerned. Instead of honoring this sacred obligation, America has given the Lehman a bad check, a check which has come back marked 'insufficient funds.'"
The US will get inflation when China gets inflation and exports it.
Although i think real estate assets will stay deflated for some time.
I find an odd religious fervor to many inflationists, s well as some deflationist. No middle ground thinking by either camp.
Pissed Off In California | 01.16.09 - 3:45 pm | #
Errr, there's a sizable camp here on CR that yes a big Yes! to both. I think Dryfly's the leader of that pack.
Fair Economist --
(sorry this is late)
So I'm hoping somebody has figured out exactly what asset the Fed is actually using to buy the MBS, so we can start planning for the effect.
From the Fed's own FAQ
:
How will purchases under the agency MBS program be financed?
Purchases will be financed through the creation of additional bank reserves.
Sounds pretty definitive to me.
I sick of all this constant propaganda of "to big to fail...what a bunch of BS. If two people were drowning and one weighed 150 pounds and the either weighed 250 pounds...who would you save???
This myth of to big to fail, is a fricken joke. There is such a thing as "to big to save"
panic prevention
the new presidential working group
You can actually tour that home with a charitable donation. It's been in the media a lot lately. We should get up a CR tour thang?
FFDIC | 01.16.09 - 3:44 pm | #
I'm in. Haven't been to Dallas in five years. Wouldn't mind going there, taking that tour, mooning George and Laura and then getting smashed. When I lived there in the early eighties, Greenville was the spot. I'm sure the nightlife has changed locations. I've been there on and off over the years and it seems like the West End in downtown really became party central.
Conversely, never never read CR while sipping scotch. I though I was going to stop breathing one evening last month.
\t
sm_landlord | Homepage | 01.16.09 - 3:39 pm | #
Can I have the Long-EZ and IO-320?
The US Dollar is the world's reserve currency.
Comrade Volker the Viking | 01.16.09 - 3:25 pm |
Not for long....
We are clearly facing massive deflationary forces
Agreed, and a certain amount of printing could get swallowed up by deleveraging. That's probably what happened in Japan. If Bernanke reins in the press now I'm not so sure about the outcome. I could see a 15% increase getting swallowed. But doubling the money supply? That's going to inflate, if it happens.
LAST CHANCE.... GIT YUR STOX NOW, BEFORE OBAMA COMES IN AND YUR PRICED OUT FOREVERS!
All Fall Down writes:
And last year we couldn't find enough to fund projected future SS and medicare shortfalls? Just print some more.
All Fall Down | 01.16.09 - 3:07 pm | #
forget that there wasn't enough money for SCHIP $6 billion. Though I guess all this TARP money could be considered as Obama making good on his health care promise- would be tragic if some of these guys decided to jump out windows. US life expectancy increased!!!
Not for long....
USD will be the reserve currency as long as the US has the best military.
Here's what I call it: Theft authorized by the Criminals-In-Command.
Cordially,
Килгоре Форель
Not for long
Because it will be replaced by the stronger, better....?
"When shelves become bare and loans are let for inventory."
Not gonn'a happen....
[haven't had a decent pump in a while
irreverent ]
Tough to say. Maybe we've had a bunch just to keep the patient flatlining.
stock performance (dow)on inauguration day....
George W Bush 01/20/05 -68.5 -0.65%
01/20/01 -9.35 -0.09%
Bill Clinton 01/20/97 10.77 0.16%
01/20/93 -14.04 -0.43%
George H W Bush 01/20/89 -3.75 -0.17%
Ronald Reagan 01/20/85 34.01 2.77%
01/20/81 -20.31 -2.09%
Jimmy Carter 01/20/77 -9.64 -1.00%
Gerald Ford 08/09/74 -7.59 -0.97%
Richard Nixon 01/20/73 -7.38 -0.72%
"Japan printed less in 15 years than Bernanke (apparently) wlll print in one. If Bernanke intended to drag this MBS purchase out S L O W L Y until 2024 I'd agree we'd see little inflation."
The 600B MBS is another mirage like many others that Bernanke has performed. On multiple occasions he has jaw-boned to push rates down and the bond market has front-run him.
You can find plenty of evidence by many knowledgeable bond traders that Bernanke is simply moving the 600b in MBS from one pocket to another and the out of pocket expense is less than 5B per year.
I don't deny that there some "printing" going on and the replacement of treasuries for toxic assets is another form of stealth printing.
But the level of printing is nowhere near the level that the inflationist crowd likes to crow about.
Bernanke is attempting to convince everyone that inflation is coming so that money moves into crap assets.
So far the bond market and currency market is not biting. And they have proven historically to be a bit more intelligent than the stock market when it comes to these things.
10T in leveraged wealth has disappeared. 2T in consumer credit is disappearing as we speak. What the government has spent has barely dented the deleveraging so far.
There is a lot more deleveraging ahead before inflation kicks in barring a bond-market collapse which hasn't happened yet.
so if there isn't an inflationary consequence to all the bailouts and stimulus (due to lack of velocity etc), it's a win-win for everyone right? banks get solvent, savers are protected, gov't saves the day
but if there is an inflationary consequence, everyone's debts are wiped out, nominal profits go back into the black, who saves anyways so screw them, and again the gov't saves the day
am I missing something or is all this too good to be true?
Interesting. I thought NAFTA did not allow for "subsidies".
Let me take that back. I thought we were talking about free markets - the whole Adam Smith thingy.
Eric writes:
LAST CHANCE....
If you don't take that "sold at the [afternoon] top" thing away, I get 3 olives next.
Jan. 16 (Bloomberg) -- The heads of the U.S. Treasury and Federal Deposit Insurance Corp. gave further momentum to the idea of a new government-backed bank to remove toxic assets from lenders balance sheets.
As usual they have it ass backwards. They should be removing the good assets and leaving the toxic crap behind/
stream of consciousness-
all losses are now subsidies
panic retention
The corollary of too big to fail-
too small to succeed.
dada economics with a dash of Rocky and Bullwinkle:
YouTube - Rocky & Bullwinkle - Kerwood Derby - Menominee, MI episode
"Can I have the Long-EZ and IO-320?"
--Rob Dawg
Hehe. I'll be happy to show you the inventory. Maybe we can work something out while I am still breathing.
CR - Lets call this the Kash&Kari Negative Carry Trade
When I lived there in the early eighties, Greenville was the spot. I'm sure the nightlife has changed locations. Morocco Bama | 01.16.09 - 3:48 pm | #
I lived there in the mid 80's and Greenville was the place. Had enuf of the yuppies and their leased BMWs though, so I moved to Austin..cutoffs and sandals rather than coats and ties. Much nicer, but the summers got too hot for too long.
We're all subsidies now.
Citi and BofA crash land in Hudson. No boats come out to make rescue.
Banker and Skunk on the road
whats the difference?
If you don't take that "sold at the [afternoon] top" thing away, I get 3 olives next.
Popeye | 01.16.09 - 3:55 pm | #
You earned it, my man. Enjoy!
Skid marks in front of skunk...
I find an odd religious fervor to many inflationists, s well as some deflationist. No middle ground thinking by either camp.
Pissed Off In California | 01.16.09 - 3:45 pm | #
I'm believe religiously in both. The switch from one to the other will almost Hobbesian hence my addiction to read econ blogs.
Banker and Skunk on the road
whats the difference?
Skunks don't smell as bad..
"so if there isn't an inflationary consequence to all the bailouts and stimulus (due to lack of velocity etc), it's a win-win for everyone right? banks get solvent, savers are protected, gov't saves the day
but if there is an inflationary consequence, everyone's debts are wiped out, nominal profits go back into the black, who saves anyways so screw them, and again the gov't saves the day
am I missing something or is all this too good to be true?
manja_cake | 01.16.09 - 3:53 pm | # "
If it worked every country would have printed their way to prosperity.
They haven't. Government debt spending is already starting to crowd out capital from the private market.
You simply believe that inflationary pressures are 6 months down the road, I don't. I think this recession will be much worse than many believe.
The problem will most likely come when the economy starts picking up and short-term borrowing costs explode. I think that's atleast another year off in the future.
Skid marks in front of the skunk.
Does this constitute sufficient grounds for indicting Paulson and Bernanke?
Barley: "I thought we were talking about free markets - the whole Adam Smith thingy."
The markets are now ersatz. Unfortunately you will be reported to Homeland Security if you don't refer to them as "free markets". The American Dream is not a dream anymore as well, but don't tell anyone.
I lived there in the mid 80's and Greenville was the place. Had enuf of the yuppies and their leased BMWs though, so I moved to Austin..cutoffs and sandals rather than coats and ties. Much nicer, but the summers got too hot for too long.
Baca | 01.16.09 - 3:57 pm | #
I hear you on the yuppies. Austin's great...love that city.
"Can I have the Long-EZ and IO-320?"
--Rob Dawg
Hehe. I'll be happy to show you the inventory. Maybe we can work something out while I am still breathing.
sm_landlord | Homepage | 01.16.09 - 3:56 pm | #
Let's see... At 80¢/sf/mo for the next few years... I figure you'd owe me... ;-) Heck, throw in some avionics and we'll call it even.
This place is down right bubbly today. Must be a Friday.
JD2B | 01.16.09 - 3:30 pm | #
Check your calendar, rip off December and welcome to the new year. Remember, yes we can, oh shit we did, good god help us all.
rare middle finger of contempt and bat signal toward end of dow trading
A few years ago, an old paramour of Ruth's from high school, Donny Rosenzweig, called the Madoff home to ask about getting into the fund. Bernie turned him down, saying it was full, then put Ruth on the phone. The pair reminisced about old times Ruth was known in school as "a poised and chatty blonde with an updo and a winning smile" then Bernie asked to speak to Don again.
And he got back on the phone and said, Look, Donny, we go back a long way, Ill get you into the fund.
He told Mr. Rosenzweig that the minimum investment was $2 million. That was more than Mr. Rosenzweig had, so he asked family members to pitch in. Ultimately, his mother, brother, sister, sister-in-law and brother-in-law and an 83-year-old uncle all contributed.
Wow. He must have been simmering when listening to that chatty phone call. There's a lesson here, folks, one that applies to us all: Never invest with your ex's husband, even if it has been sixty years.
Sure, she lost billions of dollars in Bernie Madoff's Ponzi scheme and may have had to go into hiding from the Russian oligarchs whose money it was, but is not Sonja Kohn, the feisty founder of Vienna's Bank Medici, kind of a feminist hero? Quoth the Journal: "Ms. Kohn, who was raised in Vienna, spent the 1970s and 1980s between Milan and Zurich. Her official U.S. stock brokerage employment history states that during that time Ms. Kohn was a 'domestic engineer, or housewife.'"
Bernanke is attempting to convince everyone that inflation is coming
Bernanke: "Everyone should buy equities now or be priced out forever!"
Here's the thing: are there 'laws' of economics or is it all just a manipulatable game? Experience tends to prove that governments do not control reality... but I think economists today really believe they can.
\t wally | \t \t \t \t01.16.09 - 3:34 pm | #
wally | 01.16.09 - 3:34 pm | #
There are rules, but as soon as everyone knows the rules, the rules change. Govt's. can control our perception of reality, until they can't.
Heard a good bon mot the other day.
The Republicans came in as social conservatives.
They leave as conservative socalists.
Purchases will be financed through the creation of additional bank reserves.
Ah, but reserves of what? They could issue T-bills and call them "reserves". I distrust statements from the Oracle of Obfuscation.
You can find plenty of evidence by many knowledgeable bond traders that Bernanke is simply moving the 600b in MBS from one pocket to another and the out of pocket expense is less than 5B per year.
Well, I can't. I want to know what Bernanke is actually doing, and I haven't seen any facts yet. I suppose we'll get a balance sheet analysis from Setser in a few weeks.
In terms of inflation/deflation, I agree we've got a period of deflation ahead of us, probably about a year. Perhaps more; inflationary expectations speed up the printing -> inflation process so I should think deflation could slow it down. But big time printing will lead to big time inflation.
OK, off to the treadmill and a little online poker.... back later for BFF, boys and girls!
Rocky and Bullwinkle - Minisode 03:
YouTube - Rocky and Bullwinkle - Minisode 03
Comrade Volker the Viking writes:
This place is down right bubbly today. Must be a Friday.
JD2B | 01.16.09 - 3:30 pm | #
PIZZAAAA!
We're thinking about buying this house, but wanted to run it by you guys first to see what you think.
Morocco Bama | 01.16.09 - 3:42 pm | #
go for it-
"There's a lesson here, folks, one that applies to us all: Never invest with your ex's husband, even if it has been sixty years.
Anonymous"
Another lesson: Don't let your 83 year old uncle invest in anything.
POIC,
I think a long, drawn out Japan style malaise is a very real possibility.
It might be the best outcome too. Inflation is not a solution. Neither is an all out deflationary bust.
I think the fed will take the middle ground - a controlled crash landing. Who knows for sure?
We are clearly facing massive deflationary forces. Attitudes about debt are changing too. But a determined central banker with a printing press is a spooky thing.
I think Mish is right: We're on the back side of Credit Peak. A multi-generational change in social attitudes.
I want to know what Bernanke is actually doing
Fair Economist | Homepage | 01.16.09 - 4:04 pm | #
Guess which shell the pea is under....
Wally, can I archive (on another site, with attribution) that comment of yours about what money really is? I've been looking for something like that for months and I think you hit the nail more squarely on the head than anything else I've seen.
I want to know what Bernanke is actually doing
Fair Economist | Homepage | 01.16.09 - 4:04 pm | #
So does he...
House isn't big enuf, Bama.
You have to wonder what the Fed has on their books ...
Banker and Skunk on the road
whats the difference?
----------------
Skunks don't smell as bad..
\t Anonymous | \t \t \t \t01.16.09 - 3:58 pm | #
Anonymous | 01.16.09 - 3:58 pm | #
Banker deserved it; skunk didn't.
"You have to wonder what the Fed has on their books"
autographs from Goofy and Dopey
House isn't big enuf, Bama.
lawyerliz | 01.16.09 - 4:10 pm | #
That's what I thought. Also, maybe the CR Tour is not such a great idea. I don't think Comrade Kristina and Bond Girl would be able to keep their hands off me.
wally wrote: "Here's the thing: are there 'laws' of economics or is it all just a manipulatable game?"
Both. There are solid economic laws, but they only apply in theoretical situations that do not (and can not) actually occur in the world; for example, that all participants in a market have complete information and behave rationally. In the real world, economics is a division of politics, or possibly vice-versa, and so is routinely manipulated.
"I want to know what Bernanke is actually doing'
Re-Reading his doctoral thesis to see if he missed anything. He was always told he's such a clever boy...Must have missed a knob or switch or something...cuz his Keynsian navel gazing profs said it was brilliant.
Nostrovia,
Banker and Skunk on the road
whats the difference?
xxxxx | 01.16.09 - 4:11 pm | #
You aren't forced to buy the skunk after it's dead.
"I want to know what Bernanke is actually doin"
Grooming his beard.
"You can find plenty of evidence by many knowledgeable bond traders that Bernanke is simply moving the 600b in MBS from one pocket to another and the out of pocket expense is less than 5B per year.
Well, I can't. I want to know what Bernanke is actually doing, and I haven't seen any facts yet. I suppose we'll get a balance sheet analysis from Setser in a few weeks."
There is a post on tickerforum.org by somone called MtgSpy who went through in intricate detail exactly what is being done in this case.
He's very conversant in MBS as that is what he deals in for a living.
Brad Setser balance sheet will not show exactly what is being done in this case. Assets are being moved from FNM/FRE to the FED using banks as intermediaries who take a standard point on the loan as they always do before selling it.
The point is that this is not 600B in new loans. This is 600b in existing loans that are being taken off FNM/FRE balance sheet to reduce their leverage. Once again it is being portrayed by MSNBC and the government as something that it is not. It is at a cost to the government of the difference between t-bill rates and gse debt which comes to 5B per year.
Just like with Hope Now, TARP etc..
"Also, maybe the CR Tour is not such a great idea. I don't think Comrade Kristina and Bond Girl would be able to keep their hands off me.
Morocco Bama"
If there is a CR Tour I hope the tour bus is a Marathon Coach.
Circuit (Breaker) City says as of tomorrow 13 million sq ft of CRE are on the market. GGP and SPG welcome under the TARP.
"Just like with Hope Now, TARP etc.."
yes and we all know how successful those were.
I'm with Fair on this one.....it's still creating value where none existed previously...see repo. process.
Same thing IMO
Ciao
MS
$1.5 Billion U.S. Loan for Chrysler Financial
If you're not a financial company you're SOL for getting money with no accountability strings attached.
I don't think Comrade Kristina and Bond Girl would be able to keep their hands off me.
Morocco Bama | 01.16.09 - 4:13 pm | #
I don't think you have to worry about their hands, I'd be afraid of the baseball bats and two-by-fours, if I were you.
more stream of consciousness inspired by CR commentators:
A government policy of malevolent, malicious, malaise married to a dadaist economy that plays 3 card monty with it's participants.
Subsidy is the new synonym for loss.
The ass side of the credit peak.
Without You - Mark Gormley:
YouTube - Without You - Mark Gormley
If there is a CR Tour I hope the tour bus is a Marathon Coach.
Elvis | 01.16.09 - 4:16 pm | #
I think it'll be an Airbus. If the engines swallow geese, we can land in the pool.
Rob Dawg,
"Circuit (Breaker) City says as of tomorrow 13 million sq ft of CRE are on the market."
'Tis but a scratch.
Nostrovia,
Moody's pts Citigroup ratings for possible downgrade.
Sure took them long enough.
\t Anonymous
Anonymous | 01.16.09 - 3:37 pm | #
NExt they'll warn that a plane is at risk of crashing into the Hudson.
""Circuit (Breaker) City says as of tomorrow 13 million sq ft of CRE are on the market."
Soon to be Paintball City.
That's what I thought. Also, maybe the CR Tour is not such a great idea. I don't think Comrade Kristina and Bond Girl would be able to keep their hands off me.
Morocco Bama
I know at least one person that would have a hard time keeping his fists off you
"yes and we all know how successful those were.
I'm with Fair on this one.....it's still creating value where none existed previously...see repo. process.
Same thing IMO"
I agree fully with the above statement. But creating value to allow a controlled detonation of the credit market is very different from creating value in a functioning credit market.
Global leverage is coming down to 10:1 from 30:1 and staying there for many decades to come. That's 10's of trillions of potential credit gone permanently.
Add to that increased government spending, downstream inflationary pressures from this spending and on top of that reduce total credit available to the private market and you have the makings of a horrible mix.
Regardless of what happens to inflation there are plenty of asset classes that will stay depressed for years to come.
Calif. tax refunds to be delayed starting Feb. 1
SACRAMENTO, Calif. (AP) - California's controller says he will begin a 30-day delay on tax refunds and other payments starting Feb. 1 because the state is running out of money.
Controller John Chiang said Friday he must delay $3.7 billion in payments
Chiang says his office must continue education and debt payments but will defer money for tax refunds, student aid, social services and mental health programs.
A severe drop in revenue has left the state's main bank account depleted. The state had been relying on borrowing from special funds and Wall Street investors; those options are no longer available.
Ouch...30 day delay - I.O.U.
For sure 2nd half tarp will be ready, other states will be jumping all over this.
Cali out of cash..,tax refunds delayed.
My Way
Noticed today that the market seems to have soured on bankster bailouts. Seems to me that a lot of inflation might make those assets worth more than our gov't paid for them. We're gonna be rich!
"Apple's Jobs Said Considering Liver Transplant - Bloomberg"
Gotta love it....it's only called manipulation when the stock goes down...
Ciao
MS
Baltics have riots, governments will be ejected
The death of the "flat tax" very likely
LAM,
"Calif. tax refunds to be delayed starting Feb. 1"
That's cool, I'm paying Moddy's to raate my I.O.U's to the state AAA.
Nostrovia,
CBO calls its a "subsidy cost", others call it a "loss".
It's not a "loss" because the securities were yielding a below market rate when they were purchased. It was an instantaneous, intended subsidy. What would have been more helpful would be to compare the "value" of the securities at purchase, and compare that to their current value.
It also looks like they used 10-year trading history to value the warrants, which I think undervalues the warrants because current volatility in these stocks is much higher than it has been for the last 10 years.
A liver transplant. Only a slight, hormonal problem.
Poor guy, tho.
Jan. 16 (Bloomberg) -- Until a few months ago, Amit Singh dreamed of buying a car. Now, with S$75,000 ($50,100) in the bank, the lawyer is holding back, saying hell continue to make the one-hour commute to work on the Singapore subway.
In these bad times, the buzzword is save, not spend, says Singh, 34. Its not the right economic climate to be lavish or to have a luxurious lifestyle.
Singapore is asking its citizens, the worlds third- wealthiest adjusted for purchasing power, to be prudent as analysts predict the worst economic slump in the nations 43- year history. In speeches, pamphlets and ads, the government is advising people to switch to cheaper frozen meats, take shorter showers and skip the top-of-the-line mobile phone.
The islands strategy contrasts with that of other countries such as Japan and Taiwan, which are trying to boost consumer spending to spur economic growth as exports falter. Singapore, whose 4.8 million population is one of Asias smallest, doesnt have a big enough home market to make up for falling sales overseas, so officials are not even going to try to tell people to spend more, says Vishnu Varathan, an economist at Forecast Singapore Pte.
"Calif. tax refunds to be delayed starting Feb. 1"
Question crossed my mind...
2007 tax refunds or 2008
"A liver transplant. Only a slight, hormonal problem.
Poor guy, tho.
lawyerliz"
If only he could program a liver...
the week was still a wash
DOW -3.7%
SP500 -4.5%
Nasd -2.7%
so says the google
"The death of the "flat tax" very likely"
That should make Keira Knightly happy.
Nostrovia,
Gotta be 2007. 08 just over.
"It's not a "loss" because the securities were yielding a below market rate when they were purchased."
Totally false...they have a market rate and have had for some time. It's because the holder's didn't and don't like the input prices they get from the market. The entire reason this was done.
Nice try though...
Ciao
MS
A side note on a Friday - after close - I challenge the notion that this economic catastrophy will cause the collapse of the dollar, our nation or even our class structure. I agree with Conjure in saying I want indictments - chit, I want heads on pikes. But I know that won't happen.
The market has moved far - further if you were early to see the change - - - however - - - look around you and ask yourself - - which one of these guys will be swept out to sea - - and which one perceives a change of tide
..... but wadda I know - not much, I assure you.
Banker and Skunk on the road
whats the difference?
There are skid marks in front of the skunk.
"In speeches, pamphlets and ads, the government is advising people to switch to cheaper frozen meats, take shorter showers and skip the top-of-the-line mobile phone."
I hope they didn't forget "if it is yellow let it mello and, if it is brown, flush it down. That with shorter showers and frozen rodent is great advice.
Oh, glod, elvis.
hicker90,
"There are skid marks in front of the skunk."
There are in both cases. It takes careful analysis to know which are caused by breaking, and which by spinning the tires do to acceleration.
Nostrovia,
"which one of these guys will be swept out to sea - - and which one perceives a change of tide"
You seeing double from all those martinis, Popeye?
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning" - Henry Ford
j marston,
I don't buy the drama others see. That's all.
BTW C preferred shares downgraded today after the bell. They'll probably not exist by Tuesday.
"and skip the top-of-the-line mobile phone.""
Now, now...Stevie needs a new liver...get the phone.
Nostrovia,
I wonder whether whoever wrote this headline on Yahoo sees the humor in it
"Wall Street Rebounds After Banks Report Big Losses- AP"
Steve can afford a dozen livers.
But this is awful surgery.
He should pop some milk thistle.
Can someone please explain to me how what our government is dong to our country is different from what Mugabee did to Zimbabewe or what Chavez is currently doing to Venezula (taking over the oil business from private control)??
Our future is grim...
girlbear | 01.16.09 - 3:02 pm | #
Ya we're different - we have the reserve currency so we can borrow in our own currency and then print to pay off.
Until we can't anymore.
Why help train them? Just deport them to Canada.
Elvis | 01.16.09 - 3:23 pm |
I doubt the world can handle another Israel.
THe analysis is correct if one was looking at current value. However, it values the preferred by immediately discunting them to the same interest rate as ones on the market instead of making the assumption that they will be held until redeemed at face value, which is the intent of the program. Its instead uses current value. Since the preferred were set up to pay the government 5% for the first 5 years and since other preferred (BAC for example are paying 11%) the value for the Government ones be listed as being 45 cents on the dollar. Now the Government is not planning to sell them, but instead holding them until they are redeemed at face value. As a result the analysis, while correct in terms of present value, does not properly represent to ending costs to the government.
"I don't buy the drama others see."
I don't either...I buy action flicks, horror flicks, and SciFi.
Nostrovia,
CMiD, I stand corrected. LOL.
"Gotta be 2007. 08 just over"
Not good at all,
thought someone earlier posted... all Cali 250k state employees layed off for 1 year equals less than half of the 46 Billion shortfall
Aronld might be back
New thread, Phred.
Totally false...they have a market rate and have had for some time. It's because the holder's didn't and don't like the input prices they get from the market. The entire reason this was done.
I think you misunderstood me. The whole reason there is a "loss" is because the preferred securities are paying a below market rate. 5% is not the market yield on bank preferred right now (and neither is 9%).
But that was one of the intents of the program. Hence it was a "subsidy".
I found this site about 8 months ago and have used the information gathered to save my retired mother the rest of her retirement fund. (She lost 20K before finally listening to me).
Now I am seeking some fiscal guidance. I'm mid-30's, seemingly stable fulltime-job, part-time internet-only hobby that pays well(affiliate marketing) and the wife works in medical field. We're renting and saving our money bigtime right now.
I have RRSP's and stock options with work. It's all self-directed but I am wondering what I should do to protect my money for the next 3-5 years while things hit the fan up in Vancouver, Canada.
So..Do I take all our money out and put it in the matress? I'm thinking that parking it in Money markets is okay, but, what are money markets really? If the worldwide economy is going bankrupt, will MM's be safe?
We're happily renting as the Vancouver housing market tanks and know that we'll probably buy in 2012 after the Olympics fiasco has screwed everyone over. Not to prey on the weak, but hey, I want to be like my great grandparents who made out like bandits because they had a lot of cash during the Depression and were able to buy when things were low, low, low.
ANy idea of where to put my money so that it is still worth something in 3-5 years?
Add to that increased government spending, downstream inflationary pressures from this spending and on top of that reduce total credit available to the private market and you have the makings of a horrible mix.
Regardless of what happens to inflation there are plenty of asset classes that will stay depressed for years to come.
Pissed Off In California | 01.16.09 - 4:22 pm | #
Keep on with this logic. Very low employment levels, etc.? I'd like to read more.
BigDawg - I've moved everything into credit unions. Not perfect safe, but safer than banks. Not sure if there are credit unions in Canada.
We have credit unions here. Are they "safe"? I'd assume deposits are protected up to a certain amount. I'll look in to that.
I don't either...I buy action flicks, horror flicks, and SciFi.
Comrade Misean is Dope | 01.16.09 - 4:36 pm | #
What you get pr0n for free?
Anonymous writes:
Moody's pts Citigroup ratings for possible downgrade.
Will Citi's bond rating equal its ticker symbol?
I believe that we will have both inflation and deflation at the same time. We will have deflation of housing and wages (yes) while suffering through inflation of all consumables because of the printing press approach to bankruptcy financing when you are the reserve currency.....18 months (or less) and counting to total meltdown.
Where i am going wrong? One automobile comany loan for 4 Billion, subsidy cost is 3 billion and they get 63% rate? Isn't 3/4 75% maybe we have a problem at CBO
"Why help train them? Just deport them to Canada.
Elvis"
I think we should leave Canada alone. They are the only semi-ally we have left.
By the way, who are the "trainers"? And who's paying for them?
How much explanation does a shovel need?
Government Considers New Bailout Plans
WSJ * JANUARY 16, 2009, 5:58 P.M. ET
WASHINGTON -- The U.S. government, recognizing that the banking crisis is larger than originally thought, is laying the groundwork for a second phase of its rescue attempt with plans to tackle the toxic assets gumming up the system.
Officials at the Treasury, Federal Reserve and Federal Deposit Insurance Corp., in consultation with the incoming Obama administration, are discussing a range of options, according to government and transition officials. One plan would create a government bank that would buy up bad assets. Another would standardize efforts to have the ...
U.S. Plots New Phase in Banking Bailout - WSJ.com
We have credit unions here. Are they "safe"? I'd assume deposits are protected up to a certain amount. I'll look in to that.
BigDawg | Homepage |
I'd thoroughly investigate any credit union before moving money into it. I know of at least two that failed in California in 2008. Sterlent was one of them, I can't think of the name of the other off the top of my head.
On the Ca. IOU tax refunds for 2008 taxes (since it's 2009 y'all), I wonder if you could either claim exempt or double digit deductions on state income taxes for a few months and then apply your 2008 refund towards your 2009 future tax bill. I seem to always owe the Feds a bit but I get most of it back from the state but my tax situation is a little unusual. I simply don't want to pour more of my money into state coffers while they are already holding my 2008 overpayment as ransom...especially while I am reading blog comments posted by state employees while they are "on the clock".
This state needs a good PR person, it's unbelievable that the state treasurer won't agree to furlough his staff two days a month to help balance the budget, but he'll hold onto money the state isn't entitled to from taxpayers. Thank glod it's sunny and 70 degrees here today or I'd threaten to move to Oregon where I'd be met at the border by pitchforks and torches. (kidding)
Any thoughts on the tax withholding part?
Fuzzy Math
Citigroup has actually taken down $45 Billion in TARP money plus a gty on troubled assets. CBO needs to get a new calculator.