CR --

It has been a while since you gave your estimate for the depth/duration of the current recession.

Care to share your current thoughts?

Nemo, I was looking for a better word.
Calculated Risk | Homepage | 01.15.09 - 9:27 pm | #

I'm not sure there is one.  But even more scary:  The numbers probably need to revert to the 91 recession * population growth.

Like getting an answer from the Delphic oracle.

Thanks.

At this point, our fate appears to depend on whether the Keynesian Stimulus actually works...

How much of the export drop is due to strength of the dollar vs inability to get trade financing ?

Nemo, worse than I thought before ...

best wishes.
Calculated Risk | Homepage | 01.15.09 - 9:30 pm | #

CR,
How many years ago was it that I first invited you to join us on the darkside?  You thought I was kidding. 

Anyway the news is good here west of Los Angeles at the Port of Hueneme where the BMWs are just stacking up in the prep yard all safe in their extended storage wrappers. 

I think everybody is starting to unplug from everybody else in a recoil manner. Maybe the new paradigm is "Think Local, Spend Local"

Folks, bring me to my senses pls
Exporter to GANT | 01.15.09 - 9:43 pm | #

As the old saying goes:  Don't panic.  But if you're gonna panic, be the FIRST to panic.

So let's have a recap of the day...

BofA is getting half the TARP2 money

Yellen figured out there's a "worldwide recession".

"the banks are insolvent"

California is bankrupt

I figure we have at least a two hundred point rally tomorrow...

Exporter to GANT,

Welcome to the desert of reality..

Canada geese are not known for being shy and elusive. I have seen them mob little kids who are trying to feed them breadcrumbs.

//Ummmmm...methinks that actually the Canada geese were struck by the jet, unless of course it was that mutant order of aggressive, turbofan attacking geese.
Soft Cell | 01.15.09 - 9:43 pm | #//

Paradoxically, Smoot-Hawley 2 will be constructed to encourage anti-tariffs.

Now, what cute phrase shall we construct to update the forlorn "beggar thy neighbor" of yesteryear?...

"Bugger thy lender"?

Global economy to shrink; deflation greatest threat, says UN - Times Online
London Times
Global economy to shrink; deflation greatest threat, says UN

CR, did our port/shipping conversations bring this up? Cause based on the posts on the last thread - it is going to get a lot worse.

Long Beach is a Chinese port. They run the old LB Naval Base.

This has been a slow motion downturn until very recently.

Credit cycle. The up cycle has increasing positive feedback so you get a final blowoff in the stock market and RE prices.

The down cycle has increasing positive feedback so things accelerate downward faster than expected.

I'm surprised things still look so stable.
.

Obviously the Stock Market is not aware of the trade (import/export)issue. The Stock Market has become the biggest scam of All Time, Bar None.

Exporter to GANT writes:
Whomever got TARP is not insolvent..

Haha, 221 banks got money cause we have a new socialist banking system.
Sorry

\tAccording to your graph, it's typical for loaded in to fall off precipitously this time of year. The telling part is the peak was lower than in 2008. What caused loaded out to start climbing in 2006 through first half of 2008? It was pretty steady for the years previous to that, then it started rising.
Morocco Bama | Homepage | 01.15.09 - 9:53 pm | #

It's a little deceptive.  The shape appears the same but compare Dec 08 to '07, '06, '05.  See now.  The current volume is already far blow the usual bottom in Feb-Mar. 

Govt pushed TARP into the throats of BNYM eventhought its not insolvent....
Exporter to GANT | 01.15.09 - 9:54 pm | #

What business is going to accept a forced 10% loan when it doesn't need the money.  C'mon, think.

Exporter,
My spouse is not worried much.

I guess that if you panic quietly, nobody will notice.

Of course, you could just sorta not worry about any debt you have- after all, what will a dollar be worth after we get done tarping our entire debt structure.

The counterrational viewpoint is to embrace more debt, as it will basically be reprieved by the government.

We shall see if the shrill deflationists prevail. So far BHO and the dems look like they will stimulate the crap out of this economy, along with Ben.

I take them at their word.

JJ and MS don't.

Never underestimate a government bureaucrat with a blank check.

Someday this war's gonna end...

The U.S. has been absorbing all the world's extra goodies for quite a while. There's a daisy chain that starts in Asia , i.e. for electronics: maybe a Japanese design, parts manufacturing in Taiwan and Vietnam, assembly in China - sale to the U.S. U.S. sells 'intellectual capital' back and heavy machinery. Generically speaking. It seems based on reserve currency and massive deficit spending on all levels in the U.S. I see no countries in Asia wanting to take on reserve currency status because they have been structurally designed on the export model for a long time, and too many vested interests in their power structures get rich off of it (the EU I'm not sure, but there a lot of divisions there, too). So it seems like we are in for a long-term breakdown of trade based on the current model, despite attempts to revive the banks, etc.

Hang on Tight! - Barrons.com
Barron's cover story:
Hang on Tight!
Our go-to group of investment experts sees tough times for the economy -- but good fortune for stockpickers. (2008 Roundtable Report Card and 2008 Mid-Year Roundtable Report Card)

I met a guy in an adult theater tonite. I gave him a handjob.
Kondratieff canuk | 01.15.09 - 10:08 pm | #
Was this before or after he gave you the latest Citi tip?

So, after the inventory glut of goods that are in some demand is wiped out will there be scarcity and massive inflation, in some items ?

I wouldn't be surprised. Bought a computer this week while before my USDs get downgraded from 2-Ply to second-hand-condition single Ply.

Never mind..

Jan. 15 (Bloomberg) -- When Jared Kushner closed on 666 Fifth Avenue, the Manhattan trophy property, for a record $1.8 billion two years ago, little did he know it was the peak for an investment that shows no signs of bottoming.

Since Kushner bought the building, its occupancy rate has dropped 10 percent and rental income has declined. Citigroup Inc., Kushner’s biggest tenant, vacated about 80,000 square feet of space in August and the skyscraper had about 69 cents in rental income available for every $1 owed in the third quarter, down from 80 cents in the second quarter, according to loan servicing documents examined by Bloomberg

Is the $20B BAC "loan" an advance from Tarp II or just pocket change?

Shit, Congress will spill that much in DC bars tonight.

Kondratieff canuk(Excellent) writes:
Comrade Byzantine_Ruins

I think we finally have to exchange that email. Let's buy some oil...

You are fronting for it, I hope!

Topher "The only thing that’s going to fix this is time, paying down debt, and a new era of frugality"

You might be right but governments are structured for the screaming velocity of money we've had over the 2003-2007 period to continue growing. There is no way in hell we can service the debtloads, both consumer & government if velocity caves.

It's going to get unstable, socially, if the USD takes a massive hit and the US Treasury sales dry up forcing yields upward at precisely the wrong time.

Seriously, when do we start seeing major supply disruptions.

Is it really time to start stocking up? 

Is it really time to start stocking up?
Interesting Times

Considering it is three seconds to midnight on Conjure's clock and we are now seeing an accelerating deterioration of supply lines, I would say it is past time.

Comrade Byzantine_Ruin,

??

//Lucifer, when are you going to quit acting like an imp and live up to your stature as a senior partner?

Impropriety and evil are not the same thing.
Comrade Byzantine_Ruins | Homepage | 01.15.09 - 10:22 pm | #//

Let's buy some oil...
Comrade Byzantine_Ruins | Homepage | 01.15.09 - 10:18 pm | #

Royal Dutch Shell is doing a reverse hedge.  They've parked tankers full of cheap oil against higher priced future delivery.  Cheaper than running them and a guaranteed tidy profit. 

What to do about an oil glut?  I'm sure Leader O has a tax stabilization plan to make sure gas don't ever get dangerously under $2 ever again. 

Interesting Times(Unrated) writes:
Seriously, when do we start seeing major supply disruptions.

I am curious about this as well. I am thinking maybe March-July is going to be the hardest because second-order disruptions will be well-rooted but the response by the state will still be muted.

OT, but do we have any bank closures scheduled for tomorrow? Anyone keeping track of pizza orders?

Rob Dawg(Excellent) writes:
What to do about an oil glut? I'm sure Leader O has a tax stabilization plan to make sure gas don't ever get dangerously under $2 ever again.

That was kondratieff Canuck saying that. I think that we will see what we see of the oil glut. Look at those shipping figures, and the YoY sales figures CR reported from December. This is not leveraged speculation, this is a collapse in global energy demand acting a leading indicator to a like contraction in real activity.

This is going to be catastrophic. Regardless of what happens here, many weaker nations will collapse. When we see which resource states blow up and how, we'll know how the oil situation stands. Without Uncle Sugar there passing out guns left right and center, it will be a very different ballgame.

Remember when the price of rice jumped by over 100% last year...  I was one of the few who bought 3 8KG sacks 2 weeks before the "disruptions"  -  This supply disruption made the 6 O'clock news about a week after I bought...  there was NO rice on the shelves for about 10 days... then when the rice showed up it was marked up 300%...

This was really comical becuase everything else was just fine... potatoes were there, pasta, meat....  just the rice shelves empty.

But now it's about 100% the original price, I still have a full bag and it's a nothingburger....

No one starved... but shipping didn't collapse like it is now.

If it is going to come to chaos..
let it come soon. It is -25 degrees here in Minnesota, frostbite takes away your anger

"It is -25 degrees here in Minnesota, frostbite takes away your anger."

Move to Wyoming, the gas is only $1.18. . .

I'm liking RD's idea of doing it under the guise of earthquake / emergency prep ... it will allow me to avert my mind from the reality of what is actually setting in now.
RhodesianGreenbackinAZ | 01.15.09 - 10:24 pm | #

Think about the details.  How much would a replacement set of spark plugs and headlight bulbs cost and how little space would they take up in the garage?  How much are they worth when you can't get them?  I'm not getting survival here, just thinking about what's cheap now and has stored value. 

From the looks of the chart, it looks like we have  LONG way to go, yet, until we get to the lows seen in '02/'03 recession.  The rate and severity of the decline is impressive.

Kondratieff canuk(Excellent) writes:
What's the next thought?

Billing arrangements? You'll need to speak to me more about your schemes as an aside if you want an opinion.

Black Star Ranch writes:
....the first thing you have to decide is if you're going to be staying where you are or trying to get somewhere else after TSHTF....

Found these really cool motion detectors for the yard. They let you know when someone comes near the house

https://www.jansenelectronics.com/cgi-bin/store/scstore.pl?action=search&pagename=jansenelectronics&category=Security%20Sensors%20Outdoor

"But a combination of natural disasters and human miscalculations devastated American farming in the 1930s. The decade opened with a series of natural catastrophes: in 1930 hail destroyed wheat crops, and 1932 to 1935 were years of unrelenting drought. This, combined with plummeting agricultural prices, ruined countless farm families."

the harder the farmers worked, the cheaper the product, and the less money they made

Production == consumption. As people worked more, they consumed less, which drove down prices even more.

Cutting the work week improved things because it created more consumption time and reduced production.
.

If there were ever a state of emergency in the country I really don't think Blackwater goons would let everyone keep their gun and ammo collections.

Ever wonder what they'll pay the police with?

.....what police? They'll guard their own families...

"The biggest challenge facing the commercial mortgage market this year is the estimated $270 billion of mortgages that come due.

In a less-volatile year, that volume would be easily refinanced. Indeed, in 2007, nearly $508 billion of commercial mortgages were originated, according to analysis by the Mortgage Bankers Association. A whopping $230 billion of that was in the form of CMBS.

But most lenders have sharply curtailed their activity. The CMBS market, for instance, is virtually shut down and most participants don't expect any issuance this year. And insurance companies, which had been providing some $40 billion of mortgages annually, are expected to cut that volume back by some 25 percent or more."

Commercial Real Estate News

For traditionalists the Depression created an inverted world where the values they embraced only made things worse.

What can I say. I see this in the workplace. People are worried about being laid off so they are going nuts obsessing over projects, apparently convinced that if they just work harder and longer hours, the Angel of Layoffs will pass them over.

But the decisions really don't have to do with their performance, but rather who or what upper management believes they are.

lucifer(Excellent) writes:
I have always wondered about that.. S

I think the 1984 fantasies are the same as the Road Warrior guys. It's the comfort of Alex Jones; the Prison Planet myth is a nice structured world where you can rebel but the evil overlords have still ultimately got everything in hand.

...all I know is, it never hurts to be prepared. We picked here for that reason only. (Security for the family) The whole family is in agreement - it was the best thing we've ever done - and we weren't/aren't the Mad Max types. The peace of mind is priceless, and the change in our familial health is empowering!

eople are worried about being laid off so they are going nuts obsessing over projects, apparently convinced that if they just work harder and longer hours

That's anothre reason I quit. There was a general tenor of "running around with hair on fire", the creation of motion and commotion as an illusion of work.

I wasn't fitting in well.

Been there, done that, during the Dot Com Crash.

On a positive note, I had three job interviews this week, two for significantly good jobs, probably better than what I had.
.

K Canuck (re shipping agents):

Have family who's involved with pilots in a major maritime port area (by pilot, I mean the person who's responsible for bringing the ship from sea into the harbor and dock).

Perhaps I can get a handle tomorrow on volume (at least per number of pilot visits).

Or maybe not.

Comrade Byzantine_Ruins,

One of the biggest human delusion is the delusion of control. We are not in control.. no one is in control. The universe is just a probabilistic 'machine' that responds to random choices.

Comrade Byzantine_Ruins,

The double slit experiment tells us something about the universe that we do not like to understand.

Sorry, 11:00 is me (new computer).

Picking up mkt share from truckers? Rail is much cheaper per mile, but slower. Perhaps cost is trumping promptness in this economy.
Dirk | Homepage | 01.15.09 - 10:55 pm |

Dirk,
I have wondered about that, but I don't know where to find numbers from the trucking industry to see what is going on there. Do the trucking firms publish anything similar to the weekly AAR reports that the railroads put out?

Btw, in general it looks like the number of truck trailers carried by the western railroads is hurting worse than the container numbers. I was looking to see if there was any increase there as diesel got expensive and then descrease when it got cheap again, but don't see any. I figured the trucking firms would be more likely to rail their trailers when fuel was expensive, but I guess there are just less trailers to move.

People are going to have presumptions and expectations realigned. Instead of expecting government in all its forms to provide much of the infrastructure and services of the last 30 years, they will (of necessity) become more self reliant and self dependent.
Neighborhoods will have to become more interdependent and the me-first, surly types will not do well.

We are going to see a change that the ambulatory high cognitive flesh presiding this earth hasn't seen for generations. Esoteric specialization and high order vocations may go away for a season. Those without survival skills, superior social skills, and a temperament which can absorb many shocks may not see the other side.

If this is a true RESET event, where all the established institutions and markers of society become meaningless, self sufficiency will carry them through.

Feckless Ness,

It is a probability weighed system where all states are possible unless you act and collapse the wave function, Your only choice is action- random or nonrandom.

//What's the "something," lu?
Feckless Ness | 01.15.09 - 11:06 pm | #//

Okay, so put the "probability weighed system" in context for us. What does it bode for our immediate future?

quite the contrary, in my opinion. overcapacity means that physical strength and charm mean less than ever, while having a specialized high-barrier-to-entry trade means food on the table.

I think you're both right. It's a floor wax AND a dessert topping.

More food on the table... for a ridiculously tiny few. But the rest of the population isn't going to magically disappear; you're talking about a huge underclass, which will not continually starve. In their world, success WILL depend on what Johnny Lee speculates.

So yes, middle-class pricks who don't have any community sense or social skills or physical skills OR access to a high-barrier-to-entry specialized trade are going to do very poorly in the new world order. Unfortunately we probably have more of this type in the U.S. than we ought to, and they're not going to take the change very well.

Say there are n outcomes for every action.. all have a isolated probability spread. However in real life the probability spread for any system is affected by the interaction with probability spreads of other linked systems.

The only way you can change anything, for better or worse, is to to act- randomly or nonrandomly. You cannot know all states, therefore you cannot model the system accurately.

Therefore the best choice is to do what you think is right, at least you will collapse the wavefunction and things will change (for better or worse). If you do not act the other actors will still cat and change the spread of outcomes..

Turned in my cable today
tg is a born & bred dope in a | 01.15.09 - 10:59 pm | #

Do you get HDTV over the air in your area?

Good part of Marin County is going dark in mid-February, unless the household springs for cable or satellite dish.

Sorry, I'm usually all tulips, sunshine, and cotton candy.

Here ya go tho.

YouTube - Zip-A-Dee-Doo-Dah

OMG! I haven't seen that since I was a tyke. Thanks, JL!

Good part of Marin County is going dark in mid-February, unless the household springs for cable or satellite dish.
I also live in Marin (Mill Valley), but have been TV free for 20 years.
I was living in Maui, and turned in the box- quite hilarious, as they had no category to cancel the account.
I wasn't leaving the island, and was not unsatisfactory with the service.
Why are you turning it in then?

Watch this and the cry !

YouTube - $1.2 Trillion Slush Fund: Congressman Alan Grayson Grills Fed Vice Chair Donald Kohn

the

52% of ( marketwatch.com)top 100 economists surveyed agree. Encouraging isn't it. My take - USD will climb until there is dislocation . Then it will fall like a meteor. When it becomes a meteorite, things will change within weeks, as they did last time.
Kondratieff canuk | 01.15.09 - 11:04 pm | #

That would be my call.

god forbid we find a quantum reality where individual choice makes a difference; civilization might collapse overnight!

We've already found it, and systems are collapsing in less than an eye-blink, in geologic time.

@mal:

I have been thinking about your post regarding why people collect what they collect when preparing for the worst (e.g. Guns v. Coffee, Toilet Paper, etc), and for the most part, I think it is just a rational decision of security--or even limited power projection--over investment.  If you have collected tobacco and you run into a person who collected guns & ammo, it would seem that both sides have to think that they are receiving a good deal.  However, the person with the weaponry has the added vector of debating whether it is worse playing above board or below (aka prisoner's dilemma) which the tobacco trader does not have.  Ultimately, it is the fear of security and definitely the loss of Rule of Law.

I remember watching a documentary one day on black birds.  It showed how a female bird was intelligent enough to use a stick to shovel out worms and grub, and the commentator was using this exhibit to show how well off that bird could be.  Unfortunately for the bird, a big male bird just watched while she did all of the work, and whens he was ready to take advantage of her labor's results, he came in, fought her off, and enjoyed the meal for himself.  The scene ended with our mystery voice asking which party was smarter:  The one who used a tool to accomplish a task or the one who waited while another party did the work and just used force to take the goods?

I would think that therein lies the crux of the matter.

Just reviewed the details of the stimulus package for our small rural state. They are going to dump so much money that inflation has to be ignited. I was thinking that it was a fifty fifty chance we would see deflation. Wait until the eagle lands with this $800 billion in pork. Get out the wheel barrow and go buy some groceries!

video of the day

im so glad that nouriel finally bought a new tie

and as you can see he's only upped his estimate a trillion dollars or so

in six months we will look back and call his call optimistic

Unfortunately for the bird, a big male bird just watched while she did all of the work, and whens he was ready to take advantage of her labor's results, he came in, fought her off, and enjoyed the meal for himself.

True, which is what Blackwater (or any bigger, badder, more organized outfit than J6P) is going to do with those lovingly collected guns and carefully stockpiled ammo...

But I get your point.

The scene ended with our mystery voice asking which party was smarter: The one who used a tool to accomplish a task or the one who waited while another party did the work and just used force to take the goods?

You're assuming this is not a symbiotic relationship? The behavior would not continue if there wasn't something in it for both of them.

Thanks for feeding the troll, Misha.

mal writes:
\tTrue, which is what Blackwater (or any bigger, badder, more organized outfit than J6P) is going to do with those lovingly collected guns and carefully stockpiled ammo...
mal | 01.15.09 - 11:35 pm | #
-----
Wouldn't your argument also suggest that the tobacco trader might as well not stock up on tobacco?  Why stock up on perishables if Blackwater can take your tobacco and toilet paper--especially since we aren't talking about producing these items but trading them?

Finally, I don't buy the Blackwater argument yet.  Deploying merc armies into each state capital just seems like a logistical nightmare to me.  Kinda like Blackhawk Down ala Mogadishu...

Feckless Ness writes:
\tYou're assuming this is not a symbiotic relationship? The behavior would not continue if there wasn't something in it for both of them.
Feckless Ness | 01.15.09 - 11:35 pm | #
-----
The documentary presented it as a relationship of brains v. brawn.  Female bird couldn't push the male out of the way if the roles reversed.  Is there some blackbird "females birds belong in the tool pit" doctrine that the show missed?

[BAC's bailout is outside of TARP, part of the FRB/FDIC/UST systemic risk resolution. Tarp II is still intact.
anonymous ]

I think you're right, and it's hilarious... drawing imaginary lines around pools of taxpayer obligations like it makes any difference where the black hole is. Debt pools are fungible.

i fear you are correct, though, in that there just won't be room for not just kids without a somewhat specialized skill, but for those who are less-than-excellent in things like engineering. and even amongst the lawyers, the competition to hold onto one of those 30K jobs in the top big firms has become considerably more intense.
bgates | 01.15.09 - 11:42 pm | #

and even these, in the final analysis, are performing highly-specialized tasks for a finite and increasingly smaller pool of firms and face an ever-larger pool of talent competing as firms go insolvent, while the surviving firms are eventually able to lower wages due to oversaturation relative to the very limited number of positions available. the inflexible or over-specialized probably suffer the most in an unstable business climate. drop enough firms and even excellent candidates might be passed over. compound with the common hiring bias against engineers or graduate degree holders as being "overeducated" for positions that would underemploy them, but would at least mean paying work for them, and the situation looks even more grim.

no one really wins in this game, it's a matter of who loses less I guess. a race to the bottom, with the option of invention/entrepreneurship far too risky in most technical areas. how about local and/or very highly-specialized services and consultancies? they may fare best.

I would think they'd be ground zero for supply chain falling apart depression,  (retail exposure, OEM exposure, you-name-it exposure)
but management says they're fine.

seems odd
jus me | 01.15.09 - 11:18 pm | #

I just read it - I can tell you they are stressing their supply chain - longer AP terms than they stated - I can't say a lot more than that here. I think you are right that they have risks they aren't fully appreciating - both on the outlet channel side and also on their supply chain side. I don't know if you are aware that B&S now owns a number of equipment companies their engines go on... it gives them a guaranteed market at a 'controlled price', That 'top side' vertical integration was quite favorable during the boom - additional profit at each level. I think the additional overhead won't be so helpful in the bust... additional losses at each level but we'll see. They are one of the worlds 'low cost producers' IF they make their volumes.