Retailer Bankruptcy Filings Expected
Submitted by
CalculatedRisk on Sun, 01/11/2009 - 5:24pm (313 comments)
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doh!
2nd?
SRS ....
Well, some of retailers probably needed to go. Macy's for example. And those stores like Lucky Jeans that sell denim pants for $150/pair.
I tried to shop at Costco today, and was unable find a parking spot. There were probably 50 cars orbiting the lot waiting for places to park. I gave up and drove away. It looks like Costco will be just fine.
"And since Obama asked for suggestions ..."
Diminishing tax credit for sales tax. On your 2009 return, 100% federal tax credit for sales tax paid. On the 2010 return, 50% credit. Spend now, not later. Of course, some would say that the real way to save the bricks-and-mortar crowd is to enforce sales tax laws against online merchants, but I'm guessing Obama isn't open to that suggestion.
I say we demolish them.
2rd?
OT, but, will we see supply interuptions from Asia on things we use everyday, like food and clothing. I could care less if retail goes tits up, but would get concerned about the basics. Any thoughts?
The malls and restaurants were packed in Portland this weekend. Why?
1-Weekend after payday(5th/20th) people spend what disposable money they have.
2-The inertia point has been made and I would add that we have nothing else to do with our free time but to go and congregate at shopping areas.
3-Great sales going on. The sales got me out to spend a few hundred on warm clothing for the kids/wife. Fantastic deals were to be found.
4-The screw it I'm going to enjoy the short time of normalcy we have left before the crash.
5-The severity we see on this blog is an illusion.
5 is wishful thinking IMO.
Hangtown(Unrated) writes:
"OT, but, will we see supply interuptions from Asia on things we use everyday, like food and clothing. I could care less if retail goes tits up, but would get concerned about the basics. Any thoughts?"
If retailers are closing down, where will the inventory go? To other stores.
And why would the Asians fail to export anything they possibly could? Their economies depend on exports.
Hangtown | 01.11.09 - 8:47 pm | #
That reasoning was behind my purchases. I bought jackets, boots, warm clothing that will fit the kids for the next three years. Just in case.
Cost Plus World Market to close all MN locations. This gives anecdotal evidence that stores held out through Dec. and are gonna throw in the towel.
Local World Market stores to close - TwinCities.com
I know that you wanted to see picosecs predictions for retail in 2009, but were to shy to ask, so here they are anyhow.
In short, youll pay more for what used to be your second or third choice, and youll expend more effort finding it.
Does this mean 'sustainable consumerism' in America is now illusory ?
And why would the Asians fail to export anything they possibly could? Their economies depend on exports.
sm_landlord | Homepage | 01.11.09 - 8:50 pm | #
A certain amount of demand is necessary to keep manufacturing sustainable. The coming shock of retail and mall closures will destroy manufacturing from our main suppliers. Add in dollar devaluation, world conflict, and unrest in our cadre of top trade countries and supply might dry up quickly.
There will be retailers(wal mart) that enjoy continued sales and their suppliers will survive. The dearth of choices and price/quality points is already disappearing and might not return for quite some time.
I'm pretty sure dryfly called this about a week ago. Congratulations!
Oops. What picosec said.
It will be interesting to see if the $hundred jeans and stuff at Abercrombie get any takers when the kids get their cards taken away by parents and their allowance cut.
Blue jeans are the wonder of retailing. The older, more beat up the jeans, the higher the price, if the brand label is right.
Anyone notice that jeans (and sneakers and tees) are the worldwide uniform of all classes? I'm surprised there isn't a vigorous market for sew-on brand labels to 'upgrade' one's Target jeans to A&F.
"I would add that we have nothing else to do with our free time but to go and congregate at shopping areas."
Except for those of us who are building up our Victory Gardens in anticipation of rationing. I built a raised bed and a couple of compost bins this weekend.
I didn't see any good sales at the department stores at all this year. As a single male I don't need any kids' stuff, nor do I need anything with faux gang symbols from the "urban contemporary" themed 3/4 of the mens' department, nor do I need any shiny maroon and gray dress shirts, thanks.
I expect back-to-basics from the department stores next year, if any are left.
Cost Plus to cut corporate staff
Cost Plus is closing 18 stores, BUT is opening 17!
I'm surprised there isn't a vigorous market for sew-on brand labels to 'upgrade' one's Target jeans to A&F.
Someone tried to sell keychain fobs with the automobile manufacturers logo on them. It didn't quite fall under counterfeit law because there was no authentic product, so the courts said that it violated trademark law.
The planet is over supplied with goods. That is what capitalism does best. No one will go without clothing, as it is ubiquitous. Thrift store are doing great business, with high end goods available.
The malls and restaurants were packed in Portland this weekend. Why?
same thing here in Northern VA. Had to WAIT 10 minutes for a table Saturday Night at a restaurant.
Not seeing the recession (here in NoVA at least).
OT, but, will we see supply interuptions from Asia on things we use everyday, like food and clothing
Hangtown | 01.11.09 - 8:47 pm | #
Are we not a net exporter of food?
Well, picosec FU'd again!
The article that I linked to at 9:06 pm is almost a year old.
Backsies. please.
Are we not a net exporter of food?
My observation is that a surprising amount of heavily packaged food originates from Asia. Not so much the ear of corn, but if it involves a box and a microwave, the odds get a lot better.
From my semi-inside view of retail..
Survivors are pushing vendors more than ever for realistic attainable margins. Those vendors that will not sharpen the pencil will see greatly reduced bookings (see Picosec's #2 above).
It spending has already dove off the cliff. Any new projects will have to have a hefty ROI and be implemented with greatly reduced resources (Keep it Simple). Actually this is long overdue.
The attitude that I'm seeing is that many have weathered the holiday storm and breathing a sigh of relief for the moment. They are all pretty much banking on things settling down later this year. It's a 'one day at a time' outlook. No one is predicting ANYTHING...they are just 'hoping'.
Side note, at the grocery store today (Von's), several of the checkers mentioned that they had received their walking papers. Business volume is normal they say, but management is cutting everything they can.
What picosec said. If there are some specialty things you really need (like I need my New Balance shoes), it might be prudent to stockpile. There will be shortages also due to lack of parts...which may have to be ordered from Asia. We're not just talking about a lack of salad shooters here.
ever been a better time to buy and sell retail BK attorneys.
Friend of mine owns a wholesale furniture business - lost money last year. I don't see how he can make it.
The market will sort itself out. Look at your shoes, what central planner controlled that process, from rubber seed to shoe box?
The danger is inflation from FED. That will lead to higher prices for consumer goods (Japan 95-05). Then politicians will blame business men and set price controls. That's when you should read how Rome became feudal. The breakdown of division of labor.
I echo previous posters: traffic at the malls is still very heavy. I guess all my life, I expected the malls and the shopping centers would be empty during the depression. The only outwardly noticeable sign of any sort of depression I've seen was yesterday, when browsing for a house, I saw foreclosure notices on builder model homes.
Go figure.
How could there not be less retail?
That is what puzzles me. If unemployment is really 12% who is taking the hit? Where is the pain? I am not seeing what happened in 1981.
When unemployment really hits 12% then you will see the pain, read about the pain, not be able to escape the stories of deprivation on the MSM. Your friends will be hitting you up for small cash "loans."
Cost Plus World Market to close all MN locations.
Not much demand for african art except among Somali community and and the asian art isn't Hmong.
I like that joint, but there's only so many picnic I can go on and I don't drink coffee.
Toys R Us is definitely in pre-wind down mode. I'm seeing liquidator inventory tags on valuable items, no restocking and serious discounting on some items.
TJ Maxx's "fashions" are catching up with real world fashion cycles.
How will exurb nation thrive if there's no place for the worker bees to shop?
We visited the Liz Clairborne Embarcadero location in San Francisco this afternoon. They're having a going out of business sale and had the new spring collection.
1 pair pants, reg. $59 on sale $10.99
2 tops, reg. $69 on sale $7.99
1 womans jacket reg.$69 on sale $15.99
buy 3 get the 4th cheapest one for free.
Get an additional 25% price off the total.
Came out to roughly $26.
Also visited Anne Taylor. Got a jacket that normally retails for $150 for $69 and jeans that normally retail for $60 for $30.
And again another 25% taken off.
Great deals out there right now.
I echo previous posters: traffic at the malls is still very heavy. I guess all my life, I expected the malls and the shopping centers would be empty during the depression. The only outwardly noticeable sign of any sort of depression I've seen was yesterday, when browsing for a house, I saw foreclosure notices on builder model homes.
Go figure.
RockyR |
People go to the mall because that's the closest thing to a community/downtown in far suburbia/exurbia that isn't a megachurch.
Lots of bodies, very few bags. Then again, I'm the guy who bought a new fake xmas tree last week.
".....a surprising amount of heavily packaged food originates from Asia."
Am I the only consumer that has a concern about NOT knowing where a food product comes from? Some foodstuffs are not required to abide by COOL statutes. In light of baby formula melamine additives from China, I'd like to know where all food is produced!
Stocking up on useful items with a currency showing strain in a world cracking up seems to be common sense.
Where to put your wealth? Items that will feed you, shelter you, and protect you are great starting points. Eventually you'll utilize or resell if the worst case scenarios are avoided.
Not having the option to go out and buy a sturdy and warm pair of boots in the future is a good impetus to doing it now. Hedging survival needs has proven to be good planning throughout history.
Not having the option to go out and buy a sturdy and warm pair of boots in the future is a good impetus to doing it now. Hedging survival needs has proven to be good planning throughout history.
anon | 01.11.09 - 9:31 pm
Only one problem. It's expensive. I don't know how many people here have begun doing it. Planning, and buying the stuff just to handle a 2 week Katrina type event is not cheap.
"Am I the only consumer that has a concern about NOT knowing where a food product comes from? Some foodstuffs are not required to abide by COOL statutes. In light of baby formula melamine additives from China, I'd like to know where all food is produced!"
My relatives in Beijing say that no-one buys shiny, fresh looking fruits/vegetables. They specifically look for items that look a bit bruised. Less likely that they're full of chemicals/pesticides.
The news your hear in the West of contamination etc.. of the food supply for food coming out of China pales in comparison to the stories I have heard from them of what has gone on within China.
For everyone saying the malls are busy, I wonder how many are returning items they got for Christmas?
The news your hear in the West of contamination etc.. of the food supply for food coming out of China pales in comparison to the stories I have heard from them of what has gone on within China.
Pissed Off In California
Go long translations of Upton Sinclair into mandarin and Cantonse.
OT with ancient history (Madoff): WSJ web site says Madoff's attorneys and prosecutors have agreed to postpone a monday deadline for bringing an indictment.
We visited the Liz Clairborne Embarcadero location in San Francisco this afternoon.
Pissed Off In California | 01.11.09 - 9:29 pm | #
Retail at Embarcadero has been winding down for the last couple of years. I suspect that it is related to the buildings being bought at the top of the market a couple of years ago and building management trying to raise rents to match the inflated deal assumptions.
We were looking to rent offices there last winter. Management company quoted lease rates so high that I had to pinch myself to keep from laughing in their faces.
Their attempts to salvage their bad deal is going to seriously cook their goose that used to lay golden eggs.
ova | Homepage | 01.11.09 - 9:34 pm | #
I completely agree. My family has sacrificed vacation and eating out last year to invest that money in survival needs. The mental relief I felt when I thought I'd covered the basics was tremendous.
The best $10,000 I ever spent. We did this on a gross of $75,000 income.
Japan closed today......yet another "holiday" because of it's poor decisions of the last 20 year's...I thought that "Sports Day" was the dumbest named market closure that masquerades as the product of an imploding financial system HOWEVER today's aptly named "Coming of Age Day" takes the cake.....
I expect the U.S. to institute several stupid bank holiday names in the near future...
Any guesses?
Ciao
MS
42?
I say we demolish them.
JP | Homepage | 01.11.09 - 8:42 pm | #
More stimulus - yea!
CONJURE'S GLOBAL DEPRESSION CLOCK
The time is now--
11:59:55 Conjure Universal Time (CUT)
NOTE: The last Conjure Clock update took place on 7 January 2009, when it advanced 1 second to 11:59:54
SPECIAL ANALYTICAL NOTE: Conjure now estimates that, if appropriate action isn't taken forthwith, the gap between actual and potential GDP will exceed 10% by 2010-Q2, thereby making this recession a "depression" in both the practical and technical senses of the word.
Conjure says, "Have a nice day."
When does a company finally decide to enter bankruptcy? Is there a best time? Or are they whenever? Will we see bankruptcies appear in a random fashion, or will they happen before such-and-such a date for some reason unknown to me. Just curious.
Thanks.
"Planning, and buying the stuff just to handle a 2 week Katrina type event is not cheap."
That's why you do it over a period of time. If you think it's only going to be for 2 weeks then you will be completely unprepared. You must think periods of several month's at a time....that may be conservative IMO.
Ciao
MS
The other possibility is many people made a New Years resolution to quit paying all unsecured debt. Huge amount of disposable income has now become available.
I'm pretty sure dryfly called this about a week ago. Congratulations!
Billy Hill | 01.11.09 - 9:00 pm | #
I didn't call squat - it's been all over the biz news for awhile... I was just awake enough to hear it... they didn't have to hit me with a board first [like usual].
You are optimistic, we passed the tipping point in Sep 09.
**CONJURE'S GLOBAL DEPRESSION CLOCK***
The time is now--
11:59:55 Conjure Universal Time (CUT)
"Subcommander Doom writes:
The planet is over supplied with goods. That is what capitalism does best. No one will go without clothing, as it is ubiquitous. Thrift store are doing great business, with high end goods available."
I bought a pair of barely worn Cole Haan loafers at Goodwill recently for $12.00. Also got about $300.00 worth of classic cookbooks and a set of Le Creuset pots (retail at least $500.00) for less than $50.00. I'm living large on used goods. Of course, I did pay full price for the foie gras...
You must think periods of several month's at a time....that may be conservative IMO.
I disagree. I think, at least in my area. What I do see is social disturbance events that cause fluctuations in supplies.
We are changing to container gardening with rain barrels. Not really expensive but I understand what it is like to have no slack in a paycheck.
Cost Plus is closing 18 stores, BUT is opening 17!
picosec | 01.11.09 - 9:06 pm | #
Minnesota has been a terrible market for them - complete dud. Not 100% sure why - but they never made it work here.
Short of a miracle, the inertia is going to carry us there..
There could always be a miracle, but I am not one to live my life based on the possibility of miracles
//SPECIAL ANALYTICAL NOTE: Conjure now estimates that, if appropriate action isn't taken forthwith, the gap between actual and potential GDP will exceed 10% by 2010-Q2, thereby making this recession a "depression" in both the practical and technical senses of the word.//
Comrade Mikhailovich hit the nail on the head. Americans will keep going to malls no matter how bad it gets. The only question is how much will they buy and at what prices?
OK, there are a few caveats for any given mall -- the mall has to stay open, and at least some of the anchor stores must remain. But as long as those conditions are met, people will go. For better or worse, "going to the mall" is a ritual up there with Thanksgiving for many Americans. It's the shopping equivalent of comfort food for them.
When does a company finally decide to enter bankruptcy? Is there a best time?
Depends on the company and the creditors; way too many flavors.
For example, the inventory of most retailers comes with reclamation rights that allow the mfg/distributor to reclaim upon timely notice. The BK stay prevents the reclamation and allows the retailer to operate normally.
If a company has lots of secured creditors, the secureds will often place the company in involuntary BK to prevent the debtor from whittling away the secured assets. For example, if you're GM and you see a dealer selling a car at 50% of the secured interest, then you'll try to put the dealer in BK to prevent losing your assets.
mp:
Big fan of conjure. Every time I think of him and his special diet, however, it reminds me of this cartoon. Cue conjure's cruel laugh.
Conde Nast's group- Error - Page not found
Hey anon, what are some of things you spent the $10K on?
@anon writes:
nova | Homepage | 01.11.09 - 9:34 pm | #
I completely agree. My family has sacrificed vacation and eating out last year to invest that money in survival needs. The mental relief I felt when I thought I'd covered the basics was tremendous.
The best $10,000 I ever spent. We did this on a gross of $75,000 income.
anon | 01.11.09 - 9:42 pm | #
Lucifer- "You are optimistic, we passed the tipping point in Sep 09."
Conjure says, "I assume you meant to write September 2008, not '09."
"Having said that, I challenge you."
"Prove it."
"Publish a paper that is available to everyone in PDF format, such as the discussion paper on LIBOR that I published some weeks ago."
"If your paper merits it, I will immediately publish my analysis."
Conjure asks, "DO YOU ACCEPT THIS CHALLENGE?"
and the room went silent...
Prediction....
City's and townships will seize vacant mall properties and they will be used to bring homeless families off the streets.
(note to self..."Do not...repeat, do NOT mess with conjure")
That is what puzzles me. If unemployment is really 12% who is taking the hit? Where is the pain? I am not seeing what happened in 1981.
nova | Homepage | 01.11.09 - 9:22 pm | #
Me either - not yet. But understand a lot of the seediness of the early 80s was a result of almost a half decade of pressure - the whole period form 1975 - 1980 was the heart of stagflation ... then capped off with early 80s recession. No wonder we all looked like 'we were shot at and missed shit at and hit' - a saying some of my stagflation friends actually USED back then.
5-The severity we see on this blog is an illusion.
5 is wishful thinking IMO.
anon | 01.11.09 - 8:49 pm | #
I first got exposed to these "fringe" notions in 2004, and I think I went through every stage of the Kubler-Ross process of grief. in terms of education, I started at ridicule, then denial, goldbug, conspiracy theorist, fundamentals, Elliot, cycle theories, international economics, ended up here knowing only just how little I know!
I think in some respects the mass sentiment will get to and through their own process of acceptance, facilitated by the media for its own (profit-driven) reasons. I've long passed getting emotional over the issues, and closer to detachment, but it is a long and probably unending process. can you imagine something like I.O.U.S.A. being discussed on CNN even a year ago? unthinkable.
Don't forget that it is tax time. If you are getting a refund you file early. If you pay you wait . That's why people have disposable cash now.
dryfly | 01.11.09 - 9:55 pm
The tell for me was when the Washington Post had to stop publishing ads in the classified that stated "Will do anything for cash."
My friends would meet for lunch or dinner, we all lived close together, and we would ask the waitress for the kids menu.
ova-
The problem is that those fluctuations of supply is the start of something much larger. It's like the market in late '06.....
Many people have no idea about what is coming.....NONE WHATSOEVER.
Dropping the cost of gasoline over the last few months is making it worse. It was done on purpose......to make it appear that people have "more to spend". Have not seen the 60 Minutes thing on Oil yet.....it's not quite 7pm here however if it doesn't tackle two key points: the canceling of futures contracts right before delivery (one of the key reasons oil even got over $100 amidst steady inventory increases and the start of demand destruction) AND the enabling of the commodity bubble through the blatant money printing habits of the Fed....then it is not addressing the real issues.
Supply fluctuations are telling you something........I hope everyone hears it.
Ciao
MS
Citigroup May Book $10 Billion Gain From Morgan Stanley Deal
Citi May Book $10 Billion Gain on Morgan Stanley Deal (Update4) - Bloomberg.com
Long list.
Start by pretending all infrastructure has ceased and then cover those NEEDS.
Water purifier.
Water storage.
Clothing/boots
Hand tools
Weapons/ammo($2000 right there)First to be sold if this is overblown.
Gardening supplies/heirloom seeds/fertilizer
Trauma med kit/antibiotics
DYI Books
1 years supply food properly stored($1500)
Camping supplies
Propane stove with lots of propane
I could keep going on and on but there are some great websites with lists of recommended supplies. Google survival supply lists.
I also could spend thousands more but storage has become an issue. I can think of dozens of things I wanted to buy but didn't.
At walmart earlier tonight, in a mega-strip mall... as I was walking in, noticed that next door a smoothie place and a horse saddle place both had "For lease" signs up. Marginal, speciality places like that are going to be vaporized at a steady pace now. OTOH, I got some leather shoes repaired (look brand new now - definitely worth the $40) and this old-timer who ran the place said his business was steady - hadn't noticed any change in business. Discretionary versus products will play a big role in these BKs.
Bond Girl writes:
Citigroup May Book $10 Billion Gain From Morgan Stanley Deal
So C divestiture doesn't begin until April instead of next week?
Citigroup expected to post a $10 billion Q4 loss. Not bad for a company with a $37 billion market value.
A bit more anecdotal evidence. I sell welding equipment and supplies to body shops in NE Il./NW In. Business has sucked for most of last year, although its picked up some, due to winter setting in. The number of "drivable wreck" repairs is WAY down.
If somebody's in a fender bender, and the car still drives..well....a coat hangar to hold up one side of the bumper, and some duct tape to hold the headlight in place, and don't have to pay the deductible.
Interesting STHF list, anon. Thanks for sharing.
Sorry, link
Citi Board Backs CEO as Outlook Worsens - WSJ.com
Counterpointer says - Conjure, lay off the e already. It's gonna be worse than that.
So stop necking the pretty ones.
We have an obligation to suggest preparedness.
C
The Brits feel the pain too:
Retailers pay 25 per cent of business rates despite making up only 8 per cent of GDP, according to the consortium. The loss of empty property relief, inflation-related rises in business rates, revaluation and supplements would add up to £1.6billion to retailing costs, the equivalent of 100,000 staff salaries.
Stephen Robertson, the director-general of the BRC, said: Many retailers are struggling with the triple whammy of falling sales, crushed margins and rising costs. The Government must revise its plans to impose a range of extra burdens, which can only increase the pressure on retailers and destroy more of the UK's three million retail jobs. Retailers are crucial to livelihoods, customers and communities. We don't expect handouts, but we don't want further handicaps.
Weary retailers muster to fight business tax plans - Times Online
Water purifier.
Water storage.
Clothing/boots
Hand tools
Weapons/ammo($2000 right there)First to be sold if this is overblown.
Gardening supplies/heirloom seeds/fertilizer
Trauma med kit/antibiotics
DYI Books
1 years supply food properly stored($1500)
Camping supplies
Propane stove with lots of propane
anon | 01.11.09 - 10:00 pm | #
Damn I'm not even a survivalist and I got ALL of that - light on food and the guns & ammo (only got two guns one pistol & one rifle - small amount of ammo) - but still. And what's worse, I've had a cache like that all my adult life... I'm starting to worry myself.
Thanks, Basel Too.
If unemployment is really 12% who is taking the hit? Where is the pain? I am not seeing what happened in 1981.
Dual income + consumer credit + selective default means this is going to take a while...
mp (and conjure),
We passed the tipping point in Sep 08 (thanks for correcting the date) because the last support holding up our ponzi economy came apart. Once Lehman Bro. went down, there was no going back.
We had crossed the rubicon. All of the other pieces had already been in place for some time.. but the psychological and legal triggers had not been pressed.
Think of our situation as a complex bomb assembled over decades and years. But like most high explosives, it was not too sensitive to shocks- it required a proper fuse. The Lehman bro. fiasco was that fuse (it could always have been Bear Sterns).
Once the primary charge went off, the end (explosion) was a foregone conclusion.
The real question now is- What is the final mortality/ morbidity count from this explosion? And what will replace the old building?
"....If unemployment is really 12% who is taking the hit? Where is the pain?..."
We're in an area people are moving out of. U-Haul & Ryder have more units leaving town full, more cable disconnects than installs, more electric service cutoffs than service starts, but the REAL troubling thing:
60-Minutes isn't on CBS at 7pm? House has replaced it? Uh-Oh....Now THAT's TROUBLING.
mp - I thought that the D-Clock was event driven. Which event moved the hand? Absence of actions?
Christ, Le Creuset has gone up in price! I got about $1,500.00 worth of pots for 30 odd bucks.
"mp - I thought that the D-Clock was event driven. Which event moved the hand? Absence of actions?"
Conjure says it's because of a failure to agree.
Bond Girl writes:
Citigroup expected to post a $10 billion Q4 loss. Not bad for a company with a $37 billion market value.
You know this or it is based on MS deal?
Citi has a couple Bil of exposure to Lyondell. Any other specific exposures (in addition to CDO/MBS)?
Another anecdotal note:
Back in January 2008, I made a loan to a retail shop owner, who looked like a good bet because his store was working, he had a six-figure settlement coming from another company, and he also had other employment income to the tune of 9K/month. The loan was roughly one month's gross income for him at the time it was made.
Since then, he got laid off from his day job and his retail income collapsed. The settlement still hasn't happened. The note went into default in May 2008.
The point is that not only retail, but other businesses have been in trouble for some time - at least since spring 2008.
So none of this surprises me, but I think what we're seeing now in retail is bad stuff that happened before September 2008, when the defaults hit the banks. So the first wave of defaults is done. What remains to be seen is what the second wave looks like.
The guy I made the loan to has adjusted his business, laying off staff and now running the place himself. He may be OK if the sales tax does not skyrocket, and if business continues at the level it is now. If things continue to get worse, he is probably toast and so is my loan.
You may all have a good laugh at me now.
mp- I'll take on Conjure, should be a great bitcheroonie...
C
"Conjure says it's because of a failure to agree."
Reminiscent of the famous line from "Cool Hand Luke" about "failure to communicate".
I looked at replacing one of my old "froggie" pots and actually ventured into one of there stores. A 6 qt. cast iron pot had a $300 price tag on it.
I laughed out loud as I walked out knowing that store will be one of the first casualties.
Oh..and it was at an "outlet" too....
Ciao
MS
the shadow knows... where you can get $80 per sq ft prime office space in London
Search - Global Edition - The New York Times
The global economy is continuing to deteriorate, said Rob Patterson, who manages about $2 billion at Argo Investments Ltd. in Adelaide. If the U.S. economy is slowing, it means theyre importing less from countries like China, and that China is buying fewer commodities. Its not helpful to anyone.
Counterpointer writes:
mp- I'll take on Conjure, should be a great bitcheroonie...
Conjure is asking if he has committed some sort of faux pas.
Conjure, What happened on Jan. 7, then? And where can we get these papers you have written?
Bond Girl - Thanks for the WSJ link.
Like I said yesterday, the key date for Citi is not Jan 20, but Jan 22
such as the discussion paper on LIBOR that I published some weeks ago
mp | 01.11.09 - 9:52 pm | #
I missed this, MP. Do you have a link to this paper?
Many thanks!
The financial crisis has caught up with Deutsche Bank, said Lutz Roehmeyer, who helps manage about $17 billion at Landesbank Berlin Investment in Berlin, including Deutsche Bank shares. The bank needs to reduce risk and scale back prop trading to adapt to changing conditions. After the collapse of Lehman, even the best hedging in the world doesnt help.
That Deutsche Bank, which made more money trading debt than all competitors except Goldman Sachs in 2007, could wind up reporting the first annual loss at its securities unit in at least nine years, as analysts estimate, shows how the company failed to fully skirt dire trading conditions. Jain, 46, declined to comment ahead of the release of fourth-quarter results on Feb. 5.
http://www.bloomberg.com/apps/news?pid=20602095&sid=awbSSx.rEmxQ&refer=govt_bonds
@I believe CR
The German bond auction.
The German bond auction - and the euro still costs more than a dollar.
@RockyR
Check the comments section for the evening of October 13.
You'll find the link there.
A quick snippet on CRE,
Calgary, Canada has experienced a huge increase in ads for renting out CRE space. A year ago, the popular opinion was that the vacancy rate would be below 5 % even after all of the current projects were completed.
Now there are tons of ads for immediate possession CRE in older buildings that were supposed to be fully rented out.. And the rents are LOW... almost unheard of in Calgary for years.
@RockyR
The link may have expired. If it did, let me know and I'll ask Conjure to put it up again.
Market Consensus Before Announcement
Retail sales are looking ugly at year end. Overall retail sales fell 1.8 percent in November, following a 2.9 percent record drop in October. Overall retail sales have fallen for five consecutive months. In the latest month, weakness was primarily in gasoline and motor vehicle sales which fell 14.7 percent and 2.8 percent, respectively. Excluding motor vehicles, retail sales dropped 1.6 percent in November, after a 2.4 percent pullback the previous month.
Retail sales Consensus Forecast for December 08: -1.2 percent
Bloomberg.com:
Economic Calendar
NorkaWest writes:
"Embarcadero... We were looking to rent offices there last winter. Management company quoted lease rates so high that I had to pinch myself to keep from laughing in their faces."
Office rates (and most of retail) are a complete joke w/r/t rents. I am SO SO HAPPY that I did not succumb to the temptation to 1031 into commercial a few years ago. The deals looked good at the time: triple net leases with exchange-traded companies, yada yada. Complete BS. The "tell" that convinced me not to invest in commercial was watching the way Rite-Aid completely bungled their retail remodels, coupled with the observation that local office rents were back to dot.com rates and completely unsustainable with any business model that made any sense to me.
I dodged that bullet, but the enemy has a machine gun and plenty of belts of ammo.
Talks on the plan to combine Smith Barney with Morgan Stanleys brokerage in a $20 billion joint venture progressed over the weekend...
Under the plan being considered, Morgan Stanley would pay $2 billion to $3 billion to Citigroup to obtain 51 percent of a venture that would combine both firms retail brokerage arms.
Wow, MS is going to pay $2-3B for 51% of a joint venture valued at $20B? Citi then write-ups the value to its Tier 1 Capital? I'd like to read the tax law and accounting rules on this transaction.
mp @ 10:20 and Speed @ 10:22
Ding, Ding!!
Ciao
MS
Marginal, speciality places like that are going to be vaporized
That's what I've seen but you might be surprised. Last night we ate dinner at a small Greek restaurant with a live belly dancer and walked by this place -
Greenwood Space Travel Supply Co.
You can buy a bottle of uncertainty to take the sting out of mp's clock.
.
wheres olive writes:
"Wow, MS is going to pay $2-3B for 51% of a joint venture valued at $20B? Citi then write-ups the value to its Tier 1 Capital? I'd like to read the tax law and accounting rules on this transaction."
That was probably one of the tax laws that was suspended. Cit probably gets to leverage it at 10:1 or more.
.
Deutsche Bank AG on Jan. 10 lowered its forecast for the average price of crude oil this quarter by $10 to $45 a barrel, citing expectations consumption will fall by 1 million barrels a day this year. U.S. supplies have climbed in 13 of the past 15 weeks as the economy slows, according to the Energy Department.
mp - no, am just feelin scrappy.
Conjure can have a good and deep sleep. Well deserved.
C
How and why C is still: listed AND has any trading value as an equity is going to be one of those questions that we may never have an answer to.
BTW the "looking glass moment" was the repeal of Glass-Steagal...everything else that has happened after it is just a ramification of that event.
Ciao
MS
MS writes:
mp @ 10:20 and Speed @ 10:22
Ding, Ding!!
Conjure says, "Ding, Ding!!"
Re: thereby making this recession a "depression" in both the practical and technical senses of the word.
Well, some of retailers probably needed to go. Macy's for example.
Macy's? Uh oh. The Walmart Thanksgiving Parade just doesn't have the appeal.
anon writes:
Long list.
Start by pretending all infrastructure has ceased and then cover those NEEDS.
Water purifier.
etc.
For those of you storing for armageddon, don't forget crutches. I broke my toe recently and believe me, a set of crutches does wonder for mobility.
dryfly writes:
Me either - not yet. But understand a lot of the seediness of the early 80s was a result of almost a half decade of pressure - the whole period form 1975 - 1980 was the heart of stagflation ... then capped off with early 80s recession. No wonder we all looked like 'we were shot at and missed shit at and hit' - a saying some of my stagflation friends actually USED back then.
dryfly | 01.11.09 - 9:55 pm | #
Thanks for the flashback lafin You center punched it there. Comparatively speaking the 70's were like a one big recession interrupted with periods of week recovery. Unemployment kept hitting new plateaus with each new recession. By the time we got to the la pièce de résistance (the 1980/83 double header) we were all pretty well spent.
Digging through the memory banks..Bought my 1st house in '70 and got laid off a few months later. That was pretty much the MO for the 70's - if ya worked 'high tech' you got laid-off every 2-3 years. Usually at the end of May cuz it was tied to the end of the FY/Q4 corp finance cycle. Collect unemployment for 3-6 months (summer off - party time!). When the unemployment folks got on you're a$$ you got serious about getting another job - sometimes ya even ended up back at your old job. Once you factored out taxes and gas it was pretty much a wash anyways. No biggie...
The good news was that Schlitz was like 45 cents/qt and pot was $20/oz. An 'inspectable jungle cruiser' could be had for $250 (I had a '65 GTO 'hi-boy' with a transplanted 421 HO tri-power from a '63 Bonnie convert). The back seat was striped out to facilitate transporting scrounged firewood and whatnot. I used my 3:23's when gas money was scarce and 4:11's when times were good. You did a lot 'improvement projects' with the help of friends and foraged/traded for supplies. All in all it was a good life grinz
MS writes:
"How and why C is still: listed AND has any trading value as an equity is going to be one of those questions that we may never have an answer to."
They still have valuable assets to sell. Thus they are still trading, as TBTF companies cannot go BK until there is nothing left for the stock and bond holders.
"BTW the "looking glass moment" was the repeal of Glass-Steagal...everything else that has happened after it is just a ramification of that event."
Gramm-Leach-Bliley Act:
From Wikipedia:
"This bipartisan, veto proof legislation was signed into law by President Bill Clinton on November 12, 1999."
An act of collective mass financial suicide. One for the record books.
.
Outsider writes:
"Macy's? Uh oh. The Walmart Thanksgiving Parade just doesn't have the appeal."
Get used to it. At least we won't be celebrating Chinese New Year. In 2009, at least.
.
SPECIAL ANALYTICAL NOTE: Conjure now estimates that, if appropriate action isn't taken forthwith, the gap between actual and potential GDP will exceed 10% by 2010-Q2, thereby making this recession a "depression" in both the practical and technical senses of the word.
Conjure says, "Have a nice day."
mp | 01.11.09 - 9:43 pm | #
What does Conjure think is "appropriate action"?
UAW strike would kill auto loans
Auto rescue terms raise stakes in deal mandating changes in pay, benefits
http://www.freep.com/article/20090109/BUSINESS01/901090397/1014/Auto+rescue+terms+raise+stakes
The U.S. Treasury Department could declare General Motors Corp. and Chrysler LLC in default of their $17.4 billion in loans and demand the money back, according to pacts signed with the Bush administration last month
mp, are you still here? What kind of electric system did you get? The one thing I learned about our recent ice storm power outage was that electricity rules. Without it life is barely worth living. Esp. since it controls our plumbing.
Thinking about generators, but wondered if you found something better.
Marginal, speciality places like that are going to be vaporized
That's what I've seen but you might be surprised. Last night we ate dinner at a small Greek restaurant with a live belly dancer and walked by this place -
Broward Horne | Homepage | 01.11.09 - 10:28 pm | #
niche and "long-tail" end of the markets will probably survive if they offer value at a reasonable price. bubble-dependent shops, pet psychiatrists, glorified coffee-houses... not so much. anything with local color may be squeezed but will fare much better than big-box and mass-market retail. race to the bottom there. anyone reliant on price-point leadership without any unique selling point or product line: good luck unless your name is Wal-mart. all IMHO.
Does this mean 'sustainable consumerism' in America is now illusory ?
km4 | 01.11.09 - 8:58 pm | #
God, I hope so, for the sake of our planet.
At least we won't be celebrating Chinese New Year. In 2009, at least.
sm_landlord | 01.11.09 - 10:39 pm | #
You are invited to the "Southwest Airlines Chinese New Year Parade" in San Francisco on February 7.
Basel Too, referring to several of your topics within last week:
i) With respect to meme about avoiding US taxes by transfer patent rights to foreign jurisdiction, have you considered impact of "deemed royalty" rules? We moved some operations to Ireland in early '90s and I believe the rule was you had to create the technology from scratch within foreign sub; if Service could prove you transfered any IP, even intangibles, they could impose a taxable royalty on the transfer regardless of inter affilate transfer pricing.
ii) On the FL ordinance, don't know if this has been updated by LL yet, but poked at this in the library a few days ago. You win on argument that mortgagees are not a "protected class", and more importantly, probably not a "fundamental right" deserving of equal protection. However, not sure you can assume creditors don't have viable argument that State lacks rational basis for discriminating. Even without elevated scrutiny, good advocacy suggests there is no rational basis for discriminating between classes of sellers simply because one is creditor and one is arms' length third party. In other words, the scrutiny (even if not elevated for a protected class) may focus on the rational for the discrimination, not the stated objective (improve the housing). Why impose it for one class and not all?
Thanks for brining these points up. Interesting issues.
@bobn
Conjure says, "I have more."
Am I the only consumer that has a concern about NOT knowing where a food product comes from? Some foodstuffs are not required to abide by COOL statutes. In light of baby formula melamine additives from China, I'd like to know where all food is produced!
Black Star Ranch | 01.11.09 - 9:30 pm | #
I'm with you on that.
December Resale Data Rodeo | Piggington's Econo-Almanac | San Diego Housing Bubble News and Analysis
The Fed is now officially creating money out of thin air in order to buy Agency debt and mortgage-backed securities, pushing mortgage rates down to unnaturally low levels. This is a radical act that flies in the face of what used to be considered sound central banking. I mention this just to show how desperate the government is to prop the whole edifice up. And there is a lot more intervention to coming, housing and otherwise.
ResistanceIsFeudal writes:
"anything with local color may be squeezed but will fare much better than big-box and mass-market retail."
I have to disagree there. Big-box is going to kill off the last of the local retail stores. You won't read about it much, but the LATimes recently carried a story about a small family grocer who is going OOB. He can't to pay minimum wage, and he can't compete on price, so it's all over for him. There are thousands like him. Local color is dead, unless I misunderstand what you mean by that.
.
mp,
I agree with your list.. if the PTB do not implement these ideas soon, there will be a world of hurt!
anon-
The fed has been creating money out of thin air for some time now. That just happens to be the biggest example of it at this point.
Just think...Pim(P)co get to collect the fee's on that too..
Ciao
MS
Eight reasons why we are in a depression
Tyler Cowen
1. We have zombie banks.
Marginal Revolution
For a fact I'm thinking many people working at C no longer care. They see the way the wind is blowing, why bother helping corporate any longer. Every person for themselves so to speak.
Not going into any detail but ...
Comrade V writes:
"i) With respect to meme about avoiding US taxes by transfer patent rights to foreign jurisdiction, have you considered impact of "deemed royalty" rules? We moved some operations to Ireland in early '90s and I believe the rule was you had to create the technology from scratch within foreign sub; if Service could prove you transfered any IP, even intangibles, they could impose a taxable royalty on the transfer regardless of inter affilate transfer pricing."
I'm betting that rule has been subverted more time than anyone can count. Derivative refinements of patents come to mind. Quite a few companies have successfully transferred IP offshore.
IMHO, get get of FASB, because they are a bunch of lobbiest that parade around as accountants that front run regulations!
You may all have a good laugh at me now.
sm_landlord | 01.11.09 - 10:12 pm | #
Why laugh at you for taking a risk?
From prior thread:
But it is going to be very different to get the Chinese or the Saudis sign up for it.
MrM | 01.11.09 - 9:44 pm | #
I actually am not convinced of that. What the Saudis and Chinese need is a much healthier economy. The most indebted countries are among their best customers. A deflationary spiral will most likely result in significant unrest in both of these countries. Therefore, once the immediate shock of such a proposal dissipates the benefits might become a lot clearer.
This is why I believe that it will take a little time to fester.
Local color is dead, unless I misunderstand what you mean by that.
.
sm_landlord | 01.11.09 - 10:48 pm | #
yes, I mean a business primarily producing non-substitutible goods. i.e. well-regarded local family-owned ethnic restaurant, etc. mass-market grocery hasn't even been very able to compete with walmart factor even during boom times in many areas. recession is just the nail in the coffin unless you have something unique to offer or are big enough to get economies of scale and engage in anticompetive practices without going BK. walmart is ruthless and their supply chain and inventory management is top-notch.
mp;
Conjure has some excellent suggestions, but I'm afraid they will not be acted upon. I anticipate another update of the clock(s) after January 20th.
Not to front-run Conjure or anything, but...
After seeing $4 gas, $4 eggs and $4 milk one day last summer I told friends all this economy needed was a good $4 bill. Now just six months later the grocers are in a discount race to new price lows, and for starters we are buying storable sale items for a 90 day food supply for 2, estimated cost $300. BBY, Circuit City, WMT, grocers and roads were busy today in the first warm Desert Cities day in 2 months, but I think it was sale oriented and shoppers more price-conscious.
1-2 retail for lease signs showing up weekly in new strip centers adds some intrigue. I see a bad moon rising, literally and figuratively (closest perigee of the year last night), but the earthquake window closes in 4 or so days.
lucifer writes: if the PTB do not implement these ideas soon, there will be a world of hurt!
We are already in the world of hurt. No actions/inactions can change that. The only difference is how much more pain will be inflicted and for how long.
mp - Agree with the list, I would also suggest "Review of the 2009-10 USG Budget, including Defense and Medicare"
Check the comments section for the evening of October 13.
mp | 01.11.09 - 10:23 pm | #
grrrr...
K.
"Not to front-run Conjure or anything, but..."
Conjure says, "Not at all, sm_landlord. You see much."
Eight reasons why we are in a depression
9) The government was hobbled by trillions of dollars of debt for the purpose of limiting its ability to act.
RockyR writes:
"Why laugh at you for taking a risk?"
The schadenfreude runs deep on this board. I took a risk and lost, so I expect to provide some entertainment.
But that wasn't really the point.
.
sm_landlord writes:
"I'm betting that rule has been subverted more time than anyone can count. Derivative refinements of patents come to mind. Quite a few companies have successfully transferred IP offshore."
To be sure. But you can't transfer with impunity, and most protect themselves with a formal agreement and pay "something" for the IP. Its harder to hide completely than you think. The service will look at ownership of foreign sub, and similarity of businesses prior to foreign sub's inception and operation. Hard to make case that sub invented similar technology out of thin air which parent now imports as substitute for products previously manufactured in US. Not to say rules can't be "worked" but its not a walk over.
BTW the "looking glass moment" was the repeal of Glass-Steagal...everything else that has happened after it is just a ramification of that event.
Ciao
MS
With all deference, could you please elaborate, because at first glance I find that to be hogwash.
Last I checked the IB's that vaporized last year weren't subject to G/S, and the commercial banks that went hybrid weren't any good at it.
Citi's failures were that A: they never gained economies of scale when combining groups B: they made too many bad bets in too many areas on either side of the divide(they were in a danceathon with multiple partners) and C: Neglected their retail banking operations in a period of consolidation(why be #1 or #2 anywhere when we can be #5 everywhere?)
For me that's just shitty management(a recurring theme throughout Citi's history.)
G/S allowed them to make new and better mistakes, but with the Greenspan credit orgy they would have just found a different way to hole their own ship upon the rocks of avarice.
From the trucking thread:
Bet the Line writes:
Eagles over Giants (I know)
Steelers to survive at home.
Bet the Line | 01.11.09 - 1:56 pm | #
Hey bet the line, how about championship weekend?
"Get my broker, Miss Jones."
"Yes sir. Stock, or Pawn?"
The problem with investment bank balance sheets is that on the left side nothing is right and on the right side nothing is left.
There's a surgeon, an architect and an economist. The surgeon said, 'Look, we're the most important. God's a surgeon because the very first thing God did was to extract Eve from Adam's rib.' The architect said, 'No, wait a minute, God is an architect. God made the world in seven days out of chaos.' The economist smiled, 'And who made the chaos?
On December 9, 2008 I posted that this country is in trouble. The drama continues. Follow the money.
sm_landlord writes:
"The schadenfreude runs deep on this board. I took a risk and lost, so I expect to provide some entertainment."
A calculated risk at that.
MrM,
The world of hurt I am refering to is widespread social problems, because after a certain stage the economy might not be our biggest concern.
RE: Such acknowledgment will be tantamount to the admission of deep flaws in and harm caused by the economic policies of the countries in question. The Saudis have rather militarized country, so they can probably afford that. I do not think the Chinese can. I think it is important for them to have somebody to blame for their problems. And if the whole country agrees with the assignment of blame, that's even better.
Conjure continues to complain that he hasn't yet seen the necessary ass-kicking, tasering, and "proceeding with a sense of purpose."
It's just, he says, "the same worn-out names" playing the policy game.
"Decisive action," he says, is what's necessary to turn this around and to inspire the confidence "absolutely necessary" to sell the debt that will be required to finance a viable program.
Lucifer @11:05 pm - I agree with that clarificatio
The Conjure paper link still works. It's in the 2:42 am thread on October 13. Do a search for Conjure.
mp,
conjure has a point.. I have often made the same case- unless we replace the "management" with people who are not linked to the old system, we will not get any decisive or evolutionary action.
It's a link to some random looking website so I am not reposting here -- no need to trust my link. But it still works.
Comrade V writes:
"A calculated risk at that."
Mis-calculated in my case
"Mis-calculated in my case ;-)"
Have faith. The story isn't over until The Fat Lady sings and everyone has gone home.
Conjure says, "I have more."
mp | 01.11.09 - 10:45 pm | #
Nice list...
Is Conjure still expecting some serious ass-kicking from this team? With Summers, Geither, Volcker, Romer all trying to do something, but it is not clear who is in charge? I am actually tempted to repeat after Cramer: "They have no idea! No idea!"
Disclaimer: I strongly supported Obama in '08
mp... and here I thought www was an acronym for the innertoobz. could it be rearranged to the first two parts remaining the same alphabetically, but the last part becoming a number indicative of making a single out of adding the parts?
or am i barking up the wrong tree? perhaps peeing in the wind, as it were.
Lucifer: These guys have thought all this out. Iraq and then Katrina were training grounds for Blackwater et al to deal with disgruntled real Americans when the economy went South and we noticed that the Robber Barons we elected were stealing us blind (KRB) and hoping to shift into a banana republic style of government before term limits tossed them out.
They have all kinds of Homeland Security justifications for dealing with civic unrest due to disasters, pandemics etc.
I'll be curious to see if they pulled it off, or if we ditched them in time.
mp(Unrated) writes:
\t@bobn
4. Immediate revocation of recent Federal Reserve ruling on credit cards.
HUH?
6. $2 trillion stimulus program, to be devised.
So Conjure is Keynsean big time? How are we ever supposed to pay off $2 Trillion on top of everythng else?
7. Immediate investigation by Congress of causes of the "Financial Crisis."
Congress can't find its ass with both hands. What would this help?
Conjure says, "I have more."
mp | 01.11.09 - 10:45 pm | #
I'm not singling out C specifically...my other post is just a statement based on the realities that other better equipped institutions have failed and C has not....it clearly should have by now.
Look...if you take away the framework that legally prevents this crap from happening then I'd say it has everything to do with why they are failing. I've also said they would most likely have found another way to do it just not on this scale. Glass-Steagal made sure that it legally could not happen...that's also an entirely different discussion however chalking it up to bad management certainly depends on one's perspective.
I've also said (many times) that you can write all the regulation you want...if you don't enforce it it means nothing. I think the SEC has done a great job at allowing this to occur while making sure that no one has any culpability..other than those "bad home owner's". Repealing that act was the great enabler of all of this.......100% the single largest contributor to our current "issues". Because if you still had it......how would all those "bad mortgage's" have been securitized and sent out into the world (legally speaking of course)?
Ciao
MS
Comrade V:
Excellent points!
i) Yes, the deemed royalty rules would prevent transfers of existing IP. IIRC, there's just no legal mechanism prevent the initial establishment of the IP in Ireland. I could invent something in America, but file my patent in Ireland first, and then the US. Furthermore, the reason that BigPharma and Silicon Valley started stashing IP in Ireland is that multi-stage R&D in those areas became global; the companies all have research labs in Ireland as well as several countries throughout the world. Can any country claim the invention? Pre-TRIPS, the reason to host the IP was the long-arm of US enforcement. Post-TRIPS, any signatory pretty much gets the same level of enforcement. Behind, the scenes, globalization's a bitch, especially with "soft" products.
Even without elevated scrutiny, good advocacy suggests there is no rational basis for discriminating between classes of sellers simply because one is creditor and one is arms' length third party.
As between a business and an individual, a state can pretty much establish any discriminating criteria it wants under its powers to regulate businesses. The more interesting question is whether a state can distinguish between a foreclosing creditor and a regular business (e.g. REIT) selling a home. Once again, the basis of this one is purely factual. If the state can show that there are public safety issues with foreclosed homes (e.g. dilapidation) that warrant more stringent code enforcement, then the state has an extremely strong argument.
Anyways, the interesting thing about the ordinance (at least to me) is that it doesn't actually regulate the foreclosure process itself. Instead, it tries to influence the foreclosure decision by making resale cost-prohibitive. As such, the ordinance appears to regulate the "business of banking," which would make it inapplicable to federally chartered banks and thrifts (and their subs).
You would have the worse of both worlds: the ordinance applies but not to C, JPM, etc.
1. Immediate nationalization of all federally chartered banks.
mp | 01.11.09 - 10:45 pm | #
I guess we could do this... America is already dead. Nothing to lose.
Why depression?
(1) All IBs dead. Banks and bank holding companies face a supersaturated borrowing market. All legitimate borrowers have been accessed. ONLY deadbeats remain.
(2) Debt Spiral. Indebtedness has very nearly reach a scale where for every dollar of debt created only 75 cents of real GDP emerges. Seriously diminishing returns of credit.
(3) Global correlation. All nations undergoing contraction cannot use state collected funds to underwrite other sovereign debt but must divert to own stimulus package. Unfortunately those stimulus packages are often debt financed. Glut of bond offerings, thin market in underwriting same.
(4) Fear psychology. All citizens of all nations are becoming aware of Ponzi nature of Keynesian based fiat founded economic system. Purchasing restraint is feeding heavily into adverse feedback loop.
(5) Price instability and deflation/inflation unknowns make long term corporate strategic planning chaotic.
(6) Systemic obfuscation about the real state of global economic affairs are being revealed in real time. Official duplicity and intentional opacity make forecasting treacherous and undermine political and Central Bank legitimacy.
(7) Government intrusion into free markets distorts pricing mechanisms and clouds the telegraphing of reality. Greater uncertainty ensues and drives away capital which might seek risk under well defined rules
(8) Ineffectuality of regulation and supervisory institutions. Past faults and inability to detect fraud on massive scale is gnawing away at the vestiges of market confidence.
(9) Dearth of innovative marketable goods and services. Little explosive value creating products are being announced or making it to market. Means to lift out of a contraction are absent.
(10) Government social programs have become so cumbersome as to consume all the capital and energies that might be directed to nourishing and sustaining infant and necessary industry. Government borrowing lures away capital which might otherwise be dedicated to the MOST productive sectors. Death of Golden Goose.
Without it life is barely worth living. Esp. since it controls our plumbing
in a city , it sure does. In 12 hours after the 2003 blackout, my 50th floor midtown apartment was out of water. getting home was fun to. If it had lasted more than 36 hours, nyc would be fubar'ed
The Conjure paper concludes that one should stay away from BBA LIBOR-priced financial products for the foreseeable future. (Basically because it's gameable and/or was being gamed).
FWIW at the hedge fund I work for we're seeing much less swap activity than we saw pre-Lehman but what there is still is priced using BBA LIBOR. Of course the dealers charge LIBOR + X, where X is much greater than X was a year or two ago, but LIBOR itself is still king.
Cpas aint economists,
They have to be able to pay their goons.. in a currency that is accepted to buy stuff for their families, who depend on services that we take for granted.
Given the worldwide nature of this problem, their old assumptions might be wrong..
Comrade Mikhail:
You have it exactly right with regard to Glass Steagall and Citi.
The notion that repealing Glass-Steagall and thus allowing for bank holding companies to own investment banks somehow has led to where we are defies logic. In fact, the 1998 law will allow (finally) for the federal regulators to force a reduction in risk ratios. But After the April G-20 in London there will be a Basel III and the game will start all over. Next time, though, I do not expect exposures to climb to anything like they did in the 1998-2008 decade.
The Conjure paper link still works. It's in the 2:42 am thread on October 13. Do a search for Conjure.
Loudocracy | 01.11.09 - 11:11 pm | #
Ohh... I searched MPs posts, found no link, and gave up. Se La Vie.
Without it life is barely worth living. Esp. since it controls our plumbing
however, I'm sure if we asked Comrade MacGyver, aka Dryfly, he could survive in the sticks without electric for days and days w/little pain.
@bobn
re: Federal Reserve regulations on credit cards.
Conjure says, "According to Meredith Whitney, the recent Fed action will remove $2 trillion in credit from the system."
re: Congress finding its ass.
Conjure says, "Of course it can't, but it's important to give the rest of the world the appearance that it does."
sm_landlord(Excellent) writes:
Back in January 2008, I made a loan to a retail shop owner, who looked like a good bet because his store was working, he had a six-figure settlement coming from another company, and he also had other employment income to the tune of 9K/month. The loan was roughly one month's gross income for him at the time it was made.
This seems like a very fine personal loan. It went sour, oh well. Sometimes loans do that, especially personal loans.
You may all have a good laugh at me now.
If you can afford to, and don't think he ripped you off, forgive the debt and transfer it into social obligation.
Be his friend. You don't want to try to extract the sum by other means, not directly, but your forbearance is an obligation on him.
Where can he get you entree? Do you need new allies? Is there a skill he can teach you? Do you children need fosterage? Do you want to develop a client-patron relationship with him? Would he be a good employee? Would he be a good friend on equal terms? Is there something of his you covet you can obtain now to cushion your loss, by offering an absurd markup on its real value in "forgiveness" of money you'll never be paid any other way?
Turn this matter over and examine him for every possible use, as both tool and social partner.
Punditry writes:
Without it life is barely worth living. Esp. since it controls our plumbing
in a city , it sure does. In 12 hours after the 2003 blackout, my 50th floor midtown apartment was out of water. getting home was fun to. If it had lasted more than 36 hours, nyc would be fubar'ed
Punditry | 01.11.09 - 11:20 pm | #
The lack of capacity in the generation/delivery of electricity is a far more salient domestic problem than anything Obama has identified. Way more critical than reducing fossil fuel burning, which is more like a junior high school feel-good ecology class exercise, or universal health care. Whether the new Energy Secretary will notice the electricity problem and try to move the ball forward is anyone's guess, but paving roads and repairing bridges ain't going to get it done.
The malls and restaurants were packed in Portland this weekend. Why?
i dunno, maybe cause 90% of those employable have a job?
I like Conjure's 7 point plan, or at least the first 7 points of his plan.
I think there is a decent chance we will see much of it come to pass.
"I guess we could do this... America is already dead."
Conjure says, "America isn't dead. Anyway, my nationalization proposal would be a temporary measure."
"The banks would be sold after being brought back to health and their former owners and managers would be financially EVISCERATED."
I think it is important for them to have somebody to blame for their problems. And if the whole country agrees with the assignment of blame, that's even better.
MrM | 01.11.09 - 11:05 pm | #
MrM,
I agree with that sentiment. However, because I would expect it to be couched under a BW2 type accord, it will be much easier to sell. The blame game will still be played by the Chinese and even the Europeans, but it will be sold as a benefit to all. It has happened before just not as a single event but a series of events. This time it better be different...
... Currency devaluation proved effective in ending the Great Depression. In 1930, Australia was the first to leave the gold standard, immediately devaluing the aussie by more than 40%, and the economy quickly recovered. New Zealand and Japan followed suit in 1931, each with the same result. By 1933, at least nine major economies had enacted a devaluation of their currency by removing it from the gold standard, all of whom emerged from depression. In 1933, through a series of gold-related acts, culminating in the Gold Reserve Act of 1934, America realized a dollar devaluation of 41% when the price of gold was adjusted from $20.67 per ounce of gold to $35 per ounce. America, like the others before, had its economy bottom and recover as a result. Of the larger economies, only the French and Italians continued to adhere to the gold standard, and their economies remained depressed until finally, in 1936, they allowed their currencies to devalue, and their economies then recovered. ...
joe shmoe(Unrated) writes:
I think there is a decent chance we will see much of it come to pass.
It's a tightly time-bound crisis. It can't happen someday, it has to happen in the next 5 "seconds"
@mp
Not sure I see how the FRB regs cost 2 Trillion of credit, but Whitney knows her stuff.
Congressional show-trials - yumm.
all those generations of American soldiers who gave their lives to keep banks in private hands . . . lives that will have been given up in vain if the government temporarily nationalized the banks. the end of america.
in a city , it sure does. In 12 hours after the 2003 blackout, my 50th floor midtown apartment was out of water. getting home was fun to. If it had lasted more than 36 hours, nyc would be fubar'ed
Punditry | 01.11.09 - 11:20 pm | #
yeah, I was in the city for that blackout. That was a LOAD of fun, wasn't it?
"federal regulators to force a reduction in risk ratios"
That's just too funny for words....
"Next time, though, I do not expect exposures to climb to anything like they did in the 1998-2008 decade."
There won't be a "next time"
Where does one get the capital, or more importantly, the vehicle to do so?
Thanks I needed a good laugh
Ciao
MS
Lucifer: These guys have thought all this out.
cpas aint economists | 01.11.09 - 11:16 pm | #
dead right. whether by design or luck and greed for power, we had a perfect setup to abdicate most of our civil liberties and expectations of privacy and government non-intervention. now that legislation is in place, and precedents established through "domestic terrorism", "child pornography" and other hot-button issues used as justification, and from there it's a slippery slope that could well end up in the high-tech centrally-managed police state conspiracy wonks have been warning about for decades. or it might not. point is, the mechanisms are there for "crisis control" in any sense of the word and the domestic surveillance apparatus is in place and well-funded.
Because if you still had it......how would all those "bad mortgage's" have been securitized and sent out into the world (legally speaking of course)?
With all man made disasters, it's a succession of failures that allows major calamities to happen, G/S is a magnifier, but not the originator:
If you look at a chart of ABS make up, it was growing at semi organic pace both before and after G/S repeal(likely to increased computer power available to crunch models and process deals.) In 2003 it exploded due to insanely cheap money.
mp - Banks are slashing credit card en masse lines with or without the Federal Reserve. It is in their economic interests, and not because of some rule. The only thing that can stop this is nationalization.
BTW with C folding it's shit pile known as Smith Barney into MS it's a good bet that we now know (at least a good guess) who was holding C's other half.
lather, rinse, repeat.
Ciao
MS
America isn't dead. Anyway, my nationalization proposal would be a temporary measure.
mp | 01.11.09 - 11:30 pm | #
All this business of bail-outs and propping up failing industry has pretty much killed it for me. Oh well, I'm an outlier at best.
Didn't Sweden try this with good success? Of coruse, Sweden is already a socialist state.
I still don't see accountability on the horizon. Sure, the media and legislators are asking incrementally tougher questions, but the egregious immorality that got us to this point has not subsided.
That will be our final undoing, I think.
RE: I do not quite follow. Devaluation of currency is easy in the current regime. I thought you were talking about debt forgiveness and partial default, no?
Or maybe I mean amorality.
Eviscerated. Now we're talking.
@RockyR
Conjure isn't a socialist. His thinking is that if it's broke, fix it, then cut it loose to play yet another day.
Under supervision, of course.
"G/S is a magnifier,"
Which is why I clearly state that it is the single largest act responsible for the mess.
Complicity is needed however with out that you don't create the need for "investment opportunities" so to speak....
Would it have happened on the same scale? We'll never know as it was that act that provided all the fodder needed to create the current problems.
Ciao
MS
i would have done it in September, but I was not president.
i was fun for those who had short commutes. My fun started on the climb up! i'm in great shape, so was a non-issue. Others were'nt so fortunate, and the stress/strains showed.
There will always be those equipped for harsh conditions.
And that's the point. Another 24 hours and those stresses wou;d have gone parabolic.
Of course, queens can handle 4-6 days without electric. not us manahattanites!
mp writes:
"The banks would be sold after being brought back to health and their former owners and managers would be financially EVISCERATED."
I hope that Conjure has an unlimited appetite for viscera.
There will be a lot to eat.
.
Lucifer(Unrated) writes:
>Cpas aint economists,
>
Mr. Devil, he understands this crisis. I might make fun of his hooker humping ways, but he's a canny lil imp. Y'all would be well advised to pay attention.
Byz, I have no sympathy for the devil.
ResistanceIsFeudal(Unrated) writes:
and from there it's a slippery slope that could well end up in the high-tech centrally-managed police state conspiracy wonks have been warning about for decades.
Except the no money part. That'll prove problematic, won't it just?
Feckless Ness(Excellent) writes:
Byz, I have no sympathy for the devil.
"God is not mocked. He owns our business."
I do not quite follow. Devaluation of currency is easy in the current regime. I thought you were talking about debt forgiveness and partial default, no?
MrM | 01.11.09 - 11:37 pm | #
Correct, but they are related. Coordinated devaluation among countries through an individual but agreed upon money supply multiplier is IMO partial debt forgiveness. It could easily be expanded on locally by let's say an increase in minimum wage, etc...
What's that from?
"Turn this matter over and examine him for every possible use, as both tool and social partner."
--Comrade Byzantine_Ruins
Already underway, and thank you for the good advice!
"I hope that Conjure has an unlimited appetite for viscera."
If Conjure was Fed Chair, I can foresee a time in the far future when Conjure's portrait in the Eccles Building could only be exposed on certain occasions because bankers would cringe in fear and wet themselves every time they came under his gaze.
@ mp1. Immediate nationalization of all federally chartered banks.
Shit, man, you aren't even going to get past step one.
FWIW, I agree, the banks need to be nationalized.
@ The dude looking at a $300 stock pot
I don't understand people. Restaurants have some of the highest fatality rates in business - for $300 you can pick up two lifetimes worth of complete kitchen setups at any of the monthly restaurant supply auctions held in every city in N.A.
Feckless Ness(Excellent) writes:
What's that from?
The lyrics to a song called "Nemesis".
Who is to say whether he is too ugly to bear, or too beautiful to bear?
Diana Muldaur, on Star Trek
I went to the Houston Galleria today and the smaller stores were absolutely packed. The department stores were pretty empty. I am not sure what this means, my wife noted that many folks had 2-3 shopping bags.
The Galleria is the premier mall in Houston, so perhaps that was the reason. The Apple store looked like a mosh pit there were so many people in there...
I was pretty shocked. My wife can rarely get me to a mall but I went under the assumption it would be empty. I am starting to think the economic crisis might be a bit overblown...
Didn't Sweden try this with good success? Of coruse, Sweden is already a socialist state.
RockyR | 01.11.09 - 11:36 pm | #
Sweden is mixed economy - if you think they are socialist you don't know socialism. BTW I do think we'll see a return to REAL state owned across the board socialism after this 'failure'... folks will be willing to revisit a lot of things that were once 'rebuked'... all that was old will be new again. Doubt it will happen here in US and doubt we'll see 'Bolshevik' like revolutions but if this gets real bad then all bets are off.
Funny, we have a treat-the-symptom society and the new dr seems to be prescribing the same medicine as the old one.
Change you can't wipe off your shoes.
The stores here in Western Pa were fairly busy early this afternoon. But they all cleared out about 4PM when
we all went home to watch the Steelers-and they won!
Good times. Good Times.
and from there it's a slippery slope that could well end up in the high-tech centrally-managed police state conspiracy wonks have been warning about for decades.
Except the no money part. That'll prove problematic, won't it just?
Comrade Byzantine_Ruins | Homepage | 01.11.09 - 11:41 pm | #
nationalizing the banks (at the public's insistence, for stability and/or national security) would take care of that neatly, wouldn't it?
"(10) Government social programs have become so cumbersome as to consume all the capital and energies that might be directed to nourishing and sustaining infant and necessary industry."
--Johnny Lee
This is my greatest fear. I don't think we're there yet, but we're so close that it already take ludicrous profit margins to operate in California. The only hope now is to move business to low-tax states or overseas. The goose is on life support, and the politicians are preparing to pull the plug.
.
RE: The US will have to give China major sweeteners to have them agree to anything like this. It is better for China to play PIMCO and be the only holdout who gets to benefit when others are trying to save the system. Btw, by pegging the RMB to the USD, China has been already devaluing its currency with respect to the USD for quite some time
too beautiful to bear
I was talking about Conjure, not the devil.
nationalizing the banks (at the public's insistence, for stability and/or national security) would take care of that neatly, wouldn't it?
ResistanceIsFeudal | 01.11.09 - 11:51 pm | #
Public utility companies pumping money instead of say 'water'...
ResistanceIsFeudal(Unrated) writes:
nationalizing the banks (at the public's insistence, for stability and/or national security) would take care of that neatly, wouldn't it?
No not really.
energyecon: Treasury Marketable Debt Maturity
That's the problem. Every failed state has legions of thugs and people willing to collaborate with the state.
Then it doesn't.
Why is that?
How does Musashi put it? Something like, "this is very important, you must think about it constantly until you really understand it".
Btw, by pegging the RMB to the USD, China has been already devaluing its currency with respect to the USD for quite some time
MrM | 01.11.09 - 11:52 pm | #
Note that China, in effect, has already gone along with part of the proposal... :)
China plans to increase money supply 17% in 2009
http://www.iht.com/articles/2008/12/14/business/yuan.php
Thanks for the 7 point starter plan. Concur that nationalization would #1 and who knows.
Playing connect the dots this weekend as dealt with life. Bush asks for the remaining TARP $ and obviously isn't going to be spent for him due to the congressional time lag, so goes to set up for OB.
OB has to show that he's serious and has to get things under control quickly, so he's looking for a big bang thing. What is he's setting up like FDR in the earliest days of his first term and going to do a bank nationalization?
11:59:55.
Shit.
RockyR (and any others searching)
mp misremembered the date. It was October the 12th, not 13th. The link to the actual pdf is:
this link.
6. Is bean-o a necessity for the duration as well?
Homedad43 | Homepage | 01.11.09 - 11:59 pm | #
Gas keeps you warm.
Conjure isn't a socialist. His thinking is that if it's broke, fix it, then cut it loose to play yet another day.
mp | 01.11.09 - 11:39 pm | #
I hear you. I'm not accusing anyone of anything. Should the USG take this step, I'll not only lose faith I'll lose any will to try and save it. I'd rather flee it than support any efforts to fight for it and save it (see post from Joe, above). That's just me, though.
I'm feeling rather depressed. Appro for the times, no doubt. I'm headed to bed. 've got work tomorrow and it's been awhile. TTFN.
Come to think about it, it is rather sad that this board has been coming with solutions/insights way ahead of TPTB. With the great respect to the CR crowd, I must say it makes TPTB look rather pathetic and inept, which is a scary thought.
I am afraid that soon Tanta's classic phrase "We are all subprime now" will evolve into "We are all New Orleans now".
Good night, everybody
Gee, the Mrs. is gonna be delighted to know that I explained a "flamer" to the boys...
I am starting to think the economic crisis might be a bit overblown...
char | 01.11.09 - 11:48 pm | #
yup.
"3. Is FDIC even remotely close to staffed to handle such an event?"
Conjure says, "US Army Finance officers acting under FDIC supervision."
"If the US Air Force can run the US Air Traffic Control System, the army can fix the banks."
dryfly writes:
"Public utility companies pumping money instead of say 'water'..."
In California, they can't even pump water. The politicians and enviros have killed every water project for the last 30 years.
The only thing the pols in Cali can do any more is pump money. Or should I say "pimp" money. Once again, California sets the standard for corrupt politics and bad policy. It's an embarrassment that cannot be expunged. I am personally embarrassed to note that I live in this state.
But I am moving another business out of California this month. And contemplating moving another this spring. The only thing I cannot move is the real property. And I'm working on that. Maybe I can sell out to a Chinese trust or something.
California is going to end up like Florida: no industry other than fishing and entertainment, plus whatever they can suck out of the retirees.
.
Public utility companies pumping money instead of say 'water'...
dryfly | 01.11.09 - 11:54 pm | #
Politicians deciding who gets money based on... what? Pay-to-play? Just don't get me started. I have to put this crack pipe down and go to bed.
Come to think about it, it is rather sad that this board has been coming with solutions/insights way ahead of TPTB.
That's cuz on CR the laws are fiat just like the currency!
Thread music:
YouTube - Robert Palmer - Simply Irresistible
Enough. I'm out of Prozac and I need to face reality tomorrow.
Thanks all.
.
my comment on US soldiers dying to preserve private ownership of banks was, uh, sarcastic.
MrM(Excellent) writes:
Come to think about it, it is rather sad that this board has been coming with solutions/insights way ahead of TPTB.
1) The Powers That Be suck, it is true. Unpaid anonymous volunteers outperform them. Handily.
Fire Scotland Yard, the Hardy Boys are on the case. Have you accepted that all policy and all "fact" are ultimately political yet? There is no other explanation for this dismal performance.
2) Interesting thing about the internet creating communities -- some stuff, there really is only one place in the world or a tiny handful of places to share your knowledge and interest. You can get all the loose world-class talent for certain issues, self selected for interest in contribution, on one forum or mailing list.
350,000 people apply for 3,000 jobs in Obama's new transition team. Not to worry, the bailout will be creating 600K government jobs soon enough. Traffic in DC metro to get even worse (if possible)
Record number of job seekers flock to Obama administration - Jan. 11, 2009
"all those generations of American soldiers who gave their lives to keep banks in private hands"
?
I can tell you for sure they didn't mention at Fort Benning that we would be fighting for bankers. As I recall, it was something about the Russians having nukes and nerve gas and us trying to hold the Fulda Gap. If they told me I would be fighting for bankers on my first day of basic training, I would have been over the fence that night. Maybe I'm crazy, but I don't think I'm the only one.
Looking back I guess it did all end up being for the bankers. Fortunately for me that was a long time ago and I didn't actually have to do any fighting. So sign me up for the nationalization and the evisceration, and let's get those kids home from Iraq.
Conjure says, "US Army Finance officers acting under FDIC supervision."
I humbly suggest shanghai-ing the ratings agencies. They're pretty much useless for their stated purpose.
and let's get those kids home from Iraq.
albrt | 01.12.09 - 12:14 am | #
Now. No excuses. Keep the campaign promise.
"Now. No excuses. Keep the campaign promise."
mp and Conjure say in unison, "Amen to that!"
Sorry Joe, your clarification came while I was typing. Should have caught that.
The new credit card rules bar (most) increases in interest on existing debt. Insofar as the credit card companies need those kinds of shenanigans, they're defrauding, not providing credit. Such "services" are highly destructive to the economy and should be stopped immediately. I don't believe for one second that applying common-sense contract rules to credit cards would dry up 2 trillion in credit anyway, and I don't care who says that, including Whitney.
it is rather sad that this board has been coming with solutions/insights way ahead of TPTB
Talk is easy.
Realiy is hard.
Looks like I got the Anarcho-Capitalist crowd riled up yesterday.
hee hee hee hee.
.
and let's get those kids home from Iraq.
albrt | 01.12.09 - 12:14 am | #
Now. No excuses. Keep the campaign promise.
anon | 01.12.09 - 12:16 am | #
I am right there with you. Let's end this disgrace ASAP.
Thread music:
These Are The Days Of Our Lives
I will humbly ask again... what are military forces, within or without, being brought up and discussed here.
I asked directly and was ignored, but then it kind of came up again in a roundabout way.
I'm serious, paranoid, or seriously paranoid. Those are the first three states of being I want to try and comprehend operating from.
If a highway is gonna be shut down, I'd like to know how to get to work in a timely manner. As it were, I guess.
mp:
thanks for the quick response to #3.
curious (and doubt I'll ever know) whether this is just your off-cuff answer or whether this is something from a bottom of the desk drawer plan sitting in the back offices of the Fed.
Have a good night...tomorrow's early.
"I don't believe for one second that applying common-sense contract rules to credit cards would dry up 2 trillion in credit anyway, and I don't care who says that, including Whitney."
Well, Fair Economist, you may be interested in knowing that the ABA said as much themselves.
More thread music:
YouTube -
Barack pledged to bring the Joint Chiefs in on 1/21 and ask them to end the war in Iraq. Repeated tonight on 60 Minutes.
so where is the C-is-going-down-Monday meme that we started the weekend with?
showtime in 9 hours - well?
so where is the C-is-going-down-Monday meme that we started the weekend with?
bgates | 01.12.09 - 12:22 am | #
You did read the FFDIC follow up in that thread, did you? It is important for context.
ationalizing the banks (at the public's insistence, for stability and/or national security) would take care of that neatly, wouldn't it?
No not really.
Comrade Byzantine_Ruins | Homepage | 01.11.09 - 11:54 pm | #
I'm not fully understanding it then. nationalization means the government directly controls both the issuance and circulation of the currency, and terms of credit, along with who can and can't receive it. moreover they can devalue it at will, and issue as much as necessary for their "loyal subjects" to pay their bills. you're saying it gets even worse? at this point the government "controls the horizontal and the vertical", no? especially given that they control access to critical service infrastructure already we even now have barely a leg to stand on. maybe I'm just being stupid - what am I missing here?
Well, Fair Economist, you may be interested in knowing that the ABA said as much themselves.
Is that Bar or Bankers? And if it's Bankers why is Conjure so concerned about the ruling?
Albrt
since you said you weren't there to guard the banksters I took no offense.
@Fair Economist
The bankers said they'll have to pull credit as a consequence of the new regulations.
It may surprise you to learn that Conjure is concerned because he agrees with both Meridith Whitney and the banks.
"Meridith" s/b "Meredith."
Meredith, sorry.
1 reason we are in a depression, we moved tons of productive industry out of the country
From Brad Setser:
This really doesn't look good
"This really doesn't look good."
That's one reason why Conjure calls it the "global" depression clock.
Look at Korean exports to ChinaL
http://blogs.cfr.org/setser/files/2009/01/korea-and-taiwan-3.png
I think China will soon be open to "innovative" solutions.
RE writes:
\tYou did read the FFDIC follow up in that thread, did you? It is important for context.
RE | 01.12.09 - 12:24 am | #
-----
Are you referring to his "Don't ask me questions. I won't answer them. I don't have any insight into any yet-to-be-known activity dealing with C aside from connecting various dots" comment or did I also miss it?
That's one reason why Conjure calls it the "global" depression clock.
mp | 01.12.09 - 12:34 am | #
mp,
this is becoming deadly serious. You can't reverse such drops quickly. These are exports not penny stocks.
That's enough economic flagellation for one evening.
'Night, all. This too shall pass.
this is from a poster there:
"None of this is helpful to the common people on the street. The sooner this is settled the better. 70% of Chinas GDP is from exports and 40% of that is to the US. If Obama puts a ban on Chinese imports, the Chinese will collapse quickly. The very possibility of this should make the CCP cave in. If Roubini thinks 55 GDP growth is a hard landing for China, imagine what a year with a loss of 28% GDP from exports to the US would be like."
Brad Setser: Follow the Money » Blog Archive » This really doesn’t look good
Are you referring to his "Don't ask me questions.
yagij | 01.12.09 - 12:36 am | #
I meant this one:
http://www.haloscan.com/comments/calculatedrisk/274341541357587576/#814831
"...this is becoming deadly serious. You can't reverse such drops quickly. These are exports not penny stocks."
RE, Conjure and I are very much aware. As you know, we've been warning of this for some time now.
Few listened.
Why would the banks have to pull a large portion of credit card borrowing limits just because they're barred from a particularly egregious way to defraud customers? And even if they did, why do we want credit card customers to be carrying that 2 trillion at 30% interest anyway? If the CC company can't make money on a properly disclosed rate, the economy is harmed by that loan being made. It's exploitative and wasteful, and the last thing we need now is more bad private debt.
70% of China's GDP is from exports and 40% of that is to the US.
Anonymous | 01.12.09 - 12:38 am | #
The guy is full of ...
from Wikipedia: Exports of goods/services (39.7)
Also, the EU is China's biggest export market.
this is becoming deadly serious. You can't reverse such drops quickly
"becoming"?!
I thought you'd been paying attention here, RE.
The concept of global trade is a lot of complexity for fleeting gain. It never made any real sense, moving commodities and parts from A to B to C so that they could be sold to D for a rapidly increasing pile of paper.
The E. F. Schumacher Society • Buddhist Economics
"Equally, people who live in highly self-sufficient local communities are less likely to get involved in large-scale violence than people whose existence depends on world-wide systems of trade"
"dependence on imports from afar and the consequent need to produce for export to unknown and distant peoples is highly uneconomic and justifiable only in exceptional cases and on a small scale"
.
Few listened.
mp | 01.12.09 - 12:38 am | #
I agree and many still think (hope) that conventional solutions will do the trick...
Fair Economist, if I was in control of the banking system right now and Bernard Madoff's sons walked in and asked for a loan tomorrow, I'd probably give it to them. The situation is that bad.
The household sector is in desperate need of credit at the moment, even if it is usurious, wasteful and exploitative.
Households must be kept above water by any and all means available.
@mp
Sorry to sound daft but I never caught conjure's background.. what's the history/scoop? Is this a real person?
Apologies for the lame question.. just was never sure.
Damn, another thought to research...
How do banks actually securitize credit card loans, since they're revolving loans? Anyone got the nutshell version?
Reagarding earlier survivalist talk, did I miss something in history class or the Discovery channel about the roving bands of marauders during the Depression, or do folks think that human nature has changed that much?
Actually Whitney predicted the 2 trillion cutback in credit card lines as a result of the entire credit crisis situation not the recent Fed ruling specifically. IMO the vast majority of that will happen regardless of the Fed ruling - the banks don't have enough money, and they've known all along nobody should be borrowing at 20%+ anyway and, in a recession, will have to stop or default.
If the banks are nationalized, that regulation is a dead issue anyway in terms of credit line loss. The government can provide the credit anyway, although we very well might regret it if they did.
Re Discussion aout devaluation:
Without the gold standard, I am having trouble understanding the discussions about dollar devaluation. Devaluation as compared to what? Does this dollar devaluation assume this is relative to another currancy and, if so which one? Or is dollar devluation just another expression for inflation. Seems this term is used in variety of contexts on this board.
I had this very discussion last night with Ukrainian businessman, former test pilot for Soviets who defected to US shortly before breakup, and now owns successful air charter business for heavy lift contracts. Operations all over the world, including central Asia. Fears "dollar" devaluation (classic example of reverse split), but is even more concerned with every other currency his business is exposed to. Instead, his family is buying real estate, mostly residential, in SoCal, FL, Ecuador and elsewhere. You might think this is senseless, but this is a family whose parents survived slave labor camps in Germany during WWII and all of the trauma pre and post Soviet breakup. Hard to discount that kind of experience.
The concept of global trade is a lot of complexity for fleeting gain. It never made any real sense, moving commodities and parts from A to B to C so that they could be sold to D for a rapidly increasing pile of paper.
Broward Horne | Homepage | 01.12.09 - 12:45 am | #
I agree that the process is quite inefficient from various perspectives. However, I also firmly believe that global trade is essential to keep conflict at bay. With looming commodity shortages in so many areas, significantly less globalized trade will lead to much more intense sphere of influence plays.
It is quite disconcerting to see that the U.S. thinks it HAS to play occupying force in far away places like Afghanistan and Iraq in order to insure supply...
Fair Economist, if I was in control of the banking system right now and Bernard Madoff's sons walked in and asked for a loan tomorrow, I'd probably give it to them. The situation is that bad.
Well, we have to part company there. There are plenty, plenty of things to spend money on that don't require giving it to probable crooks, or saddling ordinary Americans with even more unbearable debt. For starters: Medicare for all, landscaping eyesore open space, grafitti removal, and neighborhood safety patrols.
I never caught conjure's background.. what's the history/scoop? Is this a real person?
Weep For Our Government Cheese.
Its Time Has Come
To Pass.
I think China will soon be open to "innovative" solutions.
RE | 01.12.09 - 12:35 am | #
Understatement of the day.
However, I also firmly believe that global trade is essential to keep conflict at bay
I'm sure you do. I'm sure the globalists thought so, too.
One of the more interesting and irritating aspects of IT projects is that they are never perfect.
And inevitably, some super-genius (like myself) comes along and declares... "Lo, this system should look like THIS"
And off they go, embarking on the mission to "fix" whatever anomaly they've discovered.
Anomalies almost always exist for a reason. And what happens is that Mr. Super-Genius runs smack-dab into that reason about 1/2 through the project and then applies his own half-assed, patchwork fix.
There's a reason that globalism failed.
.
"Devaluation as compared to what?"
obviously, that's the trillion dollar question, at least for the inflationistas (and perhaps for the opposite camp in reverse, shorting oil was certainly a nice trade in '08).
the candidates are: dollar vs other currencies
... vs gold (and/or other PMs)
... vs oil (and/or other commodities
... vs real estate
... vs art (and/or other collectibles)
and long bonds vs dollars or any combination of the above.
personally, i like a little bit of all of the above, but not an epic amount. i also like the concept of holding corporate paper at over 20% while shorting treasuries at 3%.
Does this dollar devaluation assume this is relative to another currancy and, if so which one? Or is dollar devluation just another expression for inflation.
Both.
Ceteris paribus, inflate the money supply and you will have dollar deflation against all currencies.
Or you can have dollar devaluation against select currencies (e.g. JPY/USD).
ms,
The "biggest contributor" would mean that G/S drove everything that happened, which plainly isn't the case. It didn't start the tech bubble and didn't try to arrest its collapse, it didn't give away money to counteract 9/11. In addition it didn't create the ABS market, computers or derivatives.
We can never know how things would have played out with no repeal, but we do know that C had a malfunctioning corporate culture well before then.
I agree that abdication of regulatory authority is contributory as well to the calamity.
But if the Greenspan hadn't acted the way they had in mispricing money, then the market wouldn't have been mispricing risk.
This isn't potAto/ potahto, this is the fed chair talking about irrational exuberance and 1st not pulling away the punch bowl, then pouring vodka in it. Now we have both the host of the party and his friends pouring in everclear. Phill Gramm is the idiot who let a bunch more people into the party; some could handle their liquor while Chuck Prince was the late stage alkie who gets pie eyed on 2 drinks.
@Fair Economist
@Fair Economist
"Fourth, amend the proposal on Unfair and Deceptive Lending Practices that is set to be adopted in 2010. The proposal includes one major change that will lead to a severe unintended consequence--pulling credit from consumers. Restricting lenders' ability to reprice and unsecured loan will cause them to stop lending or to lend less. This change could cut over $2,000 bn in unused credit card lines, or over 40% of unused credit lines."
Meredith Whitney in
"America must keep consumer liquidity flowing."
Financial Times, November 30, 2008
I love the MP/Conjure duo. I really do, but it sort of reminds of the movie Total Recall, in which the tiny genius, Kuato is embedded into the chest-cavity of George.
"thinks it HAS to play"
need has nothing to do with it, cretins who are too arrogant, stupid or busy profiteering to be aware of pre ww2 british history has everything to do with it.
I always love it when people try and explain currency...there only ever is one currency..
another confused questioner, mistaking subject for object:
Gubbmint Cheese writes:
@mp
Sorry to sound daft but I never caught conjure's background.. what's the history/scoop? Is this a real person?
Conjure is real. MP maybe not
Actually, I believe Kondratieff canuk has offered the best explanation to date on MP/CB:
"I always love it when people try and explain currency...there only ever is one currency.."
Toss in the stuff about frog bones and I'd say that's as perfect as we'll ever expect to get!
C
Hey, how bout I proof-read my post first next time, eh?
Little brown:
I love the MP/Conjure duo. I really do, but it sort of reminds of the movie Total Recall, in which the tiny genius, Kuato is embedded into the chest-cavity of George.
THAT plus the frog bones.
Goodnite everybody!
C
"Toss in the stuff about frog bones and I'd say that's as perfect as we'll ever expect to get!"
Conjure says, "Please. Toad bones or nothing at all."
picosec writes:
Cost Plus to cut corporate staff
Cost Plus is closing 18 stores, BUT is opening 17!
picosec | 01.11.09 - 9:06 pm | #
++++++++++++++++++++++++++++++++++++++
Cost Plus is in the dead pool. I used to work for them. I bring bad luck to companies.
I also worked for Payless Cashways(aka Hugh M Woods), Mervyn's, Microage, Countrywide*, Global Crossing, and a couple of other companies.
*Technically not a bankruptcy, but I suspect the Feds twisted BAC's arm.
thx