Can we shorten this to the NecrObamaCon? Broward Horne | Homepage | 01.06.09 - 1:32 pm | #
That is funny! citizen energyecon | Homepage | 01.06.09 - 2:18 pm | #
I lit my black flame candle in Broward's honor.
From Friday, February 03, 2006:
Thumbing through my copy of "The Necronomicon" (at midnight by the light of a black flame), it warns that the consequences of bringing the housing market back from the dead will be far more dangerous than letting it rot in the stygian depths to which it has fallen. The extent of those depths in the dark days ahead will not be known until the spectre of Cthulu awakens and (re)posses those things most dear to the doomed minions souls. Namely the holy speed boat, the most reverent Harley-Davidson, those objects of all desire the SUV, RV and ATV. Only then when all hope is lost and the scavengers are finished picking the bodies on the bloody battlefield clean of all that is valuable will the lamentations of the children, resigned to public schools and community college be heard. Only then as the wives cry out to the darkness, "Maui, Cancun wherefor art thou" will the true nature of the beast variously known to mere humans as the House ATM, the great equity withdrawl, the very HELOC himself so powerful that he is CAPITALIZED be revealed as a vampire sucking the lifeblood of guilty and innocent alike. Listen now, quiet, in the distance. The sound, the smell, the desperation. Those who thought an easy death, bankruptcy itself will be denied. No one gets off that easy. The laws of the gods of light and dark are no match for the US courts system. Ameriquest will eat their livers every dawn and peck out their eyes every sunset only to keep them barely alive to feed again on the morrow. And at night, where will they sleep? Not in their own beds, that's for sure.
What is all this garbage about "disinflation"? Don't they mean "deflation"? Oh yes, the bureaucrats at the Fed are Newspeak experts. Especially since they fear deflation so much but haven't been able to stop it. At least not yet. When all that new money starts moving, we'll never again have to worry about "disinflation".
How come they can't do a better job of forecasting? Are they are going to replace or better scrutinize the assumptions that go into the forecasts next time, so they aren't so surprised?
"the unemployment rate was likely to rise significantly into 2010, to a level higher than projected at the time of the October 28-29 FOMC meeting."
"btw China reduced the wholesale cost of aluminum by 23% and modest pricing pressure as this should help consumers, right?
Barley | 01.06.09 - 2:40 pm | # "
I just checked the pantry and I was fresh out of aluminum. I had to borrow a cup from the neighbor.
The only people scared of deflation are the money changers and asset flippers. People who earn dollars for a living love the idea that they can buy more with their paycheck.
"The most merciful thing in the world, I think, is the inability of the human mind to correlate all its contents. We live on a placid island of ignorance in the midst of black seas of infinity; and it was not meant that we should voyage far."
WASHINGTON – President-elect Barack Obama says the nation probably faces huge deficits for years to come, but heavy spending is needed now to spur the economy....
...Obama said: "Potentially we've got trillion-dollar deficits for years to come, even with the economic recovery that we are working on."
WASHINGTON President-elect Barack Obama says the nation probably faces huge deficits for years to come, but heavy spending is needed now to spur the economy....
...Obama said: "Potentially we've got trillion-dollar deficits for years to come, even with the economic recovery that we are working on."
Obama should read up on the history of fiscal abuses, and endless borrowing and spending by governments. He might be borrowing every single Washington bureaucrat out of a job if a dollar collapse leads to political failure.
By the way, who takes the Fed's forecasts/projections seriously? These fools can't even forecast into the next quarter. They revise each forecast so many times that the final revision looks nothing like the original. This is absurd.
And yes, I realize that it's impossible to accurately forecast the future, but why bother when the (Keynesian) methodology is so flawed? Using a little common sense I could have told you in late 2007 that 2008 was going to be a shitty year and 2009 even worse. What was the Fed saying in late 2007?
??
in case some people have not lost enough money yet?
so far today money is flowing out of SPY
of course they may want to pump until 967ish Fib. retrace
Again I will take the opportunity to point out that this illustrates the source of nearly all the problems we have today:
The financial system no longer represents reality; it merely represents expectations of money creation.
The markets have been rendered useless as a tool for supporting meaningful economic activity by relentless government intervention in the credit markets and the money supply.
Elvis(Unrated) writes: \tPoor Obama. Change of this magnitude takes more than 4 years. Elvis | 01.06.09 - 2:50 pm | #
In a way, this is good news for him. The timing is great for pushing his stimulus package. The media will spend the next two weeks telling everyone that they're going to get poorer for years unless....
"Real GDP was projected to decline for 2009 as a whole and to rise at a pace slightly above the rate of potential growth in 2010" - Did Ben let old Greenspan throw a line into the notes this week? Say what now?
"The only people scared of deflation are the money changers and asset flippers. People who earn dollars for a living love the idea that they can buy more with their paycheck."
Arthur Pigou, is that you? If so, please reread chapter two of Keynes's General Theory. People with no money do not care if prices are lower.
The deals are pretty good, we have the money, the kids are the right age and quite honestly, we actually discussed whether this would be last opportunity with what's on the horizon.
Maybe someone can help me flesh out my thoughts on the inflation/deflation debate. Is anyone seeing a "tear" emerging between pricing of services as compared to physical goods. If the rise of the first commodity bubble was caused by excess capital piling in fleeing from an earlier bubble, can we expect another rise in commodity prices from dollar weakness due to Fed "stimulation". If so, does that mean the present deflationary environment is temporary and only in physical goods as producers must shed excess inventory and will either eventually halt or even reverse course. However service related goods, i.e. washing each others laundry, will see continued erosion in prices as unemployment rises. Is this a realistic way to look at 2009? Please add input as I want to learn.
You've got to understand the mindset that the Fed wants us to be force-injected into the public.
"Disinflation" is what is desirable when inflation is raging and they need to cool the economy (Fed Newspeak, Chapter 11)
Deflation is what is bad when the economy is tanking and about to go TU over the cliff toward monetary collapse, and must be vigorous fought by igniting the fires of inflation.
So, the Fed speaks TRUTH when their statements now talk about disinflation. Nothing to worry about, just balancing the ballast.
[Thumbing through my copy of "The Necronomicon"...] Awesome mixed-message pattern. For 1/2 of America, it gets less funny with each passing day.
And for the other 1/2, it's downright hysterical. Broward Horne | Homepage | 01.06.09 - 2:52 pm | #
That 50:50 ratio keeps shrinking. Used to be I'd hold my opinions at parties because they wouldn't be believed. Now I hold my opinions because they will be believed.
Since we've already had two consecutive months of negative CPI (-1.7% in November and -1.0% in October) we are in deflation now. There also can't be any disinflation, since that's a declining rate of inflation, and there isn't any.
@JMS "Real GDP was projected to decline for 2009 as a whole and to rise at a pace slightly above the rate of potential growth in 2010" - Did Ben let old Greenspan throw a line into the notes this week? Say what now?
That one had me too. They seem to have reversed the " L___" shape.
But then, economic modelers as a community have never reallly been able to forecast trend changes (ever), so this is no surprise.
People with no money do not care if prices are lower.
--Jose Padilla
Then they likewise wouldn't care if prices were higher. But they would care about being employed again, at which point they wouldn't want to have their labor constantly devalued. And you are referencing Keynes's general theory? I don't respect Keynes much. He basically tried to justify government intervention as a part of study of economics. But it is really politics.
10 REM * FED ALGORITHM PROGRAM *
20 REM
30 PRINT "WOULD YOU PREFER A SHORT OR LONG RECESSION ? (S/L)"
40 REM
50 INPUT X
60 REM
70 IF X = S THEN GOTO 100
80 IF X = L THEN GOTO 100
90 REM
100 PRINT "YOU WIN A LONG DEPRESSION!"
Let's face it...there's not enough "true" work to be done. Either we cull the herd, or we all agree to legitimate welfare for more than just a handful. We're essentially doing that right now, yet not calling it that.
Speaking of rice, I have noticed that the price per kilo of imported Korean rice has not decreased significantly from highs. This is in spite of deflationary pressure and cliff diving of the won.
@Rob Dawg: "That 50:50 ratio keeps shrinking. Used to be I'd hold my opinions at parties because they wouldn't be believed. Now I hold my opinions because they will be believed. "
Same here...
Although when my father said his accountant had said he thought the DOW would be back into 14000 territory this year, I finally broke down and sent him CR's URL and the post where both Yellen and Feldstein agreed on how this was going to be a really really bad recession...
....we really need to spend MORE & MORE. There is no turning back. We need this spending train to hit the dead-end station track at 100mph. This collapse will be monumental in that 1000s of vids will be available to show the visual side of this colossal universal financial & structural depression.
Disneyworld is one of the biggest entertainment bargains on the planet, at least with respect to the admission ticket. I have spent an endless day there before, on a holiday, in Magic Kingdom during extra magic hours, and the park was open until 3 a.m. Parades, fireworks, world class rides, clean, safe as can be and the kids love it.
Food, lodging, souveneirs are a total gouge but if you restrain yourself just a little and plan ahead, it's one of the best deals going.
Oh, and Orlando and Kissimmee are both total shartholes.
A significant dollar adjustment would be quite beneficial for the US. It might well force a much needed correction in international imbalances.
Self-finance is not a bad thing.
There is a tendency to underestimate the benefits of adjustments.
Americans are able to thrive in a more down to earth economy, and it's worth remembering that we are not Japan in several decisive ways, and not only 1 or 2.
there's not enough "true" work to be done.
--Morocco Bama
So you want the government to tell you what to do? If there is nothing to be done, then why force people to bust their asses? Give them more time off. People can grow a decent amount of food in a backyard garden. So maybe they don't really need that much money. Why do you want to be a slave driver?
. The markets have been rendered useless as a tool for supporting meaningful economic activity by relentless government intervention in the credit markets and the money supply.
ac | 01.06.09 - 2:52 pm | #
Luckily, their function as a slaughterhouse for gullible wealth is much enhanced.
.
Unless an until we get real action including a Bank Holiday and Medicare for All the prospects for the US economy are a lot worse than presented here. mmckinl | 01.06.09 - 2:35 pm | #
Regarding the bank holiday... what would that entail and what would it hope to accomplish? Serious question. I am reading Kennedy's GD book, and am at the 'bank holiday' point. I see why it was done then, as there were major runs on banks. What would be the intent this time, since we are not seeing that (yet)?
@JMS "Real GDP was projected to decline for 2009 as a whole and to rise at a pace slightly above the rate of potential growth in 2010" - Did Ben let old Greenspan throw a line into the notes this week? Say what now?
That one had me too. They seem to have reversed the " L___" shape.
But then, economic modelers as a community have never reallly been able to forecast trend changes (ever), so this is no surprise.
I think it's so much worse than that. It's denial till the very end is what it is. The Fed can no longer shoot false hope into 2009 (that was fast) so they pick a date just beyond the horizon, come up with a statement that sounds positive if you're just skimming the statement and viola you've invented a better tomorrow. Once tomorrow arrives and it's a little less rosy then predicted? Simply, rinse, wash, repeat. It may seem trivial and absurd but as long as these absurd predictions keep being allowed to become the official view the decline continues to gather more and more downward force as trust and confidence in our economic leadership is justifiably further eroded. It's insidous in the end.
This is an amazing post. The Fed's own data does not support the unemployment prognostication. Are they dealing with November data? Claims for unemployment has slowed in each of the reporting periods in December. Claims fell significantly to their lowest level in 16 years for the period reported most recently: Unemployment Claims DROP is largest in 16 years
Are they just trying to set Obama up for a quick win or what? I guess if they use the positive numbers they lose support politically for the much sought after stimulus package?
Last night I finally figured out why the single-income family dominated in the 1950s.
We were still coming out of the 1930s/1940s credit reset. There was a longstanding labor surplus and for 20 years there had been ferocious competition for what jobs were available. Therefore, the work ethic was very strong - those who held down jobs would do what it took to keep them.
And a single worker with family at home could put in a lot more hours and be more productive than someone with a working spouse and kids needing care.
Finally, having the second person at home gave the family a lifeline in case the first lost the family's job: two could seek work in a pinch.
[ This was stimulated by skimming The Two-Income Trap over the holidays... There's clearly a global labor surplus and there will be fewer two-income families in the future: how would our household get by on a single (likely to be reduced) salary? Save, Save! ]
btw China reduced the wholesale cost of aluminum by 23% and modest pricing pressure as this should help consumers, right? Barley | 01.06.09 - 2:40 pm | #
I don't know if it is online yet but one of the projects tied to three gorges dam was for China to become one of the worlds largest aluminum smelters - you need lots of cheap energy for that.
But just the recent decline in energy prices could allow the Chinese (or anyone with low cost power) to cut aluminum prices and still turn a profit. The ore isn't that expensive - it's the capital & the energy to convert the ore to metal that costs real money.
there's not enough "true" work to be done. Either we cull the herd, or we all agree to legitimate welfare for more than just a handful. We're essentially doing that right now, yet not calling it that
OT: "Under the proposal being crafted by the incoming Obama administration and congressional Democrats, companies would be able to use their so-called tax losses to offset taxable U.S. profits earned in the past five years." - From DJI newswire
When did this idea get resurrected? And who thinks this will help ANYTHING? I remember all the discussion of this when it popped up last summer and thought it was idiotic then. That it has resurfaced should be embarassing to Obama.
The markets have been rendered useless as a tool for supporting meaningful economic activity by relentless government intervention in the credit markets and the money supply.
ac | 01.06.09 - 2:52 pm | #
Luckily, their function as a slaughterhouse for gullible wealth is much enhanced.
.
bobn
The problem is when the government decides to take the wealth of the non-gullible and throw it into the wood chipper too.
That seems to be where we are now - using legal force or monetary means to co-opt the wealth of people who would ordinarily use it wisely and essentially throw it away to win elections.
OT: "Under the proposal being crafted by the incoming Obama administration and congressional Democrats, companies would be able to use their so-called tax losses to offset taxable U.S. profits earned in the past five years." - From DJI newswire
When did this idea get resurrected? And who thinks this will help ANYTHING? I remember all the discussion of this when it popped up last summer and thought it was idiotic then. That it has resurfaced should be embarassing to Obama.
Mr. Sparkle |
Claims for unemployment has slowed in each of the reporting periods in December. Claims fell significantly to their lowest level in 16 years for the period reported most recently
Doesn't sound like lowest level in 16 years in NY. So many calls to the state unemployment office today the system went down. 10,000 calls per hour.
A staggering 83 percent of the 404 corporate leaders surveyed by the Siena Research Institute in Loudonville said economic conditions in New York state were worse at the time of the survey than six months prior, while only 2 percent believed the economy had improved.
And 72 percent said the economy would worsen further in the coming year, while only 10 percent expected it to get "a little better" and 1 percent predicted it will get considerably better.
I can haz bailouts? writes:
Maybe someone can help me flesh out my thoughts on the inflation/deflation debate.
I think it's worth visiting Itulip.com for Eric Janzen's thoughts on inflation/deflation. He predicts "disinflation" now (says true deflation is impossible with a fiat currency), followed in a year or two by heavy inflation, but not real hyperinflation.
Regarding the bank holiday... what would that entail and what would it hope to accomplish? Serious question. I am reading Kennedy's GD book, and am at the 'bank holiday' point. I see why it was done then, as there were major runs on banks. What would be the intent this time, since we are not seeing that (yet)?
~~~~
We need a bank holiday to scrub the books of all banks to begin restoring faith in the financial system. All the Wall Street Banks have more "Mark to Make Believe" assets on their books than verified assets. They are essentially insolvent several times over and the situation will only get worse as the economy gets worse. This is why they are hoarding cash andd will drag the economy down with them if allowed to.
dryfly...China is exponentially growing its power generating capacity...in a down turn the cost become negative because your cant store the stuff. Barley | 01.06.09 - 3:09 pm | #
Aluminum is one of the great 'stores' of value for surplus energy... always has been. That's why aluminum (and magnesium) companies operate near hydro plants - Columbia River, Canada, Scandinavia, Russia and now China. Once the local demand exceeds the supply of cheap hydro they tend to leave.
I believe a bank holiday is possible, but not probable. It will not be announced, nor called a bank holiday. The effects will be as mmcmkinl describes.
The federal reserve, like death, taxes and reality television will be with us always.
@Morocco & Broward - 1930s saw the rise of the 5-day workweek (versus previous 6) as a way to cope with the labor surplus. I'll go out on a short limb and say that this year or next we'll see more proposals for 4- or even 3-day workweeks. (Company could operate 6 days/week with two people sharing 3 day/week jobs...)
@ JMS: "It may seem trivial and absurd but as long as these absurd predictions keep being allowed to become the official view the decline continues to gather more and more downward force as trust and confidence in our economic leadership is justifiably further eroded. It's insidous in the end."
It's not just the U.S. either. People have the choice of either organizing to stop the lies, or letting it happen. Fortunately we have the blogosphere now to keep the mainstream media parrots honest. Because the end-of-Roman Empire scenario lies down the other path...
"says true deflation is impossible with a fiat currency"
What? The money is created as debt. If the debt is canceled and it isn't replaced, the money supply shrinks. In a bankruptcy, they liquidate whatever you got and the rest of the loss is eaten by creditors, so how can deflation be impossible? And if it can't happen with a fiat currency, then when does it happen?
What? The money is created as debt. If the debt is canceled and it isn't replaced, the money supply shrinks. In a bankruptcy, they liquidate whatever you got and the rest of the loss is eaten by creditors, so how can deflation be impossible? And if it can't happen with a fiat currency, then when does it happen? s0mebody | 01.06.09 - 3:19 pm | #
I agree deflation certainly could happen in a fiat based economy - just shrink the money supply. And I also agree there is a lot of deflationary pressure trying to do just that. I think the point is it is unlikely to happen (or happen for long) given the political reality & the ability of central banks to then create more money especially if they have the full support of the treasury [which in our case they certainly do].
So the FRB was wrong about their overly optimistic views in Oct. Could they be wrong about overly pessimistic views in Dec and stepping too dangerously hard on the accelerator? It would be at least as harmful to the US economy...
Could they be wrong about overly pessimistic views in Dec and stepping too dangerously hard on the accelerator? It would be at least as harmful to the US economy... bearly | 01.06.09 - 3:24 pm | #
Q: How can you tell when the government is fucking up? A: They're doing something.
dryfly writes:
I think the point is it is unlikely to happen (or happen for long) given the political reality & the ability of central banks to then create more money especially if they have the full support of the treasury [which in our case they certainly do]
This summarizes Janzen's argument. He looks at all the wild Fed actions lately and concludes that given no restraints (and he predicts that what restraints do exist will soon disappear), the Fed can prevent deflation from occuring.
there's not enough "true" work to be done.
--Morocco Bama
I'm glad someone finally said it.
"It is difficult to get a man to understand something when his job depends on not understanding it."
Upton Sinclair
Government stooges who create problems that they insist we need them to solve... self perpetuating-what a gig, er ah, scam , er ah, sham-yeah!Parasitic is more like it-of the self- replicating kind. I spoke to a family member with the Federal Government over the Holidays who said they could lose half the people in their office and still get all the work done-better find something for these robots to do-if they had to enter the real world workforce they might have to think for themselves-they'll never cut it-can't have angry robots on the rampage.
@Sparkle: I was saying that the honest now had the means to fight lies with truth, and could thus skip the revolution. But yes, I'm usually an optimist. Life is better that way.
Morocco Bama(Unrated) writes: Let's face it...there's not enough "true" work to be done. Either we cull the herd..."What do you mean, "we", paleface? ", or we all agree to legitimate welfare for more than just a handful. We're essentially doing that right now, yet not calling it that. \t Morocco Bama | \t \t \t \t01.06.09 - 3:00 pm | #Also, define "true work." If you're talking stuff that makes money on a balance sheet aimed at short-term profit-loss for a profit-making company, possibly so. But what about all the stuff that doesn't get done because "it doesn't make a profit," such as actual good education, better health care, and generally making sure that people don't grow up to be convicts, drug addicts, or Wall Street bankers -- people who harm society and incur real societal costs on an ongoing basis.
I agree that it is theoretically possible for the government to inflate out of this, but why couldn't they inflate out of the '30's? IMO, They aren't even on the right scale to try and inflate out of this. Consider the size of the stock market, treasury market, and all derivatives markets, how much has been bet, and how much would potentially need to be covered to make good on poorly underwritten bets. My number is a lot higher than ~$10 trillion to cover the losses that will occur. I don't think they are on the right scale to inflate out of this and being on the right scale would be so politically reprehensible, at least right now.
@Broward - Good, I thought you were more sensible than to agree (as you seemed to) that there was no choice but to "cull the herd, or we all agree to legitimate welfare for more than just a handful".
A shorter workweek is neither of those and IMHO better than either one.
(If you want to own the shorter-workweek meme, I suggest you take more care for your marketing and brand identity.)
Come on guys, if the debate is about disinflation (lowering inflation, still positive) or deflation (negative inflation), everybody should know the terms or google it.
The weakness of depending on the blogosphere to maintain information and opinion is the ease with which it is controlled.
China has proven how easy it is to limit access to the internet. Australia is currently experimenting and the UK has implemented active monitoring with law enforcement intervention if they question your motives.
The US has "carnivore" and Google keeps a permanent record of anything you search or access including Gmail.
Watching newspapers consolidate and implode worries me. Newspapers have always been part of the local power structure and been allowed access to all political functions from crime reporting to zoning commissions. Concentrate news gathering and limit access and you have a recipe for censorship and control of the "message".
First Amendment freedoms? Speech published on a private medium subject to EULA's won't provide much protection. Can you make the local newspaper publish your news or opinion?
"When did this idea get resurrected? And who thinks this will help ANYTHING? I remember all the discussion of this when it popped up last summer and thought it was idiotic then. That it has resurfaced should be embarassing to Obama"
Net Operating Losses can already be carried back two years. Extending to five years will enable a lot of those in the residential construction related fields who are now in their third year of losses to recover their taxes from the boom years. A similar strategy was employed right after 9/11 to the benefit of those in the technology fields after the collapse of the internet bubble. The trouble that I have with this is that it is putting money into a dead end rather than investing in something positive.
Wisdom- Didn't mean to sound overly harsh/rude!
I just am skeptical that most people want to be honest. Most citizens have tons of debt and sincerely hope for a bailout. Further, I don't think that 75% of them have any real clue about what's been going on and who stands to benefit. I think they all sympathize with too much debt and hope to get some of the slop from the trough. I personally think that a lot of people are going along because they truly believe these actions will help them.
Just my 2 cents...
This summarizes Janzen's argument. He looks at all the wild Fed actions lately and concludes that given no restraints (and he predicts that what restraints do exist will soon disappear), the Fed can prevent deflation from occuring. blueridge | 01.06.09 - 3:26 pm | #
I think he is right - but that raises the next question... can they then manage the resulting inflationary overshoot without pain & disappointment? I doubt it.
"If the rise of the first commodity bubble was caused by excess capital piling in fleeing from an earlier bubble, can we expect another rise in commodity prices from dollar weakness"
Well, I don't see an investment in commodities being very attractive in the face of ongoing decreases in demand. If you think you can tap a speculative bubble, OK, but that could be a very quick, sharp bubble.
@Unblvbl - that's my point. It benefits nothing except giving more money to... who exactly? Shareholders? CEO?
Last time I checked, businesses kept employees not based on their cash on hand, but more based on current/future business expectations. I'm not so sure those future expectations are so bright. Dead end/black hole is just about right.
He might be borrowing every single Washington bureaucrat out of a job if a dollar collapse leads to political failure.
ac | 01.06.09 - 2:49 pm | #
Given all the discussion of the Buiter piece yesterday: look, we are well and truly fucked due to the disastrous policies of the last 30 years, predominantly due to Greenspan, Reagan, and Bush.
Even if you believe the ship is going down no matter what (and I know we have some "The Road" onanists here) wouldn't you prefer a government that at least tries to unshit the bed?
Obama and admin will try like hell to clean up the messes these scumbags have left for us. I am pulling for him. What would you do differently?
First, I think Cdn banks are in good shape and much, much better shape than US and Euro banks. I sense that the recent moves to issue more preferred shares is more about generating K for M&A. The challenge the Cdn banks have is that they are more regulated (this has helped this time around).
Second, Cdn banks are generally to small to compete internationally - while size may be an issue they have overcome obstacles by being smart and stealth. Now, the marketplace has changed especially now with the accelerated concentration. Global finance takes a critical mass. [An opinion here: C will do the opposite]
Third, by "holiday", I mean a more workable framework of regulation to allow Cdn banks to broaden their business. Both in Canada and especially abroad. Especially in the US marketplace. I also see very generous tax changes to sustain and encourage this. (Perhaps, even, in the Canadian tradition, to backstop some business deals)
Unlike their US counterparts, Cdn banks are profitable. Sure their will be increased levels of writedowns due to a weaker markets(s) but overall the conservative stewardship of shareholder interest has done them well.
Thanks for the answer. What if the market prevents the treasury from creating debt? It would be deflationary, unless it was Ben who started buying it, in which case you have a Ponzi scheme and people would flee the dollar as the currency collapsed. But if the Treasury defaulted on debts, it would mean the cash could by more treasuries, so could the dollar get stronger if the Treasury defaults? I personally wouldn't invest in U.S. treasuries until some of the debt is wiped off the books so that I knew I had a better chance of being paid. But then you have to factor in default risk. What a game.
When everyone knows that sovereign bond failure in the USA will lead to serial default, and when commodities don't bring in enough to balance current account- Issue your own debt.
So the FRB was wrong about their overly optimistic views in Oct. Could they be wrong about overly pessimistic views in Dec and stepping too dangerously hard on the accelerator? It would be at least as harmful to the US economy...
bearly | 01.06.09 - 3:24 pm | #
Or more likely they are still a bunch of pollyanna's. They are talking about growth resuming in 2H08, but weak growth that will not ofset the down 1H, and slightly above "potenetial" growth in 2010. If the savings rate is going to return to more normal levels over a few years, then this seems to me to be an EXTREMELY optimistic scenario. Big time paradox of thrift kicking in and fighting the rise in the savings rate, diminished multiplier effects of the stimulus. The stimulus package softens the blow, sort of like an airbag, but the car still crashes and is totalled. At least the passengers survive.
What? The money is created as debt. If the debt is canceled and it isn't replaced, the money supply shrinks.
~~~
Because it is leveraged debt ... when the banks lose $1 they lose the ability to give $9 in credit sucking a leveraged amount out of the system.It is called Fractional Reserve Banking. What it really means is "leveraged debt"
I agree that it is theoretically possible for the government to inflate out of this, but why couldn't they inflate out of the '30's? s0mebody | 01.06.09 - 3:27 pm | #
They did - it just took time and a massive & expensive war [paid for w/ deficit spending] and currency devaluations. If I'm not mistake the treasury & the fed are pumping about the same amount of 'stimulus' into the system now [as witnessed by the growth of the deficit & debt]... it won't register immediately as there is a significant lag but it will register.
We need a bank holiday to scrub the books of all banks to begin restoring faith in the financial system.
If it happens it will be to net out all the various CDS contracts...
CDS contracts don't have a centralized clearing house or counter-party like stock options or other derivatives. To close them out, you'd need to go back to your counter party and settle them with cash. Since this was such a pain, nobody ever did it and CDS contracts were typically never closed, just offset with other contracts.
The problem was that nobody assumed that somebody selling huge amounts of CDS contracts (like AIG) could go under. If a large seller of AIG contracts goes under then what was a small "net" exposure becomes a very large "gross" exposure on somebody else's book. And we all fall down. Maybe. Nobody really knows. Which is why the Fed and Treasury are trying to keep everything solvent.
Problem is that nobody is interested in forming a centralized clearing house for CDS contracts right now because they take on all the risk with little upside. But, the only other choice is to hope that nobody big blows up for the next five years.
"The weakness of depending on the blogosphere to maintain information and opinion is the ease with which it is controlled."
The Net is the most progressive invention since Jethro Tull taught us how to plant crops, and civil engineers learned how to make water safe to drink. I'm not speaking only of blogs, but of inexpensive and easy global communication, and access to information.
If the Internet is crushed, you can kiss your *** goodbye. I'm serious.
Ok folks, have to change into my suit and get over to the studio. Should be on at 4:15 NY, 3:15 Chicago time on bubblevision (CNBC)if anyone cares to see what I look like.
I call BS. In the past month, somebody has been busy updating the look of Google Reader and now espn.com which now is impossible to navigate. Willem Buiter was wrong about American innovation.
Given all the discussion of the Buiter piece yesterday: look, we are well and truly fucked due to the disastrous policies of the last 30 years, predominantly due to Greenspan, Reagan, and Bush.
Even if you believe the ship is going down no matter what (and I know we have some "The Road" onanists here) wouldn't you prefer a government that at least tries to unshit the bed?
Obama and admin will try like hell to clean up the messes these scumbags have left for us. I am pulling for him. What would you do differently?
My frustration with the the incoming admin is I don't see that they're doing anything different from their predecessors.
I don't believe that a crisis created by too much debt can be solved by even more debt. Also I don't necessarily assume we're completely fucked.
I admit at this point it may be ideological posturing all around if we've already painted ourselves into a corner.
So I'll go with the ideological posture of not continuing to abuse debt.
Ok. But if they lose the dollar, they have to raise capital to meet the capital requirements. So they become a demander of dollars as well as everyone else. Then what?
Martin Feldstein, in the WSJ: A substantial short-term rise in spending on defense and intelligence would both stimulate our economy and strengthen our nation's security.
If the Internet is crushed, you can kiss your *** goodbye. I'm serious.
Pavel Chichikov | 01.06.09 - 3:39 pm | #
Bye bye. I'm serious as well.
The internet is a business and requires a paid subscription with special equipment to access, not to mention electricity. The fallacy here is the freedom of the internet. Highly illusory.
Censoring web sites due to porn is an easy way to implement a system to shutdown any questionable website. Who decides? How would you get your site back online without suing? See the danger?
Kicker, you bring up a good point--there already has been a run, but on the shadow banking system. Full impact still uncalculated.
I am very much on mmckini's (sorry, can't spell that ID) side in this. My concern about this Fed report is based on my concern about Paulson's and Obama's stimuli. We're pouring large but finite sums into a hole of unknown depth. There is no question debt destruction is the endgame anyway, so let's get it over with and then make sure every incremental dollar spent goes to a good end--like new banks able and willing to lend, not wounded hulks still looking to plaster their wounds with taxpayer money.
And to Gary's point, yes Obama is trying to help. But his very disappointing stimulus plan indicates he, too, still thinks we have room to play games. In this respect, he is like Dimon and Paulson and all the rest who think a little tinkering are enough to get the good times rolling again on a status quo basis.
Holy crap, how can anyone still believe the deflation propaganda?
Just because insolvant banks have had their grossly valued shares plummet and joe-manja-cakes have had their grossly inflated mcmansions plummet in value, implies deflation for them; for the rest of us, nothing has changed. Long run trends in prices and costs for everything, from property taxes to gold to hamburgers to condoms continue to hold and increase.
The printing presses are running 24/7, don't get caught with your pants down holding cash.
One other thing I like about Janzen at Itulip is that he's given the best argument I've read for holding gold. In a nutshell, "If every central bank is holding on to some gold reserves, you should, too."
It's easy to say 'let it all collapse and then pick up the pieces' when you have no political responsibility.
I think the problem that most have is that the political responsibility needs to extend past the next election. Ultimately, the question becomes whether we are building something substantive or simply kicking the can down the road.
asl hearts lenin writes:
"Somebody from Apple not named Steve Jobs presents at MacWorld and his biggest introduction is a MacBook with a 17-inch screen and 8-hour battery."
The big news was the price cuts and removal of DRM on iTunes.
Welcome to the nightmare on main street dingbats. We've been in recession since 2000.
There is no such thing as a jobless recovery. Real incomes have declined since 2000, while nominal incomes have stagnated. No way is that a recovery.
We had an increase in debt above and beyond output. Hence, I would argue we are poorer today than in 2000.
The fed & their spreadsheets do not reflect reality. For the last 8 years, GDP growth was a measure of the rate Americans were impoverishing themselves with un-payable debts.
Ok. But if they lose the dollar, they have to raise capital to meet the capital requirements. So they become a demander of dollars as well as everyone else. Then what?
~~~~
Then they go belly up andd we the tax payer make whole depositors up to $250,000 per account.
Of course now they have their CEO, Ben Bernake Chairman of the privately owned and operated corporation known as the Federal Reserve throwing money at his shareholders, the Member Banks.
And there is a loss associated with those people who had over $250,000 in an account. And the creditors to the bank lose big on the debt they hold. Both are deflationary. Ben could be a factor, but right now the banks are sitting on their taxpayer money.
"The internet is a business and requires a paid subscription with special equipment to access, not to mention electricity. The fallacy here is the freedom of the internet. Highly illusory."
I didn't say it cost nothing to provide or use. Nor did I say that all six billion of us human beings have access to it.
Potable water must be paid for, and not everybody has it. That doesn't mean its benefits are illusory.
For the first time in human history global communication between individuals and local groups is possible, and huge stores of information are accessible.
If we can't tolerate the freedom that offers, we'll have done the whole human community great harm. Agreed, that never stopped us before. War is an example of our self-destructive instincts.
"Please let us know how all this new money will enter the economy when demand is at multi-decade lows."
The the fed or the treasury (I don't get my panties-in-a-knot trying to distinguish the two), as a last resort, moenetizes the national debt.
Maybe they'll even monetize all debt, they're going in that direction.
Relative valuations have changed, granted, and depending on weather you were screwed or were the screwer, you're seeing deflation or inflation. But the proof is in the money supply, which is going parabolic.
"I think the problem that most have is that the political responsibility needs to extend past the next election. Ultimately, the question becomes whether we are building something substantive or simply kicking the can down the road."
A practical suggestion must include avoidance of general suffering, civil breakdown, and in the case of the implementers political suicide.
It may very well be that the political class is winging it. A lot is riding on how well the new chief executive of this republic can get a grip. IMHO, we're in new territory, and no one in new territory is competent from the moment they set foot in it.
A solution is going to take guts, honesty, and intellectual horse power.
We don't know now how events will develop. This is the moment in time that we have, not some other time and place.
What happens next?
Pavel Chichikov | 01.06.09 - 3:58 pm | #
Keep watching. There seems to be an implacable slide towards more control and less freedom. I believe you've already posited several ideas of what the future is becoming. Much more autocratic if I remember correctly.
So what if the velocity is zero? If tomorrow the entire economy took a holiday and no transactions took place, would that mean the money supply = zero???
The money may be idle, but the first wiff of inflation-expectations, it will be deployed, that is probably hapening right now in precious metals and oil.
manja-cake - Please let us know how all this new money will enter the economy when demand is at multi-decade lows. Interesting Times | 01.06.09 - 3:56 pm | #
That's why the fed gov's are calling for 'fiscal stimulus' and have given up on the idea the Fed can manage this via monetary intervention alone. Once they go 'fiscal' they can pump money in directly via printing for projects like bridges to nowhere - directly into workers' pockets & suppliers' coffers. A direct injection. Or increase medicare & medicaid payments - goes directly to local hospitals - hospital workers as salaries. or military projects - again directly into the economy boosting both money supply & velocity.
It is NOT without cost as I fear we will learn later butt hat will come later. Inflation once started is much tougher to reel in than deflation.
manja-cake - I'm with you on the oil play... but it's nowhere near enough money supply to even out the collapse of home values, CRE values, jobs, equities, etc that has vanished from the economy.
It's gone. It won't come back for a long time.
And btw, those "MBS" that the FED is backing right now with all that "money supply"... their days are numbered as well. They are worth 10 cents to the dollar.
Rob Dawg writes:
Thumbing through my copy of "The Necronomicon" (at midnight by the light of a black flame), it warns that the consequences of bringing the housing market back from the dead will be far more dangerous than letting it rot in the stygian depths to which it has fallen. The extent of those depths in the dark days ahead will not be known until the spectre of Cthulu awakens and (re)posses those things most dear to the doomed minions souls....
And at night, where will they sleep? Not in their own beds, that's for sure.
And there is a loss associated with those people who had over $250,000 in an account. And the creditors to the bank lose big on the debt they hold. Both are deflationary. Ben could be a factor, but right now the banks are sitting on their taxpayer money.
~~~~~
Right now the more deflationary aspect of the money supply is reduction of velocity not credit. We have to restore confidence to get money moving again. Most of this debt is debt we can't service anyway, the system is approacj=hing insolvency. Beernanke andd Paulson are desperately trying to underwrite our $50 trillion in aggregate debt but it can't happen, the measures they are taking are only making matters worse by contracting confidence and credit so that thiss debt is even more unpayable.
What Paulson and Bernanke are doing is subsidizing their shareholders, friends and benefactors to the detriment of the eeconomy.
A practical suggestion must include avoidance of general suffering, civil breakdown, and in the case of the implementers political suicide.
As well as a method for ensuring this outcome with reasonable certainty.
And therein lies the problem - the current state of our knowledge about the consequences of economic policies doesn't seem to suggest that there is a clear strategy for preventing these things from happening. There does seem to be ample evidence, however, that implementing arbitrary policies can lead to highly destructive outcomes.
So you want the government to tell you what to do? If there is nothing to be done, then why force people to bust their asses? Give them more time off. People can grow a decent amount of food in a backyard garden. So maybe they don't really need that much money. Why do you want to be a slave driver?
s0mebody | 01.06.09 - 3:04 pm | #
Me, a slave driver? Are you kidding? Know with whom you are speaking.
The Internet is probably indispensable now and not just for the U.S.
Here's why - travel back with me to 1920 when the average Ford broke down every fifty miles. Bring that technology forward and put it on today's freeways in LA and SF.
They would seize up almost immediately and never work again. The current flows are built on the assumption of a certain level of reliability.
Likewise, a good chunk of business is now dependent on the assumption of quick and easy information to support an extremely complex infrastructure. Do you really think that IT guy KNOWS the answers?
Hell, no.
He looks them up.
"espn.com which now is impossible to navigate"
Okay, I have to say something about this. I interviewed for a position within the owner of ESPN.com and was ousted by the "Information Prieshood".
One of the afflictions of IT is that there's a certain type of geek that likes to geek. But they have no business sense and focus on the bottom line. Those guys should never be allowed to make business decisions but at many places they do because the real management is afraid of technology.
I can say that my interview revealed some interesting issues that were more extreme than what I've seen at other places.
.
"Keep watching. There seems to be an implacable slide towards more control and less freedom. I believe you've already posited several ideas of what the future is becoming. Much more autocratic if I remember correctly."
Those are certainly possible futures. I hope they remain only possibilities.
ac wrote:
I don't believe that a crisis created by too much debt can be solved by even more debt. Also I don't necessarily assume we're completely fucked.
ac | 01.06.09 - 3:41 pm | #
depends what the debt is spent on
if we as a country incur more debt to finance more consumer spending towards goods produced abroad then you are right
if we incur debt to make domestic capital investment, then WE CAN spend (invest) our way out of this crisis.
And btw, those "MBS" that the FED is backing right now with all that "money supply"... their days are numbered as well. They are worth 10 cents to the dollar. Interesting Times | 01.06.09 - 4:10 pm | #
The less they are worth the more 'inflationary' it is for the Fed to buy them at above market value... inflationary actions like this are a direct 'attack' on deflationary pressures.
cd, I know what you mean. I was upset that Breyers Ice Cream is much smaller than I originally thought. I had assumed for a while that it was a half gallon but I realized last year that they had switched to something like 1.5 liters or such nonsense. Blue Bunny however is still selling ice cream by the old amount or at least they were (I've avoided Ice Cream for months now trying to get a better physique). Unfortunately Blue Bunny, no matter the flavor, does not taste as good as Breyers. My favorite being the Peach flavor.
this guy explains the deflation hoax better than I; he's right on the money, been listening to him, am up almost 200% on my precious metal shares in 2 months.
aClem writes: "Regarding the bank holiday... what would that entail and what would it hope to accomplish?"
Ideally it would be a lot like the end of Terry Pratchett's novel "Going Postal." The Patrician (supreme dictator of the city), upon discovering some financial shenanigans, tells the head of the city guard "Send your men to the offices of the Bank of Ankh-Morpork, Sto Plains Investments, [etc. - a list of the businesses involved] and inform them that they are closed for audit. Also inform them that anyone who so much as moves a piece of paper before my clerks arrive to secure the premises will be thrown in the dungeons." And then he conducts a full audit of the books, backing out the transactions to find the shenanigans, and quite a lot of people do end up in the dungeons.
We need a bank holiday to scrub the books of all banks to begin restoring faith in the financial system. All the Wall Street Banks have more "Mark to Make Believe" assets on their books than verified assets. They are essentially insolvent several times over and the situation will only get worse as the economy gets worse. This is why they are hoarding cash andd will drag the economy down with them if allowed to. mmckinl | 01.06.09 - 3:15 pm | #
This is along the lines of what I think really needs to be done. Come clean about all that toxic crap then deal with it. It's like we have a tumor and won't do a biopsy. But before all that, wouldn't there have to be some heavy preparation to actually try to untangle the mess and deal with the fallout? How long would it take to figure out? Who would do it?
wally writes: "Well, I don't see an investment in commodities being very attractive in the face of ongoing decreases in demand. If you think you can tap a speculative bubble, OK, but that could be a very quick, sharp bubble."
if we incur debt to make domestic capital investment, then WE CAN spend (invest) our way out of this crisis.
mock turtle
No we cannot. You incorrectly assume that more debt will have less drag on the economy than will be created by infrastructure investment. For but one example were we to invest in a national train network there would not only be no return on investment but operating subsidies would add even to the initial capital debt.
Or increase medicare & medicaid payments - goes directly to local hospitals - hospital workers as salaries.
Who was it the other day that said that the Japanese manufacturers play interesting accounting games by importing high priced components into the US? The same thing happens in medicine, and perhaps on a larger scale.
One of the interesting things that will need to be resolved is how to get IP taxed in the US. Because of global development, much of a MNC's IP is parked in havens like Ireland and then licensed to the American subsidiary. Because of the high technology component in modern medicine, a significant % of domestic health care expenditures gets siphoned as an import.
Globalization and international trade treaties sure have had their unintended consequences.
The acceleration of information technology has made it possible to do a lot more with a lot fewer people, not to mention the changes in the work force due to globalization.
Another side effect of globalization has been increased quality. Case in point, the automobile industry. The functional life of most automobiles today is probably double what it was 20 years ago. There is less need for replacement of almost everything aside from consumables.
More joblessness seems inevitable. Logically, the economy no longer requires the services of vast sections of the population. So, a more socialistic society seems inevitable in a democratic system.
If it's inevitable why not go ahead and give a nod to reality rather than flogging a dead horse. Invest in programs which will yield societal benefits such as a new energy infrastructure or universal healthcare, not pouring money into terminally ill private institutions.
What Paulson and Bernanke are doing is subsidizing their shareholders, friends and benefactors to the detriment of the eeconomy.
--mmckinl
I agree with what you said in this post.
Me, a slave driver? Are you kidding? Know with whom you are speaking.
--Morocco Bama
I'm sorry... Oh great, mighty and wise Morocco Bama, why do you want to be a slave driver? Even if you personally aren't doing the slave driving, you are advocating the government should do it on your behalf. Having people put to work doing things that aren't necessary only so they can continue to pay the debts you owe (The U.S. government has run up huge debts so now it needs suckers it can put to work so that it can tax them to pay off its debts) is basically slave driving. Debt slavery, but slavery.
" fallonPDX writes:
Disney, the largest theme-park operator, increased 3.2 percent to $24.24 on the news on the FED being scared shitless about the state of the economy.
So the equity market is still in denial.
Wow. Capitalism in the US is totally fucked.
No job? Underwater in your mortgage.? Near bankrupt?
IIRC, the '30's was a boom time for the movies. People who couldn't afford a house or a car could enjoy going to the movies for a quarter (no adjustment for inflation), so ya', we might all be going to Disney World in lieu of a cruise or Europe or Hawaii.
dryfly(Excellent) writes: The less they are worth the more 'inflationary' it is for the Fed to buy them at above market value... inflationary actions like this are a direct 'attack' on deflationary pressures.
And the best part is, even if the Fed is wrong and deflation continues that just means the money they paid to their banker friends is worth more and more in real terms.
WSJ breaking: Alcoa plans to cut about 15,000 jobs, or roughly 14.5% of its current employees and contractors. It also plans salary and hiring freezes, more plant closures and a 50% cut in capital expenditures.
Inflation once started is much tougher to reel in than deflation.
I thought it was opposite? Not challenging, just looking for how?
cant they raise rates to stop it but when your stuck on 0% how can you stop consumer deflation if they are out of money? cd | 01.06.09 - 4:12 pm | #
Look at the 70s as an example - in theory BOTH should be easy to regulate - just throttle up or throttle back the money supply creation via monetary & fiscal stimulus to maintain stable monetary levels and therefore prices. The problem is that the treatment & the disease are very different in inflation & deflation... and resultant political will to enforce is also different.
In deflation the disease (shrinking money supply & velocity) is very painful for most people because most don't save & most HAVE debt. The treatment (fiscal largesse & low rates) is kinda fun... so fighting deflation isn't that tough politically for a gov't to pursue. The disease sucks, the treatment kinda fun - go for it!
Inflation is the opposite - while no one want's the prices they pay to increase THEY LOVE having their debts get smaller retative to prices & their incomes/profits increasing... without them doing ANYTHING but breathing! The treatment to slow the inflation disease is quite painful (high rates and reduced fiscal deficits) so gov'ts avoid if at all possible.
So it is politically difficult to bring all the force to bear necessary to fight inflation and that makes it quite difficult to control once underway.
Common theme from the 70s... "I want inflation controlled as soon as my income catches up with inflation... but not until!" Sums the problem up pretty well.
Comrade Terry(Excellent) writes: But, I hear you on the shrinking package contents. The ice cream thingie is the most heinous example.
I personally love best the fig leaf of it being a highly virtuous act on the part of the mfg to charge you more for less to "help combat the obesity epidemic".
Until that fad dies a nasty death at the hands of consumer value-seeking, Jasus Jainus, the born and bred American dope, lives on.
Bank Holiday:
For the record joking aside this is not 1933. There can be no bank holiday. This is a 24/7 picosecond world. Think "Ghostbusters" when they shut down the containment field.
Commissar Rob Dawg | 09.23.08 - 6:07 pm
Disneyland:
As a season ticket holder I can speak with some familiarity. I've seen no evidence of any park decline. The only change seems to be the average weight of the attendees. I'm not sure why or what it means but the number of hungry hippos and hefty heifers has assumed massive proportions. Disney is very proprietary with their attendance but I would guess they are increasingly reliant upon local cachement volume. We go 9-10x per year or about $24/visit. That's not particularly profitable even after our $9 Cobb salads.
And the best part is, even if the Fed is wrong and deflation continues that just means the money they paid to their banker friends is worth more and more in real terms.
LOL - very much so. I will know they are REALLY serious about fighting deflation when the Fed starts buying gold & silver directly. Extract PM from the economy and directly replace it with fiat. Almost like buying homes except you can't store the homes in a vault.
Tin Free writes:
no more Tin! egads!
Tin Free | 01.06.09 - 4:24 pm | #
The ability to pronounce an opinion as "tinfoil" never ceases to amaze. The sheer arrogance of the person holding the only true factual view of reality is breathtaking.
The definition of a solvent banking system- a customer can deposit their money in the bank and have complete confidence that it will be returned to them on demand.
One to do that is to ensure that the bank has capital and plenty of liquidity. The other way is for the government to guarantee it aka Nationalization. Our current and future economic mess is entirely due to the policy makers being unwilling to nationalize the banking system. Rather than creating all these fancy financing structure if they had simply said those that can't fund themselves in the private market will be nationalized there would have been no credit crunch for credit worthy borrowers.
The definition of a solvent banking system- a customer can deposit their money in the bank and have complete confidence that it will be returned to them on demand.
By that definition, any fractional banking system then is not solvent.
I took profits today on all but two holdings. Nice profit, but I didn't feel good about it. I'm too uneasy to let it ride only to have somebody swipe it back; so, I banked it.
" Mr. Beach writes:
Back after holiday with family.
Some reactions:
- Family members confessed to being "trapped" by the economic downturn. Upside down on homes, fearful of job losses. Cutting back spending.
- Family members are riding out the stock market. Hoping for a return to growth.
- Family members used spare cash to buy more stock in Sep/Oct/Nov. Now most are fully invested - with no spare cash.
- Family members are not concerned about USD or Gold.
Happy New Year to all.
Mr. Beach | 01.06.09 - 3:22 pm | # "
I was there a couple of weeks ago. It was surprising how much of the crowd was local...hardly any out of state tags in the parking lots which was surprising since I figured to rack up there in our running game of who could get the most states' license tags on the trip.
So, I would concur with the parks' increasing reliance on local traffic. That is probably a very temporary boost.
That's a good way to have a government bank. But what if you really don't want the government holding your money, or looking through your transactions, or possibly denying you access to your money for whatever reason. And what if you just really don't want to support what has been going on in this system with your personal money?
You're right that people want their money in a bank they know can give it back to them, but I don't know that anything in this system resembles that.
"On two occasions, I have been asked [by members of Parliament], 'Pray, Mr. Babbage, if you put into the machine wrong figures, will the right answers come out?' I am not able to rightly apprehend the kind of confusion of ideas that could provoke such a question." - Charles Babbage (1791-1871)
Even if you personally aren't doing the slave driving, you are advocating the government should do it on your behalf.
I never advocated any such thing. Bob Dobbs was correct with his "we" comment. I should have said the herd needs to be culled. I won't be doing the culling, but you can be sure someone, or something will at this rate.
Correct me if I'm way off base here, but are we attempting to buy our way out of a deep recession by refinancing an "interest only loan" into a "choose your payment"?
By that definition, any fractional banking system then is not solvent.
anonymous | 01.06.09 - 4:33 pm | #
not necessarily. As long as the Fed is a lender of last resort. Now you could argue that a banking system in which the government doesn't play a role is not solvent. The crisis is caused by two conflicting interests- the desire for a private banking system and no use of tax payer money. A lender of last resort doesn't mean the use of tax payer funds- banks can place collateral at the Discount window- technically if they ran themselves properly every loan they make could be discount window eligible. Therefore there is a simple rule-either you operate in the private market or you are nationalized.
Going out on a business trip - I'll check in at hotels & wifi hotspots as able. Should be interesting - meeting some corporate mucketty mucks from a large OEM to discuss sourcing some work they currently have placed in shops feared to be going BK... the guys I'm working with are looking to steal some of the biz, have intentionally avoided excess leverage, run older but well maintained machines and pay their workers more than most other jobbers we compete against but still less than UAW (plus we expect them to actually think and surprise surprise - they can and do!). We got a shot and in this economy that is something.
Stay safe. Try to get them to take reproduction rights as part of any contract imbalance settlements. "Partz" is the new black if ya know what I mean and I know you know what I mean.
Having worked for several large corps plus the fed gov't I don't think there will be inflated salaries to pay for inflated price increases. These people would rather go thru a sex change operation than increase pays IMO.
The only change seems to be the average weight of the attendees. I'm not sure why or what it means but the number of hungry hippos and hefty heifers has assumed massive proportions.
That is so true. It's a sight to behold. We go once a year...to Disney World and stay at one of the Deluxe Resorts....Animal Kingdom Lodge last two years, but we won't be going this year. However, the wife and I can't help gasping at the size of these people....and a number of them love their motorized scooters. It's like a scene out of WALL-E. One of the fat asse had their 6 yr old frop his pants and piss into the lake in front of everyone without shame. Class acts.
not putting you money in bank is called investing in a non insured money market. As we discovered there aren't too many people like you who don't want the government insuring them.
To rephrase Lincoln- you can have a private banking system or you can have a nationalized system what you can't have is what we are currently in neither private nor nationalized.
The less they are worth the more 'inflationary' it is for the Fed to buy them at above market value... inflationary actions like this are a direct 'attack' on deflationary pressures.
dryfly | 01.06.09 - 4:13 pm | #
Bernake's maximal plan, which I doubt he has political support for at this point, is to increase the Fed's balance sheet by the amount of the total decrease in banks' balance sheets. That would be net neutral if not for the fact that the entries offsetting some of the money that's been created has migrated off the balance sheets of regulated banks. Those losses wouldn't be offset even under the maximal plan.
These attacks on deflationary pressures will not be enough, though they may well be helpful (I'm not necessarily endorsing that particular definition of "help", you understand...).
I'm still looking for some over-leveraged guy's fire-sale priced boxster. I got $10K.
Hold tight. There is some sweet stuff on ebay for 15k. I went up just to quickly find the current value on our two cars for end of year household calculations and spent about three hours "shopping" around, eyes wide with childlike glee.
[No we cannot. You incorrectly assume that more debt will have less drag on the economy than will be created by infrastructure investment. For but one example were we to invest in a national train network there would not only be no return on investment but operating subsidies would add even to the initial capital debt.
Rob Dawg
I rode through the Holland Tunnel the other day on a city bus. Would you not say that use of that tunnel by millions daily, 70+ years after construction, is a fairly significant ROI? Why would a nat'l train network provide no similar ROI?
Fractional reserve systems are always solvent until the bank runs come. The bank runs always come eventually, and a "lender of last resort" only means there is one lender bigger than all the others, not that that lender has immunity from a bank run.
Call me crazy, but physical cash is one of my "investments". It is mine, and no else can touch it. I can hold it and risk losing it to fire or theft, or I can let the government hold it and risk privacy and confiscation.
"Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low. The exception is subprime mortgages with variable interest rates, for which delinquency rates have increased appreciably. The labor market is expected to stay healthy, and real incomes should continue to rise, although the pace of employment gains may be slower than that to which we have become accustomed in recent years. In part, slower average job growth may simply reflect the moderation of economic activity. Also, the impending retirement of the leading edge of the baby-boom generation, and an apparent leveling out of women's participation rate in the workforce, which had risen for several decades, will likely restrain the growth of the labor force in coming years. With fewer jobseekers entering the labor force, the rate of job creation associated with the maintenance of stable conditions in the labor market will decline. All told, consumer expenditures appear likely to expand solidly in coming quarters, albeit a little less rapidly than the growth in personal incomes if, as we expect, households respond to the slow pace of home-equity appreciation by saving more out of current income."
Then in their next report in July of 2007 they state the economy is getting worse. Ultimately, the Fed is poor at forecasting the future.
If they can't see 5 months ahead a 12 month analysis seems a bit optimistic.
I rode through the Holland Tunnel the other day on a city bus. Would you not say that use of that tunnel by millions daily, 70+ years after construction, is a fairly significant ROI? Why would a nat'l train network provide no similar ROI? - freeulysses
I cannot thank you enough for this exact example. Did you know that NYCTA uses tolls from bridges and tunnels to subsidize rail transit in the city? Worse, they actually book tolls as transit fare revenue and use that make transit look less unprofitable than it is.
Morocco Bama writes:
Dawg, you'll appreciate the irony of this, I'm sure...
Funny but unfortunately an intertubz myth. What happened was as the boats got older and leaked they'd lay new fiberglass inside. If anyone here is a glass boater they'll tell you how that works over 50+ years. The boats were bogging down from thick waterlogged bottoms, not thick bottomed riders. A few weeks ago it looked almost ready. Sometime in Feb, I suspect.
I rode through the Holland Tunnel the other day on a city bus. Would you not say that use of that tunnel by millions daily, 70+ years after construction, is a fairly significant ROI? Why would a nat'l train network provide no similar ROI?
Do you know how long it takes to plan and build something like the Holland Tunnel?
Longer than the federal government will be solvent.
All this talk about infrastructure stimulus is laughable.
They will choose projects that let them throw the largest amount of money against the wall in the shortest possible time.
re: After hours trading, Alcoa isn't being viewed as positive.
I cant believe B of A finished green after admitting a miss but not quantifying it. They and JPM will need some Citi type "backing" soon, and maybe the market knows it.
Anyone catch my CNBC hit? Those things are always too short, had about 30 other points I wanted to make, fortunately the other guest on the slot seemed to be fairly sharp.
They will choose projects that let them throw the largest amount of money against the wall in the shortest possible time.
rich | 01.06.09 - 5:01 pm | #
This could never happen in Canada.. or any other western country.
CNN's Gupta approached for surgeon general
Dr. Sanjay Gupta, CNN's chief medical correspondent, has been approached by Barack Obama's transition team about the U.S. surgeon general's post, according to sources inside the transition and at CNN. Gupta, a neurosurgeon, has served as a White House fellow and as a special adviser to then-first lady Hillary Clinton.
What do you mean "fears"? This is what they live for!
We have nothing to fear but fear itself.. err... right, right?
Can we shorten this to the NecrObamaCon?
Broward Horne | Homepage | 01.06.09 - 1:32 pm | #
That is funny!
citizen energyecon | Homepage | 01.06.09 - 2:18 pm | #
I lit my black flame candle in Broward's honor.
From Friday, February 03, 2006:
Thumbing through my copy of "The Necronomicon" (at midnight by the light of a black flame), it warns that the consequences of bringing the housing market back from the dead will be far more dangerous than letting it rot in the stygian depths to which it has fallen. The extent of those depths in the dark days ahead will not be known until the spectre of Cthulu awakens and (re)posses those things most dear to the doomed minions souls. Namely the holy speed boat, the most reverent Harley-Davidson, those objects of all desire the SUV, RV and ATV. Only then when all hope is lost and the scavengers are finished picking the bodies on the bloody battlefield clean of all that is valuable will the lamentations of the children, resigned to public schools and community college be heard. Only then as the wives cry out to the darkness, "Maui, Cancun wherefor art thou" will the true nature of the beast variously known to mere humans as the House ATM, the great equity withdrawl, the very HELOC himself so powerful that he is CAPITALIZED be revealed as a vampire sucking the lifeblood of guilty and innocent alike. Listen now, quiet, in the distance. The sound, the smell, the desperation. Those who thought an easy death, bankruptcy itself will be denied. No one gets off that easy. The laws of the gods of light and dark are no match for the US courts system. Ameriquest will eat their livers every dawn and peck out their eyes every sunset only to keep them barely alive to feed again on the morrow. And at night, where will they sleep? Not in their own beds, that's for sure.
It's all baked in.
...Fed Fears Long Recession...
Donnerwetter !
Priced in, Nanook. Priced in.
Perhaps CR could lend an editorial-type finish to this post? Tell the few newbies and non-econ kids what he thinks, and how much of this he believes?
Unless an until we get real action including a Bank Holiday and Medicare for All the prospects for the US economy are a lot worse than presented here.
the unemployment rate was likely to rise significantly into 2010, to a level higher than projected at the time of the October 28-29 FOMC meeting.
CR, can we expect an update to your unemployment projections?
TAKE THE MARKET ON THIS GREAT NEWS.
Meaningful job growth won't resume until 2011.
disinflationary?
Not DEflationary?
How do they figure that?
I guess after the famous 'Making Sure "It" Doesn't Happen Here' speech, the word "deflationary" is banned.
WMD's is the new deflation.....where's Sean Penn?
So, I guess no deflation, just disinflation, right?
One of their mandates is to fight inflation and by dis(ing) it, they are living up to their mandate.
btw China reduced the wholesale cost of aluminum by 23% and modest pricing pressure as this should help consumers, right?
Time to take S out..a nice 10%
What is all this garbage about "disinflation"? Don't they mean "deflation"? Oh yes, the bureaucrats at the Fed are Newspeak experts. Especially since they fear deflation so much but haven't been able to stop it. At least not yet. When all that new money starts moving, we'll never again have to worry about "disinflation".
Is the FOMC doom designed to panic Congress (especially Senate Republicans) into doing their Keynesian duty?
Disney, the largest theme-park operator, increased 3.2 percent to $24.24 on the news on the FED being scared shitless about the state of the economy.
So the equity market is still in denial.
Wow. Capitalism in the US is totally fucked.
No job? Underwater in your mortgage.? Near bankrupt?
We're going to Disneyland!
Rob Dawg | Homepage | 01.06.09 - 2:31 pm | # Ah, Cassandra...
How come they can't do a better job of forecasting? Are they are going to replace or better scrutinize the assumptions that go into the forecasts next time, so they aren't so surprised?
"the unemployment rate was likely to rise significantly into 2010, to a level higher than projected at the time of the October 28-29 FOMC meeting."
I am predicting a Bank holiday in Canada, on Jan 27th.
69 cent iTunes with no DRM skys the market?
Who says we have nothing to export ..
"btw China reduced the wholesale cost of aluminum by 23% and modest pricing pressure as this should help consumers, right?
Barley | 01.06.09 - 2:40 pm | # "
I just checked the pantry and I was fresh out of aluminum. I had to borrow a cup from the neighbor.
The only people scared of deflation are the money changers and asset flippers. People who earn dollars for a living love the idea that they can buy more with their paycheck.
Not One Cent - lol
Thumbing through my copy of "The Necronomicon"...
This quote so often comes to mind these days:
"The most merciful thing in the world, I think, is the inability of the human mind to correlate all its contents. We live on a placid island of ignorance in the midst of black seas of infinity; and it was not meant that we should voyage far."
Obama doing the work of Osama
Obama says trillion-dollar deficits may last years
Yahoo! 404 - Page Not Found
WASHINGTON – President-elect Barack Obama says the nation probably faces huge deficits for years to come, but heavy spending is needed now to spur the economy....
...Obama said: "Potentially we've got trillion-dollar deficits for years to come, even with the economic recovery that we are working on."
and another 600,000+ public sector employees.
I'm calling this the blowoff top.
Well, hell, what a perfect time to raise the Jumbo conforming limits. Lighter fluid on a fire.
People who earn dollars for a living love the idea that they can buy more with their paycheck.
Until they lose their job.
Obama doing the work of Osama
Obama is just trying to clean up after Bush's efforts: Debt to the Penny (Daily History Search Application)
Re: "disinflation"
This Fed is real big on "inflation expectations". Heck, they pretty much believe that inflation/deflation are caused by expectations alone.
They will never say anything that might encourage people to expect deflation. I am surprised they even said "disinflation".
I also love how they refer to massive nationwide layoffs as "increased slack in resource utilization".
WASHINGTON President-elect Barack Obama says the nation probably faces huge deficits for years to come, but heavy spending is needed now to spur the economy....
...Obama said: "Potentially we've got trillion-dollar deficits for years to come, even with the economic recovery that we are working on."
Obama should read up on the history of fiscal abuses, and endless borrowing and spending by governments. He might be borrowing every single Washington bureaucrat out of a job if a dollar collapse leads to political failure.
Nothing in the notes on where to take rates though? That's weird because...they did what now? Zero? Oh.
The "second half recovery" language appears to have not made the cut.
Poor Obama. Change of this magnitude takes more than 4 years.
Until they lose their job.
At which point they would prefer inflation?
By the way, who takes the Fed's forecasts/projections seriously? These fools can't even forecast into the next quarter. They revise each forecast so many times that the final revision looks nothing like the original. This is absurd.
And yes, I realize that it's impossible to accurately forecast the future, but why bother when the (Keynesian) methodology is so flawed? Using a little common sense I could have told you in late 2007 that 2008 was going to be a shitty year and 2009 even worse. What was the Fed saying in late 2007?
Eric writes:
TAKE THE MARKET ON THIS GREAT NEWS."
??
in case some people have not lost enough money yet?
so far today money is flowing out of SPY
of course they may want to pump until 967ish Fib. retrace
"increased slack" (in resource utilization) is what you get from pushing on a string, no?
Thumbing through my copy of "The Necronomicon"
Awesome mixed-message pattern.
For 1/2 of America, it gets less funny with each passing day.
And for the other 1/2, it's downright hysterical.
.
TAKE THE MARKET ON THIS GREAT NEWS.
Again I will take the opportunity to point out that this illustrates the source of nearly all the problems we have today:
The financial system no longer represents reality; it merely represents expectations of money creation.
The markets have been rendered useless as a tool for supporting meaningful economic activity by relentless government intervention in the credit markets and the money supply.
Elvis(Unrated) writes:
\tPoor Obama. Change of this magnitude takes more than 4 years.
Elvis | 01.06.09 - 2:50 pm | #
In a way, this is good news for him. The timing is great for pushing his stimulus package. The media will spend the next two weeks telling everyone that they're going to get poorer for years unless....
"Real GDP was projected to decline for 2009 as a whole and to rise at a pace slightly above the rate of potential growth in 2010" - Did Ben let old Greenspan throw a line into the notes this week? Say what now?
"The only people scared of deflation are the money changers and asset flippers. People who earn dollars for a living love the idea that they can buy more with their paycheck."
Arthur Pigou, is that you? If so, please reread chapter two of Keynes's General Theory. People with no money do not care if prices are lower.
TBT / TLT do not seem to be giving any credence to the Fed's pledge to hold down long-term Treasury rates...
TBT also seems like it would outperform a twice-as-large short on TLT... Hmm...
fallonPDX:
Actually, yeah, we're going to Disney in June.
The deals are pretty good, we have the money, the kids are the right age and quite honestly, we actually discussed whether this would be last opportunity with what's on the horizon.
Maybe someone can help me flesh out my thoughts on the inflation/deflation debate. Is anyone seeing a "tear" emerging between pricing of services as compared to physical goods. If the rise of the first commodity bubble was caused by excess capital piling in fleeing from an earlier bubble, can we expect another rise in commodity prices from dollar weakness due to Fed "stimulation". If so, does that mean the present deflationary environment is temporary and only in physical goods as producers must shed excess inventory and will either eventually halt or even reverse course. However service related goods, i.e. washing each others laundry, will see continued erosion in prices as unemployment rises. Is this a realistic way to look at 2009? Please add input as I want to learn.
You've got to understand the mindset that the Fed wants us to be force-injected into the public.
"Disinflation" is what is desirable when inflation is raging and they need to cool the economy (Fed Newspeak, Chapter 11)
Deflation is what is bad when the economy is tanking and about to go TU over the cliff toward monetary collapse, and must be vigorous fought by igniting the fires of inflation.
So, the Fed speaks TRUTH when their statements now talk about disinflation. Nothing to worry about, just balancing the ballast.
[Thumbing through my copy of "The Necronomicon"...]
Awesome mixed-message pattern.
For 1/2 of America, it gets less funny with each passing day.
And for the other 1/2, it's downright hysterical.
Broward Horne | Homepage | 01.06.09 - 2:52 pm | #
That 50:50 ratio keeps shrinking. Used to be I'd hold my opinions at parties because they wouldn't be believed. Now I hold my opinions because they will be believed.
I think this is what Obama meant when he said change.
https://www.obamacoincollection.com/Default.aspx?MID=527017
The v shaped recovery is always just two quarters away.
Like free beer tomorrow.
Morocco Bama: pls quote Obama correctly (lol).
Spange is spare change in city talk.
Wisdom Speaker:
If TBT does spike upwards, I'm going to:
a. be royally pissed for giving up and selling it;
b. do a final stock-up on rice and beans.
Rice and beans, baby, rice and beans.
Since we've already had two consecutive months of negative CPI (-1.7% in November and -1.0% in October) we are in deflation now. There also can't be any disinflation, since that's a declining rate of inflation, and there isn't any.
@JMS "Real GDP was projected to decline for 2009 as a whole and to rise at a pace slightly above the rate of potential growth in 2010" - Did Ben let old Greenspan throw a line into the notes this week? Say what now?
That one had me too. They seem to have reversed the " L___" shape.
But then, economic modelers as a community have never reallly been able to forecast trend changes (ever), so this is no surprise.
People with no money do not care if prices are lower.
--Jose Padilla
Then they likewise wouldn't care if prices were higher. But they would care about being employed again, at which point they wouldn't want to have their labor constantly devalued. And you are referencing Keynes's general theory? I don't respect Keynes much. He basically tried to justify government intervention as a part of study of economics. But it is really politics.
Rice and beans, baby, rice and beans.
Homedad43 | Homepage | 01.06.09 - 2:56 pm | #
You need more baby in that recipe for it to come out right.
10 REM * FED ALGORITHM PROGRAM *
20 REM
30 PRINT "WOULD YOU PREFER A SHORT OR LONG RECESSION ? (S/L)"
40 REM
50 INPUT X
60 REM
70 IF X = S THEN GOTO 100
80 IF X = L THEN GOTO 100
90 REM
100 PRINT "YOU WIN A LONG DEPRESSION!"
Let's face it...there's not enough "true" work to be done. Either we cull the herd, or we all agree to legitimate welfare for more than just a handful. We're essentially doing that right now, yet not calling it that.
Speaking of rice, I have noticed that the price per kilo of imported Korean rice has not decreased significantly from highs. This is in spite of deflationary pressure and cliff diving of the won.
@Rob Dawg: "That 50:50 ratio keeps shrinking. Used to be I'd hold my opinions at parties because they wouldn't be believed. Now I hold my opinions because they will be believed. "
Same here...
Although when my father said his accountant had said he thought the DOW would be back into 14000 territory this year, I finally broke down and sent him CR's URL and the post where both Yellen and Feldstein agreed on how this was going to be a really really bad recession...
....we really need to spend MORE & MORE. There is no turning back. We need this spending train to hit the dead-end station track at 100mph. This collapse will be monumental in that 1000s of vids will be available to show the visual side of this colossal universal financial & structural depression.
Disneyworld is one of the biggest entertainment bargains on the planet, at least with respect to the admission ticket. I have spent an endless day there before, on a holiday, in Magic Kingdom during extra magic hours, and the park was open until 3 a.m. Parades, fireworks, world class rides, clean, safe as can be and the kids love it.
Food, lodging, souveneirs are a total gouge but if you restrain yourself just a little and plan ahead, it's one of the best deals going.
Oh, and Orlando and Kissimmee are both total shartholes.
disinflationary?
Not DEflationary?
How do they figure that?
bobn | Homepage | 01.06.09 - 2:39 pm | #
I think they really meant to say... disdeflationary...
Modern man cannot see his chains or see the source of his afflictions.
Still, row away galley slave.
YouTube -
A significant dollar adjustment would be quite beneficial for the US. It might well force a much needed correction in international imbalances.
Self-finance is not a bad thing.
There is a tendency to underestimate the benefits of adjustments.
Americans are able to thrive in a more down to earth economy, and it's worth remembering that we are not Japan in several decisive ways, and not only 1 or 2.
Dedisinflationary? That's unpossible !
dryfly:
You should be in the state department.
China is the nation in the most difficult situation.
there's not enough "true" work to be done.
--Morocco Bama
So you want the government to tell you what to do? If there is nothing to be done, then why force people to bust their asses? Give them more time off. People can grow a decent amount of food in a backyard garden. So maybe they don't really need that much money. Why do you want to be a slave driver?
oh, oh....
404 visitors online at CR
End of the World!
.
The markets have been rendered useless as a tool for supporting meaningful economic activity by relentless government intervention in the credit markets and the money supply.
ac | 01.06.09 - 2:52 pm | #
Luckily, their function as a slaughterhouse for gullible wealth is much enhanced.
.
Unless an until we get real action including a Bank Holiday and Medicare for All the prospects for the US economy are a lot worse than presented here.
mmckinl | 01.06.09 - 2:35 pm | #
Regarding the bank holiday... what would that entail and what would it hope to accomplish? Serious question. I am reading Kennedy's GD book, and am at the 'bank holiday' point. I see why it was done then, as there were major runs on banks. What would be the intent this time, since we are not seeing that (yet)?
@JMS "Real GDP was projected to decline for 2009 as a whole and to rise at a pace slightly above the rate of potential growth in 2010" - Did Ben let old Greenspan throw a line into the notes this week? Say what now?
That one had me too. They seem to have reversed the " L___" shape.
But then, economic modelers as a community have never reallly been able to forecast trend changes (ever), so this is no surprise.
I think it's so much worse than that. It's denial till the very end is what it is. The Fed can no longer shoot false hope into 2009 (that was fast) so they pick a date just beyond the horizon, come up with a statement that sounds positive if you're just skimming the statement and viola you've invented a better tomorrow. Once tomorrow arrives and it's a little less rosy then predicted? Simply, rinse, wash, repeat. It may seem trivial and absurd but as long as these absurd predictions keep being allowed to become the official view the decline continues to gather more and more downward force as trust and confidence in our economic leadership is justifiably further eroded. It's insidous in the end.
What is all this garbage about "disinflation"? Don't they mean "deflation"? Oh yes, the bureaucrats at the Fed are Newspeak experts.
Maybe what they meant was disinflormation?
Always looking for answers to the myriad of problems. Free PDF book with a big picture plan to a sustainable future. \t
Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble
Bookstore - Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble
| EPI
This is an amazing post. The Fed's own data does not support the unemployment prognostication. Are they dealing with November data? Claims for unemployment has slowed in each of the reporting periods in December. Claims fell significantly to their lowest level in 16 years for the period reported most recently: Unemployment Claims DROP is largest in 16 years
Are they just trying to set Obama up for a quick win or what? I guess if they use the positive numbers they lose support politically for the much sought after stimulus package?
Last night I finally figured out why the single-income family dominated in the 1950s.
We were still coming out of the 1930s/1940s credit reset. There was a longstanding labor surplus and for 20 years there had been ferocious competition for what jobs were available. Therefore, the work ethic was very strong - those who held down jobs would do what it took to keep them.
And a single worker with family at home could put in a lot more hours and be more productive than someone with a working spouse and kids needing care.
Finally, having the second person at home gave the family a lifeline in case the first lost the family's job: two could seek work in a pinch.
[ This was stimulated by skimming The Two-Income Trap over the holidays... There's clearly a global labor surplus and there will be fewer two-income families in the future: how would our household get by on a single (likely to be reduced) salary? Save, Save! ]
btw China reduced the wholesale cost of aluminum by 23% and modest pricing pressure as this should help consumers, right?
Barley | 01.06.09 - 2:40 pm | #
I don't know if it is online yet but one of the projects tied to three gorges dam was for China to become one of the worlds largest aluminum smelters - you need lots of cheap energy for that.
But just the recent decline in energy prices could allow the Chinese (or anyone with low cost power) to cut aluminum prices and still turn a profit. The ore isn't that expensive - it's the capital & the energy to convert the ore to metal that costs real money.
and there isn't any.
El Cliffo
opps time to change the model (again)
there's not enough "true" work to be done. Either we cull the herd, or we all agree to legitimate welfare for more than just a handful. We're essentially doing that right now, yet not calling it that
That's the fact, jack.
.
dryfly...China is exponentially growing its power generating capacity...in a down turn the cost become negative because your cant store the stuff.
"Barley writes:
I am predicting a Bank holiday in Canada, on Jan 27th."
Oh, come on, Barley. You can't just throw out a statement like that and not elaborate.
OT: "Under the proposal being crafted by the incoming Obama administration and congressional Democrats, companies would be able to use their so-called tax losses to offset taxable U.S. profits earned in the past five years." - From DJI newswire
When did this idea get resurrected? And who thinks this will help ANYTHING? I remember all the discussion of this when it popped up last summer and thought it was idiotic then. That it has resurfaced should be embarassing to Obama.
404
- CharlotteObserver.com
Anyone miss this? From the "Now that we're uncovering all the fraud" news pile...
Hmm. No longer accepting houshold appliances as collateral for auto loans.. Might have an effect on sales? Ya think?
The markets have been rendered useless as a tool for supporting meaningful economic activity by relentless government intervention in the credit markets and the money supply.
ac | 01.06.09 - 2:52 pm | #
Luckily, their function as a slaughterhouse for gullible wealth is much enhanced.
.
bobn
The problem is when the government decides to take the wealth of the non-gullible and throw it into the wood chipper too.
That seems to be where we are now - using legal force or monetary means to co-opt the wealth of people who would ordinarily use it wisely and essentially throw it away to win elections.
OT: "Under the proposal being crafted by the incoming Obama administration and congressional Democrats, companies would be able to use their so-called tax losses to offset taxable U.S. profits earned in the past five years." - From DJI newswire
When did this idea get resurrected? And who thinks this will help ANYTHING? I remember all the discussion of this when it popped up last summer and thought it was idiotic then. That it has resurfaced should be embarassing to Obama.
Mr. Sparkle |
We're all Ronald Reagan now.
W@ho coined disinflationary?
ac -
We're all going to hold press-conferences under helicoptors about to take off?
Claims for unemployment has slowed in each of the reporting periods in December. Claims fell significantly to their lowest level in 16 years for the period reported most recently
Doesn't sound like lowest level in 16 years in NY. So many calls to the state unemployment office today the system went down. 10,000 calls per hour.
And don't miss the survey of NY CEO's that came out today.
A staggering 83 percent of the 404 corporate leaders surveyed by the Siena Research Institute in Loudonville said economic conditions in New York state were worse at the time of the survey than six months prior, while only 2 percent believed the economy had improved.
And 72 percent said the economy would worsen further in the coming year, while only 10 percent expected it to get "a little better" and 1 percent predicted it will get considerably better.
I can haz bailouts? writes:
Maybe someone can help me flesh out my thoughts on the inflation/deflation debate.
I think it's worth visiting Itulip.com for Eric Janzen's thoughts on inflation/deflation. He predicts "disinflation" now (says true deflation is impossible with a fiat currency), followed in a year or two by heavy inflation, but not real hyperinflation.
His track record looks pretty good..
I'm calling this the blowoff top.
Gavshire Hathaway | 01.06.09 - 2:47 pm | #
I've used this one before, but...
[russian accent]
"I may be wrong for THOUSAND POINTS....."
[/russian accent]
aClem says
Regarding the bank holiday... what would that entail and what would it hope to accomplish? Serious question. I am reading Kennedy's GD book, and am at the 'bank holiday' point. I see why it was done then, as there were major runs on banks. What would be the intent this time, since we are not seeing that (yet)?
~~~~
We need a bank holiday to scrub the books of all banks to begin restoring faith in the financial system. All the Wall Street Banks have more "Mark to Make Believe" assets on their books than verified assets. They are essentially insolvent several times over and the situation will only get worse as the economy gets worse. This is why they are hoarding cash andd will drag the economy down with them if allowed to.
Please abolish the Federal Reserve....as a whole.
Please abolish the Federal Reserve....as a whole.
Darth Paulson | 01.06.09 - 3:15 pm | #
1) There's never going to be a bank holiday
2) They will never abolish the Federal Reserve.
dryfly...China is exponentially growing its power generating capacity...in a down turn the cost become negative because your cant store the stuff.
Barley | 01.06.09 - 3:09 pm | #
Aluminum is one of the great 'stores' of value for surplus energy... always has been. That's why aluminum (and magnesium) companies operate near hydro plants - Columbia River, Canada, Scandinavia, Russia and now China. Once the local demand exceeds the supply of cheap hydro they tend to leave.
1) There's never going to be a bank holiday
2) They will never abolish the Federal Reserve.
Eric | 01.06.09 - 3:16 pm | #
I absolutely love absolutes, especially when they are wrong.
I believe a bank holiday is possible, but not probable. It will not be announced, nor called a bank holiday. The effects will be as mmcmkinl describes.
The federal reserve, like death, taxes and reality television will be with us always.
there's not enough "true" work to be done.
--Morocco Bama
~~~~
Reduce the work week from 40 hours to 36 ...
We've done this before to get the 40 hour work week. Accompanying this should be Medicare for All to subsidize the transition.
@Morocco & Broward - 1930s saw the rise of the 5-day workweek (versus previous 6) as a way to cope with the labor surplus. I'll go out on a short limb and say that this year or next we'll see more proposals for 4- or even 3-day workweeks. (Company could operate 6 days/week with two people sharing 3 day/week jobs...)
@ JMS: "It may seem trivial and absurd but as long as these absurd predictions keep being allowed to become the official view the decline continues to gather more and more downward force as trust and confidence in our economic leadership is justifiably further eroded. It's insidous in the end."
It's not just the U.S. either. People have the choice of either organizing to stop the lies, or letting it happen. Fortunately we have the blogosphere now to keep the mainstream media parrots honest. Because the end-of-Roman Empire scenario lies down the other path...
Barley - Bank Holiday ?
Please elaborate.
Only the sith deal in absolutes
I should know.
Palpatine? Is that you?
"says true deflation is impossible with a fiat currency"
What? The money is created as debt. If the debt is canceled and it isn't replaced, the money supply shrinks. In a bankruptcy, they liquidate whatever you got and the rest of the loss is eaten by creditors, so how can deflation be impossible? And if it can't happen with a fiat currency, then when does it happen?
I absolutely love absolutes, especially when they are wrong.
anonymous | 01.06.09 - 3:17 pm | #
This government will never do those things.
Take that however you wish.
You are correct though, in that you should "always fade always", and "always fade never".
Wisdom - The revolution will be blogged? That's umm... optimistic.
Could The U.S. Attorney's (Shapperts) plea that was used on this Older Gentleman and his business's not have been used on The Wallstreet Bankster's.
Back after holiday with family.
Some reactions:
Happy New Year to all.
What? The money is created as debt. If the debt is canceled and it isn't replaced, the money supply shrinks. In a bankruptcy, they liquidate whatever you got and the rest of the loss is eaten by creditors, so how can deflation be impossible? And if it can't happen with a fiat currency, then when does it happen?
s0mebody | 01.06.09 - 3:19 pm | #
I agree deflation certainly could happen in a fiat based economy - just shrink the money supply. And I also agree there is a lot of deflationary pressure trying to do just that. I think the point is it is unlikely to happen (or happen for long) given the political reality & the ability of central banks to then create more money especially if they have the full support of the treasury [which in our case they certainly do].
@Morocco & Broward - 1930s saw the rise of the 5-day workweek
Ahem, yes, I know, I'm the one that's been floating the idea for several years now.
The 1873-1893 period had a similar reduction in workweek (about 20%) but it wasn't as organized or well-documented.
.
Just like blueridge, I think "itulip" when I see the word disinflation.
NYT: Toyota Motor will idle its plants in Japan for 11 days in February and March to reduce output in the face of steeply declining global vehicle sales, the company said Tuesday.
A Car Holiday!
So the FRB was wrong about their overly optimistic views in Oct. Could they be wrong about overly pessimistic views in Dec and stepping too dangerously hard on the accelerator? It would be at least as harmful to the US economy...
great news- when was the last time these guys were right. Wasn't so long ago that they told us everything was contained!
So I think we can expect to see an economic recovery sooner.
Could they be wrong about overly pessimistic views in Dec and stepping too dangerously hard on the accelerator? It would be at least as harmful to the US economy...
bearly | 01.06.09 - 3:24 pm | #
Q: How can you tell when the government is fucking up?
A: They're doing something.
dryfly writes:
I think the point is it is unlikely to happen (or happen for long) given the political reality & the ability of central banks to then create more money especially if they have the full support of the treasury [which in our case they certainly do]
This summarizes Janzen's argument. He looks at all the wild Fed actions lately and concludes that given no restraints (and he predicts that what restraints do exist will soon disappear), the Fed can prevent deflation from occuring.
Mr. Beach:
Sibling and parent both have same financial adviser and sibling sits on his board.
Sibling and adviser both advised parent to keep the nest egg invested as had been (altho to be honest, adviser has been pretty good...).
Parent did so and nest egg now down about 30%.
And still invested.
Sounds like you...
there's not enough "true" work to be done.
--Morocco Bama
I'm glad someone finally said it.
"It is difficult to get a man to understand something when his job depends on not understanding it."
Upton Sinclair
Government stooges who create problems that they insist we need them to solve... self perpetuating-what a gig, er ah, scam , er ah, sham-yeah!Parasitic is more like it-of the self- replicating kind. I spoke to a family member with the Federal Government over the Holidays who said they could lose half the people in their office and still get all the work done-better find something for these robots to do-if they had to enter the real world workforce they might have to think for themselves-they'll never cut it-can't have angry robots on the rampage.
@Sparkle: I was saying that the honest now had the means to fight lies with truth, and could thus skip the revolution. But yes, I'm usually an optimist. Life is better that way.
Morocco Bama(Unrated) writes:
Let's face it...there's not enough "true" work to be done. Either we cull the herd..."What do you mean, "we", paleface?
", or we all agree to legitimate welfare for more than just a handful. We're essentially doing that right now, yet not calling it that.
\t Morocco Bama | \t \t \t \t01.06.09 - 3:00 pm | #Also, define "true work." If you're talking stuff that makes money on a balance sheet aimed at short-term profit-loss for a profit-making company, possibly so. But what about all the stuff that doesn't get done because "it doesn't make a profit," such as actual good education, better health care, and generally making sure that people don't grow up to be convicts, drug addicts, or Wall Street bankers -- people who harm society and incur real societal costs on an ongoing basis.
dryfly,
I agree that it is theoretically possible for the government to inflate out of this, but why couldn't they inflate out of the '30's? IMO, They aren't even on the right scale to try and inflate out of this. Consider the size of the stock market, treasury market, and all derivatives markets, how much has been bet, and how much would potentially need to be covered to make good on poorly underwritten bets. My number is a lot higher than ~$10 trillion to cover the losses that will occur. I don't think they are on the right scale to inflate out of this and being on the right scale would be so politically reprehensible, at least right now.
The Federal Reserve is going to screw deflation from the top of the mountain long after inflation returns.
You can't go around buying up everything from MBS to CHEESE!!! and be screaming deflation.
Ya know?
wow...I need to learn to proofread.
I agree that it is theoretically possible for the government to inflate out of this, but why couldn't they inflate out of the '30's?
In the 30s the value of the dollar was fixed to the value of gold (until FDR unfixed it).
The government couldn't inflate until this relationship was broken because they don't have the capacity to create gold.
@Broward - Good, I thought you were more sensible than to agree (as you seemed to) that there was no choice but to "cull the herd, or we all agree to legitimate welfare for more than just a handful".
A shorter workweek is neither of those and IMHO better than either one.
(If you want to own the shorter-workweek meme, I suggest you take more care for your marketing and brand identity.)
Come on guys, if the debate is about disinflation (lowering inflation, still positive) or deflation (negative inflation), everybody should know the terms or google it.
Fed still thinks > 0 inflation for 2009.
Darth Paulson - Once the FED starts sending my weekly cheques that match my previous income, I promise to start screaming inflation.
Thanks Eric!
Homedad43:
All in my family are upset about financial losses. But do not seem to understand the credit bubble and the bubbly wealth it created.
Most want to find something else to latch onto: in short, another bubble and use it propel their portfolio back to where it was before.
The weakness of depending on the blogosphere to maintain information and opinion is the ease with which it is controlled.
China has proven how easy it is to limit access to the internet. Australia is currently experimenting and the UK has implemented active monitoring with law enforcement intervention if they question your motives.
The US has "carnivore" and Google keeps a permanent record of anything you search or access including Gmail.
Watching newspapers consolidate and implode worries me. Newspapers have always been part of the local power structure and been allowed access to all political functions from crime reporting to zoning commissions. Concentrate news gathering and limit access and you have a recipe for censorship and control of the "message".
First Amendment freedoms? Speech published on a private medium subject to EULA's won't provide much protection. Can you make the local newspaper publish your news or opinion?
More unintended consequences?
"No job? Underwater in your mortgage.? Near bankrupt?
We're going to Disneyland!"
But are you coming back, or will you be getting a job as one of the animatronic hippos?
"When did this idea get resurrected? And who thinks this will help ANYTHING? I remember all the discussion of this when it popped up last summer and thought it was idiotic then. That it has resurfaced should be embarassing to Obama"
Net Operating Losses can already be carried back two years. Extending to five years will enable a lot of those in the residential construction related fields who are now in their third year of losses to recover their taxes from the boom years. A similar strategy was employed right after 9/11 to the benefit of those in the technology fields after the collapse of the internet bubble. The trouble that I have with this is that it is putting money into a dead end rather than investing in something positive.
Wisdom- Didn't mean to sound overly harsh/rude!
I just am skeptical that most people want to be honest. Most citizens have tons of debt and sincerely hope for a bailout. Further, I don't think that 75% of them have any real clue about what's been going on and who stands to benefit. I think they all sympathize with too much debt and hope to get some of the slop from the trough. I personally think that a lot of people are going along because they truly believe these actions will help them.
Just my 2 cents...
Most want to find something else to latch onto: in short, another bubble and use it propel their portfolio back to where it was before.
Uh-oh. You just rang Jas Jain's dinner bell!
Dopes, anyone?
This summarizes Janzen's argument. He looks at all the wild Fed actions lately and concludes that given no restraints (and he predicts that what restraints do exist will soon disappear), the Fed can prevent deflation from occuring.
blueridge | 01.06.09 - 3:26 pm | #
I think he is right - but that raises the next question... can they then manage the resulting inflationary overshoot without pain & disappointment? I doubt it.
"It is difficult to get a man to understand something when his job depends on not understanding it."
Upton Sinclair'
Isn't he the guy who ran for Governor of California on a kind of socialist ticket and lost?
Market opens in 1 minute!
ps halotimestamp is off
Oh, by the way, that bounce 10 minutes ago was me, buying more puts of course. IFSATG. (poker lingo: I F'ing Suck At This Game).
"...can't have angry robots on the rampage."
--Private Sector
They already are, but you can purchase Robot Insurance. It's true, I saw it on TV:
Old Glory Robot Insurance-Saturday Night Live
"WARNING: Persons denying the existence of Robots may be Robots themselves."
"If the rise of the first commodity bubble was caused by excess capital piling in fleeing from an earlier bubble, can we expect another rise in commodity prices from dollar weakness"
Well, I don't see an investment in commodities being very attractive in the face of ongoing decreases in demand. If you think you can tap a speculative bubble, OK, but that could be a very quick, sharp bubble.
@Unblvbl - that's my point. It benefits nothing except giving more money to... who exactly? Shareholders? CEO?
Last time I checked, businesses kept employees not based on their cash on hand, but more based on current/future business expectations. I'm not so sure those future expectations are so bright. Dead end/black hole is just about right.
He might be borrowing every single Washington bureaucrat out of a job if a dollar collapse leads to political failure.
ac | 01.06.09 - 2:49 pm | #
Given all the discussion of the Buiter piece yesterday: look, we are well and truly fucked due to the disastrous policies of the last 30 years, predominantly due to Greenspan, Reagan, and Bush.
Even if you believe the ship is going down no matter what (and I know we have some "The Road" onanists here) wouldn't you prefer a government that at least tries to unshit the bed?
Obama and admin will try like hell to clean up the messes these scumbags have left for us. I am pulling for him. What would you do differently?
First, I think Cdn banks are in good shape and much, much better shape than US and Euro banks. I sense that the recent moves to issue more preferred shares is more about generating K for M&A. The challenge the Cdn banks have is that they are more regulated (this has helped this time around).
Second, Cdn banks are generally to small to compete internationally - while size may be an issue they have overcome obstacles by being smart and stealth. Now, the marketplace has changed especially now with the accelerated concentration. Global finance takes a critical mass. [An opinion here: C will do the opposite]
Third, by "holiday", I mean a more workable framework of regulation to allow Cdn banks to broaden their business. Both in Canada and especially abroad. Especially in the US marketplace. I also see very generous tax changes to sustain and encourage this. (Perhaps, even, in the Canadian tradition, to backstop some business deals)
Unlike their US counterparts, Cdn banks are profitable. Sure their will be increased levels of writedowns due to a weaker markets(s) but overall the conservative stewardship of shareholder interest has done them well.
ac,
Thanks for the answer. What if the market prevents the treasury from creating debt? It would be deflationary, unless it was Ben who started buying it, in which case you have a Ponzi scheme and people would flee the dollar as the currency collapsed. But if the Treasury defaulted on debts, it would mean the cash could by more treasuries, so could the dollar get stronger if the Treasury defaults? I personally wouldn't invest in U.S. treasuries until some of the debt is wiped off the books so that I knew I had a better chance of being paid. But then you have to factor in default risk. What a game.
When everyone knows that sovereign bond failure in the USA will lead to serial default, and when commodities don't bring in enough to balance current account- Issue your own debt.
If the world floods with debt, will yields rise?
So the FRB was wrong about their overly optimistic views in Oct. Could they be wrong about overly pessimistic views in Dec and stepping too dangerously hard on the accelerator? It would be at least as harmful to the US economy...
bearly | 01.06.09 - 3:24 pm | #
Or more likely they are still a bunch of pollyanna's. They are talking about growth resuming in 2H08, but weak growth that will not ofset the down 1H, and slightly above "potenetial" growth in 2010. If the savings rate is going to return to more normal levels over a few years, then this seems to me to be an EXTREMELY optimistic scenario. Big time paradox of thrift kicking in and fighting the rise in the savings rate, diminished multiplier effects of the stimulus. The stimulus package softens the blow, sort of like an airbag, but the car still crashes and is totalled. At least the passengers survive.
Brazil, Colombia Sell $2 Bln of International Bonds (Update6) - Bloomberg.com
What? The money is created as debt. If the debt is canceled and it isn't replaced, the money supply shrinks.
~~~
Because it is leveraged debt ... when the banks lose $1 they lose the ability to give $9 in credit sucking a leveraged amount out of the system.It is called Fractional Reserve Banking. What it really means is "leveraged debt"
I agree that it is theoretically possible for the government to inflate out of this, but why couldn't they inflate out of the '30's?
s0mebody | 01.06.09 - 3:27 pm | #
They did - it just took time and a massive & expensive war [paid for w/ deficit spending] and currency devaluations. If I'm not mistake the treasury & the fed are pumping about the same amount of 'stimulus' into the system now [as witnessed by the growth of the deficit & debt]... it won't register immediately as there is a significant lag but it will register.
We need a bank holiday to scrub the books of all banks to begin restoring faith in the financial system.
If it happens it will be to net out all the various CDS contracts...
CDS contracts don't have a centralized clearing house or counter-party like stock options or other derivatives. To close them out, you'd need to go back to your counter party and settle them with cash. Since this was such a pain, nobody ever did it and CDS contracts were typically never closed, just offset with other contracts.
The problem was that nobody assumed that somebody selling huge amounts of CDS contracts (like AIG) could go under. If a large seller of AIG contracts goes under then what was a small "net" exposure becomes a very large "gross" exposure on somebody else's book. And we all fall down. Maybe. Nobody really knows. Which is why the Fed and Treasury are trying to keep everything solvent.
Problem is that nobody is interested in forming a centralized clearing house for CDS contracts right now because they take on all the risk with little upside. But, the only other choice is to hope that nobody big blows up for the next five years.
"it won't register immediately as there is a significant lag but it will register."
--dryfly
Yup, and I'm betting that the Fed gets whipsawed.
"The weakness of depending on the blogosphere to maintain information and opinion is the ease with which it is controlled."
The Net is the most progressive invention since Jethro Tull taught us how to plant crops, and civil engineers learned how to make water safe to drink. I'm not speaking only of blogs, but of inexpensive and easy global communication, and access to information.
If the Internet is crushed, you can kiss your *** goodbye. I'm serious.
Ok folks, have to change into my suit and get over to the studio. Should be on at 4:15 NY, 3:15 Chicago time on bubblevision (CNBC)if anyone cares to see what I look like.
Fed still thinks > 0 inflation for 2009.
Brooster | 01.06.09 - 3:30 pm | #
Not like their an impartial observer either.
Eric writes:
Oh, by the way, that bounce 10 minutes ago was me, buying more puts of course. IFSATG. (poker lingo: I F'ing Suck At This Game).
puts? sorry but your first post was too ambiguous for you to be beleivable. They do it better on Yahoo
there's not enough "true" work to be done.
I call BS. In the past month, somebody has been busy updating the look of Google Reader and now espn.com which now is impossible to navigate. Willem Buiter was wrong about American innovation.
Yup, and I'm betting that the Fed gets whipsawed.
sm_landlord | Homepage | 01.06.09 - 3:39 pm | #
Me too. It doesn't sound fun either.
Given all the discussion of the Buiter piece yesterday: look, we are well and truly fucked due to the disastrous policies of the last 30 years, predominantly due to Greenspan, Reagan, and Bush.
Even if you believe the ship is going down no matter what (and I know we have some "The Road" onanists here) wouldn't you prefer a government that at least tries to unshit the bed?
Obama and admin will try like hell to clean up the messes these scumbags have left for us. I am pulling for him. What would you do differently?
My frustration with the the incoming admin is I don't see that they're doing anything different from their predecessors.
I don't believe that a crisis created by too much debt can be solved by even more debt. Also I don't necessarily assume we're completely fucked.
I admit at this point it may be ideological posturing all around if we've already painted ourselves into a corner.
So I'll go with the ideological posture of not continuing to abuse debt.
Barley - Thanks.
I 2nd that about espn.com! Who thought that new design was a good idea?
Dirk,
Good selling to you today...remember though what nbc stand for
naturally biased creatures
"I am pulling for him. What would you do differently?"
That's what I keep wondering. It's easy to say 'let it all collapse and then pick up the pieces' when you have no political responsibility.
puts? sorry but your first post was too ambiguous for you to be beleivable. They do it better on Yahoo
Anonymous | 01.06.09 - 3:41 pm | #
I don't know how to parse that statement. I really don't.
I was poking fun at myself because I tried to add a small put position, and they ran the market before I even got my confirm back.
Looking a little better right now. Almost paid for the bid/offer spread. Another 200 DOW points, I might conver the commission.
mmckinl,
Ok. But if they lose the dollar, they have to raise capital to meet the capital requirements. So they become a demander of dollars as well as everyone else. Then what?
dirk.
savings rate.
just utter; in the vernacular of howard stern , the savings rate is, 0.0. then stand up and leave.
Barley,
Keep repeating that bulls**t about canuck financial prudence. You cannot fool reality.
You as a group are screwed for reasons including and beyond your financial system.
From the unintentionally funny department:
Martin Feldstein, in the WSJ:
A substantial short-term rise in spending on defense and intelligence would both stimulate our economy and strengthen our nation's security.
Defense Spending as Stimulus - WSJ.com
If the Internet is crushed, you can kiss your *** goodbye. I'm serious.
Pavel Chichikov | 01.06.09 - 3:39 pm | #
Bye bye. I'm serious as well.
The internet is a business and requires a paid subscription with special equipment to access, not to mention electricity. The fallacy here is the freedom of the internet. Highly illusory.
Censoring web sites due to porn is an easy way to implement a system to shutdown any questionable website. Who decides? How would you get your site back online without suing? See the danger?
Proposed Web Filter Criticized in Australia - NY Times
Somebody from Apple not named Steve Jobs presents at MacWorld and his biggest introduction is a MacBook with a 17-inch screen and 8-hour battery.
Becoming not cool to be an Apple geek.
Kicker, you bring up a good point--there already has been a run, but on the shadow banking system. Full impact still uncalculated.
I am very much on mmckini's (sorry, can't spell that ID) side in this. My concern about this Fed report is based on my concern about Paulson's and Obama's stimuli. We're pouring large but finite sums into a hole of unknown depth. There is no question debt destruction is the endgame anyway, so let's get it over with and then make sure every incremental dollar spent goes to a good end--like new banks able and willing to lend, not wounded hulks still looking to plaster their wounds with taxpayer money.
And to Gary's point, yes Obama is trying to help. But his very disappointing stimulus plan indicates he, too, still thinks we have room to play games. In this respect, he is like Dimon and Paulson and all the rest who think a little tinkering are enough to get the good times rolling again on a status quo basis.
asl hearts lenin,
They did introduce the Apple MacBook Wheel.
Apple Introduces Revolutionary New Laptop With No Keyboard | The Onion - America's Finest News Source
Holy crap, how can anyone still believe the deflation propaganda?
Just because insolvant banks have had their grossly valued shares plummet and joe-manja-cakes have had their grossly inflated mcmansions plummet in value, implies deflation for them; for the rest of us, nothing has changed. Long run trends in prices and costs for everything, from property taxes to gold to hamburgers to condoms continue to hold and increase.
The printing presses are running 24/7, don't get caught with your pants down holding cash.
One other thing I like about Janzen at Itulip is that he's given the best argument I've read for holding gold. In a nutshell, "If every central bank is holding on to some gold reserves, you should, too."
Pavel:
It's easy to say 'let it all collapse and then pick up the pieces' when you have no political responsibility.
I think the problem that most have is that the political responsibility needs to extend past the next election. Ultimately, the question becomes whether we are building something substantive or simply kicking the can down the road.
asl hearts lenin writes:
"Somebody from Apple not named Steve Jobs presents at MacWorld and his biggest introduction is a MacBook with a 17-inch screen and 8-hour battery."
The big news was the price cuts and removal of DRM on iTunes.
Fed fears long recession?
Welcome to the nightmare on main street dingbats. We've been in recession since 2000.
There is no such thing as a jobless recovery. Real incomes have declined since 2000, while nominal incomes have stagnated. No way is that a recovery.
We had an increase in debt above and beyond output. Hence, I would argue we are poorer today than in 2000.
The fed & their spreadsheets do not reflect reality. For the last 8 years, GDP growth was a measure of the rate Americans were impoverishing themselves with un-payable debts.
Recovery? What a sham!
s0mebody writes:
mmckinl,
Ok. But if they lose the dollar, they have to raise capital to meet the capital requirements. So they become a demander of dollars as well as everyone else. Then what?
~~~~
Then they go belly up andd we the tax payer make whole depositors up to $250,000 per account.
Of course now they have their CEO, Ben Bernake Chairman of the privately owned and operated corporation known as the Federal Reserve throwing money at his shareholders, the Member Banks.
kudos to MS for calling the macworld p&d.
I expect by time this is all over...we will all be able to bend down and touch our toes.
My oldest son is like OBama in that he's a Helluva Talker but can't swing a hammer worth a sh**
manja-cake - Please let us know how all this new money will enter the economy when demand is at multi-decade lows.
Thanks.
MPinCO writes:
Obama doing the work of Osama
Obama says trillion-dollar deficits may last years @ 254
MPinCO
youre right
obama should NOT tell the truth
better to lie like bush did 8 years ago campaigning when he said he would balance the budget
or lie like greenspan did when testifying to congress that there would be surpluses as far out as the eye can see
i got a newsflash for you, there is probably little obama can do to stem the destruction at this late date
the bushies have accomplished their objective, terminating the budget surplus reached during the clinton administration
and in its place, US bankruptcy
thats what they wanted to ensure the supremacy of the corporation and the end to government social programs (except war)
mmckinl,
And there is a loss associated with those people who had over $250,000 in an account. And the creditors to the bank lose big on the debt they hold. Both are deflationary. Ben could be a factor, but right now the banks are sitting on their taxpayer money.
inflation is already here in food...
pisses me off that now a 1/2 gallon of Ice cream is really 1.5 qrts...at same price...
sneaky bastards...
...the IndyMac depositors still haven't been paid for the money in their accounts??
Good thing they didn't really need it....
"The internet is a business and requires a paid subscription with special equipment to access, not to mention electricity. The fallacy here is the freedom of the internet. Highly illusory."
I didn't say it cost nothing to provide or use. Nor did I say that all six billion of us human beings have access to it.
Potable water must be paid for, and not everybody has it. That doesn't mean its benefits are illusory.
For the first time in human history global communication between individuals and local groups is possible, and huge stores of information are accessible.
If we can't tolerate the freedom that offers, we'll have done the whole human community great harm. Agreed, that never stopped us before. War is an example of our self-destructive instincts.
What happens next?
cd - Exactly! And I only get 75 grams of soap when it used to be 90 grams!
Someone buy gold quick !
ot-
[BAC] BofA Lewis expects results to be below expectations: WSJ
3:51 p.m.
[BAC] BofA Lewis recommends no bonuses for himself, execs: WSJ
"Please let us know how all this new money will enter the economy when demand is at multi-decade lows."
The the fed or the treasury (I don't get my panties-in-a-knot trying to distinguish the two), as a last resort, moenetizes the national debt.
Maybe they'll even monetize all debt, they're going in that direction.
Relative valuations have changed, granted, and depending on weather you were screwed or were the screwer, you're seeing deflation or inflation. But the proof is in the money supply, which is going parabolic.
manja-cake - Money supply that you're looking at is stuck. Frozen.
Look at the multiplier. It's dropped.
The velocity of money is next to nothing.
If the money can't enter the economy does it really exist?
IT-
I bet most people don't look at weights and measurements on food..they would see inflation all day long...
Almost got me. bastards....ruining my ice cream momemts
don't know why but I like nutrigrain bars but same box but now 1 inch smaller bar...
tip for ice cream addicts like me..
vanilla ice cream plus microwave some apple butter and pour over top...
apple pie without the crust...
delicious...
Is a 730,000 job loss print for Friday priced in yet ?
cd - I wish I didn't start looking. We are all being scammed daily...
But unfortunately it is just marketing tricks not inflation...
And to be honest, some of us could use a little less ice cream and a bit more soap
"I think the problem that most have is that the political responsibility needs to extend past the next election. Ultimately, the question becomes whether we are building something substantive or simply kicking the can down the road."
A practical suggestion must include avoidance of general suffering, civil breakdown, and in the case of the implementers political suicide.
It may very well be that the political class is winging it. A lot is riding on how well the new chief executive of this republic can get a grip. IMHO, we're in new territory, and no one in new territory is competent from the moment they set foot in it.
A solution is going to take guts, honesty, and intellectual horse power.
We don't know now how events will develop. This is the moment in time that we have, not some other time and place.
What happens next?
Pavel Chichikov | 01.06.09 - 3:58 pm | #
Keep watching. There seems to be an implacable slide towards more control and less freedom. I believe you've already posited several ideas of what the future is becoming. Much more autocratic if I remember correctly.
So what if the velocity is zero? If tomorrow the entire economy took a holiday and no transactions took place, would that mean the money supply = zero???
The money may be idle, but the first wiff of inflation-expectations, it will be deployed, that is probably hapening right now in precious metals and oil.
manja-cake - Please let us know how all this new money will enter the economy when demand is at multi-decade lows.
Interesting Times | 01.06.09 - 3:56 pm | #
That's why the fed gov's are calling for 'fiscal stimulus' and have given up on the idea the Fed can manage this via monetary intervention alone. Once they go 'fiscal' they can pump money in directly via printing for projects like bridges to nowhere - directly into workers' pockets & suppliers' coffers. A direct injection. Or increase medicare & medicaid payments - goes directly to local hospitals - hospital workers as salaries. or military projects - again directly into the economy boosting both money supply & velocity.
It is NOT without cost as I fear we will learn later butt hat will come later. Inflation once started is much tougher to reel in than deflation.
Roubini said all this some time ago. You get a better idea of what is coming from him than from the FED.
manja-cake - I'm with you on the oil play... but it's nowhere near enough money supply to even out the collapse of home values, CRE values, jobs, equities, etc that has vanished from the economy.
It's gone. It won't come back for a long time.
And btw, those "MBS" that the FED is backing right now with all that "money supply"... their days are numbered as well. They are worth 10 cents to the dollar.
Rob Dawg writes:
Thumbing through my copy of "The Necronomicon" (at midnight by the light of a black flame), it warns that the consequences of bringing the housing market back from the dead will be far more dangerous than letting it rot in the stygian depths to which it has fallen. The extent of those depths in the dark days ahead will not be known until the spectre of Cthulu awakens and (re)posses those things most dear to the doomed minions souls....
And at night, where will they sleep? Not in their own beds, that's for sure.
..... Lenore ?
s0mebody writes:
mmckinl,
And there is a loss associated with those people who had over $250,000 in an account. And the creditors to the bank lose big on the debt they hold. Both are deflationary. Ben could be a factor, but right now the banks are sitting on their taxpayer money.
~~~~~
Right now the more deflationary aspect of the money supply is reduction of velocity not credit. We have to restore confidence to get money moving again. Most of this debt is debt we can't service anyway, the system is approacj=hing insolvency. Beernanke andd Paulson are desperately trying to underwrite our $50 trillion in aggregate debt but it can't happen, the measures they are taking are only making matters worse by contracting confidence and credit so that thiss debt is even more unpayable.
What Paulson and Bernanke are doing is subsidizing their shareholders, friends and benefactors to the detriment of the eeconomy.
A practical suggestion must include avoidance of general suffering, civil breakdown, and in the case of the implementers political suicide.
As well as a method for ensuring this outcome with reasonable certainty.
And therein lies the problem - the current state of our knowledge about the consequences of economic policies doesn't seem to suggest that there is a clear strategy for preventing these things from happening. There does seem to be ample evidence, however, that implementing arbitrary policies can lead to highly destructive outcomes.
dryfly,
Inflation once started is much tougher to reel in than deflation.
I thought it was opposite? Not challenging, just looking for how?
cant they raise rates to stop it but when your stuck on 0% how can you stop consumer deflation if they are out of money?
I bet most people don't look at weights and measurements on food..they would see inflation all day long...
cd | 01.06.09 - 4:04 pm | #
I went to the liquor store today, and found them raising prices seemingly across the board. My regular Scotch will be +40% tomorrow.
Yeah, I know - I should shop at Lefty's.
But, I hear you on the shrinking package contents. The ice cream thingie is the most heinous example.
So you want the government to tell you what to do? If there is nothing to be done, then why force people to bust their asses? Give them more time off. People can grow a decent amount of food in a backyard garden. So maybe they don't really need that much money. Why do you want to be a slave driver?
s0mebody | 01.06.09 - 3:04 pm | #
Me, a slave driver? Are you kidding? Know with whom you are speaking.
The Internet is probably indispensable now and not just for the U.S.
Here's why - travel back with me to 1920 when the average Ford broke down every fifty miles. Bring that technology forward and put it on today's freeways in LA and SF.
They would seize up almost immediately and never work again. The current flows are built on the assumption of a certain level of reliability.
Likewise, a good chunk of business is now dependent on the assumption of quick and easy information to support an extremely complex infrastructure. Do you really think that IT guy KNOWS the answers?
Hell, no.
He looks them up.
"espn.com which now is impossible to navigate"
Okay, I have to say something about this. I interviewed for a position within the owner of ESPN.com and was ousted by the "Information Prieshood".
One of the afflictions of IT is that there's a certain type of geek that likes to geek. But they have no business sense and focus on the bottom line. Those guys should never be allowed to make business decisions but at many places they do because the real management is afraid of technology.
I can say that my interview revealed some interesting issues that were more extreme than what I've seen at other places.
.
"Keep watching. There seems to be an implacable slide towards more control and less freedom. I believe you've already posited several ideas of what the future is becoming. Much more autocratic if I remember correctly."
Those are certainly possible futures. I hope they remain only possibilities.
ac wrote:
I don't believe that a crisis created by too much debt can be solved by even more debt. Also I don't necessarily assume we're completely fucked.
ac | 01.06.09 - 3:41 pm | #
depends what the debt is spent on
if we as a country incur more debt to finance more consumer spending towards goods produced abroad then you are right
if we incur debt to make domestic capital investment, then WE CAN spend (invest) our way out of this crisis.
ac - spot on!
And btw, those "MBS" that the FED is backing right now with all that "money supply"... their days are numbered as well. They are worth 10 cents to the dollar.
Interesting Times | 01.06.09 - 4:10 pm | #
The less they are worth the more 'inflationary' it is for the Fed to buy them at above market value... inflationary actions like this are a direct 'attack' on deflationary pressures.
cd, I know what you mean. I was upset that Breyers Ice Cream is much smaller than I originally thought. I had assumed for a while that it was a half gallon but I realized last year that they had switched to something like 1.5 liters or such nonsense. Blue Bunny however is still selling ice cream by the old amount or at least they were (I've avoided Ice Cream for months now trying to get a better physique). Unfortunately Blue Bunny, no matter the flavor, does not taste as good as Breyers. My favorite being the Peach flavor.
Kitco - Commentaries - Howard Katz
this guy explains the deflation hoax better than I; he's right on the money, been listening to him, am up almost 200% on my precious metal shares in 2 months.
..... Lenore ?
Popeye
Nevermore. Just H.P. Lovecraft and nothing more.
aClem writes: "Regarding the bank holiday... what would that entail and what would it hope to accomplish?"
Ideally it would be a lot like the end of Terry Pratchett's novel "Going Postal." The Patrician (supreme dictator of the city), upon discovering some financial shenanigans, tells the head of the city guard "Send your men to the offices of the Bank of Ankh-Morpork, Sto Plains Investments, [etc. - a list of the businesses involved] and inform them that they are closed for audit. Also inform them that anyone who so much as moves a piece of paper before my clerks arrive to secure the premises will be thrown in the dungeons." And then he conducts a full audit of the books, backing out the transactions to find the shenanigans, and quite a lot of people do end up in the dungeons.
mok turtle(Unrated) writes:
Ookla the Mok Turtle?
We need a bank holiday to scrub the books of all banks to begin restoring faith in the financial system. All the Wall Street Banks have more "Mark to Make Believe" assets on their books than verified assets. They are essentially insolvent several times over and the situation will only get worse as the economy gets worse. This is why they are hoarding cash andd will drag the economy down with them if allowed to.
mmckinl | 01.06.09 - 3:15 pm | #
This is along the lines of what I think really needs to be done. Come clean about all that toxic crap then deal with it. It's like we have a tumor and won't do a biopsy. But before all that, wouldn't there have to be some heavy preparation to actually try to untangle the mess and deal with the fallout? How long would it take to figure out? Who would do it?
wally writes: "Well, I don't see an investment in commodities being very attractive in the face of ongoing decreases in demand. If you think you can tap a speculative bubble, OK, but that could be a very quick, sharp bubble."
I think we already had this one, over the summer.
if we incur debt to make domestic capital investment, then WE CAN spend (invest) our way out of this crisis.
mock turtle
No we cannot. You incorrectly assume that more debt will have less drag on the economy than will be created by infrastructure investment. For but one example were we to invest in a national train network there would not only be no return on investment but operating subsidies would add even to the initial capital debt.
mok turtle up thread
is that idiot mock turtle (me)
who cant spell his own name
like ive said many times...me stupid
Jose Padilla wrote: "People with no money do not care if prices are lower."
Ah, but since they have no money, they can have no economic effect, and so may be omitted from the analysis.
Sadly, some economists, and some in government, don't seem to see any problem with the above sarcasm.
Or increase medicare & medicaid payments - goes directly to local hospitals - hospital workers as salaries.
Who was it the other day that said that the Japanese manufacturers play interesting accounting games by importing high priced components into the US? The same thing happens in medicine, and perhaps on a larger scale.
One of the interesting things that will need to be resolved is how to get IP taxed in the US. Because of global development, much of a MNC's IP is parked in havens like Ireland and then licensed to the American subsidiary. Because of the high technology component in modern medicine, a significant % of domestic health care expenditures gets siphoned as an import.
Globalization and international trade treaties sure have had their unintended consequences.
"jobless recovery"
The acceleration of information technology has made it possible to do a lot more with a lot fewer people, not to mention the changes in the work force due to globalization.
Another side effect of globalization has been increased quality. Case in point, the automobile industry. The functional life of most automobiles today is probably double what it was 20 years ago. There is less need for replacement of almost everything aside from consumables.
More joblessness seems inevitable. Logically, the economy no longer requires the services of vast sections of the population. So, a more socialistic society seems inevitable in a democratic system.
If it's inevitable why not go ahead and give a nod to reality rather than flogging a dead horse. Invest in programs which will yield societal benefits such as a new energy infrastructure or universal healthcare, not pouring money into terminally ill private institutions.
mock turtle(Excellent) writes:
like ive said many times...me stupid
You sure invest a lot of effort into saying it, too. =)
What Paulson and Bernanke are doing is subsidizing their shareholders, friends and benefactors to the detriment of the eeconomy.
--mmckinl
I agree with what you said in this post.
Me, a slave driver? Are you kidding? Know with whom you are speaking.
--Morocco Bama
I'm sorry... Oh great, mighty and wise Morocco Bama, why do you want to be a slave driver? Even if you personally aren't doing the slave driving, you are advocating the government should do it on your behalf. Having people put to work doing things that aren't necessary only so they can continue to pay the debts you owe (The U.S. government has run up huge debts so now it needs suckers it can put to work so that it can tax them to pay off its debts) is basically slave driving. Debt slavery, but slavery.
" fallonPDX writes:
Disney, the largest theme-park operator, increased 3.2 percent to $24.24 on the news on the FED being scared shitless about the state of the economy.
So the equity market is still in denial.
Wow. Capitalism in the US is totally fucked.
No job? Underwater in your mortgage.? Near bankrupt?
We're going to Disneyland!
fallonPDX | 01.06.09 - 2:43 pm | # "
IIRC, the '30's was a boom time for the movies. People who couldn't afford a house or a car could enjoy going to the movies for a quarter (no adjustment for inflation), so ya', we might all be going to Disney World in lieu of a cruise or Europe or Hawaii.
dryfly(Excellent) writes:
The less they are worth the more 'inflationary' it is for the Fed to buy them at above market value... inflationary actions like this are a direct 'attack' on deflationary pressures.
And the best part is, even if the Fed is wrong and deflation continues that just means the money they paid to their banker friends is worth more and more in real terms.
It's win-win!
WSJ breaking: Alcoa plans to cut about 15,000 jobs, or roughly 14.5% of its current employees and contractors. It also plans salary and hiring freezes, more plant closures and a 50% cut in capital expenditures.
Bulletin:
Alcoa to lay off 13,500 workers, freeze salaries and cut spending by 50%
o more Tin! egads!
Alcoa to lay off 13,500 workers, freeze salaries and cut spending by 50%
® - you beat me to it
Inflation once started is much tougher to reel in than deflation.
I thought it was opposite? Not challenging, just looking for how?
cant they raise rates to stop it but when your stuck on 0% how can you stop consumer deflation if they are out of money?
cd | 01.06.09 - 4:12 pm | #
Look at the 70s as an example - in theory BOTH should be easy to regulate - just throttle up or throttle back the money supply creation via monetary & fiscal stimulus to maintain stable monetary levels and therefore prices. The problem is that the treatment & the disease are very different in inflation & deflation... and resultant political will to enforce is also different.
In deflation the disease (shrinking money supply & velocity) is very painful for most people because most don't save & most HAVE debt. The treatment (fiscal largesse & low rates) is kinda fun... so fighting deflation isn't that tough politically for a gov't to pursue. The disease sucks, the treatment kinda fun - go for it!
Inflation is the opposite - while no one want's the prices they pay to increase THEY LOVE having their debts get smaller retative to prices & their incomes/profits increasing... without them doing ANYTHING but breathing! The treatment to slow the inflation disease is quite painful (high rates and reduced fiscal deficits) so gov'ts avoid if at all possible.
So it is politically difficult to bring all the force to bear necessary to fight inflation and that makes it quite difficult to control once underway.
Common theme from the 70s... "I want inflation controlled as soon as my income catches up with inflation... but not until!" Sums the problem up pretty well.
This is certainly good news about Bank of America and Alcoa. Might be worth another 200 points tomorrow.
I also know a couple people that got pink slips this week.
Other than that, this depression is purely psychological.
You sure invest a lot of effort into saying it, too. =)
Comrade Byzantine_Ruins
ive learned the hard way (over and over again)
pride comes before the fall
Comrade Terry(Excellent) writes:
But, I hear you on the shrinking package contents. The ice cream thingie is the most heinous example.
I personally love best the fig leaf of it being a highly virtuous act on the part of the mfg to charge you more for less to "help combat the obesity epidemic".
Until that fad dies a nasty death at the hands of consumer value-seeking, Jasus Jainus, the born and bred American dope, lives on.
That's some bullish news from Alcoa. If all of the S&P does that, we'll have DOW 12,000 by Valentines Day.
Not again C&C.
How come i don't get to be first? Not fair at all.
Aluminum production cut, back to real tinfoil for headwear.
Dryfly writes:
"Common theme from the 70s... "I want inflation controlled as soon as my income catches up with inflation... but not until!"
And those escalator clauses in contracts. As you say, once it sets in...
What was the BofA news? I have been working today and not following this site
Bank Holiday:
For the record joking aside this is not 1933. There can be no bank holiday. This is a 24/7 picosecond world. Think "Ghostbusters" when they shut down the containment field.
Commissar Rob Dawg | 09.23.08 - 6:07 pm
Disneyland:
As a season ticket holder I can speak with some familiarity. I've seen no evidence of any park decline. The only change seems to be the average weight of the attendees. I'm not sure why or what it means but the number of hungry hippos and hefty heifers has assumed massive proportions. Disney is very proprietary with their attendance but I would guess they are increasingly reliant upon local cachement volume. We go 9-10x per year or about $24/visit. That's not particularly profitable even after our $9 Cobb salads.
The Net is the most progressive invention since Jethro Tull taught us how to plant crops...
Songs From The Wood
YouTube - Jethro Tull Songs From The Wood
And the best part is, even if the Fed is wrong and deflation continues that just means the money they paid to their banker friends is worth more and more in real terms.
It's win-win!
Comrade Byzantine_Ruins | Homepage | 01.06.09 - 4:22 pm | #
LOL - very much so. I will know they are REALLY serious about fighting deflation when the Fed starts buying gold & silver directly. Extract PM from the economy and directly replace it with fiat. Almost like buying homes except you can't store the homes in a vault.
OHHH
BAC warned...ouch
BofA Lewis expects results to be below expectations: WSJ - MarketWatch
Alcoa,
end of the world buy now or be priced out forever.
bofa says PO+LS=DD
lewis fearful oil is running out.
Crispy Bait writes:
bofa says PO+LS=DD
lewis fearful oil is running out.
Crispy Bait | 01.06.09 - 4:30 pm | #
LMFAO!!!!
What was the BofA news? I have been working today and not following this site...
Suspended bonuses. Double ouch.
Tin Free writes:
no more Tin! egads!
Tin Free | 01.06.09 - 4:24 pm | #
The ability to pronounce an opinion as "tinfoil" never ceases to amaze. The sheer arrogance of the person holding the only true factual view of reality is breathtaking.
The definition of a solvent banking system- a customer can deposit their money in the bank and have complete confidence that it will be returned to them on demand.
One to do that is to ensure that the bank has capital and plenty of liquidity. The other way is for the government to guarantee it aka Nationalization. Our current and future economic mess is entirely due to the policy makers being unwilling to nationalize the banking system. Rather than creating all these fancy financing structure if they had simply said those that can't fund themselves in the private market will be nationalized there would have been no credit crunch for credit worthy borrowers.
A good read. Where will the bubble be in 2009? Predictions.......
15 reminders that Wall Street's con game goes on 10 years later Paul B. Farrell - MarketWatch
The definition of a solvent banking system- a customer can deposit their money in the bank and have complete confidence that it will be returned to them on demand.
By that definition, any fractional banking system then is not solvent.
cd writes:
ot-
[BAC] BofA Lewis expects results to be below expectations: WSJ
What? they are not showing the TARP money as income? why not? its not like they have to pay it back or something...
I took profits today on all but two holdings. Nice profit, but I didn't feel good about it. I'm too uneasy to let it ride only to have somebody swipe it back; so, I banked it.
MPinCO writes:
Obama says trillion-dollar deficits may last years @ 254
mok turtle writes: MPinCO
youre right
better to lie like bush did 8 years ago campaigning when he said he would balance the budget
I have a newsflash for you. There hasn't been CHANGE in D.C. for decades.
Obama(Clinton II) = Bush = Clinton
The credit mess has roots in the early 90's and we are now paying the price of 4-6 bailouts (LTCM,etc) and out of control spending.
Obama's solution?
More deficit spending and an even bigger public sector.
" Mr. Beach writes:
Back after holiday with family.
Some reactions:
- Family members confessed to being "trapped" by the economic downturn. Upside down on homes, fearful of job losses. Cutting back spending.
- Family members are riding out the stock market. Hoping for a return to growth.
- Family members used spare cash to buy more stock in Sep/Oct/Nov. Now most are fully invested - with no spare cash.
- Family members are not concerned about USD or Gold.
Happy New Year to all.
Mr. Beach | 01.06.09 - 3:22 pm | # "
Condolences
We need so many czars I think it's time for a Hoocoodanode Czar!!!
DisneyWorld
I was there a couple of weeks ago. It was surprising how much of the crowd was local...hardly any out of state tags in the parking lots which was surprising since I figured to rack up there in our running game of who could get the most states' license tags on the trip.
So, I would concur with the parks' increasing reliance on local traffic. That is probably a very temporary boost.
crazyvermonter,
That's a good way to have a government bank. But what if you really don't want the government holding your money, or looking through your transactions, or possibly denying you access to your money for whatever reason. And what if you just really don't want to support what has been going on in this system with your personal money?
You're right that people want their money in a bank they know can give it back to them, but I don't know that anything in this system resembles that.
I never tire of trying to convert you.
Like all the convert's to Dopism, you too, one day will be PO.
Advice for the incoming administration:
"On two occasions, I have been asked [by members of Parliament], 'Pray, Mr. Babbage, if you put into the machine wrong figures, will the right answers come out?' I am not able to rightly apprehend the kind of confusion of ideas that could provoke such a question." - Charles Babbage (1791-1871)
Even if you personally aren't doing the slave driving, you are advocating the government should do it on your behalf.
I never advocated any such thing. Bob Dobbs was correct with his "we" comment. I should have said the herd needs to be culled. I won't be doing the culling, but you can be sure someone, or something will at this rate.
And they're not looking through our transactions now?
I think that is the only form of regulation that has followed for the past few years. Ask client 9!
Correct me if I'm way off base here, but are we attempting to buy our way out of a deep recession by refinancing an "interest only loan" into a "choose your payment"?
Like all the convert's to Dopism, you too, one day will be PO. - Crispy Bait
The incessant yipping of the Peakenese never stops.
OT: I am surprised that I have not seen one instance of the term "January effect" in the press.
My bank has become the temporary holder of my direct deposit with my safe becoming the residence of my paper wealth.
The value added of online bill pay has kept some of my income in their custody before it is passed on.
The savings rate is higher then the official rate. I suspect many people are doing what I am doing.
By that definition, any fractional banking system then is not solvent.
anonymous | 01.06.09 - 4:33 pm | #
not necessarily. As long as the Fed is a lender of last resort. Now you could argue that a banking system in which the government doesn't play a role is not solvent. The crisis is caused by two conflicting interests- the desire for a private banking system and no use of tax payer money. A lender of last resort doesn't mean the use of tax payer funds- banks can place collateral at the Discount window- technically if they ran themselves properly every loan they make could be discount window eligible. Therefore there is a simple rule-either you operate in the private market or you are nationalized.
Going out on a business trip - I'll check in at hotels & wifi hotspots as able. Should be interesting - meeting some corporate mucketty mucks from a large OEM to discuss sourcing some work they currently have placed in shops feared to be going BK... the guys I'm working with are looking to steal some of the biz, have intentionally avoided excess leverage, run older but well maintained machines and pay their workers more than most other jobbers we compete against but still less than UAW (plus we expect them to actually think and surprise surprise - they can and do!). We got a shot and in this economy that is something.
With that small ray of sunshine - see ya later.
Alcoa to cut 13,500 jobs -- AP
It's time to read the handwringing on the wall.
With that small ray of sunshine - see ya later.
dryfly
Stay safe. Try to get them to take reproduction rights as part of any contract imbalance settlements. "Partz" is the new black if ya know what I mean and I know you know what I mean.
dryfly - good luck
Having worked for several large corps plus the fed gov't I don't think there will be inflated salaries to pay for inflated price increases. These people would rather go thru a sex change operation than increase pays IMO.
The only change seems to be the average weight of the attendees. I'm not sure why or what it means but the number of hungry hippos and hefty heifers has assumed massive proportions.
That is so true. It's a sight to behold. We go once a year...to Disney World and stay at one of the Deluxe Resorts....Animal Kingdom Lodge last two years, but we won't be going this year. However, the wife and I can't help gasping at the size of these people....and a number of them love their motorized scooters. It's like a scene out of WALL-E. One of the fat asse had their 6 yr old frop his pants and piss into the lake in front of everyone without shame. Class acts.
s0mebody | 01.06.09 - 4:35 pm | #
not putting you money in bank is called investing in a non insured money market. As we discovered there aren't too many people like you who don't want the government insuring them.
To rephrase Lincoln- you can have a private banking system or you can have a nationalized system what you can't have is what we are currently in neither private nor nationalized.
The less they are worth the more 'inflationary' it is for the Fed to buy them at above market value... inflationary actions like this are a direct 'attack' on deflationary pressures.
dryfly | 01.06.09 - 4:13 pm | #
Bernake's maximal plan, which I doubt he has political support for at this point, is to increase the Fed's balance sheet by the amount of the total decrease in banks' balance sheets. That would be net neutral if not for the fact that the entries offsetting some of the money that's been created has migrated off the balance sheets of regulated banks. Those losses wouldn't be offset even under the maximal plan.
These attacks on deflationary pressures will not be enough, though they may well be helpful (I'm not necessarily endorsing that particular definition of "help", you understand...).
I'm still looking for some over-leveraged guy's fire-sale priced boxster. I got $10K.
[No we cannot. You incorrectly assume that more debt will have less drag on the economy than will be created by infrastructure investment]
IF the debt is LT fixed and it's repaid in inflation-ravaged dollahs then it's possible. Like stealing from foreign creditors.
IF the debt is LT fixed and it's repaid in inflation-ravaged dollahs then it's possible. Like stealing from foreign creditors. - bearly
If we try to inflate out of foreign debt there won't be any borrowing.
Hold tight. There is some sweet stuff on ebay for 15k. I went up just to quickly find the current value on our two cars for end of year household calculations and spent about three hours "shopping" around, eyes wide with childlike glee.
Help me understand something, Rob Dawg. You say:
[No we cannot. You incorrectly assume that more debt will have less drag on the economy than will be created by infrastructure investment. For but one example were we to invest in a national train network there would not only be no return on investment but operating subsidies would add even to the initial capital debt.
Rob Dawg
I rode through the Holland Tunnel the other day on a city bus. Would you not say that use of that tunnel by millions daily, 70+ years after construction, is a fairly significant ROI? Why would a nat'l train network provide no similar ROI?
I'm still looking for some over-leveraged guy's fire-sale priced boxster. I got $10K.
µΨ
craigslist | Page Not Found
Stock No: LX81085E VIN: WP0CB2982YU662808
Mileage: 96446
$15k (dealer)
Getting closer.
Fractional reserve systems are always solvent until the bank runs come. The bank runs always come eventually, and a "lender of last resort" only means there is one lender bigger than all the others, not that that lender has immunity from a bank run.
crazyvermonter,
Call me crazy, but physical cash is one of my "investments". It is mine, and no else can touch it. I can hold it and risk losing it to fire or theft, or I can let the government hold it and risk privacy and confiscation.
Dawg, you'll appreciate the irony of this, I'm sure
It's A Small World Afterall....Not!!
It’s A Fat World After All | Autopia | Wired.com
thanks Dryfly,
I get it now.....I like how you dumbed it down for me..bonus points for ya..
still doesn't help with my Ice cream container downsizing anger though...
the trick of staying thin and eating ice cream is walking to the store to get it and again after you eat it....or a good 10 mile hike....
Let us take a trip to February of 2007:
"Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low. The exception is subprime mortgages with variable interest rates, for which delinquency rates have increased appreciably. The labor market is expected to stay healthy, and real incomes should continue to rise, although the pace of employment gains may be slower than that to which we have become accustomed in recent years. In part, slower average job growth may simply reflect the moderation of economic activity. Also, the impending retirement of the leading edge of the baby-boom generation, and an apparent leveling out of women's participation rate in the workforce, which had risen for several decades, will likely restrain the growth of the labor force in coming years. With fewer jobseekers entering the labor force, the rate of job creation associated with the maintenance of stable conditions in the labor market will decline. All told, consumer expenditures appear likely to expand solidly in coming quarters, albeit a little less rapidly than the growth in personal incomes if, as we expect, households respond to the slow pace of home-equity appreciation by saving more out of current income."
Then in their next report in July of 2007 they state the economy is getting worse. Ultimately, the Fed is poor at forecasting the future.
If they can't see 5 months ahead a 12 month analysis seems a bit optimistic.
I rode through the Holland Tunnel the other day on a city bus. Would you not say that use of that tunnel by millions daily, 70+ years after construction, is a fairly significant ROI? Why would a nat'l train network provide no similar ROI? - freeulysses
I cannot thank you enough for this exact example. Did you know that NYCTA uses tolls from bridges and tunnels to subsidize rail transit in the city? Worse, they actually book tolls as transit fare revenue and use that make transit look less unprofitable than it is.
Morocco Bama - lol!
I still say - if youz take up two airplane seats yuoz pay for two airplane seats.
Some company health plans now have clauses for obesiety. And the plans cost more...just like smokers and non-smokers!
Songs From The Wood
YouTube - ? v=KgUw6t3b6oE
Doc at the Radar Station | 01.06.09 - 4:29 pm | #
Perhaps "Thick as a Brick" would be more appropriate, or perhaps that should wait 2 weeks to honor the departure of the 43rd POTUS
drhb - BB has said - "Once it happens we can predict it"
Morocco Bama writes:
Dawg, you'll appreciate the irony of this, I'm sure...
Funny but unfortunately an intertubz myth. What happened was as the boats got older and leaked they'd lay new fiberglass inside. If anyone here is a glass boater they'll tell you how that works over 50+ years. The boats were bogging down from thick waterlogged bottoms, not thick bottomed riders. A few weeks ago it looked almost ready. Sometime in Feb, I suspect.
IF the debt is LT fixed and it's repaid in inflation-ravaged dollahs then it's possible. Like stealing from foreign creditors.
Who is the largest holder of total US debt, not just public debt? It'd be the Fed stealing from the USG itself.
Doc at the Radar Station
YouTube - THE HOLLIES - He Ain't Heavy, He's My Brother
Do you know how long it takes to plan and build something like the Holland Tunnel?
Longer than the federal government will be solvent.
All this talk about infrastructure stimulus is laughable.
They will choose projects that let them throw the largest amount of money against the wall in the shortest possible time.
re: After hours trading, Alcoa isn't being viewed as positive.
I cant believe B of A finished green after admitting a miss but not quantifying it. They and JPM will need some Citi type "backing" soon, and maybe the market knows it.
Anyone catch my CNBC hit? Those things are always too short, had about 30 other points I wanted to make, fortunately the other guest on the slot seemed to be fairly sharp.
Dryfly --
Best of luck!
They will choose projects that let them throw the largest amount of money against the wall in the shortest possible time.
rich | 01.06.09 - 5:01 pm | #
Need to find me some "wall" costumes.
This could never happen in Canada.. or any other western country.
CNN's Gupta approached for surgeon general
Dr. Sanjay Gupta, CNN's chief medical correspondent, has been approached by Barack Obama's transition team about the U.S. surgeon general's post, according to sources inside the transition and at CNN. Gupta, a neurosurgeon, has served as a White House fellow and as a special adviser to then-first lady Hillary Clinton.
Dirk van Dijk - sorry stuck at work. Try to find a link and post it.
Wanna sum it up ?