Ye gawds, the Feds are buying mortgage paper, so I imagine that everyone is going to find some cheap toxic waste to pass on the ultimate bagholder.
I find it ironic that my equities salvation depends on the end of the treasury bubble and movement back into equities. Plus ca change.
And of course, what started happenning today. The piggies showed all of those ultrasafe treasuries on their books on 12/31, and as fast as possible started buying cheap stocks right after.
Now, we return to the regularly scheduled end of the world discussion that this site engenders.
Everybody relax, you have years until the country really changes, thanks to that devastating crash in oil. $80 oil won't be much of a shock to the system.
CR Does anything really matter to holders of adjustable rate mortgages except when it converts from floating to fixed? 1/3/5 year arms converting to 25 year fixed mortgages is going to hurt, especially when they are underwater.
Also, this CSPAN hearing is a joke. The best way to throw Congress off the trail is to send worthless "witnesses" to interrogate. Congress will never find out anything from these 2 guys. They are the wrong people.
OT, JMO - If EEM had closed 5 cents lower (less than 0.2 of 1%) then it would have "failed" by my T.A. However, given the broad market failed today (higher high, lighter volume, closed under the previous high) - I bought EEV anyway. Stop 5 cents below today's low. Same with DUG - xome of those oil stocks want to roll hard, others not so hard.
Byron R. Wien, Chief Investment Strategist of Pequot Capital Management, Inc., today issued his list of Ten Surprises for 2009. Mr. Wien has issued his economic, financial market and political surprises annually since 1986. The 2009 list follows:
The Standard and Poors 500 rises to 1200. In anticipation of a second-half recovery in the U.S. economy, the market improves from a base of investor despondency and hedge fund and mutual fund withdrawals. The mantra changes from fortunes have been lost to fortunes can still be made. Higher quality corporate bonds, leveraged loans and mortgages lead the way.
Gold rises to $1,200 per ounce. Heavy buying by Middle Eastern investors and a worldwide disenchantment with paper currencies drive the price of precious metals higher. In a time of uncertainty, investors want something they can count on as real.
The price of oil returns to $80 per barrel. Production disappointments and rising Asian demand create an unfavorable supply/demand balance. Other commodities also rise, some doubling from their 2008 lows. Natural gas goes to $9 per mcf.
Low Treasury interest rates coupled with huge borrowing by the Treasury send the dollar into a serious downward slide. Overseas investors become concerned that the currency printing presses will never stop. The yen goes to 75 and the euro to 1.65.
The ten-year U.S. Treasury yield climbs to 4%. Later in the year, as the economy shows signs of recovery, economists and investors shift their mood from concern about deflation to worries about inflation. A weak dollar, rapid growth in money supply and record-setting deficits (over $1 trillion) are behind the change.
Chinas growth exceeds 7% and its stock market revives. World leaders credit Chinas authoritarian government for its thoughtful stimulus policies and effective execution during a challenging period. The Chinese consumer begins to spend more and save less and this shift is behind the unexpected strength in the economy.
Falling tax revenues from the financial sector cause New York State to threaten bankruptcy and other states and municipalities follow. The Federal government is forced to step in and provide substantial assistance. The New York Post screams When will the bailouts stop?
Housing starts reach bottom ahead of schedule in the fall, and house prices stabilize after dropping 15% from year-end 2008 levels. The Obama stimulus program proves effective and a slow growth recovery begins before year-end. Third and fourth quarter real gross domestic product numbers are positive.
The savings rate in the United States fails to improve beyond 3%, as most economists expect. The concept of thrift seems to have vanished from American culture. Peak job insecurity and negative growth drive increased savings early in the year, but spending resumes as the economic growth turns positive in the second half, making Christmas 2009 the best ever.
Citing concerns about Iraqs fragile democratically elected government and the danger of a Taliban-controlled Afghanistan, Barack Obama slows his plan for troop withdrawal in the former and meaningfully increases U.S. military presence in the latter. In a hawkish speech he states that the threat of terrorism forces the United States to maintain a strong military force in this strategic area.
To contribute further on the state of credit market from my area of expertise, Southwest (BBB+) privately placed 3 year senior secured notes at 10.5%, with an LTV of 65%.
Yikes. In October, we were able to get a B- client in the same industry at around that mark, with an LTV of 75%ish
I like ths part:
"Corporate bonds are on fire today. Spreads are ratcheting in as buyers emerge after a long period of hiatus. One salesman noted that 10 year and 30 year industrial paper has tightened 25 basis points to 50 basis points to benchmark Treasury debt in the last two weeks.Caterpillar Tractor 10 year paper traded T + 400 less than two weeks ago and is 360 bid today."
"Obama's America will shine. The country will reemerge as undisputed top dog, the only one with real demographic, scientific, and strategic depth. As first into the crisis, it will be the first to hit bottom."
I disagree with most of Ambrose on the article. The problem is the last sentence quoted. He seems to have not noticed that we are going to hit bottom with the after burners on, thrust pointed perpendicular to the ground at several 100x terminal velocity.
You might call the impact speed "No Really this IS TERMINAL Velocity".
In spite of Federal Reserve easing, and other policy measures, the United States economy suffers its first recession since 2001 as housing starts stay soft and banks are reluctant to lend to anyone where a whiff of risk is apparent. Federal funds drop below 3%. The unemployment rate moves definitively above 5% and consumer spending is lackluster.
Standard and Poor's 500 earnings decline year-over-year and the index drops another 10 percent. Energy and materials stocks hold up relatively well in what is viewed as a correction rather than a bear market. Market conditions start to improve during the summer.
The dollar strengthens in the first half reaching $1.35 against the euro and weakens in the second exceeding $1.50. The European Central Bank begins an accommodative monetary policy. Foreign investors flock in to buy cheap assets in the U.S. early in the year but the dollar declines later as several countries holding large reserves diversify into other assets.
Inflation rises above 5 percent on the Consumer Price Index as higher commodity prices and oil finally begin to have an impact in spite of modest wage increases. The 10-year U.S. Treasury yield rises to 5 percent. Stagflation becomes a frequent presidential campaign and Op-Ed discussion topic.
The price of oil goes down early in the year and up later, sinking to $80 a barrel in the first half as western economies slow and inventories are drawn down, and rising to $115 in the second. Established wells continue to decline in production while China, India and the Middle East increase their consumption.
Agricultural commodities remain strong. Corn rises to $6 a bushel and cotton to 85 cents a pound. Gold reaches $1,000 an ounce as disillusionment with paper currencies spreads across Asia.
The recession in the United States slows the Chinese economy modestly but its stock market declines sharply. Investors recognize that paying biotechnology stock multiples for highly cyclical companies doesn't make sense. The Chinese revalue the renminbi by another 10 percent to control inflation and as a gesture to foreign governments participating in the Olympic Games who complain that Chinese terms of trade are unfair. Several long distance runners refuse to compete in certain Olympic events because of continuing air pollution problems.
The new Russian President Dmitry Medvedev, under the tutelage of Vladimir Putin, becomes more assertive in world affairs. He insists that Russian oil and gas be paid for in rubles and demands a Russian seat at major world conferences. Russia and Brazil stock markets lead the BRICs. The Gulf Cooperation Council markets begin to attract interest among emerging market investors.
Infrastructure improvement becomes an important election theme for both parties and construction and engineering stocks rally in anticipation of huge programs beginning after the new President's inauguration. Water becomes a critical problem world-wide and desalination stocks soar.
Barack Obama becomes the 44th President in a landslide victory over Mitt Romney. With conditions in Iraq improving, the weak economy becomes the determining issue in voters' minds. They want to make sure that gridlock ends and Congress gets something done for a change. The Democrats end up with 60 Senate seats and a clear majority in the House of Representatives
Look at the foreign currency ETF's. FXE, FXY, etc. They should track short dated sovereign debt fairly well (but don't have the credit rating, of course).
Spreads are coming down since now the spread is not a measure of default risk. Now it's a measure of bailout likelihood.
Socialized risk. The Fed/Treasury have demonstrated that nothing is small enough to fail, because everything is linked by CDS default risk. The USA is a socialist county... but only for the investor class.
Mish picked up the NYTimes Michael Lewis article and quoted it, but he passed on this quote:
Incredibly, intelligent people the world over remain willing to lend us money and even listen to our advice; they appear not to have realized the full extent of our madness.
"Obama's America will shine. The country will reemerge as undisputed top dog, the only one with real demographic, scientific, and strategic depth. As first into the crisis, it will be the first to hit bottom. Those expecting the dollar to collapse will have to wait."
A2P2 looks nice, but I wonder if it is a matter of companies going to the bailout window rather than trying to float crappy paper at market rates the issuer can't possibly cover.
There needn't be any guessing if volume drops is holiday related, checking data at the same time every year would show whether it is or isn't.
"If the economy were at full employment and a high rate of capacity utilisation today, it would still require a permanent resource transfer from the private sector to the public sector, that is, higher taxes or lower public spending. But for cyclical purposes, lower taxes and higher public spending are indicated "
Current account deficit + financial system bailouts + present and future social welfare obligations + supernova stimulus package - asset price depreciations - slowing velocity of money - international ability to borrow - collapsing and bankrupted industry - rising unemployment - severe haircuts on future E of P/E ratios + restricted lending - gov't intervention in all markets. ETC
Very clear we are in an exponentially convex episode without historical precedent. Print & borrow cannot make whole.
Souffle economy
Thank God for Paul Vissarionovich Krugman's idea! Now the only thing left for the new administration to do is "temporarily" nationalise the whole banking system and we should be OK!
P.S. I forgot about Obama's " The Red Shovel Deal".
P.P.S. It worked wonders in my old country.
A2/P2 is a fuzzy indicator since it covers a fairly wide range of credit risk. Volume was really high Friday so obviously a lot of deals had been parked until after the New Year so they wouldn't uglify investor's balance sheets. This may not be a representative sample. If it's relatively good companies the spread will be misleadingly low. I was expecting a big drop after the new year, but not this, so I expect it to climb up to around 3 or so by the end of the week. Not a particularly informed expectation though, just gut feel.
"Obama's America will shine. The country will reemerge as undisputed top dog, the only one with real demographic, scientific, and strategic depth. As first into the crisis, it will be the first to hit bottom. Those expecting the dollar to collapse will have to wait."
All equity may be confiscated by the state, repackaged and securitized to become a zero coupon bond of indeterminate maturity in order to meet past obligations and fund future expenditure.
All productive surplus is presumed upon by a gov't which can reach it via taxation, currency devaluation and inflation, or legal and extralegal appropriation. The black swan events are the scales to which these value extractions are imposed upon the citizenry.
A2P2 looks nice, but I wonder if it is a matter of companies going to the bailout window rather than trying to float crappy paper at market rates the issuer can't possibly cover.
"As the new owner of $172.5 billion of preferred shares and warrants in 208 U.S. financial institutions, the Treasury Department hasnt succeeded in thawing frozen credit markets, leaving taxpayers propping up an industry that wont lend to them."
The long bond interest rate is up a HUGE amount today - almost a quarter point to 3.03%, which is probably a good indicator, since the rate was just insanely low before. 2 yr remains terrifyingly low at 0.76%. If the bond market were sane this would indicate a depression (but not necessarily a great one) followed by a long period of weak growth. But the bond market isn't sane, so I'm not sure what to make of it.
"Entrecôte à la bordelaise roof rats, roof rats, roof rats
This recipe was popular with Europeans during the middle ages, and the same is true today. Who among us hasn't been enchanted by the enticing aroma of roof rats roasting on an open fire? roof rats, roof rats, roof rats roof rats, roof rats, roof rats
rats are skinned and eviscerated, roof rats, roof rats, roof rats roof rats, roof rats, roof rats
brushed with a thick sauce of olive oil and crushed shallots,
then grilled till tender and juicy"
BB gun's we'll take 'em down, and leave easy shot cleaning, cuz if you miss it, it's just a crunchy bit in the meal. Hell, make a game out of it. Family member who crunches the BB gets to make a wish...or sleep near the trash can fire pit...whatever...be creative.
All indicators that are massaged....I suppose that the Fed having a smaller balance sheet full 'o' crap is yet another indicator of the apparent thaw.
Wake me when real people get real money.
One thing about the Buiter post.....he doesn't really talk of China defending it's treasuries..just selling them....sort of a bit short-sighted don't you think?
I can't wait till Summers asks some cabinet appointee woman that questions his SHOCK&AWE spending proposals, "Don't you have a husband to go and cook dinner for? "
Interestingly enough, the low LIBOR rates are really helping commercial real estate operators. Many of the 5-year floating rate CMBS deals done in 2005/2006 were at incredibly low spreads over the 1-month LIBOR, which is currently 0.43%.
On one of our loans, which is $30MM+, the spread is 140 bps over 1-month LIBOR, with no floor. I think our DSCR is somewhere around 4.0x currently.
That's why I think the current increasing-vacancy environment won't hurt commercial real estate operators as much until:
1.) LIBOR goes up.
2.) Operators need cash (i.e. - are forced to sell)
3.) Loans mature and "technical" term defaults occur (even then, lenders may extend rather than foreclose)
[But the bond market isn't sane, so I'm not sure what to make of it.
Fair Economist ]
It isn't a market. It's pure speculation, based on Bernanke making good on his claims of unleashing the unrestrained Fed balance sheet and buying Treasuries to keep yields down. The entire credit market is impossible to make any value judgements. It's useless too even pay attention to it. And the Fed will end up with much more in the way of guarantees & obligations when municipalities come demanding their fair share.
Bond Girl, I can't square either the extremely low long-term rates or the TIP-nominal spreads with the enormous incentives for the government to inflate. These rates make sense only if you're essentially certain that inflation will be zero for many years - with a heavily indebted government and a fiat currency. It's just not rational to buy long-term treasuries at these rates.
OT, but in the BK Folder: the company formerly known as Gateway.
A note from MPC Account Executive to customers:
"As of 12/29/08, MPC Computers is no longer in business. MPC will be liquidating all assets of the company.
"This has been a sad turn of events. I was hanging on here at MPC in the hopes that the company could restructure its debt, and get back on its feet.... and to get the products many of you have been waiting for so patiently, but sadly, the company is no more."
"It does not appear that there will be an official notification of business termination by MPC management, so the information provided is unofficial. Please understand that I am giving you my best understanding of the situation, and I am not speaking for MPC, as I am no longer an employee of MPC:
· Warranty Coverage: MPC is now gone, and any remaining warranty coverage is gone too. You may be able to find local firms that might be able to repair your systems, but parts and labor will be chargeable items.
· Product in for Repair: MPC will return all customer-owned product to their owners that was sent in for repair. I suspect that the units being returned will not have been repaired.
· Product Ordered but not yet Delivered: MPC will not be shipping any products on back order. If you have received a partial shipment, do not expect the remainder to be filled.
· Will anyone at MPC be able to answer my questions? All employees were let go on 12/29/08 and the company is in the process of liquidating all assets, so the answer is no."
Someone should tell the CA budget forecasters: MPC/Gateway was the low-cost bid winner, and therefore became sole-source provider for much of the IT hardware for California. Looks like we'll have to dig a little deeper into the state empty coffers to come up with repair/maintenance of the state computers.
When treasury yields rise above sustainable pain thresholds, a newer and more desirable instrument will be unveiled.
Written with a 50- or 100- year maturity it will be collateralized with public and private real estate holding within the USA. Holders will have supersenior claims above legitimate first holders of title.
Birds of winter falling into silence
Hawk of winter sitting on the fence,
Scatter to your coverts in the trees
Wren or finch the hawk of winter sees
Crystals are indifferent to pain
Wren you have been fed on seed and grain,
What difference is there, dove or finch or wren?
Eternity will overtake you, when?
Obama's stimulus plan simply reduces taxes on last years stimulus plan. In 2008 you received a check that is taxable income. In 2009 you get a tax credit to apply to last years tax check income. A modest net positive that will have little impact except for those on earned income, who own few homes and most likely provide no employment.
Someone should tell the CA budget forecasters: MPC/Gateway was the low-cost bid winner, and therefore became sole-source provider for much of the IT hardware for California. Looks like we'll have to dig a little deeper into the state empty coffers to come up with repair/maintenance of the state computers. ChefVisar | 01.05.09 - 6:45 pm | #
It's all good - it is just more stimulus!
Don't ya just love how the low bids always seem to be the ones going t/u? Hoocoodanode.
I am trying to determine just how that unfolds. With the Tresury committed to buying Treasuries to keep yields in ine the dollar will crack and that in turn will lead to Treasury selling. How do they hold it together with a negative feedback loop.
1) You have to take into account that every day there is new information about how the feds will address the situation.
2) There are things that pull down Treasury yields besides the fear trade. For example, when the Fed tries to drive down mortgage rates by purchasing MBS and agency debt, it is also decreasing the duration of MBS holders' portfolios. They tend to fix this in the swap or Treasury market. There are different kinds of investors at different points along the curve. You can't expect the curve to tell a simple story.
There is obviously an element of fear, but you can't reduce all bond market activity to that.
Eventually the above will be cancelled out by massive amounts of supply. The moral/contingent obligations will have to weigh on Treasuries at some point too.
A lot of this will be determined by Bernanke's behavior. But if more Treasury debt is issued at higher expense, he will have to make ever more dramatic moves to keep the cost of borrowing down - assuming he stays consistent philosophically.
There's a push and pull that makes the trades a bit of a judgment call now though.
Thanks ChefVisar, I think it helps to be able to put a face to the name. Figures, I own a Gateway computer, bought it a couple years ago. I did make some money on a swing trade about a year and a half ago on the buyout rumors though
The trustee liquidating Bernard Madoffs firm found $830 million in liquid assets in the defunct brokerage to meet claims that may exceed any previous case, the president of the Securities Investor Protection Corp. said.
that's about right... everyone else on the street was 30-40/1
Re hybrid ARM resets.Some lenders are unilaterally extending the fixed rate period.In the last 10 days I have seen 2 letters from servicers informing people that their 5/1 ARMs would be fixed at 5% for an additional 5 years.Neither borrower was delinquent,neither had contacted their servicer,neither was a portfolio lender.Both borrowers were in good neighborhoods and clearly underwater...FWIW.
When I look at that 30-d A2/P2 graph, it dawns on me: 'Yes, these markets really are rational & I now see--with certainty--exactly where we're heading.'
Seriously? You'd better call your psychic hotline 'advisor' and demand a refund.
Well Strom one of the few things helping avert complete disaster in the RE world, including CRE, is the off-the-cliff LIBOR. In the residential world a re-set is no longer a 4 letter word, although the march of devaluation continues nontheless. I suspect LIBOR will continue to provide a temporary reprieve in CRE as well, but a savior it probably ain't. I think CRE is going to be in even more trouble this time next year.
It strikes me that the market has had pockets of optimism throughout this whole thing. It comes in waves. There is a solution posed (such as the TARP), things look better (the government is showing it will react quickly and aggressively to save the economy), then the reality sets back in as the solution is implemented. It is hard for me not to discount the stimulus package. I thought it was a great idea before because it would at least provide some support for employment and would remove some of the burden for state and local governments. But then you find out that you are spending future generations' income on polar bear exhibits. I hope I am wrong and that the markets normalize at some point. Alas.
When the public learns that "loose" slots is really "rigged" slots, they stop going to the casino. And the casino never sees them again.
Confidence is a generational game. The '29ers had learned their enemies' ways, but the later generations were either never taught or were slow studys.
It's game over, everyone is in the know now. It's apparent that no paper instruments "store" value, nor do they preserve cash flow in any meaningful way. Risk has been uncaged.
When price stability and inflation break out of a certain expectation band, investors view any capital market product with deep suspicion.
Stocks, bonds, annuities, currencies. 1000 ways to leave your lover.
Bond Girl writes:
It strikes me that the market has had pockets of optimism throughout this whole thing. It comes in waves.
It's like a drug. You take it and you feel good, get that rush. Then you start coming down from that high and you get anxious because you know as high as you got you will now go that low. So you take more
keep in mind many of those arms have clauses that state they can't go down...
Well, most of them do have a floor and a ceiling. But it's much better when the floor is around 3.5% The other confusing thing is their "caps"-- rate and payment are two different things, which they did their best to confuse.
sdtfs, you don't have to tell me, I was naive and distraught when I got mine. Mom had just died leaving me a mortgate and I was not working as I was her full time caregiver...Bah, you live and you learn, I'll either get a refinance in the next couple of months or lose the house...It would suck, but that's life. I really love this house and I'll do what I can to try and keep it. At least I'm not underwater with it...
I know whut's crashed th' con'my. It's them enviro-mentalists, that's whut. If'n it warn't fur all that there re-cyclin', we'd hev better prices on glass, tin, paper, plastic, an' I don't know wut'all. They's who dunnit. Put alla thet junk inna lan'fill, whur it belongs, an' things ud git better rat quik.
Willem Buiter, I read it twice. I read the comments. I don't get it. But thats why I am here. mp and others know things I don't.
The problem, for me, is the sense of helplessness. If the dollar goes, everything we have saved and worked for goes. Yet, I know it may have to. It may suck to be me but maybe what replaces it will be better for my daughter and for the people of the world. Because the American lifestyle is unsustainable, and may in the future even be considered evil.
I don't think that a year from now anyone will be saying that: 1) the recession is over; or 2) the U.S. led the way out. The U.S. economy just keeps digging itself deeper into a hole. All the stupidity and false optimism is a leading indicator of nightmares. The U.S. leads the world in stupidity and false optimism, that's all.
I am trying to determine just how that unfolds. With the Tresury committed to buying Treasuries to keep yields in ine the dollar will crack and that in turn will lead to Treasury selling. How do they hold it together with a negative feedback loop.
Can't work for long... bearly | 01.05.09 - 7:09 pm | #
I agree - the thing that will break it will be when the SWF & FCBs think they can't support the dollar anymore OR they really do give up on the US consumer market - result is the same... dollar tanks & rates sky until a new equilibrium is reached [rates at which the private money comes back in - my guess is that will be mighty high yields & very low T prices... another guess is that it happens way faster than the equity correction - hours or days not weeks and months... again assuming the SWF & FCBs really stay away as opposed to drawing a new line in the sand].
I'll grant that 0.85% is/was an unusually small difference but 4.85%? That's one of those signs of market dysfunction you purport to be tracking. Rob Dawg | Homepage | 01.05.09 - 7:24 pm | #
Dysfunction? That's not dysfunction it's PREMIUM bay-be... YSP for bankers... its GOLDEN!!! I tell you GOLDEN!!! WE'RE NOT GIVING THAT $#@! AWAY FOR FREE, IT'S $%#@! GOLDEN!
The predominant management chosen are Merrill peeps. They wiped out more than 2/3 of research a couple weeks ago. our fate is known at the end of the January - it does not look good. The chatter is they keep 10-15% of GCIB employees, or that the merged platform is 20% less than the current headcount at Merrill.
There is no chance that a nation as reputationally scarred and maimed as the US is today could extract any true alpha from foreign investors for the next 25 years or so.
The problem, for me, is the sense of helplessness. If the dollar goes, everything we have saved and worked for goes nova | Homepage | 01.05.09 - 7:47 pm | #
Not necessarily - not if the things you buy were produced inside the 'dollar zone' and can't be easily exported out of the dollar zone... those products and services won't change that much in price - your money will be good for buying them just like before. Now all we have to do is identify what those are.... [dryfly thinking]... fast food and hair cuts [personal services]. Even domestic commodity food would go up if the grain traders could physically export and get a better price somewhere else [like where the currency is stronger]. But stuff that doesn't ship should still be reasonable... burgers & haircuts don't export so well.
Good news is you will probably be working YOUR ASS OFF to produce those 'exportables' so as to help your future employer gain 'hard currency'.
oh...got another. How late am i to this WM post?
is it current on this thread only?
now...
First, there will have to be some combination of higher taxes as a share of GDP or lower non-interest public spending as a share of GDP. Second, there will have to be a large increase in national saving relative to domestic capital formation
that simply is'nt going to happen without a march on the capital(s)
mp, I guess I've moved past outraged awhile ago. I kind of accepted what was coming a few months back. I don't like it, but I count my blessings I don't have kids and I'm young enough for a "Survivor" scenario if neccesary. If we manage to avert disaster, I'll be pleasantly surprised, it's the upside of being a pessimist.
US was able to attract foreign investment because security, liquidity, and abnormally high returns (primarily from sucking in more and more retail investors). American ROI on equities was a decades long Madoff scheme.
The rest of the world now realizes America isn't wearing any clothes. The obligations are only going to get bigger (e.g. Medicare, stimulus, tax breaks, etc), especially if America doesn't have the political stomach to make the hard choices.
Financing the stimulus and future deficits will eventually be borne by Americans via higher taxes and hyperinflation, especially since American innovation sucks ass.
My observation: earlier today dryfly mentioned something about leading the 800 lb elephant back into the room. With the exception of items of national security, I don't see how the US can produce "tradeables". Because of taxes and transportation, it simply makes too much sense to have the situs of production near consumption.
I had a conversation at work today about whether my agency should acquire another armored vehicle in anticipation of civil unrest. I learned two things:
Armored vehicles are more suitable for SWAT-type deployments than Rodney King-type incidents.
My superiors have run out of Kool-Aid. The fact that they even had this conversation means a huge shift has taken place.
Kristina, after reading Buiter's piece today, I'm feeling very ignorant. It was a real eye-opener.
? I'm not seeing that. Buiter stated it all very lucidly, but all his main points - that the trade and budget deficits are unsustainable, that we'll have to switch to more balanced production, that we will probably see a drop in the dollar and inflation, etc. - are basically received wisdom around here. Great article, extremely well-written, great to see it from someone with stellar credentials; but what's particularly new to somebody who hangs out on CR?
my experience is the envied usually can't manage there cash flow and lifestyle sans employment. only the rare bird fly's free forever
All I can say is that I bailed from my Dot Com flameout about six months before it died and I was damn glad, it got incredibly nasty at the end and it didn't matter anyhow.
Likewise, I volunteered for a layoff in 2003 during a 40% cutback. Glad I left. We'd had layoffs every quarter for YEARS and it just sucked being there.
The past two years have sucked on and off, but I don't regret leaving either place.
.
In 2008 you received a check that is taxable income. In 2009 you get a tax credit to apply to last years tax check income. A modest net positive that will have little impact except for those on earned income, who own few homes and most likely provide no employment.
oops, I see mp has replied to a question like mine. Well, following up:
I don't see Buiter saying it's "checkmate" in the sense that the game is over. We'll have to consume less and produce more, and control our government expenditures. Hardly the end of the world.
askin, the thing that "sticks out" from reading Buiter's piece is that, and as a practical matter, virtually every move ends in "checkmate."
We only buy time and the time we buy will become increasingly expensive. mp | 01.05.09 - 8:33 pm | #
It's not that bad mp. At least we get to decide which shit twinkie we eat. The high unemployment high taxes we pay more of our way strongish dollar shit twinkie OR the we work our ass off for no purchasing power monopoly money looks like dollars pretend free ride shit twinkie. Regardless we are a lot poorer either way.
Great article, extremely well-written, great to see it from someone with stellar credentials; but what's particularly new to somebody who hangs out on CR?
Fair Economist
You are one those I consider a smart person. Myself, I bought a copy of Basic Economics, and I am working through it. I think the mp endorsement is important.
Also, I swing from screw it - I will survive to callous humor to "oh my Dog!"
Oh, based on something today I think I can say Sprint is toast within a year.
We'll have to consume less and produce more, and control our government expenditures. Hardly the end of the world. Fair Economist | Homepage | 01.05.09 - 8:40 pm | #
It will only FEEL like the end of the world... well to folks who have never worked for crap wages before it will really, really feel like the end of the world.
interesting. Each has an opportunity presented to them in their respective industry. i was referring to the securities industry(the print paper plan). It's never as good once your gone.
how bout them uaw'ers who in 2005 were offered 140g's to walk? how do you think they have fared?
My observation: earlier today dryfly mentioned something about leading the 800 lb elephant back into the room. With the exception of items of national security, I don't see how the US can produce "tradeables". Because of taxes and transportation, it simply makes too much sense to have the situs of production near consumption. a la moooode | 01.05.09 - 8:34 pm | #
If WB is right and the world punts on the dollar [say we see 50 yen to the dollar and $4 to the euro and RMB at parity] BELIEVE ME we'll be in the tradables biz again big time & quickly. That will NOT bring back our bubble euphoria [measured in 2006 consumption]... but people will be working and eating and talking about the sucky 'joyless' recovery.
Pretty much every place in finance is going to suck right now though
Many places still suck in IT. I can't believe what the past five years have been like. But, OTOH, by doing contracting I've been able to move on and try another place so now I have a good idea of what a "good place" looks like.
The downside is that, apparently, there's a high correlation of companies that suck and companies that use contractors.
I got a legacy treasury direct statement today. It says that my last reinvestment yielded a whopping 0.041% (0.040% discount rate). I figure treasury is the best cash warehouse, and they haven't chareged me to store it, yet. Treasury is the last domino to fall, so to speak. I figure that if treasury falls, then the only thing that will matter is how much firepower you've got and how well you can shoot.
By Steve Vogel
Washington Post Staff Writer
Monday, January 5, 2009; 5:44 PM
The new blue uniforms issued to Transportation Security Administration officers at hundreds of airports nationwide may have a snazzy look, but they have become a major irritant for some of those employees.
The new uniforms are causing rashes and other irritations among transportation security officers who screen passengers at airports, according to the union representing the workers.
"We're hearing from hundreds of TSOs that this is an issue," said Emily Ryan, a spokeswoman for the American Federation of Government Employees. Most of the complaints have been for skin rashes, but they have also included runny or bloody noses, lightheadeness, red eyes, and swollen and cracked lips, union officials say.
If WB is right and the world punts on the dollar [say we see 50 yen to the dollar and $4 to the euro and RMB at parity] BELIEVE ME we'll be in the tradables biz again big time & quickly.
Yes, when I wrote that, I meant 1950s Golden Age of exports. Basically, what WB is saying is that we will probably become China 2.0 because global labor arbitrage will now favor us. =)
Oh, so if I am a 100% Treasuries I will be ok? As that is the only "safe" option for my 401k, and my daughters college fund? nova | Homepage | 01.05.09 - 8:51 pm | #
How long? If you own them 'long' do a NPV on the current valuation if say interest rates go to 10%... not pretty. When the SWFs & FCBs walk - I'd expect something like that to happen until private 'value vultures' come back in... 2% T's don't make sense to me at ANY maturity... less so in a dollar crisis.
"Feckless Ness writes:
I had a conversation at work today about whether my agency should acquire another armored vehicle in anticipation of civil unrest. I learned two things:"
What do they intend to do with this armored vehicle?
My "gut" feeling is that the selloff in the long bonds is at least partially due to end of year portfolio rebalancing/tape painting. Lots of banks wanted to be able to print shiny brochures showing their balance sheets safely in govt bonds as of 12/31/2008.
Kind of like going to Saturday mass right before going downtown to score some hookers and crank.
Regarding DXO, if I owned it, I'd be selling here. USO hasn't "failed" yet so crude can go higher. Crude can also retrace 50% of its recent low to high move in a heartbeat.
Obama's stimulus package is a joke. This guy's not a Democrat. He proposes passing tax cuts the repubs have been trying to pass since 2002. $100 billion for infrastructure, to include transportation. For context as to how little that is, the Big Dig in Boston cost over $22 Billion. He could take the entire $800 billion and divvy it out to the states, and it still wouldn't even approach bailing them out.
the 'unusual' nature of gitmo hasn't come up in federal court to my knowledge. if these things are confusing, i'm sure John Yoo can help straighten it out for you.
ova,
They don't offer a stable value fund or a money market fund? Which company is your 401k (403b?) administrator? I'd push HR to get them to expand the choices to include a money market fund at a minimum.
Hey, the stock rose .36 cents after the announcement. More changes to come!
Jan. 5 (Bloomberg) -- Cigna Corp., the health insurer whose shares fell 69 percent last year because of investment losses, said it will cut about 1,100 jobs and take a fourth-quarter after-tax charge of $30 million to $40 million for 2008.
The Philadelphia-based companys 4 percent workforce reduction will be complete by the middle of the year, and some offices will be consolidated, although it didnt offer details in a statement today. There may be more charges for 2009, the company said in a filing with the Securities and Exchange Commission.
Those uniforms are also causing Kidney Stones and renal failure. They were made in China with Melamine. You have to love Melamine....it's the 21st century's Asbestos...but with no recourse.
Morocco Bama writes:
Obama's stimulus package is a joke. This guy's not a Democrat. He proposes passing tax cuts the repubs have been trying to pass since 2002. $100 billion for infrastructure, to include transportation. For context as to how little that is, the Big Dig in Boston cost over $22 Billion. He could take the entire $800 billion and divvy it out to the states, and it still wouldn't even approach bailing them out.
Morocco Bama | Homepage | 01.05.09 - 9:03 pm | #
Promises promises
Lets be serious here. Did you think any politician would keep his/her promise?
Actually, the statement that you will never have to pay it back is not true. The IRS site says you won’t have to pay any income taxes on it. If you read the original bill passed by the Senate and the House (available at their website) and signed by Bush, it is merely a LOAN against your next years taxes. In other words, the amount you receive will be offset against what you paid. It’s true your taxes won’t go up, but the amount you paid on it will go down.
Supposedly, Congress is supposed to change this, but they haven’t yet.
Political promises? I have another name for them, lies for votes. Gumby could have seen there would be no money for all the toys and cookies that were promised as first priority. Looks like another Mc Same politician. Nothing new here.
Lets be serious here. Did you think any politician would keep his/her promise?
Nope. Whenever a politicain talks, I put my fingers in my ears and flutter my tongue and make that sound that Arab women make when they celebrate, otherwise I'll die laughing.
joe after the 12 pack writes:
Political promises? I have another name for them, lies for votes. Gumby could have seen there would be no money for all the toys and cookies that were promised as first priority.
I believe tax cuts for the middle-class were promised as first priority. Your rage clouds your judgement
Toyota to suspend production for 11 days in Japan
TOKYO (AP) - Toyota Motor Corp. said Tuesday it will suspend production at all of its Japanese plants for a total of 11 days in February and March because of faltering global demand. Japan's top automaker announced last year it would halt production at its 12 domestic plants for three days in...
Having been a State monitor for the private prisons contract during Arkansas' experiment with the idea, I'd say privatization of government functions like that is a poor idea. There are a number of hidden costs, especially hidden long-term costs that can come back to bite painfully. The only real saving is from paying the guards a less than living wage. The costs of settling lawsuits probably ate up any remaining illusory savings. Oh, prison work is a subculture. Soem might view it as degrading. But nothing compares to the degredation privatizing the prison work culture brings. Monstrous hybrid indeed.
Not likely. Though the treasuries issued are supposedly just issued for this fund. Makes me special.
nova | Homepage | 01.05.09 - 9:11 pm
Sounds like the line Madoff used to attract investors. Good luck!
Seriously, you need to find out the duration of the bonds held. That number will tell you how much value the bond will lose for the next 1% increase in interest rates.
I'm sure some one here can speak to ERISA and 401k's or do a google search. There is some notion of fiduciary responsibility with respect to how the 401k plan is administered if I recall correctly.
Again, IANAL or anything - this is from memory and is outside of what I do - a few minutes on google should turn up a bunch.
Gavshire Hathaway writes: \tThe Buiter article makes me want to invest in oil.
Anyone else have the same take? Gavshire Hathaway | 01.05.09 - 8:58 pm | # ----- Tinfoil Hat Me asks, "Are you talking physical or paper oil?"
Obviously, Oil/Energy isn't going away unless we all go Amish, but capturing that movement for a profit makes me wonder what options you may have. If you've seen Jesse's blog recently regarding gold, you'll learn that Comex is using little know/used rules to limit people taking physical possession and is trying to issue scrip. If this kind of action plays out in other asset markets, I'm unsure if DXO or individual companies like XOM are going to get the value and reliably return the proceeds to their investors.
The Fed & US Gov't are making things more hectic than they already are, and I agree with WB completely in that regard.
Other Thought: Is anyone else starting to think that Treasuries are playing more like US Gov't Non-Preferred/Voting common shares? You don't get much say in what the institution does or its use of money through proceeds and profits, only on price movements.
No rage, I hope he pulls something off but have big doubts. I thought it was tax the oil companies win fall profits tax with rebates of $1K was first along with raising taxes on the rich to give the middle class a tax cut. Not happening that way. Beside tax cut won't help the middle class and I am now in the middle class bracket. Just another false hope unfolding.
However you slice it, $750 billion is not a nothingburger. Won't fix the oncoming hard times? Well, that's not exactly a shock to us here. Maybe an "inadequately nourishingburger" or even a "toxicburger" but it will certainly have effects at that scale.
I'm not as disappointed as some seem to be. I view the stimulus as a vehicle for reflating the money supply and you don't really need that much total spending to increase the money supply. I think we'll need some jobs programs eventually but not yet. I wasn't expecting many jobs from current infrastructure plans, which will be very capital-intensive. I AM pretty ticked about the tax givebacks for companies with current losses as I view that as 85% bailouts for failing companies. But 100 billion is less than the Citibank bailout so it's not the worst thing going on at present.
When do they idle these? I can't see those crafty Nipponese letting the home island take the hit while fat Americans take home money
Toyota (NYSE:TM) established operations in North America in 1957. By 2008, Toyota will have the annual capacity to build about 2 million cars and trucks in 14 plants across North America. There are more than 1,700 Toyota, Lexus and Scion dealerships in North America, which sell more than 2.5 million vehicles a year. Toyota directly employs nearly 40,000 people in North America. Toyota's investment in North America is valued at more than $17.6 billion, and annual purchasing from North American suppliers totals more than $29 billion.
Persecuted Comrade Anonymouse writes:
"Regarding DXO, if I owned it, I'd be selling here. USO hasn't "failed" yet so crude can go higher. Crude can also retrace 50% of its recent low to high move in a heartbeat."
Yeah, I liked ol Sparky....they had colorful managers in those days.....the good ol days. Watch that Team Speed video of Earl....I nearly pissed my pants when he answered the question about tomato plants.
"I'm sure some one here can speak to ERISA and 401k's or do a google search. There is some notion of fiduciary responsibility with respect to how the 401k plan is administered if I recall correctly."
Plan administrators (typically HR) lay off the fiduciary liablity by hiring management company who comes armed with ususal color brochures. Hold a few meetings a year, offer a handful of choices (column A and B type choices), and not much more to do. Oh, and be careful not to lock out employees when management is harboring some huge screw up.
Read it this morning, and I think he's right if you think in terms of the status quo. Rearranging the deck chairs to avoid this scenario would be a large scale global armed confict.
I think who ever said it above. Something along the lines of "If treasuries crash - then we better know how to shoot." Thats pretty much what I tell my wife.
as bennet would say. we have 2 debt markets. 1 is supported artificially by fed intervention the other trades in the free market. improvement in spreads means zero as the fed as the pedal to the metal. let them take the foot off the gas and the economy disintegrates. what's the point reporting this anymore
You don't knows good eatin'... roofrats, roofrats...
as a vegetarian with a rat problem what do you suggest -- I caught a large one (squirrel size) and relocated down the street - but to my surprise there are more - I nearly got a big mother yesterday but they are sly and I felt a bit bad given how cold it is -- the wife says stop feeding the squirrels and the rats (I tell her they're large mice) will move on -- suggestions???
i think folks consistently underestimate the mercantile presence of the overseas CBs in terms of treasury support. i say that as a class-A TBT knucklehead.
"Bank of America, incidentally, may have wanted to take some of the profits from its investment in China Construction to raise a bit of capital, but was dissuaded by Chinese government pressure. China wasnt worried that it would lose access to Bank of Americas expertise. But it did worry that the sale might pull Chinas stock market down. The FT:
Bank of America last month cancelled a plan to sell more than $3bn worth of its shares in CCB after being told by senior government and banking officials that Beijing was unhappy with the timing of the sale, according to people familiar with the matter."
"as a vegetarian with a rat problem what do you suggest -- I caught a large one (squirrel size) and relocated down the street - but to my surprise there are more - I nearly got a big mother yesterday but they are sly and I felt a bit bad given how cold it is -- the wife says stop feeding the squirrels and the rats (I tell her they're large mice) will move on -- suggestions???"
bgates writes:
i think folks consistently underestimate the mercantile presence of the overseas CBs in terms of treasury support. i say that as a class-A TBT knucklehead
Warfarin. And I say that as a vegetarian. For me, rats fall into the same category as bugs splattered on my windshield. Ethically 'convenient'? Perhaps. Effective? Heck yeah.
Pythagoras--one of the greatest vegetarian philosophers who wouldn't hurt an animal for food--excuses the mass killing of rodents who are hurting you! So, kill 'em!
askin, the thing that "sticks out" from reading Buiter's piece is that, and as a practical matter, virtually every move ends in "checkmate."
We only buy time and the time we buy will become increasingly expensive.
mp | 01.05.09 - 8:33 pm | #
So is the proper alternative to simply knock over your king and resign? Or is it to take the only potential way out for the next several moves, even though it means sacraficing your queen, and hope for a blunder by the other side? In a chess turney, the honorable thing to do is to resign. However, this is wizards chess where the pieces play for keeps. The super low savings rate and big current account deficit have been huge concerns of mine for a long time now. Yes high probability that it will not work, but the alternatives have even lower probabilities of working out well. The physical infrastructure of this country sucks, so if we go down, at least we will have a few fewer bridges falling down etc.
Might want to check out my post today on savings rate on Zacks.com, it touches on a few of these issues. Its key point, as of Nov. savings rate is only up to 2.8%, used to be 9-10% until mid 80's. All the pain we have been through is just from savings rate going up 2.0% from where it was languishing, how much pain as we work our way back to 9%. That pain results in lower incomes, which makes savinngs harder, causing even more pain as you try to raise the savings rate.
Having a feast is lots of fun, until you realize that the cornbread stuffing was made out of your seed corn.
[bgates writes:
i think folks consistently underestimate the mercantile presence of the overseas CBs in terms of treasury support. i say that as a class-A TBT knucklehead ]
That's expecting Asia/ME to bet the farm on a guaranteed loss indefinitely . This whole contraption could/should bust wide open on any given day. Ignoring the inevitable or worse, piling on, is a fool's game...
Dirk writes:
"Its key point, as of Nov. savings rate is only up to 2.8%"
But that's in the face of every conceivable effort of Fed to discourage savings. Just imagine if they tried to incentivize and reward savings. Of course no one can dare to think this way.
"Question: Where will the government get tax dollars for bailouts if people don't have jobs to pay taxes?"
The government puts it on your share of all the debt they carry. Take $10 Trillion and divide by 300 million people in the US and that is where we are going. Our taxes are only paying the interest to who ever buys our government notes. Something a responsible person would not do.
"to bet the farm on a guaranteed loss indefinitely "
fear of destabilization probably outweighs fear of principal loss.
"if people don't have jobs to pay taxes?"
not an issue. if the nyfed can magically create a trillion dollars, congress shouldn't have any problem doing such. real fear will handle the niceties involved in simplifying the treasury/fed/comptroller shell game.
I dont understand why the WB article was so eye-opening. The simple model is that there's a stack of promises to several guys but only one gets to collect it. Welcome To The Plunderdome!
"as a vegetarian with a rat problem what do you suggest"
If you own your home then being a vegetarian is (or should be) irrelevant. Rats can get into places all throughout the house and create stains and smells that will not go away without a serious amount of carpentry. Think joists and subfloor. Or at minimum, think about having to replace insulation in your attic. Rats have evolved to foul their immediate environment. Do yourself a favor and find a good exterminator.
"Take $10 Trillion and divide by 300 million people in the US and that is where we are going. Our taxes are only paying the interest to who ever buys our government notes. Something a responsible person would not do."
But...but...but...they said if I transfer my balance to their card, I would get a lower interest rate and a higher limit, so I can have more money for the minimum payments and still buy more stuff...And...and...and...they said I could re-fi my house and dump the balance of my CC into that and get a tax break...that's responsible, right?
At this point, we're not likely to buy another one. This vehicle could be used in the event of a barricaded suspect, a hostage situation, or other SWAT deployment. Maybe six occupants max - it's street-legal and would be good protection in a shoot-out with gang bangers or bank robbers.
We only buy time and the time we buy will become increasingly expensive.
That's the nature of exponential systems. They reach a point where nothing can stop what it coming, and sharp "correction" is unavoidable. Ramp-and-crash is a pretty fundamental aspect of existence...
mp(Unrated) writes: \taskin, the thing that "sticks out" from reading Buiter's piece is that, and as a practical matter, virtually every move ends in "checkmate." mp | 01.05.09 - 8:33 pm | #
Yes. For more detail The Crash Course at chrismartenson.com also does a very good job - Buiter hasn't even looked at Peak Oil in this article, for example, but it will be so contractionary as to become a major factor in coming years.
Well the question is the extent we plant that seed corn as opposed to eat it. Also depends if we are dillegent in trying to raise that corn that we plant. But there is such a thing as positive ROI govt spending. Think about SF with the golden gate down, or NY with the GW closed. Some interest rate arb if the stimulus is tax cuts aimed at lower and true middle class, you know those super over indebted types, who might use it to pay down the credit card at 19% interest, or might prevent a forecloseure or two. What will be the mix well I'm not all that optimistic, but at least some % will be worthwhile. Do we go down swinging or do we go down without a fight. Odds are we are going down one way or another.
Crisis is over. Time to spend, people!
Numo!
please disperse( disburse?)
thats a relief, so much cash that needs a home.....
Please add Chrysler sales to this list...
c&c:
killjoy.
Is this going effect pony delieveries?
3 month treasury, LIBOR, TED spread, A2P2, 2 year swap
Am I crazy for thinking this is just a list of indicators that the Fed can manipulate? is manipulating?
Ye gawds, the Feds are buying mortgage paper, so I imagine that everyone is going to find some cheap toxic waste to pass on the ultimate bagholder.
I find it ironic that my equities salvation depends on the end of the treasury bubble and movement back into equities. Plus ca change.
And of course, what started happenning today. The piggies showed all of those ultrasafe treasuries on their books on 12/31, and as fast as possible started buying cheap stocks right after.
Now, we return to the regularly scheduled end of the world discussion that this site engenders.
Everybody relax, you have years until the country really changes, thanks to that devastating crash in oil. $80 oil won't be much of a shock to the system.
Someday this war's gonna end....
Now how do you think those figures would look if the govt withdrew life support?
Is it accurate to say things look better when the govt is working so hard to prop things up?
I dunno.. I still see bad things coming..
maybe I'll feel differently when every sector and business under the sun doesn't need a bailout..
(call me old fashioned)
The nightmare to come: intervention withdrawal/ cold turkey.
CR Does anything really matter to holders of adjustable rate mortgages except when it converts from floating to fixed? 1/3/5 year arms converting to 25 year fixed mortgages is going to hurt, especially when they are underwater.
30 yr mortgage rates up over 102 bps since the bottom a few weeks ago. THis is on a loan under $417k
Also, this CSPAN hearing is a joke. The best way to throw Congress off the trail is to send worthless "witnesses" to interrogate. Congress will never find out anything from these 2 guys. They are the wrong people.
OT, JMO - If EEM had closed 5 cents lower (less than 0.2 of 1%) then it would have "failed" by my T.A. However, given the broad market failed today (higher high, lighter volume, closed under the previous high) - I bought EEV anyway. Stop 5 cents below today's low. Same with DUG - xome of those oil stocks want to roll hard, others not so hard.
OT- Does anybody believe this:
US will emerge as undisputed top dog in 2009 - Telegraph
This guy us a certifiable idiot.
Byron R. Wien, Chief Investment Strategist of Pequot Capital Management, Inc., today issued his list of Ten Surprises for 2009. Mr. Wien has issued his economic, financial market and political surprises annually since 1986. The 2009 list follows:
Am I crazy for thinking this is just a list of indicators that the Fed can manipulate? is manipulating?
s0mebody
~~~~~
Nothing to see here ... move along , move along now ...
To contribute further on the state of credit market from my area of expertise, Southwest (BBB+) privately placed 3 year senior secured notes at 10.5%, with an LTV of 65%.
Yikes. In October, we were able to get a B- client in the same industry at around that mark, with an LTV of 75%ish
XXXXX
Last man standing? It just could be.
The BBB+ rating for Southwest is unsecured, btw.
Persecuted Comrade Anonymouse writes:
"I bought EEV anyway."
Looks like a small bounce after hours, immediately after close.
EEV: Summary for PROSHARES UTLRASHORT- Yahoo! Finance
The nightmare to come: intervention withdrawal/ cold turkey.
blert | 01.05.09 - 5:26 pm | #
We can haz methadone right?
Popeye - thx for the link (last thread)
I like ths part:
"Corporate bonds are on fire today. Spreads are ratcheting in as buyers emerge after a long period of hiatus. One salesman noted that 10 year and 30 year industrial paper has tightened 25 basis points to 50 basis points to benchmark Treasury debt in the last two weeks.Caterpillar Tractor 10 year paper traded T + 400 less than two weeks ago and is 360 bid today."
3 month view of LQD is a good pic:
LQD: Basic Chart for ISHARES GS $ INVESTO - Yahoo! Canada Finance - Share Prices, Charts, News and more
and a 5 day view of HIO (on good volume and some buyers returned):
HIO: Basic Chart for WESTERN ASSET HIGH I - Yahoo! Canada Finance - Share Prices, Charts, News and more
I mentioned these over two months ago and the rewards have been healthy. Given todays appetite and volumevolume, woho!
S
2-5, 7 and 10 seem to be right, but number 1 is absolute garbage.
We can haz methadone right?
dryfly
LOL!
Well, blert, you're correct. These data points mean nothing so long as the printing press (and by extention) tax payer is backstopping all the crud.
The markets are still frozen solid, the button twisting at the CB's is just making the readouts dance.
Nostrovia,
Barley writes:
"Popeye - thx for the link ... I like ths part: "[quoting]Corporate bonds are on fire today".
Thanks for the above.
XXXXX
Last man standing? It just could be
It's a gutsy call and out of character for Ambrose. I think it's possible but not the percentage bet.
Will somebody check his bank account for secret Fed payoffs?
.
Comrade Misean is Dope - I'm seeing existing arrangements made good and newer money being shared...albeit in modest amounts
This should be good news for CRE, no?
CRE needs to take it's own bath.
xxxxx,
"Obama's America will shine. The country will reemerge as undisputed top dog, the only one with real demographic, scientific, and strategic depth. As first into the crisis, it will be the first to hit bottom."
I disagree with most of Ambrose on the article. The problem is the last sentence quoted. He seems to have not noticed that we are going to hit bottom with the after burners on, thrust pointed perpendicular to the ground at several 100x terminal velocity.
You might call the impact speed "No Really this IS TERMINAL Velocity".
Nostrovia,
alybaba writes:
Agree some predictions seem reasonable. it is just that this guy is aformer MS shill and a CNBC head in his ass bottom sniffer
Well, we now know what was on his dart board....
Barley,
"albeit in modest amounts"
As compared to obscene amounts on the "gov't" side.
Nostrovia,
Best way to play short dated sovereign debt German, Japanease, Swiss in lieu of outright deposit/currency?
SP @ 1200, Gold @ 1200, Oil @ 80, 10 yr yields at 4, NY and other states and cities threaten bankruptcy? Sounds Manic Depressive to me,
Sometimes it is helpful to remember that you are by in large listening to what YOU want to hear:
Ticker Sense: January 5th Blogger Sentiment Poll
Krugman and CR sittin' in a tree o/`
More bubble memories - Paul Krugman Blog - NYTimes.com
How useful is it to measure spreads between various debt instruments & Treasuries ?
Every debt instrument is a Treasury now.
"Improvement" ??
I'm glad that the Bush gov't manage to fix things then... /sarcasm
Sometimes it is helpful to remember that you are by in large listening to what YOU want to hear
Not yet.
I want to hear you bark, Popeye!
.
Every debt instrument is a Treasury now.
That says it all.
arfff, arff happy now ?
bearly,
"Every debt instrument is a Treasury now."
Bwahahahahahaahahhaahahahhahaahahha!
Nostrovia,
Must be dinner time
S writes:
This guy us a certifiable idiot.
Here are his 10 Surprises for 2008:
Crisis over? We don't have those 4.5% mortgage rates everyone is expecting!
FRED -
Look at the foreign currency ETF's. FXE, FXY, etc. They should track short dated sovereign debt fairly well (but don't have the credit rating, of course).
Yahoo has FXE ttm yield at 4%, for instance.
So glad econ got fixed today.
Wheee, I can sleep tonight.
Close there for awhile.
BLT'S to everyone.
Who were the folks claiming CR never posts anything positive?
"Every debt instrument is a Treasury now."
I'm going to tell that to the guy at the cash checking/payday loan place. "Don't worry, the US has my back."
Spreads are coming down since now the spread is not a measure of default risk. Now it's a measure of bailout likelihood.
Socialized risk. The Fed/Treasury have demonstrated that nothing is small enough to fail, because everything is linked by CDS default risk. The USA is a socialist county... but only for the investor class.
http://www.drudgereport.com/flashacn.htm
about time
au contraire bearly, I'm certainly small enough to fall and most probably, so are you.
And the Ten is up to 2.48 and the 30 to 3.03.
Mish picked up the NYTimes Michael Lewis article and quoted it, but he passed on this quote:
Incredibly, intelligent people the world over remain willing to lend us money and even listen to our advice; they appear not to have realized the full extent of our madness.
Well, CR, you might want to tell Bloomberg. They still think credit is hard to come by.
Banks’ ‘Catatonic Fear’ Means Consumers Don’t Get TARP Relief - Bloomberg.com
"Obama's America will shine. The country will reemerge as undisputed top dog, the only one with real demographic, scientific, and strategic depth. As first into the crisis, it will be the first to hit bottom. Those expecting the dollar to collapse will have to wait."
Well, yes.
Executives at NBC TODAY replaced Coulter with showbiz reporter Perez Hilton, who recently offer $1,000 to anyone who would throw a pie at Ann Coulter.
"Every debt instrument is a Treasury now."
Bwahahahahahaahahhaahahahhahaahahha!
Comrade Misean is Dope | 01.05.09 - 5:51 pm | #
I chuckled when I read that too...
Oh, the peak A2/P2 spread was 615 basis points, on December 30, 2008.
A2P2 looks nice, but I wonder if it is a matter of companies going to the bailout window rather than trying to float crappy paper at market rates the issuer can't possibly cover.
There needn't be any guessing if volume drops is holiday related, checking data at the same time every year would show whether it is or isn't.
"If the economy were at full employment and a high rate of capacity utilisation today, it would still require a permanent resource transfer from the private sector to the public sector, that is, higher taxes or lower public spending. But for cyclical purposes, lower taxes and higher public spending are indicated "
Current account deficit + financial system bailouts + present and future social welfare obligations + supernova stimulus package - asset price depreciations - slowing velocity of money - international ability to borrow - collapsing and bankrupted industry - rising unemployment - severe haircuts on future E of P/E ratios + restricted lending - gov't intervention in all markets. ETC
Very clear we are in an exponentially convex episode without historical precedent. Print & borrow cannot make whole.
Souffle economy
Thank God for Paul Vissarionovich Krugman's idea! Now the only thing left for the new administration to do is "temporarily" nationalise the whole banking system and we should be OK!
P.S. I forgot about Obama's " The Red Shovel Deal".
P.P.S. It worked wonders in my old country.
A2/P2 is a fuzzy indicator since it covers a fairly wide range of credit risk. Volume was really high Friday so obviously a lot of deals had been parked until after the New Year so they wouldn't uglify investor's balance sheets. This may not be a representative sample. If it's relatively good companies the spread will be misleadingly low. I was expecting a big drop after the new year, but not this, so I expect it to climb up to around 3 or so by the end of the week. Not a particularly informed expectation though, just gut feel.
"Obama's America will shine. The country will reemerge as undisputed top dog, the only one with real demographic, scientific, and strategic depth. As first into the crisis, it will be the first to hit bottom. Those expecting the dollar to collapse will have to wait."
Well, yes.
Pavel Chichikov | 01.05.09 - 6:07 pm | #
Bzzzt. Proper reply is 'Yes we can!'...
All equity may be confiscated by the state, repackaged and securitized to become a zero coupon bond of indeterminate maturity in order to meet past obligations and fund future expenditure.
All productive surplus is presumed upon by a gov't which can reach it via taxation, currency devaluation and inflation, or legal and extralegal appropriation. The black swan events are the scales to which these value extractions are imposed upon the citizenry.
dryfly | 01.05.09 - 6:19 pm | #
I thought the answer had to be in the form of a question?
A2P2 looks nice, but I wonder if it is a matter of companies going to the bailout window rather than trying to float crappy paper at market rates the issuer can't possibly cover.
~~~~
or going BK ...
Bond Girl,
"As the new owner of $172.5 billion of preferred shares and warrants in 208 U.S. financial institutions, the Treasury Department hasnt succeeded in thawing frozen credit markets, leaving taxpayers propping up an industry that wont lend to them."
Letting reality in again, huh?
Nostrovia,
Those expecting the dollar to collapse will have to wait.
Pavel Chichikov | 01.05.09 - 6:07 pm | #
No need to rush on my account. I'm not particularly good with firearms, and prefer eating beef to eating rodents (even the well sauteed squirrel).
@ Comrade Kristina
thanks for the insight into your world. Very Nice. If I ever get to to your part of the continent, I'll drop by.
But, if W. Buiter is anywhere near the mark vis. the near future, it could be a while.... and...
Rumor here is the Arnold is readying for a 1st & 3rd Friday Furlough for all state workers.
The long bond interest rate is up a HUGE amount today - almost a quarter point to 3.03%, which is probably a good indicator, since the rate was just insanely low before. 2 yr remains terrifyingly low at 0.76%. If the bond market were sane this would indicate a depression (but not necessarily a great one) followed by a long period of weak growth. But the bond market isn't sane, so I'm not sure what to make of it.
MLM,
You don't knows good eatin'
"Entrecôte à la bordelaise roof rats, roof rats, roof rats
This recipe was popular with Europeans during the middle ages, and the same is true today. Who among us hasn't been enchanted by the enticing aroma of roof rats roasting on an open fire? roof rats, roof rats, roof rats roof rats, roof rats, roof rats
rats are skinned and eviscerated, roof rats, roof rats, roof rats roof rats, roof rats, roof rats
brushed with a thick sauce of olive oil and crushed shallots,
then grilled till tender and juicy"
Mouse & Rat Extermination In Tampa, FL - Tampa Exterminators
BB gun's we'll take 'em down, and leave easy shot cleaning, cuz if you miss it, it's just a crunchy bit in the meal. Hell, make a game out of it. Family member who crunches the BB gets to make a wish...or sleep near the trash can fire pit...whatever...be creative.
Nostrovia,
All indicators that are massaged....I suppose that the Fed having a smaller balance sheet full 'o' crap is yet another indicator of the apparent thaw.
Wake me when real people get real money.
One thing about the Buiter post.....he doesn't really talk of China defending it's treasuries..just selling them....sort of a bit short-sighted don't you think?
Ciao
MS
i read ambrose as saying the US will do better than Europe next year but that may not be saying much. i'd rather be unemployed in Germany than the US.
I can't wait till Summers asks some cabinet appointee woman that questions his SHOCK&AWE spending proposals, "Don't you have a husband to go and cook dinner for? "
Interestingly enough, the low LIBOR rates are really helping commercial real estate operators. Many of the 5-year floating rate CMBS deals done in 2005/2006 were at incredibly low spreads over the 1-month LIBOR, which is currently 0.43%.
On one of our loans, which is $30MM+, the spread is 140 bps over 1-month LIBOR, with no floor. I think our DSCR is somewhere around 4.0x currently.
That's why I think the current increasing-vacancy environment won't hurt commercial real estate operators as much until:
1.) LIBOR goes up.
2.) Operators need cash (i.e. - are forced to sell)
3.) Loans mature and "technical" term defaults occur (even then, lenders may extend rather than foreclose)
But the bond market isn't sane, so I'm not sure what to make of it.
Fair Economist | Homepage | 01.05.09 - 6:26 pm | #
??
Do you have a different theory?
Most of this is related to supply. I don't think you get more sane behavior than that.
The bond market has to balance supply issues with the Fed's purchase activity.
Misean, between your roof rats and mp's missive today, I'm starting to feel some indigestion coming on.
YouTube - Casino Royale "You Know My Name" Music Video
If you come inside
Things will not be the same
When you return to the night
And if you think you've won
You never saw me change
The game that we have been playing
I've seen Diamonds cut
Through harder men
Then you yourself
But if you must pretend
You may meet your end!!!
[But the bond market isn't sane, so I'm not sure what to make of it.
Fair Economist ]
It isn't a market. It's pure speculation, based on Bernanke making good on his claims of unleashing the unrestrained Fed balance sheet and buying Treasuries to keep yields down. The entire credit market is impossible to make any value judgements. It's useless too even pay attention to it. And the Fed will end up with much more in the way of guarantees & obligations when municipalities come demanding their fair share.
It's beyond absurd. Tell me why I'm wrong.
Bond Girl, I can't square either the extremely low long-term rates or the TIP-nominal spreads with the enormous incentives for the government to inflate. These rates make sense only if you're essentially certain that inflation will be zero for many years - with a heavily indebted government and a fiat currency. It's just not rational to buy long-term treasuries at these rates.
OT, but in the BK Folder: the company formerly known as Gateway.
A note from MPC Account Executive to customers:
"As of 12/29/08, MPC Computers is no longer in business. MPC will be liquidating all assets of the company.
"This has been a sad turn of events. I was hanging on here at MPC in the hopes that the company could restructure its debt, and get back on its feet.... and to get the products many of you have been waiting for so patiently, but sadly, the company is no more."
"It does not appear that there will be an official notification of business termination by MPC management, so the information provided is unofficial. Please understand that I am giving you my best understanding of the situation, and I am not speaking for MPC, as I am no longer an employee of MPC:
· Warranty Coverage: MPC is now gone, and any remaining warranty coverage is gone too. You may be able to find local firms that might be able to repair your systems, but parts and labor will be chargeable items.
· Product in for Repair: MPC will return all customer-owned product to their owners that was sent in for repair. I suspect that the units being returned will not have been repaired.
· Product Ordered but not yet Delivered: MPC will not be shipping any products on back order. If you have received a partial shipment, do not expect the remainder to be filled.
· Will anyone at MPC be able to answer my questions? All employees were let go on 12/29/08 and the company is in the process of liquidating all assets, so the answer is no."
Someone should tell the CA budget forecasters: MPC/Gateway was the low-cost bid winner, and therefore became sole-source provider for much of the IT hardware for California. Looks like we'll have to dig a little deeper into the state empty coffers to come up with repair/maintenance of the state computers.
Memo to DGS: Sometimes you get what you pay for.
When treasury yields rise above sustainable pain thresholds, a newer and more desirable instrument will be unveiled.
Written with a 50- or 100- year maturity it will be collateralized with public and private real estate holding within the USA. Holders will have supersenior claims above legitimate first holders of title.
And we'll print too.
ESCAPE FROM ETERNITY
Birds of winter falling into silence
Hawk of winter sitting on the fence,
Scatter to your coverts in the trees
Wren or finch the hawk of winter sees
Crystals are indifferent to pain
Wren you have been fed on seed and grain,
What difference is there, dove or finch or wren?
Eternity will overtake you, when?
\t\t\t\tPavel
\t\t\t\tJanuary 5, 2009
Obama's stimulus plan simply reduces taxes on last years stimulus plan. In 2008 you received a check that is taxable income. In 2009 you get a tax credit to apply to last years tax check income. A modest net positive that will have little impact except for those on earned income, who own few homes and most likely provide no employment.
Sleight of Hand
i'd rather be unemployed in Germany than the US.
In general, I agree. But under severe circumstances, the US can feed its own - not so Germany.
Someone should tell the CA budget forecasters: MPC/Gateway was the low-cost bid winner, and therefore became sole-source provider for much of the IT hardware for California. Looks like we'll have to dig a little deeper into the state empty coffers to come up with repair/maintenance of the state computers.
ChefVisar | 01.05.09 - 6:45 pm | #
It's all good - it is just more stimulus!
Don't ya just love how the low bids always seem to be the ones going t/u? Hoocoodanode.
When the bond market goes,
when no one wants to lend to the USG at anything close to last weeks rates,
CR will have 1000 comments,
5000 visitors on line
and a non-functioning server.
Government Wants Madoff in Jail Now - ABC News
madoff giving away the jewels!
CYDCR, great stuff. Quote of the day IMHO
When the bond market goes,
when no one wants to lend to the USG at anything close to last weeks rates,
CR will have 1000 comments,
5000 visitors on line
and a non-functioning server.
ChangeYourDogCanRollIn | 01.05.09 - 7:01 pm | #
Won't that be the truth...
CYDCR, clarification.
The State of California (i.e. Gubmint) purchased the Gateway desktops and laptops. I don't know about servers...
I dunno.. I still see bad things coming..
maybe I'll feel differently when every sector and business under the sun doesn't need a bailout..
(call me old fashioned)
Gubbmint Cheese | 01.05.09 - 5:25 pm | #
Just make sure youre wearing the goggles with those little wiper blades and a mask when the shit hits the fan.
There is so much BS flying out of the supposed experts mouths!
[Won't that be the truth...
dryfly ]
I am trying to determine just how that unfolds. With the Tresury committed to buying Treasuries to keep yields in ine the dollar will crack and that in turn will lead to Treasury selling. How do they hold it together with a negative feedback loop.
Can't work for long...
Fair Economist,
1) You have to take into account that every day there is new information about how the feds will address the situation.
2) There are things that pull down Treasury yields besides the fear trade. For example, when the Fed tries to drive down mortgage rates by purchasing MBS and agency debt, it is also decreasing the duration of MBS holders' portfolios. They tend to fix this in the swap or Treasury market. There are different kinds of investors at different points along the curve. You can't expect the curve to tell a simple story.
There is obviously an element of fear, but you can't reduce all bond market activity to that.
Eventually the above will be cancelled out by massive amounts of supply. The moral/contingent obligations will have to weigh on Treasuries at some point too.
A lot of this will be determined by Bernanke's behavior. But if more Treasury debt is issued at higher expense, he will have to make ever more dramatic moves to keep the cost of borrowing down - assuming he stays consistent philosophically.
There's a push and pull that makes the trades a bit of a judgment call now though.
Thanks ChefVisar, I think it helps to be able to put a face to the name. Figures, I own a Gateway computer, bought it a couple years ago. I did make some money on a swing trade about a year and a half ago on the buyout rumors though
The trustee liquidating Bernard Madoffs firm found $830 million in liquid assets in the defunct brokerage to meet claims that may exceed any previous case, the president of the Securities Investor Protection Corp. said.
that's about right... everyone else on the street was 30-40/1
Re hybrid ARM resets.Some lenders are unilaterally extending the fixed rate period.In the last 10 days I have seen 2 letters from servicers informing people that their 5/1 ARMs would be fixed at 5% for an additional 5 years.Neither borrower was delinquent,neither had contacted their servicer,neither was a portfolio lender.Both borrowers were in good neighborhoods and clearly underwater...FWIW.
When I look at that 30-d A2/P2 graph, it dawns on me: 'Yes, these markets really are rational & I now see--with certainty--exactly where we're heading.'
Seriously? You'd better call your psychic hotline 'advisor' and demand a refund.
Well Strom one of the few things helping avert complete disaster in the RE world, including CRE, is the off-the-cliff LIBOR. In the residential world a re-set is no longer a 4 letter word, although the march of devaluation continues nontheless. I suspect LIBOR will continue to provide a temporary reprieve in CRE as well, but a savior it probably ain't. I think CRE is going to be in even more trouble this time next year.
keep in mind many of those arms have clauses that state they can't go down...That was part of the gaffe...I have one that is not allowed to go down.
It strikes me that the market has had pockets of optimism throughout this whole thing. It comes in waves. There is a solution posed (such as the TARP), things look better (the government is showing it will react quickly and aggressively to save the economy), then the reality sets back in as the solution is implemented. It is hard for me not to discount the stimulus package. I thought it was a great idea before because it would at least provide some support for employment and would remove some of the burden for state and local governments. But then you find out that you are spending future generations' income on polar bear exhibits. I hope I am wrong and that the markets normalize at some point. Alas.
CR,
Please add the delta twixt FRR and 30yr Mortages to the list:
Jan '07 FFR 5.25%, 30yr mtg 6.1%, ∂ 0.85%
Jan '08 FFR 4.00%, 30yr mtg 5.9%, ∂ 1.90%
Jan '09 FFR 0.25%, 30yr mtg 5.1%, ∂ 4.85%
I'll grant that 0.85% is/was an unusually small difference but 4.85%? That's one of those signs of market dysfunction you purport to be tracking.
When the public learns that "loose" slots is really "rigged" slots, they stop going to the casino. And the casino never sees them again.
Confidence is a generational game. The '29ers had learned their enemies' ways, but the later generations were either never taught or were slow studys.
It's game over, everyone is in the know now. It's apparent that no paper instruments "store" value, nor do they preserve cash flow in any meaningful way. Risk has been uncaged.
When price stability and inflation break out of a certain expectation band, investors view any capital market product with deep suspicion.
Stocks, bonds, annuities, currencies. 1000 ways to leave your lover.
wes - agreed, I don't see things getting better in CRE, especially Office, Retail, and Hospitality.
I don't know Johnny Lee, they still seem to be "irrationally exuberant" to me...It seems we are in the twilight zone at this point..
I quit my job today. Was that bad?
I hope everyone finished their wedding tableware sets, because "Waterford Wedgwood Succumbs" - to bankruptcy, that is.
Bond Girl writes:
It strikes me that the market has had pockets of optimism throughout this whole thing. It comes in waves.
It's like a drug. You take it and you feel good, get that rush. Then you start coming down from that high and you get anxious because you know as high as you got you will now go that low. So you take more
keep in mind many of those arms have clauses that state they can't go down...
Well, most of them do have a floor and a ceiling. But it's much better when the floor is around 3.5% The other confusing thing is their "caps"-- rate and payment are two different things, which they did their best to confuse.
DanInCambridge writes:
I quit my job today. Was that bad?
DanInCambridge | 01.05.09 - 7:28 pm | #
Dont be silly. Youll be rewarded
sdtfs, you don't have to tell me, I was naive and distraught when I got mine. Mom had just died leaving me a mortgate and I was not working as I was her full time caregiver...Bah, you live and you learn, I'll either get a refinance in the next couple of months or lose the house...It would suck, but that's life. I really love this house and I'll do what I can to try and keep it. At least I'm not underwater with it...
I know whut's crashed th' con'my. It's them enviro-mentalists, that's whut. If'n it warn't fur all that there re-cyclin', we'd hev better prices on glass, tin, paper, plastic, an' I don't know wut'all. They's who dunnit. Put alla thet junk inna lan'fill, whur it belongs, an' things ud git better rat quik.
Topher writes:
DanInCambridge writes:
I quit my job today. Was that bad?
DanInCambridge | 01.05.09 - 7:28 pm | #
Nope. Pick up a car on your way out as a parting gift.
Willem Buiter, I read it twice. I read the comments. I don't get it. But thats why I am here. mp and others know things I don't.
The problem, for me, is the sense of helplessness. If the dollar goes, everything we have saved and worked for goes. Yet, I know it may have to. It may suck to be me but maybe what replaces it will be better for my daughter and for the people of the world. Because the American lifestyle is unsustainable, and may in the future even be considered evil.
Damn, it was fun though.
who is w buiter? where is his post?
Nice chart
http://dshort.com/charts/bears/four-bears-extended-large.gif
who is w buiter? where is his post?
askin
who is w buiter? where is his post?
aski
Bah, here is the link to Buiter
FT.com | Willem Buiter's Maverecon |
Mouse: What do you think of the DXO?
i hear'ya
i hear'ya
ty
ty
I don't think that a year from now anyone will be saying that: 1) the recession is over; or 2) the U.S. led the way out. The U.S. economy just keeps digging itself deeper into a hole. All the stupidity and false optimism is a leading indicator of nightmares. The U.S. leads the world in stupidity and false optimism, that's all.
Askin -
William Buiter's blog on the Financial Times site:
Blogs.ft.com/mavereco
Doug Short's Four Bad Bears chart needs to be revised with the latest bear tacked on to the 2000-2002 bear,
then it would look a lot like 1929- et al
Wish I'd known the crisis was over last week; we had squirrel for Christmas lunch. Tasted a lot like pony.
Demand For Breast Implants Sagging
who is w buiter? where is his post?
You might have to go to the original post on the last thread to get the link to work.
blackhat writes:
mp, are we referring to this?
FT.com | Willem Buiter's Maverecon 395
We'll, in any case, yes, mad max is queing up--real horrorshow
blackhat | 01.05.09 - 4:47 pm | #
"then it would look a lot like 1929- et al"
Forget about 1929. This one's going to set the new record.
You're going to be asking why those old farts complained about it so much.
I am trying to determine just how that unfolds. With the Tresury committed to buying Treasuries to keep yields in ine the dollar will crack and that in turn will lead to Treasury selling. How do they hold it together with a negative feedback loop.
Can't work for long...
bearly | 01.05.09 - 7:09 pm | #
I agree - the thing that will break it will be when the SWF & FCBs think they can't support the dollar anymore OR they really do give up on the US consumer market - result is the same... dollar tanks & rates sky until a new equilibrium is reached [rates at which the private money comes back in - my guess is that will be mighty high yields & very low T prices... another guess is that it happens way faster than the equity correction - hours or days not weeks and months... again assuming the SWF & FCBs really stay away as opposed to drawing a new line in the sand].
Wow - McCann is leaving Merrill (I mean B of A)
Merrill’s McCann Quits After Bank of America Purchase (Update2) - Bloomberg.com
Ermmmm...
That Gateway story is kinda misleading peeps.
Gateway Professional Services was bought by MPC, from Acer, to wit:
"Last year, MPC bought the professional business unit of PC company Gateway, which itself had been bought by Acer earlier that year"
Slashdot | MPC Computers Shutting Down
If you own a Gateway...np...for now.
If you bought from pro services...well...
BWAHAHAHAHAHAHAHZHHAHAHAHAHAHAHA!
Oh, shit! I live in CA.
Oh, wait...Gov't computers stop working...that's good actually...I think.
Nostrovia,
mp, stop that. You're ruining a perfectly good buzz right now...
Wow - McCann is leaving Merrill (I mean B of A)
Darth getting clear of the DeathStar before it blows.
Oh, I remember sitting through all of those econ and finance classes so many years ago.
Great Depression? It can never happen again. We know better now. We have the technology.
Liquidity trap? Not possible. We have the printing press.
Bastards. I'm beginning to think that this one is already baked in and no one can stop it.
We all thought we were so god damned smart.
Bond Girl writes:
Wow - McCann is leaving Merrill (I mean B of A)
i think you had it right.
the chatter i hear is that most of the leadership will be merrill peeps.
kinda sad when ya think about it. merill is first to fail, they should be first to leave.
ahhh wall street, where fair is a four letter word.
I'll grant that 0.85% is/was an unusually small difference but 4.85%? That's one of those signs of market dysfunction you purport to be tracking.
Rob Dawg | Homepage | 01.05.09 - 7:24 pm | #
Dysfunction? That's not dysfunction it's PREMIUM bay-be... YSP for bankers... its GOLDEN!!! I tell you GOLDEN!!! WE'RE NOT GIVING THAT $#@! AWAY FOR FREE, IT'S $%#@! GOLDEN!
mp,
"I'm beginning to think that this one is already baked in and no one can stop it."
Begining...ROFL...Good one mp.
Nostrovia,
The U.S. leads the world in stupidity and false optimism, that's all.
rich | 01.05.09 - 7:57 pm | #
You're not trying to say we're dopes, are you?
mp writes:
Oh, I remember sitting through all of those econ and finance classes so many years ago.
Heck, people such as Krugman were making that argument a couple months ago (not anymore).
mp,
What did you think of Krugman's reply to Willem Buiter's analysis Keynesian stimulus for the US?
Krugman seems to think it is mostly a nothing burger now with only a modest impact in the future.
The predominant management chosen are Merrill peeps. They wiped out more than 2/3 of research a couple weeks ago. our fate is known at the end of the January - it does not look good. The chatter is they keep 10-15% of GCIB employees, or that the merged platform is 20% less than the current headcount at Merrill.
from
who is w buiter? where is his post?
As to Buiter's track record, he and his co-author forecast that Iceland was toast before the blowup and offered solutions, which were not implemented.
Iceland’s banking collapse: Predicable end and lessons for other vulnerable nations | vox - Research-based policy analysis and commentary from leading economists
He also has suggested that Switzerland and Britain are just big Icelands.
So if he is correct that the US is toast, Britain and Switzerland are big, smoking craters in the making.
I think Buiter is right.
cliff notes on wm post?
good grief it's long.
ewww .... a taunt!
There is no chance that a nation as reputationally scarred and maimed as the US is today could extract any true alpha from foreign investors for the next 25 years or so.
Meg Whitman quits the P&G board as she mulls a run for governor of California.
State's computer problem solved..she can unload 'em on ebay.
MarketWatch.com
Yikes, Punditry.
The problem, for me, is the sense of helplessness. If the dollar goes, everything we have saved and worked for goes
nova | Homepage | 01.05.09 - 7:47 pm | #
Not necessarily - not if the things you buy were produced inside the 'dollar zone' and can't be easily exported out of the dollar zone... those products and services won't change that much in price - your money will be good for buying them just like before. Now all we have to do is identify what those are.... [dryfly thinking]... fast food and hair cuts [personal services]. Even domestic commodity food would go up if the grain traders could physically export and get a better price somewhere else [like where the currency is stronger]. But stuff that doesn't ship should still be reasonable... burgers & haircuts don't export so well.
Good news is you will probably be working YOUR ASS OFF to produce those 'exportables' so as to help your future employer gain 'hard currency'.
oh...got another. How late am i to this WM post?
is it current on this thread only?
now...
First, there will have to be some combination of higher taxes as a share of GDP or lower non-interest public spending as a share of GDP. Second, there will have to be a large increase in national saving relative to domestic capital formation
that simply is'nt going to happen without a march on the capital(s)
We all thought we were so god damned smart.
mp | 01.05.09 - 8:05 pm | #
It's called hubris, and it always goeth before a fall.
I have come to the conclusion that there is a new reality. Buiter sees it clearly and I am coming to see it.
mp, if it makes you feel better, I think you are smart
yep... that stirred up some significant vile. then I calmed down and remembered that BAC bought countryfried and mbna.
Kristina, after reading Buiter's piece today, I'm feeling very ignorant. It was a real eye-opener.
yep... that stirred up some significant vile. then I calmed down and remembered that BAC bought countryfried and mbna.
The Employed might envy The Cashed Out. If the thing blows half-way through, there may be no severance package or 401K left.
I saw that during the Dot Com crash.
.
mp, I guess I've moved past outraged awhile ago. I kind of accepted what was coming a few months back. I don't like it, but I count my blessings I don't have kids and I'm young enough for a "Survivor" scenario if neccesary. If we manage to avert disaster, I'll be pleasantly surprised, it's the upside of being a pessimist.
what stick's out that's an eye opener for you friend of conjure?
my experience is the envied usually can't manage there cash flow and lifestyle sans employment. only the rare bird fly's free forever.
askin, the thing that "sticks out" from reading Buiter's piece is that, and as a practical matter, virtually every move ends in "checkmate."
We only buy time and the time we buy will become increasingly expensive.
Cliff Notes of Buiter's article:
My observation: earlier today dryfly mentioned something about leading the 800 lb elephant back into the room. With the exception of items of national security, I don't see how the US can produce "tradeables". Because of taxes and transportation, it simply makes too much sense to have the situs of production near consumption.
CR, the metrics you quote show improvement; however:
Since 12-29-08:
30 year treasury bond yield +50 bps
10 year treasury bond yield + 50 bps
TLT (IShares 20 year+ US govt bond ETF) -7.5%
Could this be the fabled bond vigilantes at last awakening from a long slumber?
(Blackhawk Ben better hope not. )
I had a conversation at work today about whether my agency should acquire another armored vehicle in anticipation of civil unrest. I learned two things:
Kristina, after reading Buiter's piece today, I'm feeling very ignorant. It was a real eye-opener.
? I'm not seeing that. Buiter stated it all very lucidly, but all his main points - that the trade and budget deficits are unsustainable, that we'll have to switch to more balanced production, that we will probably see a drop in the dollar and inflation, etc. - are basically received wisdom around here. Great article, extremely well-written, great to see it from someone with stellar credentials; but what's particularly new to somebody who hangs out on CR?
my experience is the envied usually can't manage there cash flow and lifestyle sans employment. only the rare bird fly's free forever
All I can say is that I bailed from my Dot Com flameout about six months before it died and I was damn glad, it got incredibly nasty at the end and it didn't matter anyhow.
Likewise, I volunteered for a layoff in 2003 during a 40% cutback. Glad I left. We'd had layoffs every quarter for YEARS and it just sucked being there.
The past two years have sucked on and off, but I don't regret leaving either place.
.
In 2008 you received a check that is taxable income. In 2009 you get a tax credit to apply to last years tax check income. A modest net positive that will have little impact except for those on earned income, who own few homes and most likely provide no employment.
Sleight of Hand
MPinCO | 01.05.09 - 6:48 pm | #
Wrong:
http://www.factcheck.org/askfactcheck/is_the_economic_stimulus_payment_taxable.html
oops, I see mp has replied to a question like mine. Well, following up:
I don't see Buiter saying it's "checkmate" in the sense that the game is over. We'll have to consume less and produce more, and control our government expenditures. Hardly the end of the world.
askin, the thing that "sticks out" from reading Buiter's piece is that, and as a practical matter, virtually every move ends in "checkmate."
We only buy time and the time we buy will become increasingly expensive.
mp | 01.05.09 - 8:33 pm | #
It's not that bad mp. At least we get to decide which shit twinkie we eat. The high unemployment high taxes we pay more of our way strongish dollar shit twinkie OR the we work our ass off for no purchasing power monopoly money looks like dollars pretend free ride shit twinkie. Regardless we are a lot poorer either way.
Hmmmm I love twinkies. [/snark]
Pretty much every place in finance is going to suck right now though.
Great article, extremely well-written, great to see it from someone with stellar credentials; but what's particularly new to somebody who hangs out on CR?
Fair Economist
You are one those I consider a smart person. Myself, I bought a copy of Basic Economics, and I am working through it. I think the mp endorsement is important.
Also, I swing from screw it - I will survive to callous humor to "oh my Dog!"
Oh, based on something today I think I can say Sprint is toast within a year.
"Hardly the end of the world."
Did I say that? Did I say it was the end of the world? I don't think so.
We'll have to consume less and produce more, and control our government expenditures. Hardly the end of the world.
Fair Economist | Homepage | 01.05.09 - 8:40 pm | #
It will only FEEL like the end of the world... well to folks who have never worked for crap wages before it will really, really feel like the end of the world.
a la moooode | 01.05.09 - 8:34 pm
Oh, nice job on the summary.
dryfly, that was hilarious
Broward Horne
interesting. Each has an opportunity presented to them in their respective industry. i was referring to the securities industry(the print paper plan). It's never as good once your gone.
how bout them uaw'ers who in 2005 were offered 140g's to walk? how do you think they have fared?
For most of the boomer generation it will be the end of the world.
fried writes:
Meg Whitman quits the P&G board as she mulls a run for governor of California.
What kind of idiot actually wants to be the next governor of California?
I think she'll be near suicidal once she discovers she can't outsource the prisons, the highway patrol, etc.
I have to agree with Fair Economist - Buiter has been running same line since September, and our first view into the abyss.
If this board wants to challenge the guy, then go to his site. I have, I will, and I'll throw some ideas out.
Why not you folks too?
C
how bout them uaw'ers who in 2005 were offered 140g's to walk? how do you think they have fared?
I knew several that moved to the Sun Belt and opened "business in a box" franchises.
In other words, not to good.
shit twinkie we eat.
ok... that's as bad as the condom on a, A? what was it again?
Norm Coleman's a sore loser. Stuart Smalley is smart enough, good enough and doggone it people like him
"If the dollar goes, everything we have saved and worked for goes."
that's a real stretch. i've spent the past 6 years positioning myself for such a thing, and i'm sure many of the crew here have as well.
not everyone believes in the great and powerful Oz.
and speaking of groupthink, 'grats to the TBT knuckleheads. 'heat' is on bravo. that flick has really aged well, unlike big 10 gootball.
better take profits on TBT, end game hasn't started yet
"If the dollar goes, everything we have saved and worked for goes."
Oh, so if I am a 100% Treasuries I will be ok? As that is the only "safe" option for my 401k, and my daughters college fund?
Why not you folks too?
I think this board has a good rapport. Ideas can be synthesized here without flame wars, and then we can spread like disciples with our wisdom.
or were just lazy.
My observation: earlier today dryfly mentioned something about leading the 800 lb elephant back into the room. With the exception of items of national security, I don't see how the US can produce "tradeables". Because of taxes and transportation, it simply makes too much sense to have the situs of production near consumption.
a la moooode | 01.05.09 - 8:34 pm | #
If WB is right and the world punts on the dollar [say we see 50 yen to the dollar and $4 to the euro and RMB at parity] BELIEVE ME we'll be in the tradables biz again big time & quickly. That will NOT bring back our bubble euphoria [measured in 2006 consumption]... but people will be working and eating and talking about the sucky 'joyless' recovery.
Pretty much every place in finance is going to suck right now though
Many places still suck in IT. I can't believe what the past five years have been like. But, OTOH, by doing contracting I've been able to move on and try another place so now I have a good idea of what a "good place" looks like.
The downside is that, apparently, there's a high correlation of companies that suck and companies that use contractors.
"better take profits on TBT"
profits? surely you jest. if only i was smart enough to have resisted at 50.
I got a legacy treasury direct statement today. It says that my last reinvestment yielded a whopping 0.041% (0.040% discount rate). I figure treasury is the best cash warehouse, and they haven't chareged me to store it, yet. Treasury is the last domino to fall, so to speak. I figure that if treasury falls, then the only thing that will matter is how much firepower you've got and how well you can shoot.
"I think she'll be near suicidal once she discovers she can't outsource the prisons, the highway patrol, etc."
--Chicago Dude
And when she discovers that the State is completely ungovernable, all she'll have to remember is "down, not across".
Heck, I'll even chip in for some scented bubble bath and candles.
By Steve Vogel
Washington Post Staff Writer
Monday, January 5, 2009; 5:44 PM
The new blue uniforms issued to Transportation Security Administration officers at hundreds of airports nationwide may have a snazzy look, but they have become a major irritant for some of those employees.
The new uniforms are causing rashes and other irritations among transportation security officers who screen passengers at airports, according to the union representing the workers.
"We're hearing from hundreds of TSOs that this is an issue," said Emily Ryan, a spokeswoman for the American Federation of Government Employees. Most of the complaints have been for skin rashes, but they have also included runny or bloody noses, lightheadeness, red eyes, and swollen and cracked lips, union officials say.
If WB is right and the world punts on the dollar [say we see 50 yen to the dollar and $4 to the euro and RMB at parity] BELIEVE ME we'll be in the tradables biz again big time & quickly.
Yes, when I wrote that, I meant 1950s Golden Age of exports. Basically, what WB is saying is that we will probably become China 2.0 because global labor arbitrage will now favor us. =)
Oh, so if I am a 100% Treasuries I will be ok? As that is the only "safe" option for my 401k, and my daughters college fund?
nova | Homepage | 01.05.09 - 8:51 pm | #
How long? If you own them 'long' do a NPV on the current valuation if say interest rates go to 10%... not pretty. When the SWFs & FCBs walk - I'd expect something like that to happen until private 'value vultures' come back in... 2% T's don't make sense to me at ANY maturity... less so in a dollar crisis.
profits? surely you jest. if only i was smart enough to have resisted at 50.
bgates
Sorry. I resisted at 50. After buying in at 56
"she can't outsource the prisons"
not true at all
The downside is that, apparently, there's a high correlation of companies that suck and companies that use contractors.
Broward Horne | Homepage | 01.05.09 - 8:51 pm | #
At least you have other diversions
dryfly | 01.05.09 - 8:55 pm
I don't have a choice. I take what they offer. The other 4 choices (approx) have lost at least 35%
Swan, that looked more like a script than predictions. I have my tinfoil hat on again. Nobody could be that right. I so love the Orchestra.
The Buiter article makes me want to invest in oil.
Anyone else have the same take?
The new uniforms are causing rashes and other irritations among transportation security officers
Excellent!
In Soviet America, the uniforms wear YOU!
.
"Feckless Ness writes:
I had a conversation at work today about whether my agency should acquire another armored vehicle in anticipation of civil unrest. I learned two things:"
What do they intend to do with this armored vehicle?
"The new uniforms are causing rashes and other irritations among transportation security officers"
I wonder what the country of origin is on those uniforms.
The new uniforms are causing rashes and other irritations among transportation security officers
Considering most TSA people I have dealt with I am surprised they noticed. Maybe because it didn't ooze anything was what tipped them off.
I'd be a little concerned if my clothes gave me a bloody nose.
Slave labor sweat payback
bgates writes:
"she can't outsource the prisons"
not true at all
I know California tried sending some inmates to other states, but I seem to remember a judge ruling it violated the state constitution.
Outsourcing to a foreign country would definitely violate the US constitution.
Re: bond vigilantes
My "gut" feeling is that the selloff in the long bonds is at least partially due to end of year portfolio rebalancing/tape painting. Lots of banks wanted to be able to print shiny brochures showing their balance sheets safely in govt bonds as of 12/31/2008.
Kind of like going to Saturday mass right before going downtown to score some hookers and crank.
"I wonder what the country of origin is on those uniforms."
California. Woven from poison oak.
NOT Irving Fisher!,
Regarding DXO, if I owned it, I'd be selling here. USO hasn't "failed" yet so crude can go higher. Crude can also retrace 50% of its recent low to high move in a heartbeat.
"Anyone else have the same take?"
not as much as the base greed response to DXO does
Obama's stimulus package is a joke. This guy's not a Democrat. He proposes passing tax cuts the repubs have been trying to pass since 2002. $100 billion for infrastructure, to include transportation. For context as to how little that is, the Big Dig in Boston cost over $22 Billion. He could take the entire $800 billion and divvy it out to the states, and it still wouldn't even approach bailing them out.
Obama says US economy 'very sick.'
BBC NEWS | Business | Obama says US economy 'very sick'
Anyone else have the same take?
I'm investing this week...perhaps tomorrow.
Obama says US economy 'very sick.'
Morocco say America very sick, including Obama.
"would definitely violate the US constitution"
is guam a foreign country? how about cuba?
the 'unusual' nature of gitmo hasn't come up in federal court to my knowledge. if these things are confusing, i'm sure John Yoo can help straighten it out for you.
ova,
They don't offer a stable value fund or a money market fund? Which company is your 401k (403b?) administrator? I'd push HR to get them to expand the choices to include a money market fund at a minimum.
Hey, the stock rose .36 cents after the announcement. More changes to come!
Jan. 5 (Bloomberg) -- Cigna Corp., the health insurer whose shares fell 69 percent last year because of investment losses, said it will cut about 1,100 jobs and take a fourth-quarter after-tax charge of $30 million to $40 million for 2008.
The Philadelphia-based companys 4 percent workforce reduction will be complete by the middle of the year, and some offices will be consolidated, although it didnt offer details in a statement today. There may be more charges for 2009, the company said in a filing with the Securities and Exchange Commission.
Those uniforms are also causing Kidney Stones and renal failure. They were made in China with Melamine. You have to love Melamine....it's the 21st century's Asbestos...but with no recourse.
I wonder what the country of origin is on those uniforms.
reptillian
Nashville.
If the stimulus program is only for $750 billion, and if 40% of that is tax breaks, it's a big nothingburger.
Mike in Long Island | 01.05.09 - 9:09 pm
Not likely. Though the treasuries issued are supposedly just issued for this fund. Makes me special.
It's a voodoo nothingburger.
Melamine....it's the 21st century's Asbestos...but with no recourse.
Just as well. Otherwise you get some lawyer buying a team like the Orioles and turning them into a AAA franchise.
Morocco Bama writes:
Obama's stimulus package is a joke. This guy's not a Democrat. He proposes passing tax cuts the repubs have been trying to pass since 2002. $100 billion for infrastructure, to include transportation. For context as to how little that is, the Big Dig in Boston cost over $22 Billion. He could take the entire $800 billion and divvy it out to the states, and it still wouldn't even approach bailing them out.
Morocco Bama | Homepage | 01.05.09 - 9:03 pm | #
Promises promises
Lets be serious here. Did you think any politician would keep his/her promise?
ROTFL!
Otherwise you get some lawyer buying a team like the Orioles and turning them into a AAA franchise.
At least their uniforms won't kill them.
Otherwise you get some lawyer buying a team like the Orioles and turning them into a AAA franchise.
nova
They've been AAA since '72.
At least their uniforms won't kill them.
No, but every August they kill their fans.
They've been AAA since '72.
Anonymous | 01.05.09 - 9:14 pm
Wrong. Maybe '85.
"Otherwise you get some lawyer buying a team like the Orioles and turning them into a AAA franchise."
I hope Moody's and S&P didn't rate them. Hate to think what the mark to reality would actually be...Little League...T-Ball...
Nostrovia,
Anonymous writes:
. . . .
Sleight of Hand
MPinCO | 01.05.09 - 6:48 pm | #
Wrong:
FactCheck.org: Ask FactCheck is_the_economic_stimulus_payment_taxable.html
Will I Have to Pay Taxes On My Rebate?
Will I Have to Pay Taxes On My Rebate?
comments section . . .
(35)
Actually, the statement that you will never have to pay it back is not true. The IRS site says you won’t have to pay any income taxes on it. If you read the original bill passed by the Senate and the House (available at their website) and signed by Bush, it is merely a LOAN against your next years taxes. In other words, the amount you receive will be offset against what you paid. It’s true your taxes won’t go up, but the amount you paid on it will go down.
Supposedly, Congress is supposed to change this, but they haven’t yet.
Political promises? I have another name for them, lies for votes. Gumby could have seen there would be no money for all the toys and cookies that were promised as first priority. Looks like another Mc Same politician. Nothing new here.
Lets be serious here. Did you think any politician would keep his/her promise?
Nope. Whenever a politicain talks, I put my fingers in my ears and flutter my tongue and make that sound that Arab women make when they celebrate, otherwise I'll die laughing.
joe after the 12 pack writes:
Political promises? I have another name for them, lies for votes. Gumby could have seen there would be no money for all the toys and cookies that were promised as first priority.
I believe tax cuts for the middle-class were promised as first priority. Your rage clouds your judgement
Toyota to suspend production for 11 days in Japan
TOKYO (AP) - Toyota Motor Corp. said Tuesday it will suspend production at all of its Japanese plants for a total of 11 days in February and March because of faltering global demand. Japan's top automaker announced last year it would halt production at its 12 domestic plants for three days in...
To the idea of privatizing government functions:
Having been a State monitor for the private prisons contract during Arkansas' experiment with the idea, I'd say privatization of government functions like that is a poor idea. There are a number of hidden costs, especially hidden long-term costs that can come back to bite painfully. The only real saving is from paying the guards a less than living wage. The costs of settling lawsuits probably ate up any remaining illusory savings. Oh, prison work is a subculture. Soem might view it as degrading. But nothing compares to the degredation privatizing the prison work culture brings. Monstrous hybrid indeed.
I believe tax cuts for the middle-class were promised as first priority.
That's not what the tax cuts in the stimulus package are, though.
Not likely. Though the treasuries issued are supposedly just issued for this fund. Makes me special.
nova | Homepage | 01.05.09 - 9:11 pm
Sounds like the line Madoff used to attract investors. Good luck!
Seriously, you need to find out the duration of the bonds held. That number will tell you how much value the bond will lose for the next 1% increase in interest rates.
I'm sure some one here can speak to ERISA and 401k's or do a google search. There is some notion of fiduciary responsibility with respect to how the 401k plan is administered if I recall correctly.
Again, IANAL or anything - this is from memory and is outside of what I do - a few minutes on google should turn up a bunch.
Gavshire Hathaway writes:
\tThe Buiter article makes me want to invest in oil.
Anyone else have the same take?
Gavshire Hathaway | 01.05.09 - 8:58 pm | #
-----
Tinfoil Hat Me asks, "Are you talking physical or paper oil?"
Obviously, Oil/Energy isn't going away unless we all go Amish, but capturing that movement for a profit makes me wonder what options you may have. If you've seen Jesse's blog recently regarding gold, you'll learn that Comex is using little know/used rules to limit people taking physical possession and is trying to issue scrip. If this kind of action plays out in other asset markets, I'm unsure if DXO or individual companies like XOM are going to get the value and reliably return the proceeds to their investors.
The Fed & US Gov't are making things more hectic than they already are, and I agree with WB completely in that regard.
Other Thought: Is anyone else starting to think that Treasuries are playing more like US Gov't Non-Preferred/Voting common shares? You don't get much say in what the institution does or its use of money through proceeds and profits, only on price movements.
XTO.
No rage, I hope he pulls something off but have big doubts. I thought it was tax the oil companies win fall profits tax with rebates of $1K was first along with raising taxes on the rich to give the middle class a tax cut. Not happening that way. Beside tax cut won't help the middle class and I am now in the middle class bracket. Just another false hope unfolding.
However you slice it, $750 billion is not a nothingburger. Won't fix the oncoming hard times? Well, that's not exactly a shock to us here. Maybe an "inadequately nourishingburger" or even a "toxicburger" but it will certainly have effects at that scale.
I'm not as disappointed as some seem to be. I view the stimulus as a vehicle for reflating the money supply and you don't really need that much total spending to increase the money supply. I think we'll need some jobs programs eventually but not yet. I wasn't expecting many jobs from current infrastructure plans, which will be very capital-intensive. I AM pretty ticked about the tax givebacks for companies with current losses as I view that as 85% bailouts for failing companies. But 100 billion is less than the Citibank bailout so it's not the worst thing going on at present.
When do they idle these? I can't see those crafty Nipponese letting the home island take the hit while fat Americans take home money
Toyota (NYSE:TM) established operations in North America in 1957. By 2008, Toyota will have the annual capacity to build about 2 million cars and trucks in 14 plants across North America. There are more than 1,700 Toyota, Lexus and Scion dealerships in North America, which sell more than 2.5 million vehicles a year. Toyota directly employs nearly 40,000 people in North America. Toyota's investment in North America is valued at more than $17.6 billion, and annual purchasing from North American suppliers totals more than $29 billion.
Mike in Long Island | 01.05.09 - 9:22 pm
Thank you Mike. I apreciate it.
the orioles beat the seasonal 65 line quite handily.
real fans buy the over.
Persecuted Comrade Anonymouse writes:
"Regarding DXO, if I owned it, I'd be selling here. USO hasn't "failed" yet so crude can go higher. Crude can also retrace 50% of its recent low to high move in a heartbeat."
I'm holding DXO but with stop @ $3.30
real fans buy the over.
bgates | 01.05.09 - 9:30 pm
Real fans go watch Carolina league games.
Earl Weaver was a hoot.
Earl Weaver Pissed
"Real fans go watch Carolina league games."
the nats and o's are indeed a poor menu. but gambling is the salsa which helps even the worst burrito.
Earl on Team Speed. Why can't we have a president like Earl? Oh wait......
Earl Weaver Tirade Video
bgates | 01.05.09 - 9:36 pm
Good line.
Morroco - so was Sparky Anderso
Chiming in: My 401K plan does not offer money market at all. Nothing but various cap plans and a bond plan.
Morroco - so was Sparky Anderson
Yeah, I liked ol Sparky....they had colorful managers in those days.....the good ol days. Watch that Team Speed video of Earl....I nearly pissed my pants when he answered the question about tomato plants.
Mike In Long island writes:
"I'm sure some one here can speak to ERISA and 401k's or do a google search. There is some notion of fiduciary responsibility with respect to how the 401k plan is administered if I recall correctly."
Plan administrators (typically HR) lay off the fiduciary liablity by hiring management company who comes armed with ususal color brochures. Hold a few meetings a year, offer a handful of choices (column A and B type choices), and not much more to do. Oh, and be careful not to lock out employees when management is harboring some huge screw up.
[I think Buiter is right.
mp ]
Read it this morning, and I think he's right if you think in terms of the status quo. Rearranging the deck chairs to avoid this scenario would be a large scale global armed confict.
That would require a reevaluation of the thesis.
I think who ever said it above. Something along the lines of "If treasuries crash - then we better know how to shoot." Thats pretty much what I tell my wife.
It would be like the nightmares I have about being back in the military. In the dream I always end up saying "I am too old for this shit."
as bennet would say. we have 2 debt markets. 1 is supported artificially by fed intervention the other trades in the free market. improvement in spreads means zero as the fed as the pedal to the metal. let them take the foot off the gas and the economy disintegrates. what's the point reporting this anymore
Comrade Misean is Dope writes:
MLM,
You don't knows good eatin'... roofrats, roofrats...
as a vegetarian with a rat problem what do you suggest -- I caught a large one (squirrel size) and relocated down the street - but to my surprise there are more - I nearly got a big mother yesterday but they are sly and I felt a bit bad given how cold it is -- the wife says stop feeding the squirrels and the rats (I tell her they're large mice) will move on -- suggestions???
suggestions???
piper | 01.05.09 - 9:47 pm
claymores
When do they idle these? I can't see those crafty Nipponese letting the home island take the hit while fat Americans take home money
Many of those are producing NA-specific products. It would require tooling-up in Japan to make Tundras and Venzas and Sequoias.
i think folks consistently underestimate the mercantile presence of the overseas CBs in terms of treasury support. i say that as a class-A TBT knucklehead.
From Brad Setser:
"Bank of America, incidentally, may have wanted to take some of the profits from its investment in China Construction to raise a bit of capital, but was dissuaded by Chinese government pressure. China wasnt worried that it would lose access to Bank of Americas expertise. But it did worry that the sale might pull Chinas stock market down. The FT:
Bank of America last month cancelled a plan to sell more than $3bn worth of its shares in CCB after being told by senior government and banking officials that Beijing was unhappy with the timing of the sale, according to people familiar with the matter."
Who says financial markets aren't efficient;)?
From Buiter:
We know that a few extreme approaches that have been tried yield lousy results - central planning, self-regulating financial markets
In pone masterful stroke, USSR == USSA
piper,
"as a vegetarian with a rat problem what do you suggest -- I caught a large one (squirrel size) and relocated down the street - but to my surprise there are more - I nearly got a big mother yesterday but they are sly and I felt a bit bad given how cold it is -- the wife says stop feeding the squirrels and the rats (I tell her they're large mice) will move on -- suggestions???"
Hmmmm....-scratches head-....hmmmmm....uhuh...hmmm...Hmmmm?
_Tinker...tinker...poke...poke...Hmmmm...Ah!
Found it!
It's that vegetarian thing you got installed. Get rid of that, should work just fine.
;P
Nostrovia,
Blessed are the vegetarians, for they shall inherit the earth....what's left of it, that is.
piper,
remember, "this side towards rats" is important.
bgates writes:
i think folks consistently underestimate the mercantile presence of the overseas CBs in terms of treasury support. i say that as a class-A TBT knucklehead
Agree. For now. Read this:
Brad Setser: Follow the Money » Blog Archive » Central banks aren’t always a stabilizing presence in the market
U.S. Treasury Quotes - Markets Data Center - WSJ.com
check out all the bond prices. Not just the headline 30 yr.
notice the 2028-2031's are at 3.4!
Warfarin. And I say that as a vegetarian. For me, rats fall into the same category as bugs splattered on my windshield. Ethically 'convenient'? Perhaps. Effective? Heck yeah.
piper | 01.05.09 - 9:47 pm
Or make a little shallow puddle. Get a chair, 12v battery and jumper cables. Let them run across the puddle and hit it with the jumper cables...
Put the little furry mammals in a bag and leave it buy a Chinese resturaunt backdoor. A good deed!
Pythagoras--one of the greatest vegetarian philosophers who wouldn't hurt an animal for food--excuses the mass killing of rodents who are hurting you! So, kill 'em!
piper,
Just nuke 'em from orbit...it's the only way to be sure.
Nostrovia,
askin, the thing that "sticks out" from reading Buiter's piece is that, and as a practical matter, virtually every move ends in "checkmate."
We only buy time and the time we buy will become increasingly expensive.
mp | 01.05.09 - 8:33 pm | #
So is the proper alternative to simply knock over your king and resign? Or is it to take the only potential way out for the next several moves, even though it means sacraficing your queen, and hope for a blunder by the other side? In a chess turney, the honorable thing to do is to resign. However, this is wizards chess where the pieces play for keeps. The super low savings rate and big current account deficit have been huge concerns of mine for a long time now. Yes high probability that it will not work, but the alternatives have even lower probabilities of working out well. The physical infrastructure of this country sucks, so if we go down, at least we will have a few fewer bridges falling down etc.
Might want to check out my post today on savings rate on Zacks.com, it touches on a few of these issues. Its key point, as of Nov. savings rate is only up to 2.8%, used to be 9-10% until mid 80's. All the pain we have been through is just from savings rate going up 2.0% from where it was languishing, how much pain as we work our way back to 9%. That pain results in lower incomes, which makes savinngs harder, causing even more pain as you try to raise the savings rate.
Having a feast is lots of fun, until you realize that the cornbread stuffing was made out of your seed corn.
Comrade Misean is Dope
Piper, do not listen to him. He is into serious overkill. Listen to me. I feel your pain.
the thread is tittled
"Credit Crisis Indicators: Improvement"
and thats a good thing
but now that the financial system has been salvaged
we can get on with the real crisis
i believe as we approach the holidaze at the end of this year
we will be saying OMG when will this disaster all end
"He is into serious overkill."
nova, my friend, there is no such thing as overkill. Only underkill. Underkill sucks cuz it gets YOU killed.
Nostrovia,
[bgates writes:
i think folks consistently underestimate the mercantile presence of the overseas CBs in terms of treasury support. i say that as a class-A TBT knucklehead ]
That's expecting Asia/ME to bet the farm on a guaranteed loss indefinitely . This whole contraption could/should bust wide open on any given day. Ignoring the inevitable or worse, piling on, is a fool's game...
Question: Where will the government get tax dollars for bailouts if people don't have jobs to pay taxes?
Nostrovia,
Comrade Misean is Dope
True. But I can honestly say with jumper cables:
One shock - one kill.
Dirk writes:
"Its key point, as of Nov. savings rate is only up to 2.8%"
But that's in the face of every conceivable effort of Fed to discourage savings. Just imagine if they tried to incentivize and reward savings. Of course no one can dare to think this way.
Dirk,
I like you man, but:
"Having a feast is lots of fun, until you realize that the cornbread stuffing was made out of your seed corn."
So, we'll get that back by borrowing seed corn from our neighbors and eating that?
Nostrovia,
"Question: Where will the government get tax dollars for bailouts if people don't have jobs to pay taxes?"
The government puts it on your share of all the debt they carry. Take $10 Trillion and divide by 300 million people in the US and that is where we are going. Our taxes are only paying the interest to who ever buys our government notes. Something a responsible person would not do.
"to bet the farm on a guaranteed loss indefinitely "
fear of destabilization probably outweighs fear of principal loss.
"if people don't have jobs to pay taxes?"
not an issue. if the nyfed can magically create a trillion dollars, congress shouldn't have any problem doing such. real fear will handle the niceties involved in simplifying the treasury/fed/comptroller shell game.
I dont understand why the WB article was so eye-opening. The simple model is that there's a stack of promises to several guys but only one gets to collect it. Welcome To The Plunderdome!
Two men enter, one man leave ( with the cash )
"as a vegetarian with a rat problem what do you suggest"
If you own your home then being a vegetarian is (or should be) irrelevant. Rats can get into places all throughout the house and create stains and smells that will not go away without a serious amount of carpentry. Think joists and subfloor. Or at minimum, think about having to replace insulation in your attic. Rats have evolved to foul their immediate environment. Do yourself a favor and find a good exterminator.
Learned the above the hard way, BTW.
joe after the 12 pack,
"Take $10 Trillion and divide by 300 million people in the US and that is where we are going. Our taxes are only paying the interest to who ever buys our government notes. Something a responsible person would not do."
But...but...but...they said if I transfer my balance to their card, I would get a lower interest rate and a higher limit, so I can have more money for the minimum payments and still buy more stuff...And...and...and...they said I could re-fi my house and dump the balance of my CC into that and get a tax break...that's responsible, right?
Nostrovia,
You bet now go get a bigger Mc Mansion to show your stuff!
What do they intend to do with this armored vehicle?
Pavel Chichikov | 01.05.09 - 9:00 pm | #
Lenco Armored Vehicles - Protecting Our Nation's Defenders™
At this point, we're not likely to buy another one. This vehicle could be used in the event of a barricaded suspect, a hostage situation, or other SWAT deployment. Maybe six occupants max - it's street-legal and would be good protection in a shoot-out with gang bangers or bank robbers.
We only buy time and the time we buy will become increasingly expensive.
That's the nature of exponential systems. They reach a point where nothing can stop what it coming, and sharp "correction" is unavoidable. Ramp-and-crash is a pretty fundamental aspect of existence...
Or a Mad Max Scenario.
"a pretty fundamental aspect of existence"
some folks call that a "weekend"
mp(Unrated) writes:
\taskin, the thing that "sticks out" from reading Buiter's piece is that, and as a practical matter, virtually every move ends in "checkmate."
mp | 01.05.09 - 8:33 pm | #
Yes. For more detail The Crash Course at chrismartenson.com also does a very good job - Buiter hasn't even looked at Peak Oil in this article, for example, but it will be so contractionary as to become a major factor in coming years.
Is peak oil the same thing as the coming rapture?
So, we'll get that back by borrowing seed corn from our neighbors and eating that?
Nostrovia,
Comrade Misean is Dope | Homepage | 01.05.09 - 10:07 pm | #
Well the question is the extent we plant that seed corn as opposed to eat it. Also depends if we are dillegent in trying to raise that corn that we plant. But there is such a thing as positive ROI govt spending. Think about SF with the golden gate down, or NY with the GW closed. Some interest rate arb if the stimulus is tax cuts aimed at lower and true middle class, you know those super over indebted types, who might use it to pay down the credit card at 19% interest, or might prevent a forecloseure or two. What will be the mix well I'm not all that optimistic, but at least some % will be worthwhile. Do we go down swinging or do we go down without a fight. Odds are we are going down one way or another.
so if I am a 100% Treasuries I will be ok
nova | Homepage | 01.05.09 - 8:51 pm | #
Depends on which Treasury. Buiter is arguing that the purchasing power of US Treasuries are going down, non-US Treasuries not so much.
So China's been feeding us seed corn when they should have been teaching us to plant it?
mustard seeds, people. mustard seeds
Yep, it's time to resume spending money with abandon again.