\tIMB Management Holdings LP, has agreed to bring in an experienced senior management team to run the day-to-day operations of the thrift. Nemo | Homepage | 01.02.09 - 3:24 pm | #
Because they have been in dire need of a decent management team for a long time now, obviously.
the British sense of humor depends to a greater degree than most on exploiting utter incongruity presented absolutely deadpan, as though there were nothing the least bit odd about it.
WASHINGTON (Reuters) - The Treasury said on Friday said it will consider financial institution rescues and asset guarantees similar to those it provided Citigroup on a case-by-case basis.
I posted this at the end of the other thread, I thought it was pretty interesting the level of volume being pushed during the slow months on short sales and foreclosures.
I ran some preliminary numbers last night for Ventura County. 70% of closed sales for December were either short sales or foreclosures:
They're all back, at least for now, thanks to TARP. After six weeks of complete silence, all the furniture companies are advertising their wares on TV. Muni bonds and high yield corporates have been rising for a week. Subprime loans are back for autos and homes via FHA. Even the japanese carry trade is perking up. And the long treasury has been very unhappy the last two trading days on this news.
Persecuted Comrade Anonymouse writes:
OT -
dedicated to c&c,
(this one's sure to lose me money)
I shorted a glod stock, NEM (newmont mining) @ 40.29, stop @ 1 penny over today's high.
I bought the other end - check my sense of timing.
Gavshire Hathaway, picking up topic from earlier thread, rather than picking individual issues to purchase puts, do you ever take options on broader indexes? Anyone else?
Persecuted, thanks for warning about EEV the other day; glad I listened (to the others who have warned about these 2X shorts as well).
OT: What is going on at PrudentBear.com? The message board seems to have been taken down and the site is barely being maintained. I seem to recall Doug Noland posting that he was relocating due to new management but cannot find any details. Last CBB was 12/19.
I don't trade broad indexes. I'll trade sector indexes like financials or real estate, but I prefer to find companies/sectors where there is a compelling fundamental reason to short.
This gives me higher volatility, but over the long run a better expected value.
Anonymous writes:
It is so nice to see so many children expressing their wisdom about the market - oh, do teach me kiddies.
Get a pet or a hooker or something
only going to say this a few times. I have been around the block. I have LIVED through this before. I was studying securities law at the time this last happened to the market. It does not matter that I - me - personally - was the prosecutor who put people in jail for securities fraud - long before you could spell money.
Popeye writes:
"Nevermind. I know what I know - trade well"
And some welcome your constructive observations; as a securities prosecutor I can't imagine how your feathers could be ruffled over some rough house comments. Please continue with informative posts.
There is an interesting dynamic where professional money managers feel they have seen this before...and thus think they have an edge while trading.
Frankly, take the last 50 years and throw it out the window. We're in seriously historic territory here. Look at the 1830's, 1870's, and 1930's for guidance. In fact, study your history -- Missisipi bubble, tulip bubble, south seas bubble.
I'm not arguing "it's different this time". Quite the opposite. You just have to take a much longer historical view.
I remember when 13.9 billion seemed like a lot of money. Now I see governors want the Feds to pony up $1 trill for the states. These amounts are just beserk.
Out of all my longs, prior to the close. EEV will be a nice buy soon
Watch EEM. It should test 26.46, reject the price, and close underneath it on less than 146 mil. shares.
It had about 63 mil. today but didn't test the price. Compare this volume at highs to the volume at lows: 244 mil. @ 18.22. A retest of that would be about an 80% gain for EEV. That's worth waiting for.
"There is an interesting dynamic where professional money managers feel they have seen this before...and thus think they have an edge while trading."
That's an ongoing saga. I used to have clients in the mutual fund industry. As far as I could tell, the only thing professional money managers have are more employees and fees. My client had a couple of good years and lots of press. People swamped them with money and those late comers got led to the slaughter for the next 3 years. I think they were down 65% or so. Holy .
was the prosecutor who put people in jail for securities fraud
Then you seem like the right person to ask:
Is it plausible that Madof pleaded guilty to fraud, in order to provide for government funded bailout of investors/investment firms that lost money in a hedge fund that simply went bust?
Ponyless in NJ writes:
Comrade V., share your opinion on SRS. bought some more today. that might a bad sign for you though. I bought some at 100, 80,..
BTW, if you have any tears available for shedding, could you spare a few for my Japanese govt. bonds? MLM | Homepage | 01.02.09 - 4:28 pm | #
I weep for your bonds.
Bought some Jun 90 SPY puts today. Already in the red, of course. At least my calls ended the day penny bid, an infinite return over their 0.00 Dec 31 mark.
I bought the thesis this is phony rally, set upside limits at 10% purchase cost last October on VV, VO and VHT. Hit my price on VV and VHT, and will set stop on VO to protect gain if we fizzle Monday.
Now looking for better trading vehicles (down as well as up markets), but nice start to the year.
Anyone notice how SRS is up on a day that the market is up 270? Very interesting.
Gavshire Hathaway
I mentioned that earlier with regard to SPX vs. RUT.
Sure it outperformed the previous trading day, but I've seen that kind of outperformance from RUT happen day after day in past rallies. Not sure what to make of it, but it makes me less confident about this sustaining into next week.
As this conversation is clearly taking a turn for the worse, does anyone have any thoughts about what will trigger the next downward leg? It is an exercise in mental masturbation to debate timing and short term fluctuations.
At some point it will become clear that our government cannot bailout the entire economy. And this will lead to a disaster for asset prices.
But what will the catalyst be? Failed treasury auctions? Rapid increase in long bond yields? International protectionist policies? Dwindling of the TARP funds? Municipal/state government bankruptcies. Muni bond collapse? Pace of bankrupcies increases and can't be papered over? So many possibilities...
The one thing I'm sure of, is we will not see an organic recovery.
It's interesting to me all this talk about reality. If nothing else 2009 should prove whether or not the Fed can create it. I would not bet against them though. Like some say on this blog "got popcorn"
Democratic Governors push $1 trillion stimulus package for states \t\t\t\t\t\t \t\t\t\t\t\t \t\t\t\t\t\t January 2, 2009 03:04 PM â + \t\t\t\t\t\t \t\t\t\t\t\t \t\t\t\t\t\t \t\t\t\t\t\t \t\t\t\t\t\t \t\t\t\t\t\t \t\t\t\t\t\tBy Matt Viser and Andrew Ryan, Globe Staff A group of influential Democratic governors that includes Deval Patrick is pressing the federal government for a $1 trillion stimulus package for the states over the next two years that would contain $250 billion for education in an effort to avoid inflicting irreversible damage to schools during a fiscal crisis.
huh, it means you should get used to spending more of your money on essentials, like food and energy, and less will be left to spend on vacations, expensive clothing, electronics and other various crap. Partially this will be because your salary isn't going to go up nearly as fast as the cost of food and energy after the dollar starts to tank.
MLM, we only get ponies if we predict what the market will do. I wish I was a bank, then I wouldn't care. I would have thousands and thousands of free ponies in my fields. Oh.. Ponies..
too bad I didn't position for it....would've made a great start to the year. The last four day's screamed for a pullback...which was why i was not in this.
@Gavshire Hathaway: A parade of highly negative corporate warnings, earnings reports, and increasingly worse unemployment figures (along with a couple more Ponzi Scheme revelations) will lead us downward.
More bad news on housing and banking sectors as well.
I am in the currency crisis camp eventually, but I don't see it as a short term event. In the near term I think deflation has a ways to run. And other countries are in a similar position.
The bond market can collapse without triggering a currency crisis, right? This happened in GD1. In fact, wouldn't this be deflationary? Up until the point where the Fed starts monetizing?
It seems clear to me that our entire financial system is insolvent, and the Fed's balance sheet must keep expanding to prevent the house of cards from collapsing. Hence suspension of Mark to Market. There has to be some finite bound for how much the Fed balance sheet can expand.
Otherwise, you could argue that money is an artificial construct, and monetary policy alone can save us. But the truth is that money is a reflection of what an economy will produce in the future. And we're now facing the realization that production resources have been terribly misallocated.
Sometimes I wonder if we're all off by a level of abstraction -- if we could just take a much larger macro view this would all make sense. But I suspect that this next level of abstraction would just show us that prosperity is a function of efficiency and proper resource allocation. Thus recent government appropriations have been an abomination.
some people up thread wrote that they, or he, had seen this chain of events unfold before and thus had a decent idea how to play this out...words to that effect
i dont believe anyone alive has quite witnessed an economic crisis like this
the great depression of the 30s is not all that instructive because of several macro economic differences, not the least of which is current account deficit, federal debt, and corporate / consumer debt
add to that half of america doesnt live on farms anymore
Gavshire Hathaway writes:
"The bond market can collapse without triggering a currency crisis, right? This happened in GD1."
Huh? Bond yields remained near ridiculous lows during the whole period. Bond markets tend to thrive during depressions.
But you can't really have a currency crisis without the bond market tanking. If people do not want to hold a currency, they certainly don't want to hold instruments which pay fixed interest in that currency.
In the current environment, a currency crisis would imply central banks (mainly Asian ones) dumping their bonds as they get out of the USD. If that doesn't happen, it ain't a currency crisis.
What I was wondering is when we talk decreased standard of living are we talking Russian post collapse in the early 90's? I read Orlov's book "Reinventing Collapse" but was unconvinced by his comparisons and argument.
I'd really like an estimate that is comparable to another first world nation. Reading first person descriptions would be helpful. I have been following Iceland closely and the mounting desperation and social unrest in what was a very prosperous country is startling to say the least.
Gavshire, you couldn't have a currency crisis in GD1. Dollars were backed by gold.
Monetary policy can not save us because at some point the dollar collapses. This is precisely because money is supposed to be a reflection of what an economy produces. If an economy produces only green pieces of paper then somebody at some point will no longer trust its currency to ever be able to purchase real goods.
I agree with you on this:
"Thus recent government appropriations have been an abomination."
London Banker has a good write-up that everyone here probably already read...
The bond market can collapse without triggering a currency crisis, right? This happened in GD1. In fact, wouldn't this be deflationary? Up until the point where the Fed starts monetizing?
I think there's a fundamental difference in the current situation in the 1930s we had a gold backed currency, so the Fed couldn't manufacture dollars to buy bonds and artificially depress yields. So we might be able to trade a dollar crash for a bond crash. Also a fiat currency takes away the threat of explicit default by the federal government, so there may be less fear regarding the bonds than there was in the 1930s. I think the bond crash then was partly related to fears of the government's gold supplies being depleted which ultimately meant the threat of outright default.
I don't think you can directly compare the bond market of the 1930s to the bond market today.
Mock - I've said my peace. I trade the market up... and I trade the market down. I am a trader. I have examined the equities as well as the futures.
Mock, one accepts one's place or pretends.....
Foreign investors, but can you elaborate on why the difference is that important? I'm not making the connection.
I keep going back to the thought that foreign governments have little incentive to let the treasuries collapse -- it would result in political instability in their own countries, likely with civil unrest. It is far more convenient and less risky to try to maintain the status quo and try to revive this dead patient.
It's sort of a catch 22, where if they stop buying they're holdings decrease, but if they keep buying they cause a larger problem later. Kick the can is the easier policy.
unhappycakeeater - on an earlier thread you mentioned a neighbor who was laid off by Murrieta (CA) PD. I can't find any reference to Murrieta laying off cops. Can you provide a link?
Murrieta's got McMansions going for outlet prices, so I'm sure layoffs are possible, but I usually hear about public safety layoffs. Could it be your neighbor lost his job for disciplinary reasons and is disguising it a layoff?
Monetary policy can not save us because at some point the dollar collapses.
Monetary policy cannot save us because money is just the scorecard for the economy.
You don't get good at [insert your favorite sport here] by changing your score to reflect a stellar performance every time you turn in a miserable one.
You simply lose the ability to objectively judge your own performance thereby leading to even more suckage.
Another forgotten anniversary that haunts the nation is the re-establishment of the gold standard in the United States by the Roosevelt administration on January 1, 1934. What? -- you may ask incredulously. Roosevelt re-introducing the gold standard in the United States? You had better believe it. Thats exactly what he did.
Argh, you are going to be a little bit more specific in how you see this playing out. So, what does the US military need to do to maintain the value of the US dollar?
"The bond market can collapse without triggering a currency crisis, right? This happened in GD1."
Re: Denninger's chart. I have no idea where he got his data from. The St. Louis Fed data on long term government bonds showed no crash of any importance, which corresponds to what little I know about the Depression.
So, what does the US military need to do to maintain the value of the US dollar?
It's one of the core reasons the dollar is the reserve currency. And as long as that holds true, nothing untoward will happen that is not already in the works.
After 9/11, there were some lowlifes who tried to cover-up ongoing embezzlements and other misdeeds by saying assets had been incinerated in the World Trade Center.
I would think the Madoff situation would provide similar opportunities.
It seems to me that Madoff victims are either coming forward or being publicly identified in much greater numbers than in previous stuff like Bayou. Don't victims have some right to privacy?
Believe those are corporates in Denninger's graph, not government..."
If that's true, well, no kidding. In a depression, everything that isn't backed directly by the central bank gets crushed. You are seeing similar behavior now; corporate spreads may be wider now than they were in the 1930s.
Bonds are not going to crash as long as the Fed keeps printing money to purchase them. $500b is equal to the shit that Bill Gross has stashed in his closet...anyone else have more??
Nope.....
Oh and Gross et al. get to collect the fee's associated with "purchasing" those too. Nice work for absolutely shoving the middle class under a bus at each presentable opp.
Argh, are we getting into conspiracy theories here? I think you are giving the USG a lot more credit than it deserves in its ability to manipulate world markets and governments.
Popeye(Excellent) writes: Of all people here, I respect you. Call me out; I will respond on point.
I'm just being at least somewhat flip -- you can't say "prosecutor" without meaning "liar" -- overselling the product is the name of the game in a system of adversarial justice. I hope you're not still working in the field or you have a whole lot to answer for -- like, the last 20 years.
I haven't been really following this foolishness. I don't really care how old you say you are or whatever. I think you're acting like Mr. Smarty and drawing fire but that's your business.
t seems to me that Madoff victims are either coming forward or being publicly identified in much greater numbers than in previous stuff like Bayou. Don't victims have some right to privacy? Billy Hill | 01.02.09 - 5:26 pm | #
I don't think many Bayou victims were drinking martinis and gloating at their country clubs.
Eric - I sincerely wish - SINCERELY WISH - my hopes for immediate gain included you. But if you ask my truth, at the moment, ....... you don't stand a chance.
"So, what does the US military need to do to maintain the value of the US dollar?
It's one of the core reasons the dollar is the reserve currency."
This is arguably true. For various reasons, the yen and the mark were not in the running to be the global reserve currency after WWII. And it would have been kind of strange for the Soviets to be the stewards of the global reserve currency.
Believe those are corporates in Denninger's graph, not government.
Ah, well that's kind of deceptive. I've never heard the term "long bond" used to refer to anything but US treasury debt.
The funny thing is I remember Krugman mentioning something similar. IIRC correctly it was something to the effect that the Fed had to raise rates to stave off a collapse in the bond market.
Anybody know if this is accurate or is my memory impaired?
I posted this in an earlier thread, just wondering if someone here knows the answer.
If one was invested fully in the Dow companies in 1929 how many years would it have taken to return to the value of the original investment. I have seen that the Dow average returned to its 1929 level in 1952. But the question is that a number of companies dissappeared during that period and new ones were added. So the question is how much longer would it have required the surviving companies stocks to recover to the point where the entire porfolio would have returned to its 1929 level? This of course, would have to be in inflation adjusted dollars.
Someone posted this quote from Stephanie Pomboy over on iTulip a couple days ago:
Could you elaborate on that choice between higher rates or a weaker dollar?
"If we rely on foreign creditors to lend us the money to sustain our lifestyles -- and that's what we do -- we need to compensate them for that risk of lending to us. As the economy weakens and our credit quality should theoretically be deteriorating, the only way we can really attract that same capital is by offering a higher interest rate or making our assets cheaper to them, in this case by having our currency be weaker."
From Barron's for those of you who have a subscription:
"IIRC correctly it was something to the effect that the Fed had to raise rates to stave off a collapse in the bond market."
you are correct..problem is that they are doing it covertly by printing the money to keep the bond market afloat in the short term. Long term, all debt is toast.
Count on it.
What we've seen in the last few months is going to be with us for two, perhaps three generations.
bond guy, I would have thought that after WWII the overwhelming size of the US economy compared to its rivals and the healthy trade surplus relative to the rest of the world were the main causes of the dollar being the reserve currency.
I have a hard time seeing a government being able to maintain the value of its currency through direct military force.
What I hoped to hear is simply your current trading perspective, your thesis, horizon for current position and vehicles. If you decline, no problem because you have no obligation to anyone. All the rest is noise.
To others, like Persecuted, Rich, Gavshire, Ponyless, etc., thanks for sharing.
"Bonds are not going to crash as long as the Fed keeps printing money to purchase them."
Isn't the Fed working against itself here? As they print, they stoke the risk of long-term inflation (ie: bonds should anticipate that) yet they want a low bond rate.
She is really tough. The word is that the woman dragged her upstairs, and then threw her down, and then pressed on her ribs whereupon she played death. The woman went upstairs to loot and my mom crawled over to the phone & dialed 911. She thinks she was out of it for a while, because the next thing she knew the police were there. The woman only got her small tv, an empty wallet which was a present from me, and some . . . underwear.
Really stupid.
My mom fought back and tried to hit her but wasn't strong enough.
Report from Balto. Balto has always been relatively poor, but housing mkt better than South Florida, which isn't saying much. Realty buddy of mom's priest friend says things were getting better but had been "interesting". Mom will be selling house.
On way back to airport, saw car storage parking lot. Cars I suppose from port?? or rail shipment. Totally full. Mom said she had never seen it so full; cars usually coming and going.
Glad to be back in non-gloomy Florida. Back to economic gloom and doom from weather gloom.
Syv--I heard it was 25 years from height to equalling previous height. This is, of course, somewhat of an exaggeration, as not that many bought at the absolute high.
I think the mkt lost roughly 90 cents on the dollar at the depth. Anyone know any better.
ac writes:
"Ah, well that's kind of deceptive. I've never heard the term "long bond" used to refer to anything but US treasury debt.
The funny thing is I remember Krugman mentioning something similar. IIRC correctly it was something to the effect that the Fed had to raise rates to stave off a collapse in the bond market.
Anybody know if this is accurate or is my memory impaired?"
They did have to target/defend gold parities (or whatever), so they may have had to raise rates at some points. You could interpret this as being needed to "save the government bond narket", but you can also argue that this is just what happens - you need to raise and lower rates over time, especially in a system where you are pegged versus gold.
But I can't recall crashing government bonds ever being an issue in the (first) Great Depression. Certainly there may have been selloffs which could have been damaging for speculators in the bonds, but that happens all the time.
Absolutely Wally.....but they current people in charge may be dead, or in "other positions" when that failed strategy is finally seen FWIW.
Bonds "should' have started to tank in early '07...just after the yield curve was inverted. It's no coincidence that the Fed pushed the printing presses to full ahead shortly after the curve indicated worthlessness.
Glad to hear you are back home and with your mom, safe and sound - the kids are acting up hereabouts - nothing serious, just some market chest beating behaviour...
In his 1929 crash book, J K Galbraith always uses something he calls the "TIMES averages" rather than the Dow, but doesn't clearly explain why. Are these averages still in use today, possibly under another name?
Interesting question, one I have not seen addressed - lawyerliz, the central point is that the index was not the same companies at the new height - if you owned the index in stock shares, how much longer would it take to equal the previous peak including the companies that were total losses in the interim?
Ponyless in NJ writes:
"bond guy, I would have thought that after WWII the overwhelming size of the US economy compared to its rivals and the healthy trade surplus relative to the rest of the world were the main causes of the dollar being the reserve currency."
Well yes. The U.S. was about the only major economy not bombed flat during the war (Canada and Australia were also exceptions, but not too major). And one can argue that this was because of the size of the U.S. military.
The fact that the U.S. had the largest gold reserves and had typically been a trade surplus nation
before the war was also important.
MS writes:
"Bonds "should' have started to tank in early '07...just after the yield curve was inverted. It's no coincidence that the Fed pushed the printing presses to full ahead shortly after the curve indicated worthlessness."
Under what interest rate model would bond yields rise going into a serious recession, with prices deflating, and short term rates going to zero?
The bond market did exactly what it was supposed to do in 2007 - discount the future outcome of growth, inflation and short rates.
What I hoped to hear is simply your current trading perspective, your thesis, horizon for current position and vehicles. If you decline, no problem because you have no obligation to anyone. All the rest is noise.
My thesis is that I am not a smart person. I offer no pretenses.
My trading perspective is that the market will build toward a rally leading up to the "change in government".
I am not a smart person; I am not in liege with those who have access to power; i wish I had such power...... eh ?
Gavshire Hathaway writes:
As this conversation is clearly taking a turn for the worse, does anyone have any thoughts about what will trigger the next downward leg? It is an exercise in mental masturbation to debate timing and short term fluctuations.
At some point it will become clear that our government cannot bailout the entire economy. And this will lead to a disaster for asset prices.
But what will the catalyst be? Failed treasury auctions? Rapid increase in long bond yields? International protectionist policies? Dwindling of the TARP funds? Municipal/state government bankruptcies. Muni bond collapse? Pace of bankrupcies increases and can't be papered over? So many possibilities...
The one thing I'm sure of, is we will not see an organic recovery.
Gavshire Hathaway | 01.02.09 - 4:34 pm | #
Well 1st Qtr 09' earning ought to do the trick...If that does not solidify the market direction...Q2 surely will. Chow...
stocks bought in 29 yielded overall a small but positive return in 49...
SURVIVING stocks bought in 29 yielded overall a small but positive return in 49 when unadjusted for inflation. US corset stays and whale bone girdles anyone?
re: occupying the middle east and selling oil for dollars... how exactly does this work or help? they world is awash with dollars and you are going to ask them to pay you in dollars for the oil? do you accept monopoly money too? how are you going to force them to accept dollars for flat screen tvs?
-Things will continue to wear out, people will continue to generate needs. Less of that maintenance and fewer of those needs will be addressed by people with "jobs".
toughtimeshomesteader. -Asking for a job is akin to walking up to a pretty girl and asking her to marry you.
-Asking for work is like walking up to the same girl and asking for a date.
-Jobs became the norm as we started buying big-ticket items on credit
-The people loaning money demanded some guarantee of future cash-flow.
-Work was the norm during the grand sweep of human evolution/history
-Even today, Amish count on a multiplicity of enterprises to generate spurts of income.
-Taken together those spurts even out into a year-round flow of income.
-A multiplicity of enterprises requires a multiplicity of skills.
-In a survival situation, a Swiss Army Knife is more useful than a LASER (J. Letarte)
-The most profitable enterprise is to stop the arterial bleeding of discretionary expenses within the household economy. -Plant a garden
-Insulate and weatherstrip
-Treat clothing gently
-Consolidate trips, or better yet, stay home and make do.
-"Job" presupposes enough fossil fuel to either bring a large customer base to me, or that I can inexpensively travel to my customer base.
-Meijer's (a Michigan supermarket) was radical in that they offered a parking lot in addition to two places in front of the store on the street. -Meijer's first parking lot accommodated 6 cars.
-Meijer's first "super market" regularly brought customers from twenty miles away...an unheard of distance.
-Meijer's first super market was 1938. -Our lifestyle choices are the biggest determinant of our health and fitness
-Much medicine can demonstrate little incremental gain to off-set huge incremental cost
-Do high school kids really need to have $2800 a year spent to address their acne?
-Soap and water are cheap and effective...for many things
My future vocation may be running our household economy, peddling my skills and adding to my portfolio of skills.
wally(Excellent) writes:
"Bonds are not going to crash as long as the Fed keeps printing money to purchase them."
Isn't the Fed working against itself here?
I have to agree with this.
IMO, the Fed can't monetize the bond mkt without blowing up the dollar as a forex instrument.
The petrodollar and sinodollar / nippodollar pumps are not going to blow into a burst bubble to try to keep the US/foreign partner debt cycle going. They're gonna focus on domestic consumption.
Sorry, either the Treasuries market is going to blow or there's going to be an artificial "market" for Treasuries denominated in worthless scrip and the dollar will cease to have meaning except as a US govt. balance sheet unit of account.
Regarding the "bond crash" during the Great Depression. Here's a graph of actual US long-term debt form 1926 to 1936.
There is a sell-off in 1931. I don't know that you could call it a crash, but it is a significant move and seems to run counter to the notion that treasury bonds necessarily rally during a depression.
Has any consensus come about here on just how difficult it will be to finance all of the new administration's stimulus and bailouts? Big numbers coming up over the next few years.
"The bond market did exactly what it was supposed to do in 2007 - discount the future outcome of growth, inflation and short rates"
I totally disagree.....The entire market got pushed up to insane levels of valuation (that includes debt) since those are tied to roughly the same metrics applied to equities. If you use the above logic then you are assuming that the market was right when it was inflated to well above 14k.
It was wrong then...and it's wrong now (bond-wise). The only reason debt stays where it's at is the massive amount of gov't induced purchases. '07 did nothing to to make it realize that because it didn't really get started until Sept of this year.
I could ask about the Chiarella case(and for extra credit who was the head of SEC Enforcement when Chiarella went down), the scienter requirement (or lack thereof for 10b prosecutions, which former Supreme Court Justice was the primary author of the '33 Act and the '34 Act, and for extra credit why is the Section 302 Certification under SarBox as to Section 404 Internal Controls effective (or not)? I could even grade you on your answers.
But, alas, who cares? What I really want to know is where you think the Dow and the S&P 500 will be at then end of Q1 2009? Thanks in advance. My real question is a serious one.
Hi LawyerLiz, best wishes for your Mom's recovery, sounds like she'll be OK.
Were you raised at your Mom's house? My grandmother had a half-sister who lived in that neighborhood (Highlandtown), we used to drive up from DC and visit. I remember the marble steps and painted screens. Her grandson was in the Baltmore POE-lease (that's how they say police in Bawlmer).
For those of you who missed in on the last thread,
Thanks to "mmckinl" who wrote:
"For those of you who haven't seen it a very important and sobering article at Naked Capitalist ... a new study by Economists Carmen Reinhart and Kenneth Rogoff ... Page not found « naked capitalism far.html
It's Bawlamer, Ed. No. I was raised on lower Park Heights, which is total slum city. They widened Park Heights Ave and tore down all the trees. Highlandtown actually held up better, even tho it was always a poor workingman's area. Mom doesn't like Greek food, alas. But we had some great Chinese and Italian take out.
bondguy is the go to guy on this one - my eyes just keep getting bigger as the numbers do as well - Setser had a good writeup a few days back on how almost all foreign Treasury buying going on is by FCB's...
@ lawerliz - good news about SuperMom. Smart, and lucky.
@ Gavshire H: I prefer the more elegant formulation of Bertrand Russel (Why I Am Not a Christian)--"intellectual onanism". Book is worth reading if you've never had the inclination - many humorous observations on the human condition, published 1927, so vaguely topical.
Don't know any of the other stuff, but Chiarella was a printer who took advantage of an early peek at a recommendation a bigshot was mailing to clients and traded on it through relatives. His main defense was that he was not an insider at any of the companies he traded.
I used to have clients in the mutual fund industry. As far as I could tell, the only thing professional money managers have are more employees and fees. lama | 01.02.09 - 4:20 pm | # Tell me about it.
The hardest thing for a money manager to do is admit what he doesn't know and then refrain from investing in areas outside his skillset. He sees that all his buddies are booking big returns doing something that doesn't make sense, he knows that he is as smart (or smarter) than them, and so he jumps in with both feet on the theory that he'll figure it out later.
Usually, the tuition charge at the "figure it out later" school of hard knocks is very expensive for his client's wealth.
Lawyerliz: Glad the Momster survived the ordeal. Nice to have a whiff of Chanel wafting amid the testosterone today.
My family just lost a loved one about the time Tanta died. One of the last horse soldiers blown up by a mine on the Burma Road. He survived 'cause he was tough; really a softie inside and a real tree hugger.
Seriously, guys...stop needling each other.
Popeye, it's a secret but all legal secs know...most lawyers can't spell.
Gavshire Hathaway writes: As this conversation is clearly taking a turn for the worse, does anyone have any thoughts about what will trigger the next downward leg?
GH: 50% off the DJI/SPX highs in only 13 months, with only several 10% rallies on the way down, and your looking for the next downleg? How cruel.
Seems to me a major bear market like this, still only one year young, fortified with a trillion $ bailout and a new president, deserves a 3 month, 30% A-B-C upmove to lower highs near DJI 11000 and SPX 1100. Then the emerging failure of the recovery efforts, and the chart failure, trigger the next down leg.
Today's break over 92 in the U$D/JPY 4 month decline from 110 to 88 is my long idea.
Setser has a couple of good posts up atm, one on the ISM and the next one on China reverting to previous policy (export subsidy, dollar peg, etc.) Setser
Gavshire Hathaway writes:
As this conversation is clearly taking a turn for the worse, does anyone have any thoughts about what will trigger the next downward leg?
any thoughts about what will trigger the next downward leg Gavshire Hathaway | 01.02.09 - 4:34 pm | # My vote would be California or some other state going BK.
It will probably happen like Cleveland's BK. They will have a deal all worked out, but they need to get the sign-off by a bunch of "Glod's gift to humanity" politicians. One of them will not have had his feathers stroked to his complete satisfaction, so he decides to play chicken. He and his state loses as the deal unravels.
You are all nice folks - please forgive me as I say things that induce you to move your dollars to my pocket. Was that too abrubt ? ......... I'M sooooooo sorry. Fool.
The dumbest people I know think the economy is going to fall apart. Therefore the market has reached a bottom, the TARP worked as intended. Paulson is now Jesus Christ.
It's sort of a catch 22 Gavshire Hathaway | 01.02.09 - 5:13 pm | #
A "Prisoner's Dilema" might be a better analogy. If both prisoners stay mute (i.e., no central bank sells), then the police have no case (i.e., Treasuries and Dollars maintain value). If one prisoner cops a plea bargain (i.e., one central bank sells early), he gets a less bad deal (i.e., early central bank retrieves most of his wealth), but the other prisoner gets the max (i.e., late central bank loses his shirt).
Look for a smaller central bank to bail out early, which could start a run on the currency.
Question: Which currency? US Dollar, GB Pound, or Swiss Franc?
Has anyone else noticed that a lot of people bought new cars over the new year? How can we not be at a bottom? GM and all car makers are saved...whohooo!
"does anyone have any thoughts about what will trigger the next downward leg?"
3 thoughts, mostly concerning the S&P 500.
1) Another major hedge fund liquidation/sell-off. Just a guess, but my hunch is soon.
2) Likely Republican resistance to Obama's economic plans. Already seeing hints of this in the news.
3) Growing public awareness of what it means now to switch jobs: not unemployed or even underemployed, just really underpaid compared to one's last job. See this link for examples of potential MSM coverage...
MLM writes:
"Has any consensus come about here on just how difficult it will be to finance all of the new administration's stimulus and bailouts? Big numbers coming up over the next few years."
If you spend too much time worrying about one side of a market (supply), you can make big mistakes. For example, the Peak Oil types correctly predicted that supply would peak this year (or earlier). What most of them missed out on was that demand also peaked this year, and that oil prices would tank as a result.
People who worry about supply always have to explain away Japan's bond market, as well.
If the economy remains in a state of near collapse, then there will be huge demand for Treasury securities. If the economy turns around, Treasurys are toast. (I'm not offering a recommendation in either direction.) If the turn around occurs as a result of a stimulus package, you can pin the blame on the stimulus package if you wish.
For further elaboration, these massive supply numbers are based on a weak economy. The economy will be weak because there will be no private sector demand for debt, and domestic savings are rising. So if the economy remains weak, the deficits will be largely self-financing.
There is the hypothetical risk that China could try selling all its Treasury securities in one day. That would be a mess, no doubt. But it is unclear what that would prove, other than losing the Chinese hundred of billions of dollars.
From TPM:
At the time, Gross was on the airwaves (on CNBC in particular) pledging that just out of a sense of patriotic duty he'd be willing to have his firm manage the government bail-out (i.e., government purchase of the crap CDOs) for free. Just for the sake of patriotism.
So far Pimco isn't saying how much they're getting in compensation, but I don't think he's doing this for free. I've lost a lot of respect for Gross over the past several months.
I'm sorry, but in terms of putting evil doers in jail, you folks are playing in quicksand - you neither know how to spell honest - nor do you care in which denomination it is spelt - YOU ARE NOT BEING HONEST WITH YOURSELVES - res ipsa loquitur.
Baca writes:
"I don't think he's doing this for free."
IIRC, Gross said he would donate his services provided everyone else who participated did so as well. Reminded me of IT vendors offering to support a standard by waiving IP licensing fees, provided everyone else who contributes IP to the standard does so as well.
You get halo of making offer with little risk of performance.
"It is difficult to get a man to understand something when his salary depends upon his not understanding it."
If you work for the organs of jutice in this country, you're either a criminal or a fig leaf for one. Sorry, it can't be a system dominated by robbers who loot the public treasury but you are the heroic one who does the best they can within the system.
It doesn't matter why you're the henchman to a robber.
I prefer Jas. Every once in a while he says something truly insightful.
There was an article in the NYTs today about Indians from a certain caste who were continuing and expanding that caste's success as a mercantile caste.
Twasn't I that said it.
Daughter went to India a couple of yrs ago, and said everything was very dirty and messy in the public sphere. Garbage haulers are lowest caste. So nobody wants to solve mess and garbage problem because they would be looked down upon. (my take)
Popeye writes:
Mock ... I am a trader. I have examined the equities as well as the futures.
...one accepts one's place or pretends.....Personally, I'm a realist.
5:13 pm
personally, im stupid, im a pretender, and a legend in my own mind...ive made the same mistakes in life over and and only learn after repeated failures
my strong point is that i know that i'm at least 50% full of shit... at least half the time.
The hub was honest. His boss was honest. Janet Reno was honest. Liz ducks huge brickbats.
The hub could have and did and does make more money in science. He took a big pay cut to go into prosecuting. Quit because he couldn't stand judges. Also juries too illogical.
He thought he could make a difference. I was dubious at this, but he wanted to try out his law degree.
lawyerliz(Excellent) writes: I prefer Jas. Every once in a while he says something truly insightful.
I have to disagree. Popeye is a jerk, and that's fine, this is a forum for bankers and economists -- buccaneers and pirate fanciers.
Jas really makes me insane because he totally avoids positive policy perscriptions. As he said to me one morning, "MY JOB IS TO WARN ABOUT THINGS THAT HAVE ALREADY HAPPENED".
I find this kinda like an airbag that activates 30 seconds after impact. I appreciate his insight, but it's mostly self-evident.
As an outsider, I have to say that Jas is an insufferable prick, though I have appreciated some of his insights. I don't think he knows how to interact with human beings.
Liz,Glad to hear your Mom is recovering well.as far as selling her home,managing a property from a distance is not a good idea. You may as well get what you can for it and I am sure someone here can advise you on the best Beanie Babies to invest in...
"I have always carried the weird impression he was probably very affable and polite in person and that he just sucks at socializing online."
I agree. He's posted the occasional anecdote about having people over -- grilling T-bones for the ex-Marine, giving a German couple advice about relocating to Tehachapi -- that supports your impression. It is just the incessant born-and-bred thing with no prescriptive advice that drives me nuts. I mean, for example, most of the market bears here mention specific ticker symbols of positions they are short or ETF-inverse; what exactly does Jas propose we do to combat the crooks and evil-doers in Gangistan?
Liz - if your mom (bless her) is looking for a place to put her money, you might try explaining to her the many wonderful investment opportunities to be had at Hoopajoops LTD, if you think her ribs can handle it.
"I'm on the sidelines because the mkt really doesn't make sense to me."
Me, too. Every now and then I get restless (like buying treasuries about 3 weeks ago, having a nice run-up and being too stupid to cash in the chips in time) and when I get restless I get clobbered. If it was random I could adjust - but it is each and every time. that's why I like to come to this blog - for fresh reassurance that the sidelines are a wise place to be.
FDIC is just a bunch of flippers.
Nemo is always first.
IMB Management Holdings LP, has agreed to bring in an experienced senior management team to run the day-to-day operations of the thrift.
I hear Michael Perry is available...
Common Sense Trumps Experts Rhetoric:
Common Sense Should Trump Expert Rhetoric « Your Mortgage or Your Life…
Or at least it should. How many times will we allow them to rake us across the coals?
\tIMB Management Holdings LP, has agreed to bring in an experienced senior management team to run the day-to-day operations of the thrift.
Nemo | Homepage | 01.02.09 - 3:24 pm | #
Because they have been in dire need of a decent management team for a long time now, obviously.
MLM writes:
Anon - My 'sense of the market' says you may be right. Unless you're wrong.
MLM,
I yam what I yam.
Shaft: better than cliff diving.
(lyrics are great when they start).
Ukulele Orchestra of GB
[hit tip: Washington Monthly]
the British sense of humor depends to a greater degree than most on exploiting utter incongruity presented absolutely deadpan, as though there were nothing the least bit odd about it.
Anythoughts on how this will affect Sheila's IndyMac Mods?
Treasury to view Citi-style rescues case-by-case
WASHINGTON (Reuters) - The Treasury said on Friday said it will consider financial institution rescues and asset guarantees similar to those it provided Citigroup on a case-by-case basis.
Goldman screws us in the front and in the back...heck-of-a job Goldie!
I posted this at the end of the other thread, I thought it was pretty interesting the level of volume being pushed during the slow months on short sales and foreclosures.
I ran some preliminary numbers last night for Ventura County. 70% of closed sales for December were either short sales or foreclosures:
Effective Demand: Ventura County short sales & foreclosures 70% of closed sales - December 2008
Banks are staying motivated.
I'll post the preliminary San Fernando Valley numbers later this weekend.
Market is up HUGE. Recession must be over.
They're all back, at least for now, thanks to TARP. After six weeks of complete silence, all the furniture companies are advertising their wares on TV. Muni bonds and high yield corporates have been rising for a week. Subprime loans are back for autos and homes via FHA. Even the japanese carry trade is perking up. And the long treasury has been very unhappy the last two trading days on this news.
MLM,
I yam what I yam. Set the propaganda aside. Listen to the market. The powers that be - - are.
MLM, I'll take my profit from you if you allow it.
Golgafrincham Ark Ship "B" is nearly full.
Breaking news...SEC To announce a new ponzi scheme. $1 billion or so...any guesss?
crispy, I posted far more salacious breaking news at the end of the last thread.
LOL!!
OT -
dedicated to c&c,
(this one's sure to lose me money)
I shorted a glod stock, NEM (newmont mining) @ 40.29, stop @ 1 penny over today's high.
Good luck...you might want to look into gamblers anonymous..
Persecuted Comrade Anonymouse writes:
OT -
dedicated to c&c,
(this one's sure to lose me money)
I shorted a glod stock, NEM (newmont mining) @ 40.29, stop @ 1 penny over today's high.
I bought the other end - check my sense of timing.
After awhile, it just seems like Monopoly money....but bigger denominations...
both of you are going to end up homeless and broke..
LOL!!
crispy&cole | Homepage | 01.02.09 - 3:42 pm | #
Tell me. Would you be interested in accepting this decidious forests' worth of leaves in exchange for that ship's peanut?
Anyone notice how SRS is up on a day that the market is up 270? Very interesting.
Oh, so that's what that was - a giant relief rally - everyone was so thrilled at the passing of Indymac!
Crispy,
I gamble with what I can afford - I'll save the rest of that lecture.
Anyone notice how SRS is up on a day that the market is up 270? Very interesting.
Gavshire Hathaway
Yes it is. Most of the underlying REITs are down a bit.
DJUSRE down over 2%. Money leaving real estate won't be back
SEC Said to Examine More Ponzi Schemes After Madoff (Update1) - Bloomberg.com
poni scheme update
poni scheme update
They should probe Nasdaq.
The market.. what a casino.. (less the free drinks of course)
It is so nice to see so many children expressing their wisdom about the market - oh, do teach me kiddies.
c&c - I'm sure you meant Ponzi scheme, not poni scheme. Because I have been promised a herd of ponies, and I trust they are on the way.
It is so nice to see so many children expressing their wisdom about the market - oh, do teach me kiddies.
Popeye
Get a pet or a hooker or something
wow -- oil over $46. Gee, and everyone thought the $42 print for Feb was too high.
Boo Yah!
Poni is where it's under a billion.
Gavshire Hathaway, picking up topic from earlier thread, rather than picking individual issues to purchase puts, do you ever take options on broader indexes? Anyone else?
Persecuted, thanks for warning about EEV the other day; glad I listened (to the others who have warned about these 2X shorts as well).
OT: What is going on at PrudentBear.com? The message board seems to have been taken down and the site is barely being maintained. I seem to recall Doug Noland posting that he was relocating due to new management but cannot find any details. Last CBB was 12/19.
Jim
Comrade V,
I don't trade broad indexes. I'll trade sector indexes like financials or real estate, but I prefer to find companies/sectors where there is a compelling fundamental reason to short.
This gives me higher volatility, but over the long run a better expected value.
Anonymous writes:
It is so nice to see so many children expressing their wisdom about the market - oh, do teach me kiddies.
Get a pet or a hooker or something
only going to say this a few times. I have been around the block. I have LIVED through this before. I was studying securities law at the time this last happened to the market. It does not matter that I - me - personally - was the prosecutor who put people in jail for securities fraud - long before you could spell money.
Nevermind. I know what I know - trade well
crispy&cole writes:
Goldman screws us in the front and in the back...heck-of-a job Goldie!
crispy&cole | Homepage | 01.02.09 - 3:35 pm | #
At least a different Paulson is involved.
An impressive end of day rally for SRS. And financials looked especially weak today. Monday should be an interesting day!
Popeye writes:
"Nevermind. I know what I know - trade well"
And some welcome your constructive observations; as a securities prosecutor I can't imagine how your feathers could be ruffled over some rough house comments. Please continue with informative posts.
Thank you,
Popeye,
I know many of us are mad as hell at all the hi-jinx by the big players in this whole mess and would love to see them run out of town on a rail.
In your opinion, any chance of this happening? Prosecution?
There is an interesting dynamic where professional money managers feel they have seen this before...and thus think they have an edge while trading.
Frankly, take the last 50 years and throw it out the window. We're in seriously historic territory here. Look at the 1830's, 1870's, and 1930's for guidance. In fact, study your history -- Missisipi bubble, tulip bubble, south seas bubble.
I'm not arguing "it's different this time". Quite the opposite. You just have to take a much longer historical view.
or he could be full of shit, like a lot of big talkers on blogs.
I remember when 13.9 billion seemed like a lot of money. Now I see governors want the Feds to pony up $1 trill for the states. These amounts are just beserk.
Re SRS:
Does anyone share the feeling that the today's weakness in IYR signals that SDS is about to make its run?
Gavshire Hathaway,
Expend your time selecting a worthy charity. You seem devoted to throwing your money; you might as well do SOME good.
Sorry, meant SRS.
Comrade V,
Out of all my longs, prior to the close. EEV will be a nice buy soon
Watch EEM. It should test 26.46, reject the price, and close underneath it on less than 146 mil. shares.
It had about 63 mil. today but didn't test the price. Compare this volume at highs to the volume at lows: 244 mil. @ 18.22. A retest of that would be about an 80% gain for EEV. That's worth waiting for.
Get a pet or a hooker or something
Anonymous | 01.02.09 - 3:58 pm | #
crcompanion is your friend, if you have no willpower
Children and their money - soon parted
Sorry Popeye. I didn't know your history. Please keep your informative posts coming
Popeye. I'm playing with house money, because i was RIGHT all last year. Thanks though.
Popeye,
Wow. How old are you?
If you lived through "this" before as a prosecutor you must have been at least in your 20s then.
Are you over 100 now?
"There is an interesting dynamic where professional money managers feel they have seen this before...and thus think they have an edge while trading."
That's an ongoing saga. I used to have clients in the mutual fund industry. As far as I could tell, the only thing professional money managers have are more employees and fees. My client had a couple of good years and lots of press. People swamped them with money and those late comers got led to the slaughter for the next 3 years. I think they were down 65% or so. Holy .
Comrade V., share your opinion on SRS. bought some more today. that might a bad sign for you though. I bought some at 100, 80,..
Aww c'mon lama, stop with all of that stinkin' thinkin'.
sandito writes:
Popeye,
Wow. How old are you?
If you lived through "this" before as a prosecutor you must have been at least in your 20s then.
Listen my children and you shall hear of the midnight ride of Paul Rivear.
Are we all grown ups now ?
My money against yours.
Who the hell is Paul Rivear?
Popeye, you're tone is obnoxious.
Youngster.
Getting out of Market and back to basics, will need all the help one can get..Bought 9 Sow's(it appears already bred) with 1 boar.
Unloaded down on the farm yesterday where my brother still has the family farm.
All these sow's will be having their piglets sometime in March...Now isn't this more fun than the market.
Had to get them from two States over, none left in my part of the country.
@ Popeye
was the prosecutor who put people in jail for securities fraud
Then you seem like the right person to ask:
Is it plausible that Madof pleaded guilty to fraud, in order to provide for government funded bailout of investors/investment firms that lost money in a hedge fund that simply went bust?
This is being reported as the case.
your tone
Hey! is it BFF or is everyone still on holiday?
Persecuted @ 4:06
Thanks; I will study and consider. Appreciate your sharing, win lose or whatever.
time for a spelling fight, need a neutral party for diploma and bar membership verification first.
@Popeye: Newsflash for you: It's a "tell" you don't know what you're talking about when you can't even spell Paul "Revere" correctly.
Ponyless in NJ writes:
Comrade V., share your opinion on SRS. bought some more today. that might a bad sign for you though. I bought some at 100, 80,..
Bought more today also. Up $1.50 after hours
Comrade Bear writes:
Popeye, you're tone is obnoxious.
Then I apologize for tone - not for honesty.
It's a "tell" you don't know what you're talking about when you can't even spell Paul "Revere" correctly.
Mannwich | 01.02.09 - 4:25 pm | #
Yeah, but it's cool watching Granpa Simpson get all uppity.
@Popeye: How about your spelling?
give MS credit. he called it today
Mannwich, he's still going to take all your money. Grab your wallet.
Eric - OK, I'll reset CR companion. BTW, if you have any tears available for shedding, could you spare a few for my Japanese govt. bonds?
Nevermind Popeye, it's just the spinach talking. It'll wear off.
What did I tell you about playing on the computer? Now GO CLEAN YOUR ROOM!
Mannwich writes:
@Popeye: How about your spelling?
Ordinarily, I'm a good speller. But to be honest, chit gets tiring.
BTW, if you have any tears available for shedding, could you spare a few for my Japanese govt. bonds?
MLM | Homepage | 01.02.09 - 4:28 pm | #
I weep for your bonds.
Bought some Jun 90 SPY puts today. Already in the red, of course. At least my calls ended the day penny bid, an infinite return over their 0.00 Dec 31 mark.
@Popeye: Not knowing Paul Revere's correct spelling is pretty damn pathetic.
I bought the thesis this is phony rally, set upside limits at 10% purchase cost last October on VV, VO and VHT. Hit my price on VV and VHT, and will set stop on VO to protect gain if we fizzle Monday.
Now looking for better trading vehicles (down as well as up markets), but nice start to the year.
Oh the challenge of it all.
I drink your Ensure.
Anyone notice how SRS is up on a day that the market is up 270? Very interesting.
Gavshire Hathaway
I mentioned that earlier with regard to SPX vs. RUT.
Sure it outperformed the previous trading day, but I've seen that kind of outperformance from RUT happen day after day in past rallies. Not sure what to make of it, but it makes me less confident about this sustaining into next week.
As this conversation is clearly taking a turn for the worse, does anyone have any thoughts about what will trigger the next downward leg? It is an exercise in mental masturbation to debate timing and short term fluctuations.
At some point it will become clear that our government cannot bailout the entire economy. And this will lead to a disaster for asset prices.
But what will the catalyst be? Failed treasury auctions? Rapid increase in long bond yields? International protectionist policies? Dwindling of the TARP funds? Municipal/state government bankruptcies. Muni bond collapse? Pace of bankrupcies increases and can't be papered over? So many possibilities...
The one thing I'm sure of, is we will not see an organic recovery.
It's interesting to me all this talk about reality. If nothing else 2009 should prove whether or not the Fed can create it. I would not bet against them though. Like some say on this blog "got popcorn"
We all know the game has changed - even I am not impressed with my experience - I learn new facts at the same time you do -
If you do not understand that the game board of investing has changed, you seriously need to pay me a lot to explain the obvious to you.
Ah gug gug. Ah-gug-gug-gug.
F you all - I remain honest.
"F you all"
DFTT
Gavshire - Mental masturbation is better than no masturbation at all.
My bet on the real answer to your question is currency dislocation, brought on by one or more of the items on your list.
Still hoping energyecon will definitely answer the question, because I'm too lazy to dig into it with any diligence.
GGP being put out of its misery could set it off. Their debt was extended to sometime in February. Or some significant retail bankruptcies.
Squeezed,
Even Google was not able to translate "DFTT". So, it's on you to say it more clearly.
Nicht Troll essen. Don't eat them either.
What which does not kill you makes you stronger.
When States's start New Budget's for 2010...Big Papa will not be there for bailouts.
A common theme to describing America's future is a much lower standard of living.
What does that mean?
GH, I'll go with dollar collapse led by massive intervention in the credit markets by the Fed... in progress...
Man denkt oder wird von denen, die denken. Wählen.
That was in german.
Democratic Governors push $1 trillion stimulus package for states \t\t\t\t\t\t \t\t\t\t\t\t \t\t\t\t\t\t January 2, 2009 03:04 PM â + \t\t\t\t\t\t \t\t\t\t\t\t \t\t\t\t\t\t \t\t\t\t\t\t \t\t\t\t\t\t \t\t\t\t\t\t \t\t\t\t\t\tBy Matt Viser and Andrew Ryan, Globe Staff A group of influential Democratic governors that includes Deval Patrick is pressing the federal government for a $1 trillion stimulus package for the states over the next two years that would contain $250 billion for education in an effort to avoid inflicting irreversible damage to schools during a fiscal crisis.
"A common theme to describing America's future is a much lower standard of living.
What does that mean?"
What was only sustainable on cheap money, cheap energy, financial wizardry, will come to an end.
And this will lead to a disaster for asset prices.
Gavshire Hathaway | 01.02.09 - 4:34 pm | #
Hyperinflation generally doesn't do that.
What was only sustainable on cheap money, cheap energy, financial wizardry, will come to an end.
Which One? | 01.02.09 - 4:49 pm | #
But at least you'll get a pony.
huh, it means you should get used to spending more of your money on essentials, like food and energy, and less will be left to spend on vacations, expensive clothing, electronics and other various crap. Partially this will be because your salary isn't going to go up nearly as fast as the cost of food and energy after the dollar starts to tank.
Ponies cost too much to maintain, just ask Lisa Simpson.
MLM, we only get ponies if we predict what the market will do. I wish I was a bank, then I wouldn't care. I would have thousands and thousands of free ponies in my fields. Oh.. Ponies..
Ponies cost too much to maintain, just ask Lisa Simpson.
Which One? | 01.02.09 - 4:51 pm | #
OK, maybe you'll get a pony burger.
JS,
1960s: "A billion here, a billion there, pretty soon, you're talking real money"
2009: "A trillion here, a trillion there, pretty soon, you're talking real money"
thats some pretty steep inflation there...
Children make a market in ponies. If you are a grown-up, you concede that was child's-play.
I am not a child. I play for keeps. Are there any adults present ?????
SD Real Estate
Note higher priced homes now finally following lower priced homes' descent.
voiceofsandiego.org
Are there any adults present ?????
Popeye | 01.02.09 - 4:55 pm | #
Mayhaps for we but not for thee.
ac-
too bad I didn't position for it....would've made a great start to the year. The last four day's screamed for a pullback...which was why i was not in this.
Can't win them all.....
Ciao
MS
@Gavshire Hathaway: A parade of highly negative corporate warnings, earnings reports, and increasingly worse unemployment figures (along with a couple more Ponzi Scheme revelations) will lead us downward.
More bad news on housing and banking sectors as well.
Rob Dawg,
I accept my place.
I am in the currency crisis camp eventually, but I don't see it as a short term event. In the near term I think deflation has a ways to run. And other countries are in a similar position.
The bond market can collapse without triggering a currency crisis, right? This happened in GD1. In fact, wouldn't this be deflationary? Up until the point where the Fed starts monetizing?
It seems clear to me that our entire financial system is insolvent, and the Fed's balance sheet must keep expanding to prevent the house of cards from collapsing. Hence suspension of Mark to Market. There has to be some finite bound for how much the Fed balance sheet can expand.
Otherwise, you could argue that money is an artificial construct, and monetary policy alone can save us. But the truth is that money is a reflection of what an economy will produce in the future. And we're now facing the realization that production resources have been terribly misallocated.
Sometimes I wonder if we're all off by a level of abstraction -- if we could just take a much larger macro view this would all make sense. But I suspect that this next level of abstraction would just show us that prosperity is a function of efficiency and proper resource allocation. Thus recent government appropriations have been an abomination.
The bond market can collapse without triggering a currency crisis, right? This happened in GD1.
Gavshire Hathaway | 01.02.09 - 5:00 pm | #
Who is buying those bonds - then vs. now?
some people up thread wrote that they, or he, had seen this chain of events unfold before and thus had a decent idea how to play this out...words to that effect
i dont believe anyone alive has quite witnessed an economic crisis like this
the great depression of the 30s is not all that instructive because of several macro economic differences, not the least of which is current account deficit, federal debt, and corporate / consumer debt
add to that half of america doesnt live on farms anymore
things are worse this time around
Rob Dawg,
The question is not who is wise. Trade well.
Gavshire Hathaway writes:
"The bond market can collapse without triggering a currency crisis, right? This happened in GD1."
Huh? Bond yields remained near ridiculous lows during the whole period. Bond markets tend to thrive during depressions.
But you can't really have a currency crisis without the bond market tanking. If people do not want to hold a currency, they certainly don't want to hold instruments which pay fixed interest in that currency.
In the current environment, a currency crisis would imply central banks (mainly Asian ones) dumping their bonds as they get out of the USD. If that doesn't happen, it ain't a currency crisis.
I am not a child. I play for keeps. Are there any adults present ?????
Popeye | 01.02.09 - 4:55 pm | #
why insult us?????
just argue your point of view, cogently and see if your ideas can withstand
Thanks for the replies.
What I was wondering is when we talk decreased standard of living are we talking Russian post collapse in the early 90's? I read Orlov's book "Reinventing Collapse" but was unconvinced by his comparisons and argument.
I'd really like an estimate that is comparable to another first world nation. Reading first person descriptions would be helpful. I have been following Iceland closely and the mounting desperation and social unrest in what was a very prosperous country is startling to say the least.
Thanks for any links or suggestions to research.
Gavshire, you couldn't have a currency crisis in GD1. Dollars were backed by gold.
Monetary policy can not save us because at some point the dollar collapses. This is precisely because money is supposed to be a reflection of what an economy produces. If an economy produces only green pieces of paper then somebody at some point will no longer trust its currency to ever be able to purchase real goods.
I agree with you on this:
"Thus recent government appropriations have been an abomination."
London Banker has a good write-up that everyone here probably already read...
London Banker: What We Value Is What We Save In a Crisis
The bond market can collapse without triggering a currency crisis, right? This happened in GD1. In fact, wouldn't this be deflationary? Up until the point where the Fed starts monetizing?
I think there's a fundamental difference in the current situation in the 1930s we had a gold backed currency, so the Fed couldn't manufacture dollars to buy bonds and artificially depress yields. So we might be able to trade a dollar crash for a bond crash. Also a fiat currency takes away the threat of explicit default by the federal government, so there may be less fear regarding the bonds than there was in the 1930s. I think the bond crash then was partly related to fears of the government's gold supplies being depleted which ultimately meant the threat of outright default.
I don't think you can directly compare the bond market of the 1930s to the bond market today.
Monetary policy can not save us because at some point the dollar collapses.
Devalues a little yes, collapse no.
Might still makes right last time i checked. Besides what else are everyone else going to hold their reserves in?
"The bond market can collapse without triggering a currency crisis, right? This happened in GD1."
Huh? Bond yields remained near ridiculous lows during the whole period. Bond markets tend to thrive during depressions.
See this graph:
this (US long bond crash in 1930s)
Mock - I've said my peace. I trade the market up... and I trade the market down. I am a trader. I have examined the equities as well as the futures.
Mock, one accepts one's place or pretends.....
Personally, I'm a realist.
Who is buying those bonds - then vs. now?
Foreign investors, but can you elaborate on why the difference is that important? I'm not making the connection.
I keep going back to the thought that foreign governments have little incentive to let the treasuries collapse -- it would result in political instability in their own countries, likely with civil unrest. It is far more convenient and less risky to try to maintain the status quo and try to revive this dead patient.
It's sort of a catch 22, where if they stop buying they're holdings decrease, but if they keep buying they cause a larger problem later. Kick the can is the easier policy.
Argh, very well. Devalues significantly.
I would be interested in learning how might would be able to maintain currency values. Force contracts at gunpoint?
Popeye(Unrated) writes:
F you all - I remain honest.
I call bullshit. You just said you were a prosecutor. No such thing as an honest DA.
unhappycakeeater - on an earlier thread you mentioned a neighbor who was laid off by Murrieta (CA) PD. I can't find any reference to Murrieta laying off cops. Can you provide a link?
Murrieta's got McMansions going for outlet prices, so I'm sure layoffs are possible, but I usually hear about public safety layoffs. Could it be your neighbor lost his job for disciplinary reasons and is disguising it a layoff?
Personally, I'm a realist.
You are also a contentless poster for at least the last two threads.
Gavshire, you couldn't have a currency crisis in GD1. Dollars were backed by gold.
Ponyless in NJ | 01.02.09 - 5:09 pm | #
If by "backed" you mean FDR and his buddies decided what mark-to-fantasy number to peg dollars to, then yeah, I guess you could say that.
Monetary policy can not save us because at some point the dollar collapses.
Monetary policy cannot save us because money is just the scorecard for the economy.
You don't get good at [insert your favorite sport here] by changing your score to reflect a stellar performance every time you turn in a miserable one.
You simply lose the ability to objectively judge your own performance thereby leading to even more suckage.
Comrade Byzantine_Ruins writes:
Popeye(Unrated) writes:
F you all - I remain honest.
I call bullshit. You just said you were a prosecutor. No such thing as an honest DA.
Of all people here, I respect you. Call me out; I will respond on point.
I would be interested in learning how might would be able to maintain currency values.
Might prevents an all out default is my argument.
The moment the US loses its might is the time the real defaults start.
If by "backed" you mean FDR and his buddies decided what mark-to-fantasy number to peg dollars to, then yeah, I guess you could say that.
Well Hoover was president through most of the actual recession, and I think the problems in the bond market occurred before FDR's time.
Argh - you mean your own, or USD in general?
Another forgotten anniversary that haunts the nation is the re-establishment of the gold standard in the United States by the Roosevelt administration on January 1, 1934. What? -- you may ask incredulously. Roosevelt re-introducing the gold standard in the United States? You had better believe it. Thats exactly what he did.
"An Unhappy New Year" by Antal E. Fekete. FSO Editorial 12/31/2008
I have been challenged by a person who I respect..... I am open and stand ready.
Argh, you are going to be a little bit more specific in how you see this playing out. So, what does the US military need to do to maintain the value of the US dollar?
"The bond market can collapse without triggering a currency crisis, right? This happened in GD1."
Re: Denninger's chart. I have no idea where he got his data from. The St. Louis Fed data on long term government bonds showed no crash of any importance, which corresponds to what little I know about the Depression.
St. Louis Fed: Error under "interest rates"
Argh - you mean your own, or USD in general?
I mean i don't see a USD default anytime at all.
bond guy | 01.02.09 - 5:24 pm | #
Believe those are corporates in Denninger's graph, not government...
So, what does the US military need to do to maintain the value of the US dollar?
It's one of the core reasons the dollar is the reserve currency. And as long as that holds true, nothing untoward will happen that is not already in the works.
I have been challenged by a person who I respect..... I am open and stand ready.
Popeye | 01.02.09 - 5:22 pm | #
Blah blah blah blah..... we get it... you're cool, ok?
After 9/11, there were some lowlifes who tried to cover-up ongoing embezzlements and other misdeeds by saying assets had been incinerated in the World Trade Center.
I would think the Madoff situation would provide similar opportunities.
It seems to me that Madoff victims are either coming forward or being publicly identified in much greater numbers than in previous stuff like Bayou. Don't victims have some right to privacy?
citizen energyecon writes:
"bond guy | 01.02.09 - 5:24 pm | #
Believe those are corporates in Denninger's graph, not government..."
If that's true, well, no kidding. In a depression, everything that isn't backed directly by the central bank gets crushed. You are seeing similar behavior now; corporate spreads may be wider now than they were in the 1930s.
Argh | 01.02.09 - 5:26 pm | #
So the relevant question appears to be what is already in the works...
Bonds are not going to crash as long as the Fed keeps printing money to purchase them. $500b is equal to the shit that Bill Gross has stashed in his closet...anyone else have more??
Nope.....
Oh and Gross et al. get to collect the fee's associated with "purchasing" those too. Nice work for absolutely shoving the middle class under a bus at each presentable opp.
Ciao
MS
Argh, are we getting into conspiracy theories here? I think you are giving the USG a lot more credit than it deserves in its ability to manipulate world markets and governments.
Popeye(Excellent) writes:
Of all people here, I respect you. Call me out; I will respond on point.
I'm just being at least somewhat flip -- you can't say "prosecutor" without meaning "liar" -- overselling the product is the name of the game in a system of adversarial justice. I hope you're not still working in the field or you have a whole lot to answer for -- like, the last 20 years.
I haven't been really following this foolishness. I don't really care how old you say you are or whatever. I think you're acting like Mr. Smarty and drawing fire but that's your business.
t seems to me that Madoff victims are either coming forward or being publicly identified in much greater numbers than in previous stuff like Bayou. Don't victims have some right to privacy?
Billy Hill | 01.02.09 - 5:26 pm | #
I don't think many Bayou victims were drinking martinis and gloating at their country clubs.
Gee, I thought I was the dumbest and socially inept commenter, until I've read Popeye's... That guy just made my day!
Eric - I sincerely wish - SINCERELY WISH - my hopes for immediate gain included you. But if you ask my truth, at the moment, ....... you don't stand a chance.
Eric.... I trade every day - beat me if you can.
Argh writes:
"So, what does the US military need to do to maintain the value of the US dollar?
It's one of the core reasons the dollar is the reserve currency."
This is arguably true. For various reasons, the yen and the mark were not in the running to be the global reserve currency after WWII. And it would have been kind of strange for the Soviets to be the stewards of the global reserve currency.
Believe those are corporates in Denninger's graph, not government.
Ah, well that's kind of deceptive. I've never heard the term "long bond" used to refer to anything but US treasury debt.
The funny thing is I remember Krugman mentioning something similar. IIRC correctly it was something to the effect that the Fed had to raise rates to stave off a collapse in the bond market.
Anybody know if this is accurate or is my memory impaired?
"....add to that half of america doesnt live on farms anymore - things are worse this time around"
THAT might be major troubling aspect of this go-around.......
Popeye....you want me to start a pot of coffee for ya??
Argh writes:
"So, what does the US military need to do to maintain the value of the US dollar?
Invade and occupy any oil producing nation that even thinks about selling oil for anything but U$
I posted this in an earlier thread, just wondering if someone here knows the answer.
If one was invested fully in the Dow companies in 1929 how many years would it have taken to return to the value of the original investment. I have seen that the Dow average returned to its 1929 level in 1952. But the question is that a number of companies dissappeared during that period and new ones were added. So the question is how much longer would it have required the surviving companies stocks to recover to the point where the entire porfolio would have returned to its 1929 level? This of course, would have to be in inflation adjusted dollars.
Someone posted this quote from Stephanie Pomboy over on iTulip a couple days ago:
Could you elaborate on that choice between higher rates or a weaker dollar?
"If we rely on foreign creditors to lend us the money to sustain our lifestyles -- and that's what we do -- we need to compensate them for that risk of lending to us. As the economy weakens and our credit quality should theoretically be deteriorating, the only way we can really attract that same capital is by offering a higher interest rate or making our assets cheaper to them, in this case by having our currency be weaker."
From Barron's for those of you who have a subscription:
Forecast: A Long, Cold Winter - Barrons.com
"IIRC correctly it was something to the effect that the Fed had to raise rates to stave off a collapse in the bond market."
you are correct..problem is that they are doing it covertly by printing the money to keep the bond market afloat in the short term. Long term, all debt is toast.
Count on it.
What we've seen in the last few months is going to be with us for two, perhaps three generations.
Ciao
MS
Eric.... I trade every day - beat me if you can.
Popeye | 01.02.09 - 5:32 pm | #
Nah, I think I'll just drop you in Ken's dustbin.
bond guy, I would have thought that after WWII the overwhelming size of the US economy compared to its rivals and the healthy trade surplus relative to the rest of the world were the main causes of the dollar being the reserve currency.
I have a hard time seeing a government being able to maintain the value of its currency through direct military force.
Also the fact that it was backed by gold and the US had lots and lot of that as well.
Popeye:
What I hoped to hear is simply your current trading perspective, your thesis, horizon for current position and vehicles. If you decline, no problem because you have no obligation to anyone. All the rest is noise.
To others, like Persecuted, Rich, Gavshire, Ponyless, etc., thanks for sharing.
"Bonds are not going to crash as long as the Fed keeps printing money to purchase them."
Isn't the Fed working against itself here? As they print, they stoke the risk of long-term inflation (ie: bonds should anticipate that) yet they want a low bond rate.
Hello Calculated Riskians--
The momster is in Fla with me.
She is really tough. The word is that the woman dragged her upstairs, and then threw her down, and then pressed on her ribs whereupon she played death. The woman went upstairs to loot and my mom crawled over to the phone & dialed 911. She thinks she was out of it for a while, because the next thing she knew the police were there. The woman only got her small tv, an empty wallet which was a present from me, and some . . . underwear.
Really stupid.
My mom fought back and tried to hit her but wasn't strong enough.
Report from Balto. Balto has always been relatively poor, but housing mkt better than South Florida, which isn't saying much. Realty buddy of mom's priest friend says things were getting better but had been "interesting". Mom will be selling house.
On way back to airport, saw car storage parking lot. Cars I suppose from port?? or rail shipment. Totally full. Mom said she had never seen it so full; cars usually coming and going.
Glad to be back in non-gloomy Florida. Back to economic gloom and doom from weather gloom.
Eric writes:
Nah, I think I'll just drop you in Ken's dustbin.
I have survived much worse treatment than that. Will you ??
Syv--I heard it was 25 years from height to equalling previous height. This is, of course, somewhat of an exaggeration, as not that many bought at the absolute high.
I think the mkt lost roughly 90 cents on the dollar at the depth. Anyone know any better.
I trade every day - beat me if you can.
So you do a lot of trading outside the US? How do you avoid getting chewed up by commissions?
ac writes:
"Ah, well that's kind of deceptive. I've never heard the term "long bond" used to refer to anything but US treasury debt.
The funny thing is I remember Krugman mentioning something similar. IIRC correctly it was something to the effect that the Fed had to raise rates to stave off a collapse in the bond market.
Anybody know if this is accurate or is my memory impaired?"
They did have to target/defend gold parities (or whatever), so they may have had to raise rates at some points. You could interpret this as being needed to "save the government bond narket", but you can also argue that this is just what happens - you need to raise and lower rates over time, especially in a system where you are pegged versus gold.
But I can't recall crashing government bonds ever being an issue in the (first) Great Depression. Certainly there may have been selloffs which could have been damaging for speculators in the bonds, but that happens all the time.
I have a hard time seeing a government being able to maintain the value of its currency through direct military force.
Your points are also part of the reason, it's just that the might happens to be in the foreground now.
No country in history has held a reserve currency or one that is 'as good as gold' without having the military advantage.
Isn't the Fed working against itself here?
Absolutely Wally.....but they current people in charge may be dead, or in "other positions" when that failed strategy is finally seen FWIW.
Bonds "should' have started to tank in early '07...just after the yield curve was inverted. It's no coincidence that the Fed pushed the printing presses to full ahead shortly after the curve indicated worthlessness.
Ciao
MS
lawyerliz,
Glad to hear you are back home and with your mom, safe and sound - the kids are acting up hereabouts - nothing serious, just some market chest beating behaviour...
In his 1929 crash book, J K Galbraith always uses something he calls the "TIMES averages" rather than the Dow, but doesn't clearly explain why. Are these averages still in use today, possibly under another name?
syvanen | 01.02.09 - 5:35 pm | #
Interesting question, one I have not seen addressed - lawyerliz, the central point is that the index was not the same companies at the new height - if you owned the index in stock shares, how much longer would it take to equal the previous peak including the companies that were total losses in the interim?
Daytrading. Yawn.
Mnuchin. Now there's a name ripe for parody.
The only good thing about this miserable financial crisis is that it has kept me busy all year, and hopefully, 2009 as well.
Well, that and home prices should finally revert to reality-based levels over the next two years.
Ponyless in NJ writes:
"bond guy, I would have thought that after WWII the overwhelming size of the US economy compared to its rivals and the healthy trade surplus relative to the rest of the world were the main causes of the dollar being the reserve currency."
Well yes. The U.S. was about the only major economy not bombed flat during the war (Canada and Australia were also exceptions, but not too major). And one can argue that this was because of the size of the U.S. military.
The fact that the U.S. had the largest gold reserves and had typically been a trade surplus nation
before the war was also important.
I suppose it will take forever to catch up.
CSC ever come back?
Evil Henry Paulson??
The Orlando airport was super super busy. You'd think we all thought we were still rich.
Mom wants to know where to invest. Stock broker useless. I said, I don't know; my money on sidelines also.
syvanen writes:
I posted this in an earlier thread, just wondering if someone here knows the answer.
If one was invested fully in the Dow companies in 1929 how many years would it have taken to return to the value of the original investment.
i dont know the answer right off the top[ but i know where you can find it
really outstanding set of presentations over at crestmont research...cool graphs and thought provoking macro-economic theories
click down two and then four charts for your answer
read secular cycles
read generational returns
if you held stocks for 20 years there was never a time when you were net negativ
stocks bought in 29 yielded overall a small but positive return in 49
but in terms of opportunity cost you lost
Stock Market
So to be in the deflationist camp, you have to believe either:
1) That the government cannot or will not provide sufficient funds to banks/corporations to offset the destruction of credit
or
2) That the destruction caused by #1 will not be sufficient to result in a default by the US government, or a currency collapse.
While the inflation/hyperinflation camp believes either:
1) Bernanke and Paulson will be overzealous in supporting the economy, devaluing the dollar and causing foreign creditors to dump treasuries
or
2) Soverign default
While those betting on a recovery are saying that none of the above happen, and additionally that the real economy will stage a recovery.
Are there other possibilities?
MS writes:
"Bonds "should' have started to tank in early '07...just after the yield curve was inverted. It's no coincidence that the Fed pushed the printing presses to full ahead shortly after the curve indicated worthlessness."
Under what interest rate model would bond yields rise going into a serious recession, with prices deflating, and short term rates going to zero?
The bond market did exactly what it was supposed to do in 2007 - discount the future outcome of growth, inflation and short rates.
Hah, 25 years. Of course the Dow wasn't the same, but it changes every few years anyhow, right.
Must look at the Case Shiller stuff, previous thread.
Comrade V writes:
Popeye:
What I hoped to hear is simply your current trading perspective, your thesis, horizon for current position and vehicles. If you decline, no problem because you have no obligation to anyone. All the rest is noise.
My thesis is that I am not a smart person. I offer no pretenses.
My trading perspective is that the market will build toward a rally leading up to the "change in government".
I am not a smart person; I am not in liege with those who have access to power; i wish I had such power...... eh ?
Popeye....you want me to start a pot of coffee for ya??
Black Star Ranch | 01.02.09 - 5:34 pm | #
Touché! I appreciate your sense of humor!
Gavshire Hathaway writes:
As this conversation is clearly taking a turn for the worse, does anyone have any thoughts about what will trigger the next downward leg? It is an exercise in mental masturbation to debate timing and short term fluctuations.
At some point it will become clear that our government cannot bailout the entire economy. And this will lead to a disaster for asset prices.
But what will the catalyst be? Failed treasury auctions? Rapid increase in long bond yields? International protectionist policies? Dwindling of the TARP funds? Municipal/state government bankruptcies. Muni bond collapse? Pace of bankrupcies increases and can't be papered over? So many possibilities...
The one thing I'm sure of, is we will not see an organic recovery.
Gavshire Hathaway | 01.02.09 - 4:34 pm | #
Well 1st Qtr 09' earning ought to do the trick...If that does not solidify the market direction...Q2 surely will. Chow...
stocks bought in 29 yielded overall a small but positive return in 49...
SURVIVING stocks bought in 29 yielded overall a small but positive return in 49 when unadjusted for inflation. US corset stays and whale bone girdles anyone?
re: occupying the middle east and selling oil for dollars... how exactly does this work or help? they world is awash with dollars and you are going to ask them to pay you in dollars for the oil? do you accept monopoly money too? how are you going to force them to accept dollars for flat screen tvs?
Joe H.
I believe -"Jobs" will be hard to find.
-"Work" will increase.
-Things will continue to wear out, people will continue to generate needs. Less of that maintenance and fewer of those needs will be addressed by people with "jobs".
toughtimeshomesteader. -Asking for a job is akin to walking up to a pretty girl and asking her to marry you.
-Asking for work is like walking up to the same girl and asking for a date.
-Jobs became the norm as we started buying big-ticket items on credit
-The people loaning money demanded some guarantee of future cash-flow.
-Work was the norm during the grand sweep of human evolution/history
-Even today, Amish count on a multiplicity of enterprises to generate spurts of income.
-Taken together those spurts even out into a year-round flow of income.
-A multiplicity of enterprises requires a multiplicity of skills.
-In a survival situation, a Swiss Army Knife is more useful than a LASER (J. Letarte)
-The most profitable enterprise is to stop the arterial bleeding of discretionary expenses within the household economy. -Plant a garden
-Insulate and weatherstrip
-Treat clothing gently
-Consolidate trips, or better yet, stay home and make do.
-"Job" presupposes enough fossil fuel to either bring a large customer base to me, or that I can inexpensively travel to my customer base.
-Meijer's (a Michigan supermarket) was radical in that they offered a parking lot in addition to two places in front of the store on the street. -Meijer's first parking lot accommodated 6 cars.
-Meijer's first "super market" regularly brought customers from twenty miles away...an unheard of distance.
-Meijer's first super market was 1938. -Our lifestyle choices are the biggest determinant of our health and fitness
-Much medicine can demonstrate little incremental gain to off-set huge incremental cost
-Do high school kids really need to have $2800 a year spent to address their acne?
-Soap and water are cheap and effective...for many things
My future vocation may be running our household economy, peddling my skills and adding to my portfolio of skills.
oftwominds.com Readers Journal-12/29/08
wally(Excellent) writes:
"Bonds are not going to crash as long as the Fed keeps printing money to purchase them."
Isn't the Fed working against itself here?
I have to agree with this.
IMO, the Fed can't monetize the bond mkt without blowing up the dollar as a forex instrument.
The petrodollar and sinodollar / nippodollar pumps are not going to blow into a burst bubble to try to keep the US/foreign partner debt cycle going. They're gonna focus on domestic consumption.
Sorry, either the Treasuries market is going to blow or there's going to be an artificial "market" for Treasuries denominated in worthless scrip and the dollar will cease to have meaning except as a US govt. balance sheet unit of account.
Hello Calculated Riskians--
lawyerliz | 01.02.09 - 5:38 pm | #
Nice to have you back.
Give your Mom a (gentle) hug for us.
Ponyless in NJ writes:
re: occupying the middle east and selling oil for dollars... how exactly does this work or help?
All nations need oil therefore need US dollars. Always a market for U$
Regarding the "bond crash" during the Great Depression. Here's a graph of actual US long-term debt form 1926 to 1936.
There is a sell-off in 1931. I don't know that you could call it a crash, but it is a significant move and seems to run counter to the notion that treasury bonds necessarily rally during a depression.
Popeye:
"My trading perspective is that the market will build toward a rally leading up to the "change in government"
I believe many here agree with that, including myself. Nothing controversial in that.
So, next question, what vehicles are you trading, and why do you prefer them?
Thanks for your prior reply and all other facts you wish to share.
When I was a child, I spoke as a child. Please stop asking me childish questions.
Hey, the hub was an honest DA (assistant state atty.) And so was his boss who is still there. . .
Humpf.
lawyerliz---we don't know one another, but I was horrified to read what happened. Glad she is stable now. Best wishes for the new year.
Who posted the Reinhart and Rogoff summary paper? That is something for folks to let soak in a bit... particularly the conclusion paragraph.
Howdy Terry....figured it bein' an extended "holiday weekend", a hearty pot of coffee never hurts....[eg]
energyecon and bond guy -
Has any consensus come about here on just how difficult it will be to finance all of the new administration's stimulus and bailouts? Big numbers coming up over the next few years.
lawyerliz writes:
"Humpf."
Cubed.
"The bond market did exactly what it was supposed to do in 2007 - discount the future outcome of growth, inflation and short rates"
I totally disagree.....The entire market got pushed up to insane levels of valuation (that includes debt) since those are tied to roughly the same metrics applied to equities. If you use the above logic then you are assuming that the market was right when it was inflated to well above 14k.
It was wrong then...and it's wrong now (bond-wise). The only reason debt stays where it's at is the massive amount of gov't induced purchases. '07 did nothing to to make it realize that because it didn't really get started until Sept of this year.
Ciao
MS
Our military is doing everything necessary to insure oil will be traded in dollars. Opening an oil bourse in Iran was not acceptable to the US.
Great having such a submarine fleet.
BBC NEWS | Technology | New cable cut compounds net woes
http://www.geek.com/articles/news/major-undersea-communication-cables-cut-near-sicily-20081222/
Third undersea Internet cable cut in Mideast - CNN.com
Eight Major Undersea Internet Communication Cables Cut in 2008: We Live in Interesting Times | Disinformation
Popeye:
I could ask about the Chiarella case(and for extra credit who was the head of SEC Enforcement when Chiarella went down), the scienter requirement (or lack thereof for 10b prosecutions, which former Supreme Court Justice was the primary author of the '33 Act and the '34 Act, and for extra credit why is the Section 302 Certification under SarBox as to Section 404 Internal Controls effective (or not)? I could even grade you on your answers.
But, alas, who cares? What I really want to know is where you think the Dow and the S&P 500 will be at then end of Q1 2009? Thanks in advance. My real question is a serious one.
LL......glad to hear you & Mom made it back safely....
Really missed CR.
Hopelessly addicted.
Worse things to be addicted to.
By the way, the police were useless. I didn't even bother to nag them.
No return phone call; no follow up.
All those CSI shows? An illusion.
Mock Turtle
Thanks for the link. The pdf crashed my computer so will have to check it out later.
Hi LawyerLiz, best wishes for your Mom's recovery, sounds like she'll be OK.
Were you raised at your Mom's house? My grandmother had a half-sister who lived in that neighborhood (Highlandtown), we used to drive up from DC and visit. I remember the marble steps and painted screens. Her grandson was in the Baltmore POE-lease (that's how they say police in Bawlmer).
Please note - I'm not that smart. I've been around the block a couple of times; but in the end, my job is to put your dollars into my pocket - ok ?
For those of you who missed in on the last thread,
Thanks to "mmckinl" who wrote:
"For those of you who haven't seen it a very important and sobering article at Naked Capitalist ... a new study by Economists Carmen Reinhart and Kenneth Rogoff ...
Page not found « naked capitalism far.html
Its worth a slow read - 10 pages.
Popeye:
You ain't gittin' my dollars?
But good luck gittin' as many of everybody elses as you can, honestly, of course.
Kind regards
It's Bawlamer, Ed. No. I was raised on lower Park Heights, which is total slum city. They widened Park Heights Ave and tore down all the trees. Highlandtown actually held up better, even tho it was always a poor workingman's area. Mom doesn't like Greek food, alas. But we had some great Chinese and Italian take out.
I could ask about the Chiarella case(and for extra credit who was the head of SEC Enforcement when Chiarella went down), the scienter requirement
Listen to the market - did you hear the Market's answer to your question ? Neither did I. K ? Our minds meet.
MLM | Homepage | 01.02.09 - 5:59 pm | #
bondguy is the go to guy on this one - my eyes just keep getting bigger as the numbers do as well - Setser had a good writeup a few days back on how almost all foreign Treasury buying going on is by FCB's...
Brad Setser: Follow the Money » Blog Archive » The collapse of financial globalization …
What ChefVisar said!
Popeye, sorry I am just back. Please write something interesting.
Case Shiller has Miami down 38%. 12% to go, if we are lucky. DC "only" down 28%. Balto similar??
Not so great time to sell Mom's house. Any idea of values in Highlandtown?? My mom's house has the marble steps and is well kept up.
@ lawerliz - good news about SuperMom. Smart, and lucky.
@ Gavshire H: I prefer the more elegant formulation of Bertrand Russel (Why I Am Not a Christian)--"intellectual onanism". Book is worth reading if you've never had the inclination - many humorous observations on the human condition, published 1927, so vaguely topical.
Love intellectual onanism.
Don't know any of the other stuff, but Chiarella was a printer who took advantage of an early peek at a recommendation a bigshot was mailing to clients and traded on it through relatives. His main defense was that he was not an insider at any of the companies he traded.
Anonymous writes:
Popeye:
You ain't gittin' my dollars?
But good luck gittin' as many of everybody elses as you can, honestly, of course.
I won't force you to bet, but it's a free country. Please understand the bets you place. I hate to feel guilty as I take profits.
I used to have clients in the mutual fund industry. As far as I could tell, the only thing professional money managers have are more employees and fees.
lama | 01.02.09 - 4:20 pm | #
Tell me about it.
The hardest thing for a money manager to do is admit what he doesn't know and then refrain from investing in areas outside his skillset. He sees that all his buddies are booking big returns doing something that doesn't make sense, he knows that he is as smart (or smarter) than them, and so he jumps in with both feet on the theory that he'll figure it out later.
Usually, the tuition charge at the "figure it out later" school of hard knocks is very expensive for his client's wealth.
Lawyerliz: Glad the Momster survived the ordeal. Nice to have a whiff of Chanel wafting amid the testosterone today.
My family just lost a loved one about the time Tanta died. One of the last horse soldiers blown up by a mine on the Burma Road. He survived 'cause he was tough; really a softie inside and a real tree hugger.
Seriously, guys...stop needling each other.
Popeye, it's a secret but all legal secs know...most lawyers can't spell.
Excepting lawyerliz, that is.
"NorkaWest writes:
I used to have clients....."
You once viewed yourself as an honest person... and then what happened ??? Who lied ?????
DFTT
squeezed | 01.02.09 - 4:38 pm | #
What does that mean?
Humor me, I'm hungover.
Popeye, it's a secret but all legal secs know...most lawyers can't spell.
I married my legal secretary..... shhhhsh -
Gavshire Hathaway writes:
As this conversation is clearly taking a turn for the worse, does anyone have any thoughts about what will trigger the next downward leg?
GH: 50% off the DJI/SPX highs in only 13 months, with only several 10% rallies on the way down, and your looking for the next downleg? How cruel.
Seems to me a major bear market like this, still only one year young, fortified with a trillion $ bailout and a new president, deserves a 3 month, 30% A-B-C upmove to lower highs near DJI 11000 and SPX 1100. Then the emerging failure of the recovery efforts, and the chart failure, trigger the next down leg.
Today's break over 92 in the U$D/JPY 4 month decline from 110 to 88 is my long idea.
My spider-sense is tingling again. New post soon.
$350 million to repaint a bridge in New Jersey. Lead paint removal. Haz Mat costs.
Do Not Feed The Troll
unless you want to take him home as a pet, then it's okay.
Setser has a couple of good posts up atm, one on the ISM and the next one on China reverting to previous policy (export subsidy, dollar peg, etc.)
Setser
IN the ISM post there is a link to some charts his CFR buds have created that compare some current economic indicators to their average for post-WWII recessions...(warning .pdf)
http://www.cfr.org/content/publications/attachments/2009OutlookFinal_Long.pdf
is that spider sense or monkey sense?
Well, it's a spider monkey...
Possible false alarm. CR moves in mysterious ways
Sorry for the delay. My colostomy bag got disconnected.
Gavshire Hathaway writes:
As this conversation is clearly taking a turn for the worse, does anyone have any thoughts about what will trigger the next downward leg?
T/A will say SPX @ 1000
any thoughts about what will trigger the next downward leg
Gavshire Hathaway | 01.02.09 - 4:34 pm | #
My vote would be California or some other state going BK.
It will probably happen like Cleveland's BK. They will have a deal all worked out, but they need to get the sign-off by a bunch of "Glod's gift to humanity" politicians. One of them will not have had his feathers stroked to his complete satisfaction, so he decides to play chicken. He and his state loses as the deal unravels.
NW
You are all nice folks - please forgive me as I say things that induce you to move your dollars to my pocket. Was that too abrubt ? ......... I'M sooooooo sorry. Fool.
Unlike the markets, SRS didn't move up on low volume:
Volume: 15,865,987
Avg Vol (3m): 9,831,860
YTD Return (Mkt)²: -29.86%
Net Assets²: 1.00B
P/E (ttm)²: N/A
Yield (ttm)²: 0.75%
Barkeep! One more round!
Popeye: Haha! I have permission to tell lawyer jokes 'cause my dad was one. So's my sister. Lawyers & judges run in the family. I'm the black sheep.
Popeye writes:
Barkeep! One more round!
I remained on-line, but did not write the above. Take care -
Hello LL, I am glad you are back.
Thanks for posting the "oftwominds" blog link. Interesting.
The dumbest people I know think the economy is going to fall apart. Therefore the market has reached a bottom, the TARP worked as intended. Paulson is now Jesus Christ.
dashingdwl writes:
Market is up HUGE. Recession must be over
i would see ANY rally as a point before the breakdown as everybody moves to buy something before the currency collapses..
It's sort of a catch 22
Gavshire Hathaway | 01.02.09 - 5:13 pm | #
A "Prisoner's Dilema" might be a better analogy. If both prisoners stay mute (i.e., no central bank sells), then the police have no case (i.e., Treasuries and Dollars maintain value). If one prisoner cops a plea bargain (i.e., one central bank sells early), he gets a less bad deal (i.e., early central bank retrieves most of his wealth), but the other prisoner gets the max (i.e., late central bank loses his shirt).
Look for a smaller central bank to bail out early, which could start a run on the currency.
Question: Which currency? US Dollar, GB Pound, or Swiss Franc?
Has anyone else noticed that a lot of people bought new cars over the new year? How can we not be at a bottom? GM and all car makers are saved...whohooo!
Meanwhile CA muni bond fund continues to drift - up! Go figure.
VANGUARD CALIFORNIA INTERM TAX- Fund Chart - Yahoo! Finance
"does anyone have any thoughts about what will trigger the next downward leg?"
3 thoughts, mostly concerning the S&P 500.
1) Another major hedge fund liquidation/sell-off. Just a guess, but my hunch is soon.
2) Likely Republican resistance to Obama's economic plans. Already seeing hints of this in the news.
3) Growing public awareness of what it means now to switch jobs: not unemployed or even underemployed, just really underpaid compared to one's last job. See this link for examples of potential MSM coverage...
Unemployed workers accept pay cuts to find jobs - Jan. 1, 2009
The True Popeye writes:
On what theory do you forward any notion that I owe an obligation to be helpful ?
Just aski
MLM writes:
"Has any consensus come about here on just how difficult it will be to finance all of the new administration's stimulus and bailouts? Big numbers coming up over the next few years."
If you spend too much time worrying about one side of a market (supply), you can make big mistakes. For example, the Peak Oil types correctly predicted that supply would peak this year (or earlier). What most of them missed out on was that demand also peaked this year, and that oil prices would tank as a result.
People who worry about supply always have to explain away Japan's bond market, as well.
If the economy remains in a state of near collapse, then there will be huge demand for Treasury securities. If the economy turns around, Treasurys are toast. (I'm not offering a recommendation in either direction.) If the turn around occurs as a result of a stimulus package, you can pin the blame on the stimulus package if you wish.
For further elaboration, these massive supply numbers are based on a weak economy. The economy will be weak because there will be no private sector demand for debt, and domestic savings are rising. So if the economy remains weak, the deficits will be largely self-financing.
There is the hypothetical risk that China could try selling all its Treasury securities in one day. That would be a mess, no doubt. But it is unclear what that would prove, other than losing the Chinese hundred of billions of dollars.
All Hail TARP
From TPM:
At the time, Gross was on the airwaves (on CNBC in particular) pledging that just out of a sense of patriotic duty he'd be willing to have his firm manage the government bail-out (i.e., government purchase of the crap CDOs) for free. Just for the sake of patriotism.
So far Pimco isn't saying how much they're getting in compensation, but I don't think he's doing this for free. I've lost a lot of respect for Gross over the past several months.
Popeye sez - "Never mind. I know what I know..."
. Kinda similar to " I yam what I yam..." ;^)
CSI shows
lawyerliz | 01.02.09 - 6:02 pm | #
They are in Dade County and NYC, not the provinces.
So I'm sitting here, thinking.... "Why aren't the futures reacting (either up or down) to today's rally?
Oh yeah.... it's Friday.
I need a beer.
I think the economy can be in a state of collapse and simultaneously have demand for Treasuries weaken:
-A mind-bogglingly expensive stimulus package that turns out to be nothing but pork.
-A major muni default that creates the impression that the govt is on the hook for muni debt.
-A currency crisis. Perhaps one manufactured by our Federal Reserve.
I'm sorry, but in terms of putting evil doers in jail, you folks are playing in quicksand - you neither know how to spell honest - nor do you care in which denomination it is spelt - YOU ARE NOT BEING HONEST WITH YOURSELVES - res ipsa loquitur.
Unfortunate indeed...
FDIC Employs Tool Used for S&L Crisis - WSJ.com
FDIC Employs Tool Used for S&L Crisis
FDIC: A Tri-Cities Bank "Unsafe/Unsound" Banking Practices | TriCities
FDIC: A Tri-Cities Bank Unsafe/Unsound Banking Practices
Federal regulators reprimand western NC bank - BostonHerald.com
Federal regulators reprimand western NC bank
DL-Online | Detroit Lakes, Minnesota
FDIC issues cease and desist order against Park Rapids bank
Baca writes:
"I don't think he's doing this for free."
IIRC, Gross said he would donate his services provided everyone else who participated did so as well. Reminded me of IT vendors offering to support a standard by waiving IP licensing fees, provided everyone else who contributes IP to the standard does so as well.
You get halo of making offer with little risk of performance.
You once viewed yourself as an honest person... and then what happened ??? Who lied ?????
Popeye | 01.02.09 - 6:20 pm | #
I went to the Popeye school of ethics. He taught me eveything he knew. Now I am an investment retrobate, just like him. And I can no longer spell.
I think I my hve figured it out. Is Popeye Jas' dad???
NorkaWest writes:
You once viewed yourself as an honest person... and then what happened ??? Who lied ?????
Popeye | 01.02.09 - 6:20 pm | #
I went to the Popeye school of ethics. He taught me eveything he knew. Now I am an investment retrobate, just like him. And I can no longer spell.
MATH WORKS
Comrade V(Unrated) writes:
> lawyerliz writes:
"It is difficult to get a man to understand something when his salary depends upon his not understanding it."
If you work for the organs of jutice in this country, you're either a criminal or a fig leaf for one. Sorry, it can't be a system dominated by robbers who loot the public treasury but you are the heroic one who does the best they can within the system.
It doesn't matter why you're the henchman to a robber.
"I went to the Popeye school of ethics."
If you went to the Broward Horne school, you wouldn't need to retrobate.
I prefer Jas. Every once in a while he says something truly insightful.
There was an article in the NYTs today about Indians from a certain caste who were continuing and expanding that caste's success as a mercantile caste.
Twasn't I that said it.
Daughter went to India a couple of yrs ago, and said everything was very dirty and messy in the public sphere. Garbage haulers are lowest caste. So nobody wants to solve mess and garbage problem because they would be looked down upon. (my take)
Anonymous writes:
"I went to the Popeye school of ethics."
If you went to the Broward Horne school, you wouldn't need to retrobate.
However, had you attended `Popeye' U.... you would understand that ..... math works
jeez, folks get their panties in a bunch around here when the market rallies. cranky bears need to appreciate a good set-up when they see it.
Popeye writes:
Mock ... I am a trader. I have examined the equities as well as the futures.
...one accepts one's place or pretends.....Personally, I'm a realist.
5:13 pm
personally, im stupid, im a pretender, and a legend in my own mind...ive made the same mistakes in life over and and only learn after repeated failures
my strong point is that i know that i'm at least 50% full of shit... at least half the time.
The hub was honest. His boss was honest. Janet Reno was honest. Liz ducks huge brickbats.
The hub could have and did and does make more money in science. He took a big pay cut to go into prosecuting. Quit because he couldn't stand judges. Also juries too illogical.
He thought he could make a difference. I was dubious at this, but he wanted to try out his law degree.
i wrote the im stupid entry above 710
Did youse guys chase all the gurlz away???
lawyerliz(Excellent) writes:
I prefer Jas. Every once in a while he says something truly insightful.
I have to disagree. Popeye is a jerk, and that's fine, this is a forum for bankers and economists -- buccaneers and pirate fanciers.
Jas really makes me insane because he totally avoids positive policy perscriptions. As he said to me one morning, "MY JOB IS TO WARN ABOUT THINGS THAT HAVE ALREADY HAPPENED".
I find this kinda like an airbag that activates 30 seconds after impact. I appreciate his insight, but it's mostly self-evident.
One cannot respond to anonymous pretenders.
I'm on the sidelines because the mkt really doesn't make sense to me. I think that is because it doesn't make sense at all.
So it is just gambling, and I'm no good at that either.
one final thought Popeye
may i suggest that at your convenience, you tap into some humility
experience teaches failure to do so at some commodious time results in the lesson being thrust upon us when we can least afford it
Thanks for the rating Byz.
Actually it does take a while for what happened to sink in.
Please feed the troll. Preferably spinach.
Yeah, that awful olive green canned stuff. That's what the cartoon P ate, right?
As an outsider, I have to say that Jas is an insufferable prick, though I have appreciated some of his insights. I don't think he knows how to interact with human beings.
mock turtle writes:
one final thought Popeye
may i suggest that at your convenience, you tap into some humility
Mock - you hold my respect as an intelligent person - it is not my place to instruct.
On the other hand, my real life job is to cause someone else's dollars to appear in my pocket.
Mock - please be sure to send me an e-mail when fairness and/or justice becomes an issue. Promise ??
lawyerliz(Excellent) writes:
Actually it does take a while for what happened to sink in.
To your mom or the market?
I hope your mom gets better. Bone injuries suck with advanced age. I made sure to harangue Pavel to pray for ya. =)
Lawyerliz: Did your hub work with Reno? My hub knew her well. He worked for the Miami Herald when she was a prosecutor.
You'd be cranky too if your hemorrhoids were on fire.
jeff(Unrated) writes:
As an outsider, I have to say that Jas is an insufferable prick, though I have appreciated some of his insights.
I have always carried the weird impression he was probably very affable and polite in person and that he just sucks at socializing online.
Comrade Byzantine: My take, too. He's an engineer, right?
Liz,Glad to hear your Mom is recovering well.as far as selling her home,managing a property from a distance is not a good idea. You may as well get what you can for it and I am sure someone here can advise you on the best Beanie Babies to invest in...
Popeye writes:
You'd be cranky too if your hemorrhoids were on fire.
Popeye | 01.02.09 - 7:27 pm | #
The honest Popeye did not write the above. Mock, you are an honest person. I am honest as well. When the dust settles, we can exchange thoughts.
"I have always carried the weird impression he was probably very affable and polite in person and that he just sucks at socializing online."
I agree. He's posted the occasional anecdote about having people over -- grilling T-bones for the ex-Marine, giving a German couple advice about relocating to Tehachapi -- that supports your impression. It is just the incessant born-and-bred thing with no prescriptive advice that drives me nuts. I mean, for example, most of the market bears here mention specific ticker symbols of positions they are short or ETF-inverse; what exactly does Jas propose we do to combat the crooks and evil-doers in Gangistan?
Liz - if your mom (bless her) is looking for a place to put her money, you might try explaining to her the many wonderful investment opportunities to be had at Hoopajoops LTD, if you think her ribs can handle it.
sandito writes:
Popeye,
Wow. How old are you?
If you lived through "this" before as a prosecutor you must have been at least in your 20s then.
Are you over 100 now?
sandito | 01.02.09 - 4:20 pm | #
lol, I was thinking the same thing.
lawyerliz writes:
"The hub was honest. His boss was honest... He took a big pay cut to go into prosecuting."
My compliments.
Yep, he worked with Reno. I was at her house once for a Halloween party. Built by her parents with their own hands. Withstood hurricane Andrew.
Also very dirty.
Good party.
She is terrifyingly inteligent. Smarter, I would say, than the big deal profs at JHU. (Grad school, not med school.)
Y'alls best wishes are appreciated.
She is getting her appetite back.
Ok, Pavel how much praying did you do???
"I'm on the sidelines because the mkt really doesn't make sense to me."
Me, too. Every now and then I get restless (like buying treasuries about 3 weeks ago, having a nice run-up and being too stupid to cash in the chips in time) and when I get restless I get clobbered. If it was random I could adjust - but it is each and every time. that's why I like to come to this blog - for fresh reassurance that the sidelines are a wise place to be.
wally - your stock may not be rising anywhere else, but it is on this blog, at least with me. Your humility is refreshing.
Above Is me -
lawyerliz,
Re: Halloween party
Did Reno go as herself?
<a href="http://www.youtube.com/watch?v=9FPv2toi5og>scroll to 2:10 =)
"Ok, Pavel how much praying did you do???"
Prayer isn't measured by volume, or weight of words, or flow, or duration. If it's measured by any thing it's by need and humility.
I'm glad she's OK. I have my own experiences, as do many other people. They have no place here.
Hahahaha, mouse.