Does this mean that any credit tightening we're seeing now is the result of lower available funds for loaning versus bank hoarding that we saw last Fall?
Easily. 1) Governments have crowded out private lending, and 2) Governments have created a vaccume by lending internally and not externally. So lending is not taking place (as much) between governments. In fact, the spread should widen significantly. Should.
Its' trading. It's just stuck at just above $1. Not sure if it's being propped up to just over $1 to prevent something from being triggered.
I bought 500 shares on Friday. I know Citi would die on it's own, but for $500, I'm willing to bet the common shareholders never get wiped out. The gov't won't take them over and I would guess if someone from the private sector were to take them over, probably with some secret gov't assurances, they would pay more than $1.
Credit is tightening for Buffett so he thinkgs that means it must be for everyone else. The fear is that BRK will lose its AAA based on its bad derivative bets and severely wounded investment portfolio.
Fungible. Learn what fungible means. TARP gave banks money to improve their capital positions so they wouldn't be BK'd, and go into receivorship. You were told this was to lend and get the engine of growth back to growing blah blah blah. Tarp pumps enough blood into the bleeding bank to make it to next week, next month. Some banks cannot lend. Cannot.
Does this mean that any credit tightening we're seeing now is the result of lower available funds for loaning versus bank hoarding that we saw last Fall?
Most of CR's indicators are spreads, and so theoretically shouldn't be affected by funding availability. They are supposed indicate banks' expectation of bankruptcy rates for moderately shaky companies.
I think the world has picked up on whats going down and realize there will be a lot more damage even as things get better bankruptcies will continue. My guess is this thing goes back up. Buffet might be looking at different data too(?).....
Just curious, but what are the "regulatory capital requirements" for most US banks? I keep hearing that big banks won't lend because their capital ratio is too low - they have too little capital compared to their assets. And, of course, much of their asset base is junk.
It's no wonder Americans feel they don't know what's going on...the country's economic leaders are hiding a lot of what they are actually doing. When the Fed rejects FOIA requests, there's something seriously wrong.
Market is down almost 60% with another potential 20-30% to go, so I don't think the market ought to be the criteria to take down some banks or not. It will go down regardless. The point is that some banks need to be shuttered, chopped up, and the good pieces redistributed to the private market. Bank holiday is likely necessary to realize the extent of the losses, reorganize into a going-concern. The market will recover in time, and by recover that might mean DOW 8000 for some time.
Shouting “Off with their heads!” and “Heads on a stick!” over 15,000 people from all over California descended on downtown Fullerton for the Revolt, Recall, Repeal rally to protest over $50 billion in tax increases in the state of California and to begin a recall effort against the governor and many state legislators. Freeway off ramps heading into Fullerton had to be shut down because so many people were heading to the event and police services were stretched thin, according to a sergeant handling traffic duty at the event.
If I were driving there I'd plow through those ideological losers. Talk about time warp idiots. They could have fired the entire California workforce and still wouldn't be able to balance the budget.
It's time for California to write a new constitution and get rid of the ridiculous referendum process that requires both high spending AND low taxes.
Those 15K people need to protest the way their state government is organized, the way districts are carved up to guarentee one party or the other never has to fight for a district, and where the legislature is completely dysfunctional. In this case, it's not the people, it's the system. Change the system, then see if the people function effectively.
I'm really glad I did the illogical thing and went into Electrical Engineering right now
as for Buffet, everyone's entitled to their opinion however I would say that too many people were caught loyally following the 'brand' without questioning the logic
...thru all the complaints, concerns, and diatribes, very little angst has been directed towards US tax money going into AIG and out the back door to foreign banks. THAT in itself should be stopped.
FDIC dosen't have the money or the staff to close larger banks. They seem to be either gaining experience or just going through the motions on smaller banks because they are fearfull of causing a run on deposits in larger bank. I know of one 1.8 bill bank that has been a zombie bank for 6 months. They can not find a buyer and the FDIC seems unwilling or unable to shut them down. Very little of anything is happening this bank. Texas ratio is above 100. I think that there are lots of banks in America like this. Community banks with large commercial real estate portfolios whoose community's are suffering with the pullback in sonsumer spending.
also, good topic for discussion
- Quantitative Easing in Britain, results to date
- trend to cut wages before layoffs this time around
- OPEC cuts, 13% or ~2-3% of global production. Will it be enough to close the demand gap, what about non-OPEC production stopping because of the low price. tangentially related, the USO related contango fading away
Shouldnt the recession be stressing all weak, poorly-positioned, and over-leveraged firms and households? If so, then the creditworthiness of the loan applicant pool should be down for all forms of credit, on average.
But technically, this wouldnt mean credit "is tightening" so much as it means that potential corporate and household dead-beats are growing exponentially in numbers, right?
While this may be the "controlled" failure mode credit contractions are not only inevitable at this point, but they are also self sustaining once started.
Short of a "miracle bubble" ( which only delays the pain ) we are headed down for a while.
"Shouting “Off with their heads!” and “Heads on a stick!” over 15,000 people from all over California descended on downtown Fullerton for the Revolt, Recall, Repeal rally to protest over $50 billion in tax increases in the state of California and to begin a recall effort against the governor and many state legislators. Freeway off ramps heading into Fullerton had to be shut down because so many people were heading to the event and police services were stretched thin, according to a sergeant handling traffic duty at the event."
and so it begins, the fall of new babylon...
"with a one way ticket to the promised land,
a hole in your belly and a gun in your hand."
California is a mess. Taxes need to go up or spending needs to go down. Their people can't accept the change and their politicians can't implement the change.
I suspect the national guard will be called in to quell the masses sooner or later.
....I'm thinking most Americans are too lazy to protest or riot for that matter. Their TVs/'puters are too far removed from the picket line and their stomachs aren't empty enough yet.
Agree. Real protest is not symbolic, it's very much grounded in life or death, not abstract life or death. Take away the ability to work, to eat, to maintain shelter, and then we'll talk about civil unrest. You need a 100million people each fighting for the same loaf of bread.
I posted more pages to my CR inspired story of doom, gloom, and general bad vibrations. American Apocalypse
excerpt:
I rolled down my window as did Max. I could hear faintly, from the house, a radio playing country music. Far off in the distance I could hear automatic weapon fire. It was coming in short staccato riffs. Max smiled at the guard “Hey, what’s up. Got a delivery here for Thermopylae Incorporated. This the right place?”
"Shouting “Off with their heads!” and “Heads on a stick!” over 15,000 people from all over California descended on downtown Fullerton for the Revolt, Recall, Repeal rally."
The ocregister put the number at 8,000 and they were not from all over California, just Orange County. John and Ken are just rabble rousers.
although this is true, to my knowledge bank lending was UP in 2008 compared to 2007.
the issue is that we're not getting good "bang" for our buck. Our fearless leaders were hoping to cash in on the benefits of fractional reserve lending. Give the banks $750b, and it'll turn into $7.5 Trillion...
but the banks are filling their holes and using the money to acquire other banks and give bonuses... Thus the $750B led to only miniscule increase in lending.
that said: I do believe lending was UP. just not "enough" (to please them).
I'm happy to be proven wrong... perhaps overall lending IS down since this latest downturn?
This is an absolutely great point. St. Louis fed shows lending did increase in '08. There a few points on this matter that are unresolved. First, did lending in fact increase? Possible. It may explain that even with over-capacity already evident, banks goosed by the fed lended even more to create even more severe over-capacity/over-production. Second, anecdotally, some banks were not lending, not resetting revolving lines of credit, or simply cutting what was in place. How to marry the data from fed to anecdotal data? Not sure. It is possible that a lot of this lending was even more non-productive (over-capacity), or was lending between banks (?) not C&D/CRE type loans. In any case, I think either possibility is rather freakish. Either the banks lent even more money in the midst of a capacity glut and therefore will incur greater losses, or the figures reported are without truth, manipulated, or reflect another reality (banks "lending" in the spirit, but not the fact).
@Black Star Ranch "....I'm thinking most Americans are too lazy to protest or riot for that matter. Their TVs/'puters are too far removed from the picket line and their stomachs aren't empty enough yet."
Don't worry, they have their iPhones to keep up with the email while they protest. ( and I wish I were kidding )
OT: Enouth with the earmarks, No, not the actual earmarks, but the political grandstanding about them. They are about as relevant to the overall federal budget and the economy as “white bimbo in distress” is to real important news. However, the fight over them is more than a distraction and is holding up important work. The fiscal year for 2009 started on October 1st, and the budget appropriations for nine departments have not been passed yet. Last week the Senate held up a $410 billion Omnibus spending package to fund those departments because of a grand total of $7.7 billion in earmarks. Most of the individual earmarks are very small, that $7.7 billion is the total for over 8,500 projects. Still, that’s less than 2% of the whole package folks. Tomorrow the Senate will try again to overcome the filibuster.
However, not all earmarks are waste, indeed not even a majority of them. Senators have a right to get up on the floor and talk about anything, but mostly in this fight they simply choose to criticize things that sound funny.
A million bucks or so for “pig odor research” is not about finding an underarm deodorant for Porky Pig (or Rush Limbaugh). A commercial factory pig farm can create as much waste as a major city (but unlike a municipality, it does not have to be treated), that can create a mighty powerful stench. Perhaps some research on how to control it, and maybe even capture the methane it creates, is a good idea. I’m sure the people who live nearby would welcome it. U.S. senators should be statesmen, not be doing imitations of Bevis and Butthead. Keep in mind that each of these projects represents domestic spending that will help employ people at a time when unemployment is skyrocketing. The bigger issue is that nearly half-way through the budget year, nine cabinet departments are still being run on the basis of stopgap continuing resolutions.
Yes, over the long term, the high rate of spending and the associated deficits are a problem, but not now. The proper criticism of the stimulus program is not that it went overboard, but that it is too small given the problems this economy faces. Additional spending will be needed. A Continuing Resolution is effectively a spending freeze. This is economic insanity at a time when the economy is spiraling downward. It is as if the ghost of Andrew Mellon were making economic policy. I do think the recently passed stimulus package will create or save the 3.5 million jobs advertised. However, in the last four months, the economy has lost 2.6 million jobs, and we currently have 12.5 million unemployed in the country. That does not even count the under-employed.
We have plenty of supply, but are lacking in demand. In these circumstances, the government must be the spender of last resort, even if it is spending to keep down the stench of pig farms.
Your point is mostly irrelevant to reality, as earmarks create such large bills that the people voting on them don't actually read them, and the people summarizing them for the people voting on them don't actually read them either.
Is this a system you want?
If pig odor research is necessary, then the person who wants it should write a bill for that and nothing else, introduce it for discussion, and have it voted on. Our politicians are paid enough to actually work for it, and actually read what they are voting on.
BlackStarRanch>>FUB, What/Why/How can this be justified, and I've read what AIG is telling the Admistration and The Treasury, Gawg, when is this gonna stop. This is kinda like a teenager telling parent if you don't give me the car keys I'll never ride with you again. It's time someone plays adult and pulls the damn pacifier.
Why doesn't this cheap son of bitch die already? Seriously, these moneyed interest bastards libe forever. How come something similar to Aids doesn't afflict them? I'm sick of this bastard's opinions. He can go to hell, for all I care. While people are looking for their lost shakers of salt, this guy talsk of recoveries, as if anyone knows what will happen next.
"Them motherfuckers got a lunchbox cold cut white bread sandwich they're muchin' Them people got lunch, but I got luncheon! I want a little luncheon. Some people got a lunch break, but I got all day, they be suckin on a milkshake while I'm sippin on a chardonay."
Ok, last try:<br/>The regulatory capital requirements were set at Basel II. The developed nations agreed to a capital framework as follows:<br/>Minimum adequate capitalization consists of a Tier 1 ratio of 4% and a Tier 1/2 ratio of 8% and a leverage ratio of 4%.<br/>Tier 1 capital is equity and disclosed reserves. Equity only includes preferred shares if they are irredeemable and non-cumulative.
Continued<br/>Tier 2 capital is undisclosed reserves, revaluation reserves, "general provisions" (estimated losses for which a reserve is made), hybrid instruments (primarily preferred stock that isn't in Tier 1), and subordinated term debt (anything below the level of depositors).<br/>The ratios are calculated with a divisor of "Risk-weighted assets." Risk-weighted assets are all of the assets held by the bank. The weighting is accor
I think you guys are missing the point on tax rally in fullerton. Orange County is hidden behind a wall of republicans and goldilockers. I would say it's quite amazing to see a turnout like that in OC.
Unrest will amplify with the summer heat...
I find it positive that people are coming out of the woodworks..
July 4th million man rally in DC would be an attention grabber...
sorry. don't think so. Fullerton has always been a pocket behind the orange curtain of very liberal young people. The place that launched Offspring, etc...I don't buy it as any kind of barometer, just like any other college town (CSF).
Dirk: Agree on all fronts. And does it strike you as more than coincidence that opponents of earmarks always select those involving science to rail against? Morons.
"Latvia will be bankrupt by June if it fails to make budget cuts required by the International Monetary Fund (IMF) and does not receive the next installment of its loan, Bloomberg reported March 9. Latvia received a 7.5 billion euros ($9.5 billion) loan from the IMF after its economy shrank by 10.5 percent. Latvian Prime Minister-designate Valdis Dombrovskis has asked the IMF to approve a deficit of 8 percent of GDP instead of the 5 percent agreed to under IMF loan conditions."
Looks like Obama threw Volcker under the bus and that Volcker gave his farewell speech a couple of weeks ago when he said he despised financial engineers and said we needed more of the engineers who make real things. I thought Obama was a fake when he named the financial engineers Rubin, Sommers, and later Geithner to his team after originally pegging Volcker. Rubin and Summers were in Clinton's cabinet as treasury secretaries when Glass-Steagall was eventually repealed, and they laid the groundwork for China to enter the WTO. Then soon thereafter, Bush used China to fund his war in Iraq when he cut taxes. Clinton, Obama, and Bush all work for the same boss and it isn't the American people. So, we will borrow money from China to build roads and bridges and then sell them to China for toll use.
Pavel says:
Today, 12:42:11 PM "Latvia will be bankrupt by June if it fails to make budget cuts required by the International Monetary Fund (IMF) and does not receive the next installment of its loan, Bloomberg reported March 9.
Yes indeed, the next phase of the crisis unwinds, largely unaddressed, as we decide if we want to dress the zombie banks up in formal or casual clothes for their media debut.
"We have plenty of supply, but are lacking in demand. In these circumstances, the government must be the spender of last resort, even if it is spending to keep down the stench of pig farms."
I think Dirk has it right. Cheap ridicule is unaffordable now.
Is the U.S. Mint's production problem long-term or short-term?
What will be the effect on gold coin prices?
In 1999, at the height of the Y2K crisis and under the strain of record gold demand, the U.S. Mint produced 2,055,000 1-ounce gold American eagles.
In 2008, with the world embroiled in an unprecedented economic crisis and once again under the strain of record gold demand, the U.S. Mint produced only 710,000 1-ounce American eagles and 189,500 1-ounce American gold buffaloes -- just under half its 1999 production.
A "smoking gun" connecting Bush to the current disasters seems to be lacking. He appointed a bunch of "regulators" that looked the other way, but I haven't seen compelling evidence that cronies benefitted directly. My impression is that some big Iraq money did go to crony contractors.
"Yes indeed, the next phase of the crisis unwinds, largely unaddressed, as we decide if we want to dress the zombie banks up in formal or casual clothes for their media debut."
BR:
The next departure of the crisis might well be geopolitical. Estonia and Latvia are NATO members, for example. Russia is just across the frontier. Extrapolate across the globe. When the president of the WB issues the kind of warning he just issued, I would take it extremely seriously.
\t
Pavel says:
Today, 12:47:05 PM “"We have plenty of supply, but are lacking in demand. In these circumstances, the government must be the spender of last resort, even if it is spending to keep down the stench of pig farms."
I think Dirk has it right. Cheap ridicule is unaffordable now.
\t
So what if that is the wrong choice and you are essentially bullying your way past the discussion phase by saying, it is too urgent, we cannot afford to point fingers or dither.
Dirque's argument is essentially, "the bubble was REALLY BIG so we HAVE TO blow into it to keep it inflated."
And when we find out that pissing in the ocean doesn't keep back the tide... and we will admit it after the time for alternatives is long past... what will you say then? "Don't hit me, I meant well?"
37A.12\t‘O see not ye yon narrow road,
\tSo thick beset wi thorns and briers?
\tThat is the path of righteousness,
\tTho after it but few enquires.
37A.13\t‘And see not ye that braid braid road,
\tThat lies across yon lillie leven?
\tThat is the path of wickedness,
\tTho some call it the road to heaven.
The Treasuries market, Pavel. You're gonna be sad when you don't have it any more. Don't come crying to me when you break it.
What I'm trying to say is that this is neither just a US crisis, or even only an economic crisis. These are, perhaps, birth pangs, but who knows what is straining to be born?
I'd say we are beginning to transition from systemic financial collapse to political collapse. Or you can use the word "transition" a more neutral way of saying "dying"...Don't get me wrong, I'm not happy about this kind of death. Furious in fact. I do not prefer it. I'd like us to stem the financial collapse part, so it's just a catastrophe, the kind you manage to remember.
Blackhat, Having grown up down the road and looking at the pictures on some sites, It seems decidely older than college kids..The offspring were from HB
"The Treasuries market, Pavel. You're gonna be sad when you don't have it any more. Don't come crying to me when you break it."
I'm as helpless here as the next person, and there are lots of us standing shoulder to shoulder. I've shed tears over the past few days, but they're shed over a personal matter.
HER FUNNY FRIEND
O Lady, beasts of grief
Assault with claws of guilt
They tear my flesh away
How will I pray?
It’s dancing that I choose
She smiles – she is amused
All will be well, she says
As I can tell
You need not hold your grief
The time of it is brief
It is the prayer of joy
That love enjoys
And as for death and sorrow
It will return tomorrow
But only for a while
Sweet Jesus was a child
And I remember too
His prattle, He was two
And O the sorrow then –
Dance, my funny friend
Anonymous sed: [Re: Fullerton, California Rally] The ocregister put the number at 8,000 and they were not from all over California, just Orange County. John and Ken are just rabble rousers.
Nice to see Homeland Security busy on the blogs dispensing RightThink.
Pavel says:
Today, 12:56:22 PM “What I'm trying to say is that this is neither just a US crisis, or even only an economic crisis.
It is entirely political in origins, and it is something we have to confront. The ideologies and practices of our era are worn out. Every practiced alternative participated in this failure.
Really, it's all notional, and most of the people who are going to die, god bless their souls, will die mostly due to distributional reasons. But, the people who made the problem, no I do not think they will suddenly get wise and make the solution. They will make more problem and brand it a solution instead.
These are, perhaps, birth pangs, but who knows what is straining to be born?
A political-economic milieu that works. Some downsizing may occur.
Either the banks lent even more money in the midst of a capacity glut and therefore will incur greater losses, or the figures reported are without truth, manipulated, or reflect another reality (banks "lending" in the spirit, but not the fact).
agreed. but "they" feel there's no other way. gotta keep the banks lending. we've booby trapped ourselves for the future however.
the banks STILL have lent long and borrowed short... since the rates the banks are borrowing at today are VERY VERY low. It is impossible to keep bank lending sources this cheap forever. (it's being subsidized by the Fed/Taxpayer). At some time the govt will have to let rates rise again (or at least go to "market rate" which will almost assuredly be higher than the manipulated rate). when they do, we face a new headwind again whenever interest rates start to rise again.
it is quite the problem.
the only way that the current plan could possibly "work" (I use this term very loosely) would be to allow the banks to lend long and borrow short, and use tons of taxpayer money to beef up their balance sheets (allowing banks to lower their borrowing costs and increase spreads on loans) Then over time have monetary inflation WITH wage inflation. This is difficult given global wage arbitrage.
Thus, it could ONLY work if this is step 1 of a mastermind plan.
Step 2 would be coordinated global currency devaluation, which could allow nominal wage increases across the globe.
Then after some time (years/decades) they could float the interest rates up, but the banks would have been "saved" through the massive tax subsidy over the years.
The problem: I don't know that there's enough time OR money to do this. Or political willpower.
also: Gold and commodity inflation would be a tell... and also could cause food disruption or other problems. thus we may need "controls" on those.
and all that's assuming there's some "mastermind" plan. More likely, they're just buying time trying to figure things out.
in which case we have crash #2 once interest rates start to rise.
I'd say we are beginning to transition from systemic financial collapse to political collapse. "
Yes, but to use a physical analogy, when an atom gives up some of its energy by emitting a photon, the energy state of the atom collapses into a new state. The atom is changed, but it is not destroyed.
I haven't gone over the the dark side, but there is a great potential in the present system to attain a new state of being. In the words of a Russian writer named Nabokov [paraphrasing slightly], one is forbidden to ransack the future (in the sense of acquiring knowledge of its form). But one can sense the potential for a new form. The system is emitting energy - financial, economic, even emotional in terms of fear and apprehension. If this continues it must assume a new state of being. Who can tell what that will be, and yet the probability is at least there for more stringent kinds of social control, etc.
Pavel says:
Today, 9:56:22 AM
“What I'm trying to say is that this is neither just a US crisis, or even only an economic crisis. These are, perhaps, birth pangs, but who knows what is straining to be born?
So you think these guys are trying to bring about a Constitutional Republic with sound money, and rule of law for all equally?
"India has successfully tested its third Ballistic Missile Interceptor (BMI), KUNA reported March 9. The test was conducted on March 6, but not shared with the media until March 9. The two-stage interceptor missile will be placed in “hot stand-by mode,” and will automatically be triggered in the event of an enemy missile launch, according to Chief Controller of Indian Missile Strategic Systems Dr. V.K. Saraswat."
Blackhat,
la mirada...lots of friends and all the family still down in OC area..not saying that some of the CSF wasnt there but it looked like older crowd..
US was given a prime location for their pavilion, but can't raise the money. So China to save face will spend $60-80mn to build it on their own
"I'm sorry to say it is just unbelievable that the richest country in the world would decide to ignore the Expo," said Shen Dingli, the head of the Centre of American Studies at Shanghai's Fudan University.
Yet if you go to their website, they wrote 2 stories to counter that fresh article Expo 2010 Shanghai China
• No major Expo woes seen from downturn
The global financial crisis will have only limited effects on the 2010 Shanghai World Expo, top officials said yesterday in the capital.
• Political advisor: Expo to help China, world overcome crisis
You read that correctly, not only will the 2010 expo be gloriously successful, it will alone end the global depression
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I'd say we are beginning to transition from systemic financial collapse to political collapse. "
Yes, but to use a physical analogy, when an atom gives up some of its energy by emitting a photon, the energy state of the atom collapses into a new state. The atom is changed, but it is not destroyed.
I haven't gone over the the dark side, but there is a great potential in the present system to attain a new state of being. In the words of a Russian writer named Nabokov [paraphrasing slightly], one is forbidden to ransack the future (in the sense of acquiring knowledge of its form). But one can sense the potential for a new form. The system is emitting energy - financial, economic, even emotional in terms of fear and apprehension. If this continues it must assume a new state of being. Who can tell what that will be, and yet the probability is at least there for more stringent kinds of social control, etc.
You can make sort of an evolutionary analogy - the things we've learned about economics and business practices can't really be applied to the economy in it's current state - there's too much inefficiency and accidental complexity built up in the system based on bad ideas or special interest lobbying. The nature of the political system does not allow any kind of spending cuts or economic retrenchment to occur, so it takes some kind of outside force (like systemic collapse, war, natural disaster) to "purge the rottenness" and clean out all the wasteful and toxic economic structure. Then new ideas that have been codified in sort of an economic DNA can be applied if the cultural and intellectual environment is still left in tact in the aftermath - admittedly this a big if, which is why it's best to avoid these things to begin with. Alas our policy of spending to avoid recessions has depleted our savings and credibility, and filled our economy with the toxic waste of bad enterprises and bad business practices.
What you describe reminds me of what happens when a pile of construction metal (I beams, etc.) is dropped; crap goes everywhere, and when you try to pull one piece out, you run the risk of having the pile collapse further, endangering anyone working near it.
That happens with a stack of aluminum where I once worked, and there was a fellow trapped in it. It was very scary getting him out, but he only lost a lot of blood, but no appendages. Really lucky.
"according to a newly released Monday memo by Rep. Dennis Kucinich (D-OH), chairman of the House Domestic Policy Subcommittee...
Citigroup Inc, which received $50 billion in Troubled Asset Relief Program funds, made an $8 billion December loan, not to an American entity, but to a Dubai public sector company,
The Goldman Sachs Group, which received $10 billion in TARP funds at the end of October, saw fit to spend $2 billion earlier in the year on the repurchase of company stock, which resulted in an increase in company share price.
The memo notes of that stock repurchase, “That increase would have constituted a significant benefit to top executives at Goldman Sachs, who typically own large amounts of company stock.”
In mid- November, Bank of America spent $7 billion investing in the China Construction Bank Corporation. Bank of America received $25 billion in TARP funds.
J.P. Morgan Treasury Services spent $1 billion investing in cash management and trade finacie solutions in India also in November. J.P Morgan Chase & Co. received $25 billion in TARP funds.
Rep. Kucinich’s office released the memo from the Subcomittee’s Democratic staff ahead of Wednesday’s hearing that will investigate Treasury Department attempts to prevent waste and abuse in the TARP program."
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We should see this tightening continue, especially when foreign creditors continue to redirect spending inward, instead of outward.
--bh
Does this mean that any credit tightening we're seeing now is the result of lower available funds for loaning versus bank hoarding that we saw last Fall?
how could credit conditions continue to tighten?
The Government has borrowed from the future to pay for everything right now!
Easily. 1) Governments have crowded out private lending, and 2) Governments have created a vaccume by lending internally and not externally. So lending is not taking place (as much) between governments. In fact, the spread should widen significantly. Should.
--bh
Is Citi not trading today?
(I was comatose all weekend)
Its' trading. It's just stuck at just above $1. Not sure if it's being propped up to just over $1 to prevent something from being triggered.
I bought 500 shares on Friday. I know Citi would die on it's own, but for $500, I'm willing to bet the common shareholders never get wiped out. The gov't won't take them over and I would guess if someone from the private sector were to take them over, probably with some secret gov't assurances, they would pay more than $1.
I still think at least one bank will be slaughtered while the other banks watch. Citi is one, BofA another.
--bh
Credit is tightening for Buffett so he thinkgs that means it must be for everyone else. The fear is that BRK will lose its AAA based on its bad derivative bets and severely wounded investment portfolio.
"Your Daily Obama" Now on CNBC!
Is he using a teleprompter?
Easily. 1) Governments have crowded out private lending
SO the TARP etc. didn't actually give money to the banks to lend?
Fungible. Learn what fungible means. TARP gave banks money to improve their capital positions so they wouldn't be BK'd, and go into receivorship. You were told this was to lend and get the engine of growth back to growing blah blah blah. Tarp pumps enough blood into the bleeding bank to make it to next week, next month. Some banks cannot lend. Cannot.
--bh
Obama's on the teevee. It is now safe to SELL.
I like ICE as a pure bull play...short term 70
Auto sector credit is still tight, buyers if any in control, low credit app volume with upper midwest-Texas the shining light in our dealer base
ades says:Today, 11:48:09 AM EDT
Is Citi not trading today?
Last: 1.04 high 1.07 low 0.99 vol 137,098,052
Thanks. I should have looked at the volume. Instead I just hit refresh a couple times and figured that was good evidence! Duhhooo....
thank you Blackhat..I didn't know that!
Does this mean that any credit tightening we're seeing now is the result of lower available funds for loaning versus bank hoarding that we saw last Fall?
Most of CR's indicators are spreads, and so theoretically shouldn't be affected by funding availability. They are supposed indicate banks' expectation of bankruptcy rates for moderately shaky companies.
I think the world has picked up on whats going down and realize there will be a lot more damage even as things get better bankruptcies will continue. My guess is this thing goes back up. Buffet might be looking at different data too(?).....
2) Governments have created a vaccume by lending internally and not externally. So lending is not taking place (as much) between governments.
Can you elaborate further on this?
TIA
SO the TARP etc. didn't actually give money to the banks to lend?
If the idiots like BF (Barney Frank)wanted them to lend he would have pushed writing it into the bill. His rants are for the sheeple. =-O
Just curious, but what are the "regulatory capital requirements" for most US banks? I keep hearing that big banks won't lend because their capital ratio is too low - they have too little capital compared to their assets. And, of course, much of their asset base is junk.
So what is the legal requirement for banks?
It's no wonder Americans feel they don't know what's going on...the country's economic leaders are hiding a lot of what they are actually doing. When the Fed rejects FOIA requests, there's something seriously wrong.
If one BIG bank gets killed..does the stock market also die with it?
Market is down almost 60% with another potential 20-30% to go, so I don't think the market ought to be the criteria to take down some banks or not. It will go down regardless. The point is that some banks need to be shuttered, chopped up, and the good pieces redistributed to the private market. Bank holiday is likely necessary to realize the extent of the losses, reorganize into a going-concern. The market will recover in time, and by recover that might mean DOW 8000 for some time.
--bh
Could someone tell me what critera the FDIC is using in closing small banks, and is there anyone beside me that smells anything other than cake.
Two things:
LOL! I guess thats three
Look at CDS spread values as published by S&P in their CDS index. The numbers are worse than those seen last fall.
Yes, if only credit condition improve then we can go back to the successful model of overbuilding and overinvesting...
another drink just really will not help this time...we've already got a splitting headache and need to get up early to go to work...
Don't forget liver failure.
Has Allen C been around after his bull market theory call a couple weeks ago....I hope he didn't take a bath..He made a great bear!
Shouting “Off with their heads!” and “Heads on a stick!” over 15,000 people from all over California descended on downtown Fullerton for the Revolt, Recall, Repeal rally to protest over $50 billion in tax increases in the state of California and to begin a recall effort against the governor and many state legislators. Freeway off ramps heading into Fullerton had to be shut down because so many people were heading to the event and police services were stretched thin, according to a sergeant handling traffic duty at the event.
Financial Armageddon
If I were driving there I'd plow through those ideological losers. Talk about time warp idiots. They could have fired the entire California workforce and still wouldn't be able to balance the budget.
It's time for California to write a new constitution and get rid of the ridiculous referendum process that requires both high spending AND low taxes.
Those 15K people need to protest the way their state government is organized, the way districts are carved up to guarentee one party or the other never has to fight for a district, and where the legislature is completely dysfunctional. In this case, it's not the people, it's the system. Change the system, then see if the people function effectively.
--bh
another drink just really will not help this time...we've already got a splitting headache and need to get up early to go to work...
Nice to know someone still has a job!
Fear no more, the Masters Of The Universe have a plan for 2009; here's Sarkozy giving his support:
YouTube - Vade Retro Nicolas - english subtitles
Any idea of timing of the BANK HOLIDAY?
I'm really glad I did the illogical thing and went into Electrical Engineering right now
as for Buffet, everyone's entitled to their opinion however I would say that too many people were caught loyally following the 'brand' without questioning the logic
We are seeing ICU-stabilized figures for most major indicators. The economy is brain-dead but the machines say the patient is technically alive.
...thru all the complaints, concerns, and diatribes, very little angst has been directed towards US tax money going into AIG and out the back door to foreign banks. THAT in itself should be stopped.
FDIC dosen't have the money or the staff to close larger banks. They seem to be either gaining experience or just going through the motions on smaller banks because they are fearfull of causing a run on deposits in larger bank. I know of one 1.8 bill bank that has been a zombie bank for 6 months. They can not find a buyer and the FDIC seems unwilling or unable to shut them down. Very little of anything is happening this bank. Texas ratio is above 100. I think that there are lots of banks in America like this. Community banks with large commercial real estate portfolios whoose community's are suffering with the pullback in sonsumer spending.
--
According to Steve Lies-man the Fed has more powerful things planned for the future than used thus far!
And what were the outcomes of their operations thus far?
Is this country heading for disaster or what?!
Jas
also, good topic for discussion
- Quantitative Easing in Britain, results to date
- trend to cut wages before layoffs this time around
- OPEC cuts, 13% or ~2-3% of global production. Will it be enough to close the demand gap, what about non-OPEC production stopping because of the low price. tangentially related, the USO related contango fading away
Shouldnt the recession be stressing all weak, poorly-positioned, and over-leveraged firms and households? If so, then the creditworthiness of the loan applicant pool should be down for all forms of credit, on average.
But technically, this wouldnt mean credit "is tightening" so much as it means that potential corporate and household dead-beats are growing exponentially in numbers, right?
Just look at how much your various earthly governments will issue new and rollover IOUs this year alone. Those spreads are going to be interesting...
You humans really are dense as....Clouds of Magellan! That kind of stupidity is almost worth of Another Specimen Taking Trip!
While this may be the "controlled" failure mode credit contractions are not only inevitable at this point, but they are also self sustaining once started.
Short of a "miracle bubble" ( which only delays the pain ) we are headed down for a while.
"Shouting “Off with their heads!” and “Heads on a stick!” over 15,000 people from all over California descended on downtown Fullerton for the Revolt, Recall, Repeal rally to protest over $50 billion in tax increases in the state of California and to begin a recall effort against the governor and many state legislators. Freeway off ramps heading into Fullerton had to be shut down because so many people were heading to the event and police services were stretched thin, according to a sergeant handling traffic duty at the event."
and so it begins, the fall of new babylon...
"with a one way ticket to the promised land,
a hole in your belly and a gun in your hand."
BUY now you Fools!!!
The Latest from Mish:
Deflationary Depression Returns To Haunt America
California is a mess. Taxes need to go up or spending needs to go down. Their people can't accept the change and their politicians can't implement the change.
I suspect the national guard will be called in to quell the masses sooner or later.
....I'm thinking most Americans are too lazy to protest or riot for that matter. Their TVs/'puters are too far removed from the picket line and their stomachs aren't empty enough yet.
Agree. Real protest is not symbolic, it's very much grounded in life or death, not abstract life or death. Take away the ability to work, to eat, to maintain shelter, and then we'll talk about civil unrest. You need a 100million people each fighting for the same loaf of bread.
--bh
I posted more pages to my CR inspired story of doom, gloom, and general bad vibrations. American Apocalypse
excerpt:
I rolled down my window as did Max. I could hear faintly, from the house, a radio playing country music. Far off in the distance I could hear automatic weapon fire. It was coming in short staccato riffs. Max smiled at the guard “Hey, what’s up. Got a delivery here for Thermopylae Incorporated. This the right place?”
more at 401 Authorization Required
plus articles and poetry written by other CR posters
"Shouting “Off with their heads!” and “Heads on a stick!” over 15,000 people from all over California descended on downtown Fullerton for the Revolt, Recall, Repeal rally."
The ocregister put the number at 8,000 and they were not from all over California, just Orange County. John and Ken are just rabble rousers.
Only 9 articles on Google News referring to this event. MSM ignoring this intentionally, I think.
Some banks cannot lend. Cannot.
although this is true, to my knowledge bank lending was UP in 2008 compared to 2007.
the issue is that we're not getting good "bang" for our buck. Our fearless leaders were hoping to cash in on the benefits of fractional reserve lending. Give the banks $750b, and it'll turn into $7.5 Trillion...
but the banks are filling their holes and using the money to acquire other banks and give bonuses... Thus the $750B led to only miniscule increase in lending.
that said: I do believe lending was UP. just not "enough" (to please them).
I'm happy to be proven wrong... perhaps overall lending IS down since this latest downturn?
This is an absolutely great point. St. Louis fed shows lending did increase in '08. There a few points on this matter that are unresolved. First, did lending in fact increase? Possible. It may explain that even with over-capacity already evident, banks goosed by the fed lended even more to create even more severe over-capacity/over-production. Second, anecdotally, some banks were not lending, not resetting revolving lines of credit, or simply cutting what was in place. How to marry the data from fed to anecdotal data? Not sure. It is possible that a lot of this lending was even more non-productive (over-capacity), or was lending between banks (?) not C&D/CRE type loans. In any case, I think either possibility is rather freakish. Either the banks lent even more money in the midst of a capacity glut and therefore will incur greater losses, or the figures reported are without truth, manipulated, or reflect another reality (banks "lending" in the spirit, but not the fact).
In any case, it is worth careful consideration.
--bh
The Latest from Mish:
Deflationary Depression Returns To Haunt America
This contains a chart from Jas Jain!
@Black Star Ranch "....I'm thinking most Americans are too lazy to protest or riot for that matter. Their TVs/'puters are too far removed from the picket line and their stomachs aren't empty enough yet."
Don't worry, they have their iPhones to keep up with the email while they protest. ( and I wish I were kidding )
The "John & Ken" Show were about the only things we really missed moving out of that state-asylum.
OT: Enouth with the earmarks, No, not the actual earmarks, but the political grandstanding about them. They are about as relevant to the overall federal budget and the economy as “white bimbo in distress” is to real important news. However, the fight over them is more than a distraction and is holding up important work. The fiscal year for 2009 started on October 1st, and the budget appropriations for nine departments have not been passed yet. Last week the Senate held up a $410 billion Omnibus spending package to fund those departments because of a grand total of $7.7 billion in earmarks. Most of the individual earmarks are very small, that $7.7 billion is the total for over 8,500 projects. Still, that’s less than 2% of the whole package folks. Tomorrow the Senate will try again to overcome the filibuster.
However, not all earmarks are waste, indeed not even a majority of them. Senators have a right to get up on the floor and talk about anything, but mostly in this fight they simply choose to criticize things that sound funny.
A million bucks or so for “pig odor research” is not about finding an underarm deodorant for Porky Pig (or Rush Limbaugh). A commercial factory pig farm can create as much waste as a major city (but unlike a municipality, it does not have to be treated), that can create a mighty powerful stench. Perhaps some research on how to control it, and maybe even capture the methane it creates, is a good idea. I’m sure the people who live nearby would welcome it. U.S. senators should be statesmen, not be doing imitations of Bevis and Butthead. Keep in mind that each of these projects represents domestic spending that will help employ people at a time when unemployment is skyrocketing. The bigger issue is that nearly half-way through the budget year, nine cabinet departments are still being run on the basis of stopgap continuing resolutions.
Yes, over the long term, the high rate of spending and the associated deficits are a problem, but not now. The proper criticism of the stimulus program is not that it went overboard, but that it is too small given the problems this economy faces. Additional spending will be needed. A Continuing Resolution is effectively a spending freeze. This is economic insanity at a time when the economy is spiraling downward. It is as if the ghost of Andrew Mellon were making economic policy. I do think the recently passed stimulus package will create or save the 3.5 million jobs advertised. However, in the last four months, the economy has lost 2.6 million jobs, and we currently have 12.5 million unemployed in the country. That does not even count the under-employed.
We have plenty of supply, but are lacking in demand. In these circumstances, the government must be the spender of last resort, even if it is spending to keep down the stench of pig farms.
Your point is mostly irrelevant to reality, as earmarks create such large bills that the people voting on them don't actually read them, and the people summarizing them for the people voting on them don't actually read them either.
Is this a system you want?
If pig odor research is necessary, then the person who wants it should write a bill for that and nothing else, introduce it for discussion, and have it voted on. Our politicians are paid enough to actually work for it, and actually read what they are voting on.
BlackStarRanch>>FUB, What/Why/How can this be justified, and I've read what AIG is telling the Admistration and The Treasury, Gawg, when is this gonna stop. This is kinda like a teenager telling parent if you don't give me the car keys I'll never ride with you again. It's time someone plays adult and pulls the damn pacifier.
"The ocregister put the number at 8,000 and they were not from all over California, just Orange County. John and Ken are just rabble rousers."
Your public demonstration skills are somewhat... laughable but it is a start! Like you Americans say: First with "BB" and then with "M16", yes?
the mortgage pig ( trademark ) has no odor at all!
Why doesn't this cheap son of bitch die already? Seriously, these moneyed interest bastards libe forever. How come something similar to Aids doesn't afflict them? I'm sick of this bastard's opinions. He can go to hell, for all I care. While people are looking for their lost shakers of salt, this guy talsk of recoveries, as if anyone knows what will happen next.
"Them motherfuckers got a lunchbox cold cut white bread sandwich they're muchin' Them people got lunch, but I got luncheon! I want a little luncheon. Some people got a lunch break, but I got all day, they be suckin on a milkshake while I'm sippin on a chardonay."
Ok, last try:<br/>The regulatory capital requirements were set at Basel II. The developed nations agreed to a capital framework as follows:<br/>Minimum adequate capitalization consists of a Tier 1 ratio of 4% and a Tier 1/2 ratio of 8% and a leverage ratio of 4%.<br/>Tier 1 capital is equity and disclosed reserves. Equity only includes preferred shares if they are irredeemable and non-cumulative.
If Jas says so, it must be true. And tactful.
Continued<br/>Tier 2 capital is undisclosed reserves, revaluation reserves, "general provisions" (estimated losses for which a reserve is made), hybrid instruments (primarily preferred stock that isn't in Tier 1), and subordinated term debt (anything below the level of depositors).<br/>The ratios are calculated with a divisor of "Risk-weighted assets." Risk-weighted assets are all of the assets held by the bank. The weighting is accor
I think you guys are missing the point on tax rally in fullerton. Orange County is hidden behind a wall of republicans and goldilockers. I would say it's quite amazing to see a turnout like that in OC.
Unrest will amplify with the summer heat...
I find it positive that people are coming out of the woodworks..
July 4th million man rally in DC would be an attention grabber...
sorry. don't think so. Fullerton has always been a pocket behind the orange curtain of very liberal young people. The place that launched Offspring, etc...I don't buy it as any kind of barometer, just like any other college town (CSF).
--bh
Long Live JAS! You even featured at MISH!
--
Link please. Thanks.
Jas
--
OK, I found it. Thanks again for alerting me.
Jas,
Deflationary Depression Returns To Haunt America
Dirk: Agree on all fronts. And does it strike you as more than coincidence that opponents of earmarks always select those involving science to rail against? Morons.
"Latvia will be bankrupt by June if it fails to make budget cuts required by the International Monetary Fund (IMF) and does not receive the next installment of its loan, Bloomberg reported March 9. Latvia received a 7.5 billion euros ($9.5 billion) loan from the IMF after its economy shrank by 10.5 percent. Latvian Prime Minister-designate Valdis Dombrovskis has asked the IMF to approve a deficit of 8 percent of GDP instead of the 5 percent agreed to under IMF loan conditions."
Looks like Obama threw Volcker under the bus and that Volcker gave his farewell speech a couple of weeks ago when he said he despised financial engineers and said we needed more of the engineers who make real things. I thought Obama was a fake when he named the financial engineers Rubin, Sommers, and later Geithner to his team after originally pegging Volcker. Rubin and Summers were in Clinton's cabinet as treasury secretaries when Glass-Steagall was eventually repealed, and they laid the groundwork for China to enter the WTO. Then soon thereafter, Bush used China to fund his war in Iraq when he cut taxes. Clinton, Obama, and Bush all work for the same boss and it isn't the American people. So, we will borrow money from China to build roads and bridges and then sell them to China for toll use.
Didn't Volcker go to bat for Geithner at confirmation hearing?
I just have to say: O:-) >:o
:'( 
=-O =-O =-X :-[ :-$ 
:-E DONT_KNOW
Thanks.
RGE Monitor: "Why You Need Devaluation - An Open Letter To The People Of Estonia"
RGE - Why You Need Devaluation - An Open Letter To The People Of Estonia
Pavel says:
Today, 12:42:11 PM
"Latvia will be bankrupt by June if it fails to make budget cuts required by the International Monetary Fund (IMF) and does not receive the next installment of its loan, Bloomberg reported March 9.
Yes indeed, the next phase of the crisis unwinds, largely unaddressed, as we decide if we want to dress the zombie banks up in formal or casual clothes for their media debut.
"We have plenty of supply, but are lacking in demand. In these circumstances, the government must be the spender of last resort, even if it is spending to keep down the stench of pig farms."
I think Dirk has it right. Cheap ridicule is unaffordable now.
"Cheap ridicule is unaffordable now."
it's not even unaffordable. It's free! And that's exactly what it's worth. Nothing.
YouTube - Great Depression Cooking Ep:1 - Pasta with Peas
YouTube - Great Depression Cooking Ep:3 - Poorman's Meal
YouTube - Great Depression Cooking Ep:2 - Egg Drop Soup
Depression Cooking with Clara - 91 years old...
Clara's goin' viral, thanks FFDIC, and mp.
we got oil, rice, flour, sugar and salt... for weeks. A little worried about the gas and power though in a 26 floor HK highrise...
Is the U.S. Mint's production problem long-term or short-term?
What will be the effect on gold coin prices?
In 1999, at the height of the Y2K crisis and under the strain of record gold demand, the U.S. Mint produced 2,055,000 1-ounce gold American eagles.
In 2008, with the world embroiled in an unprecedented economic crisis and once again under the strain of record gold demand, the U.S. Mint produced only 710,000 1-ounce American eagles and 189,500 1-ounce American gold buffaloes -- just under half its 1999 production.
Bushvilles: The new Hoovervilles, rapidly expanding
Daily Kos: State of the Nation
A "smoking gun" connecting Bush to the current disasters seems to be lacking. He appointed a bunch of "regulators" that looked the other way, but I haven't seen compelling evidence that cronies benefitted directly. My impression is that some big Iraq money did go to crony contractors.
Sorry, kids. Rightly or wrongly they will be known as Obamavilles.
"Yes indeed, the next phase of the crisis unwinds, largely unaddressed, as we decide if we want to dress the zombie banks up in formal or casual clothes for their media debut."
BR:
The next departure of the crisis might well be geopolitical. Estonia and Latvia are NATO members, for example. Russia is just across the frontier. Extrapolate across the globe. When the president of the WB issues the kind of warning he just issued, I would take it extremely seriously.
\t
Pavel says:
Today, 12:47:05 PM
“"We have plenty of supply, but are lacking in demand. In these circumstances, the government must be the spender of last resort, even if it is spending to keep down the stench of pig farms."
I think Dirk has it right. Cheap ridicule is unaffordable now.
\t
So what if that is the wrong choice and you are essentially bullying your way past the discussion phase by saying, it is too urgent, we cannot afford to point fingers or dither.
Dirque's argument is essentially, "the bubble was REALLY BIG so we HAVE TO blow into it to keep it inflated."
And when we find out that pissing in the ocean doesn't keep back the tide... and we will admit it after the time for alternatives is long past... what will you say then? "Don't hit me, I meant well?"
37A.12\t‘O see not ye yon narrow road,
\tSo thick beset wi thorns and briers?
\tThat is the path of righteousness,
\tTho after it but few enquires.
37A.13\t‘And see not ye that braid braid road,
\tThat lies across yon lillie leven?
\tThat is the path of wickedness,
\tTho some call it the road to heaven.
The Treasuries market, Pavel. You're gonna be sad when you don't have it any more. Don't come crying to me when you break it.
What I'm trying to say is that this is neither just a US crisis, or even only an economic crisis. These are, perhaps, birth pangs, but who knows what is straining to be born?
Pavel,
I'd say we are beginning to transition from systemic financial collapse to political collapse. Or you can use the word "transition" a more neutral way of saying "dying"...Don't get me wrong, I'm not happy about this kind of death. Furious in fact. I do not prefer it. I'd like us to stem the financial collapse part, so it's just a catastrophe, the kind you manage to remember.
Latvia will be bankrupt by June if it fails to make budget cuts required by the International Monetary Fund (IMF
The Baltics have a lot of Swedish, German, and Austrian banking money invested. They also have horrible demographics.
The Baltics have a lot of Swedish, German, and Austrian banking money invested. They also have horrible demographics.
How so?
Pavel,
These are, perhaps, birth pangs, but who knows what is straining to be born?
You went over to the dark side? egads....
Blackhat, Having grown up down the road and looking at the pictures on some sites, It seems decidely older than college kids..The offspring were from HB
cd,
two of the offspring were fullerton progency...having grown up there. How far down the road were you?
--bh
"The Treasuries market, Pavel. You're gonna be sad when you don't have it any more. Don't come crying to me when you break it."
I'm as helpless here as the next person, and there are lots of us standing shoulder to shoulder. I've shed tears over the past few days, but they're shed over a personal matter.
HER FUNNY FRIEND
O Lady, beasts of grief
Assault with claws of guilt
They tear my flesh away
How will I pray?
It’s dancing that I choose
She smiles – she is amused
All will be well, she says
As I can tell
You need not hold your grief
The time of it is brief
It is the prayer of joy
That love enjoys
And as for death and sorrow
It will return tomorrow
But only for a while
Sweet Jesus was a child
And I remember too
His prattle, He was two
And O the sorrow then –
Dance, my funny friend
\t\t\t\tPavel
\t\t\t\tMarch 9, 2009
Anonymous sed: [Re: Fullerton, California Rally] The ocregister put the number at 8,000 and they were not from all over California, just Orange County. John and Ken are just rabble rousers.
Nice to see Homeland Security busy on the blogs dispensing RightThink.
In Soviet Russia(U.S) banks nationalize you!
"Pavel,
These are, perhaps, birth pangs, but who knows what is straining to be born?
You went over to the dark side?"
No.
Pavel says:
Today, 12:56:22 PM
“What I'm trying to say is that this is neither just a US crisis, or even only an economic crisis.
It is entirely political in origins, and it is something we have to confront. The ideologies and practices of our era are worn out. Every practiced alternative participated in this failure.
Really, it's all notional, and most of the people who are going to die, god bless their souls, will die mostly due to distributional reasons. But, the people who made the problem, no I do not think they will suddenly get wise and make the solution. They will make more problem and brand it a solution instead.
These are, perhaps, birth pangs, but who knows what is straining to be born?
A political-economic milieu that works. Some downsizing may occur.
--
In case not posted...
Seeds of its own destruction
By Martin Wolf
Published: March 8 2009 19:13 | Last updated: March 8 2009 19:13
FT.com / Comment / Analysis - Seeds of its own destruction
I listened to Martin Wolf's talk on BOOK TV about a month ago and he impressed me. I have been reading his articles for years.
Jas
Frazier looks a bit wobbly...
GWB 's timeless words - " This sucker is going down . "
Either the banks lent even more money in the midst of a capacity glut and therefore will incur greater losses, or the figures reported are without truth, manipulated, or reflect another reality (banks "lending" in the spirit, but not the fact).
agreed. but "they" feel there's no other way. gotta keep the banks lending. we've booby trapped ourselves for the future however.
the banks STILL have lent long and borrowed short... since the rates the banks are borrowing at today are VERY VERY low. It is impossible to keep bank lending sources this cheap forever. (it's being subsidized by the Fed/Taxpayer). At some time the govt will have to let rates rise again (or at least go to "market rate" which will almost assuredly be higher than the manipulated rate). when they do, we face a new headwind again whenever interest rates start to rise again.
it is quite the problem.
the only way that the current plan could possibly "work" (I use this term very loosely) would be to allow the banks to lend long and borrow short, and use tons of taxpayer money to beef up their balance sheets (allowing banks to lower their borrowing costs and increase spreads on loans) Then over time have monetary inflation WITH wage inflation. This is difficult given global wage arbitrage.
Thus, it could ONLY work if this is step 1 of a mastermind plan.
Step 2 would be coordinated global currency devaluation, which could allow nominal wage increases across the globe.
Then after some time (years/decades) they could float the interest rates up, but the banks would have been "saved" through the massive tax subsidy over the years.
The problem: I don't know that there's enough time OR money to do this. Or political willpower.
also: Gold and commodity inflation would be a tell... and also could cause food disruption or other problems. thus we may need "controls" on those.
and all that's assuming there's some "mastermind" plan. More likely, they're just buying time trying to figure things out.
in which case we have crash #2 once interest rates start to rise.
"Pavel,
I'd say we are beginning to transition from systemic financial collapse to political collapse. "
Yes, but to use a physical analogy, when an atom gives up some of its energy by emitting a photon, the energy state of the atom collapses into a new state. The atom is changed, but it is not destroyed.
I haven't gone over the the dark side, but there is a great potential in the present system to attain a new state of being. In the words of a Russian writer named Nabokov [paraphrasing slightly], one is forbidden to ransack the future (in the sense of acquiring knowledge of its form). But one can sense the potential for a new form. The system is emitting energy - financial, economic, even emotional in terms of fear and apprehension. If this continues it must assume a new state of being. Who can tell what that will be, and yet the probability is at least there for more stringent kinds of social control, etc.
Pavel says:
Today, 9:56:22 AM
“What I'm trying to say is that this is neither just a US crisis, or even only an economic crisis. These are, perhaps, birth pangs, but who knows what is straining to be born?
So you think these guys are trying to bring about a Constitutional Republic with sound money, and rule of law for all equally?
"A political-economic milieu that works. Some downsizing may occur."
The supporting structure will be strengthened, or perhaps made more rigid.
What happened? Did somebody from the government make a speech?
"So you think these guys are trying to bring about a Constitutional Republic with sound money, and rule of law for all equally?"
How would I know what they're trying to do? I assume their trying to save the system.
"I assume their..."
Sorry. 'they're
"India has successfully tested its third Ballistic Missile Interceptor (BMI), KUNA reported March 9. The test was conducted on March 6, but not shared with the media until March 9. The two-stage interceptor missile will be placed in “hot stand-by mode,” and will automatically be triggered in the event of an enemy missile launch, according to Chief Controller of Indian Missile Strategic Systems Dr. V.K. Saraswat."
Like so.
US banks HAVE maintained lending
It is the shadow banking sector which has withdraw
Is that because no one in their right mind would buy "AAA" paper from these clowns?
with a one way ticket to the promised land,
a hole in your belly and a gun in your hand.
If it ain't all that, I'll be back my man.
Blackhat,
la mirada...lots of friends and all the family still down in OC area..not saying that some of the CSF wasnt there but it looked like older crowd..
China's £35 bn World Expo risks humiliation as financial crisis keeps foreign companies away - Telegraph
$63bn "national priority", the Shanghai world expo 2010 is in trouble
US was given a prime location for their pavilion, but can't raise the money. So China to save face will spend $60-80mn to build it on their own
"I'm sorry to say it is just unbelievable that the richest country in the world would decide to ignore the Expo," said Shen Dingli, the head of the Centre of American Studies at Shanghai's Fudan University.
Yet if you go to their website, they wrote 2 stories to counter that fresh article
Expo 2010 Shanghai China
• No major Expo woes seen from downturn
The global financial crisis will have only limited effects on the 2010 Shanghai World Expo, top officials said yesterday in the capital.
• Political advisor: Expo to help China, world overcome crisis
You read that correctly, not only will the 2010 expo be gloriously successful, it will alone end the global depression
Comments are no longer being eaten?
Zombie Bank==Bkusa
People are getting very panicky.... I think the likely hood of a circuit breaker day is increasing...
You mean like that time they guaranteed the principle of all money market funds before having the chance to do any diligence?
I don't think it will come all in one day
New Thread: Credit Conditions: Corporate Master Spread
http://www.calculatedriskblog.com/2009/03/credit-conditions-corporate-master.html ( 1 comments )
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"Pavel,
I'd say we are beginning to transition from systemic financial collapse to political collapse. "
Yes, but to use a physical analogy, when an atom gives up some of its energy by emitting a photon, the energy state of the atom collapses into a new state. The atom is changed, but it is not destroyed.
I haven't gone over the the dark side, but there is a great potential in the present system to attain a new state of being. In the words of a Russian writer named Nabokov [paraphrasing slightly], one is forbidden to ransack the future (in the sense of acquiring knowledge of its form). But one can sense the potential for a new form. The system is emitting energy - financial, economic, even emotional in terms of fear and apprehension. If this continues it must assume a new state of being. Who can tell what that will be, and yet the probability is at least there for more stringent kinds of social control, etc.
You can make sort of an evolutionary analogy - the things we've learned about economics and business practices can't really be applied to the economy in it's current state - there's too much inefficiency and accidental complexity built up in the system based on bad ideas or special interest lobbying. The nature of the political system does not allow any kind of spending cuts or economic retrenchment to occur, so it takes some kind of outside force (like systemic collapse, war, natural disaster) to "purge the rottenness" and clean out all the wasteful and toxic economic structure. Then new ideas that have been codified in sort of an economic DNA can be applied if the cultural and intellectual environment is still left in tact in the aftermath - admittedly this a big if, which is why it's best to avoid these things to begin with. Alas our policy of spending to avoid recessions has depleted our savings and credibility, and filled our economy with the toxic waste of bad enterprises and bad business practices.
What you describe reminds me of what happens when a pile of construction metal (I beams, etc.) is dropped; crap goes everywhere, and when you try to pull one piece out, you run the risk of having the pile collapse further, endangering anyone working near it.
That happens with a stack of aluminum where I once worked, and there was a fellow trapped in it. It was very scary getting him out, but he only lost a lot of blood, but no appendages. Really lucky.
There's no way that we'll hit a -800 day. Maybe in April after the numbers reset.
snips from raw story.com
i support gov stimulus im against tarp, tslf etc
"according to a newly released Monday memo by Rep. Dennis Kucinich (D-OH), chairman of the House Domestic Policy Subcommittee...
Citigroup Inc, which received $50 billion in Troubled Asset Relief Program funds, made an $8 billion December loan, not to an American entity, but to a Dubai public sector company,
The Goldman Sachs Group, which received $10 billion in TARP funds at the end of October, saw fit to spend $2 billion earlier in the year on the repurchase of company stock, which resulted in an increase in company share price.
The memo notes of that stock repurchase, “That increase would have constituted a significant benefit to top executives at Goldman Sachs, who typically own large amounts of company stock.”
In mid- November, Bank of America spent $7 billion investing in the China Construction Bank Corporation. Bank of America received $25 billion in TARP funds.
J.P. Morgan Treasury Services spent $1 billion investing in cash management and trade finacie solutions in India also in November. J.P Morgan Chase & Co. received $25 billion in TARP funds.
Rep. Kucinich’s office released the memo from the Subcomittee’s Democratic staff ahead of Wednesday’s hearing that will investigate Treasury Department attempts to prevent waste and abuse in the TARP program."
and heres the link
The Raw Story | Four largest TARP recipients spent billions on 'questionable transactions': memo
It's cheap shots or the highway, we can't afford highbrow satire.