Are we kidding ourselves to believe that, after our last episode, that a 25 bps perception is "reality based". I would not be surprised if a 50 bps is inacted, just to show the "world" that Uncle Ben is ready and willing to continue to court and spark "sporting the six inch hooker heels".
I think this Saturday's video selection should be something from the Seventies to celebrate the reintroduction of absurdly high inflation. Coming soon to a core near you. Thanks Fed.
(Although the 10-year and 30-year yields are still a mystery. Stupid question: Can the Fed purchase long bonds? If so, how would we know? Just curious.)
Right. just 25 bp and the whole SIV mess will go away, the mortgage bond market will re-open, housing prices will rebound, and we'll wake up a realize the last six months was all a bad dream.
Right. just 25 bp and the whole SIV mess will go away, the mortgage bond market will re-open, housing prices will rebound, and we'll wake up a realize the last six months was all a bad dream.
Now Nemo, for extra credit, we have to figure out what is going to make it revert back to the way it was a few days ago, before the next meeting on the 31st. Any ideas? I'm too tired to think up any at the moment. But it surely could happen, mainly, because there are plenty of people who want to make it so.
The thing is, you can't play this game too many times, because after a few rounds, youve lopped far too many bps off the FF rate. Then what you do you have? Acknowledgement that weze is broken as an economy.
And because the last 50 basis cut did SUCH a good job of keeping the liquidity crisis contained to subprime mortgages.
Which is why I'm arguing for at least a 75 bps cut this time. It would really surprise a lot of people, more so than the last 50bps did. Imagine the containment!
Yup. 25bp, eh, whutever. Couple more spills here and there, from afar, still looks contained. 50bp, edge bristles with excitement, is container moving? 75bp, things would practically be fighting each over to stay inside the container. 100bp, implosion. Container vanishes.
The Fed can't be pleased with the net effect of the last cut -- a spike in the stock market, a fall in the dollar, a spike in oil, higher mortgage rates, etc. And there was significant disagreement last cut.
Buffett said he was skeptical about the U.S. Treasury's plan to create an $80 billion fund to buy distressed assets from structured investment vehicles linked to home lending.
I don't see any way that pooling a bunch of mortgages, changing the ownership, is going to change the viability of the mortgage instrument itself -- whether people can make the payments,'' he said.It would be better to have them on the balance sheets so everyone would know what's going on'
I am trying to figure all this out so here is my conclusions...
I looked up Rhinebridge Plc. and found a list of deals done that same month. Below is just a sample from that. I noticed Rhinebridge had AAA bonds in the mix.I also noticed that these were offered in series. Interesting that a few companies name show up a lot.
So I am figuring that these companies may also be in the news shortly? That this not just a US problem but was done globably? If I understood what I read on Fitch these were bundles of all kinds of mortgage backed bonds?
Capital Mortgages Series 2007-1
Banca di Roma S.p.A.
Arranger
Transaction Summary
The first RMBS transaction from Banca di Roma S.p.A., comes
with an outstanding principal balance of EUR2,479m backed by
22,633 performing residential Italian loans. The transaction is
solely arranged by the head of the group, Capitalia S.p.A.
MBS Bancaja 4, FTA
Originator
Caja de Ahorros de Valencia, Castellón, y Alicante, Bancaja
Arranger
Europea de Titulización, S.G.F.T., S.A., Bancaja
Transaction Summary
This is the fourth MBS transaction brought in the market by
Bancaja. This RMBS backed by Spanish residential loans counts
with an outstanding principal balance of EUR1.85bn. The funds
will be managed by Europea de Titulización S.G.F.T., S.A.
The Malin CLO B.V. transaction will be well-diversified across ten
European countries. The collateral consists of senior secured and
mezzanine loans.
Rhinebridge plc
Region
GLOBAL
Investment Manager
IKB Credit Asset Management GmbH (London Branch)
Transaction Summary
Rhinebridge plc is a three-tier capital structure SIV. The portfolio
will comprise approximately 33% of seasoned AAA, AA and A
bonds, as well as 67% new issue AAA bonds.
I don't see any way that pooling a bunch of mortgages, changing the ownership, is going to change the viability of the mortgage instrument itself -- whether people can make the payments,'' he said.It would be better to have them on the balance sheets so everyone would know what's going on''
Is there any way we can make Warren Buffett Fed Chair?
If you think it is 475 bp, you are probably overestimating. What would be an interesting discussion here is how much is really possible. Im thinking, if the economy continues on a downward trajectory, you've got max two or three 50bp cuts.
But if you look at Ben's speech yesterday, he said something interesting, and that is that he doesn't really give a crap about the purported strong dollar policy. I forget his exact words, but it seemed to me that he is willing to let the dollar tank as he revs up the helicopter, so I could be wrong. We might see 1% FF all over again. But at that point, we are toast, and basically just another version of Japan 1990.
I'm starting to wonder if one should interepret the list of participants in the M-LEC as a list of institutions to avoid, when you read stuff like this:
Among the firms offering support for the plan are Fidelity Investments and Federated Investors Inc. Both hold debt issued by an arm of Gordian Knot Ltd., one of the SIVs that could benefit from the fund.
Fidelity's $10.4 billion Prime Money Market Portfolio owned $402 million medium-term notes from Gordian's Sigma Finance Inc. arm as of the end of August. A spokesman said he believed that such holdings "continue to represent minimal credit risk" and said the firm's "money-market funds continue to perform strongly."
Also, on Larry Kudlow's show on Monday, Jim Lacamp, an NBC reporter from Dallas who is always bullish, said that he believes that if they can't find a way to do the M-LEC deal or something like it to prop us the marks on this paper, we're going to see NAVs on money markets go below $1.00.
Buffett said he was skeptical about the U.S. Treasury's plan to create an $80 billion fund to buy distressed assets from structured investment vehicles linked to home lending.
I don't see any way that pooling a bunch of mortgages, changing the ownership, is going to change the viability of the mortgage instrument itself -- whether people can make the payments,'' he said.It would be better to have them on the balance sheets so everyone would know what's going on''
[Nemo]"(Although the 10-year and 30-year yields are still a mystery. Stupid question: Can the Fed purchase long bonds? If so, how would we know? Just curious.)"
"Can the Fed purchase long bonds?"
"Fed" is too general for me, but the Open Market Desk can buy them.
"If so, how would we know? Just curious."
I take a look starting from here
then, if time permits, go here and scroll waaaaaaay down to the bottom.
"Although the 10-year and 30-year yields are still a mystery."
The best explanation I've seen yet is that its a mystery to You, me, Greenspan and everybody else.
At what point will Bernanke stop acting like he is in a first person shooter game and stop firing away with the rate cuts? They are not working, and they will not work to save his banking buddies, so why destroy the dollar for the rest of us?
What do you all expect him to do? Fiddle while the economy tanks? No, he will cut - hard and fast. Unfortunately, due to all the excesses that have built up over the past many years the cuts will have little effect. It will be painful and a painfully slow process that may take many years. Many of you here seem to realize that the economy is slowing but then you criticize him for cutting. Does any body here have a "magic bullet" to get us out of this mess?
Mark- "Many of you here seem to realize that the economy is slowing but then you criticize him for cutting."
Hell, yes. He's going to run out of ammunition and have none left when he really needs it.
"If you were the Fed chair, what would you do?"
Day 1 AM: Hire CR and Tanta, although not necessarily in that order.
Day 1 PM: Call in all the Wall Street investment banks and tell them to stop crying and start rowing.
Day 2 AM: Demand that all off-the-books transactions go on the books.
Day 2 PM: Demand that Congress reinstate Glass-Steagall.
Day 3 AM: Instruct the FOMC to prepare for a possible helicopter drop.
Day 4 PM: Consult with Conjure Bag and wait.
BTW, Bernanke in response to Malpass' question said that he doesn't think a lower dollar means higher inflation. Doesn't matter whether that is correct or not but you know where he stands with regards to a strong dollar policy.
mp, I agree. If I am elected president, you are my Fed Chair. CR and Tanta would have high positions in my cabinet. In fact, most of the posters here would be in important positions in my administration. But I am not sure that we would be able to "fix" this mess. We could probably do a better job than what we currently have.
who, in their right #$%^$# mind would allocate a dime into these unregulated, alledgedly fraudulent reporting pools of capital?
a pension near you. we don't need no stinking regulation, hedge funds provide a valuable service and add liquidity, even though we boast the most transparent markets in the world, we endorse the most opaque of investment pools, why?
because the fees generated are %%^&&&$$# enormous and the lap dogs are bought and paid for to support this bullshit.
mpyou have my vote as well,and Buffet is right,putting 5 pounds of shit in a fresh 1 pound bag does not change the nature of what you are dealing with.
Can someone please explain why M-LEC is not an antitrust violation? It sounds like a bunch of alleged competitors gathering together to set prices. What am I missing?
I hope the FED folks do cut by a half pct...maybe got all out and make it at full point...really impress the world.
And thus we have inflation which give me cheap dollars to pay off all my mortgages.
And then a nice stock dip when they figger out that if the original debtors can't/won't pay, then no conduit in the world can cover the naked man forever and I can cover all my shorts.
Thereafter, living happily ever after with my social security enhanced by $24 per month.
The broader global economy is unlikely to come through the recent turbulence in the financial sector markets unscathed, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said today.
Speaking here at the Center for Transatlantic Relations ahead of the annual meetings of the International Monetary Fund and World Bank, Almunia called for "a concerted and cooperative effort on the part of all governments involved" to safeguard stability.
"If the current financial disruption generates some headwinds to the economic outlook, just remember that a disorderly unwinding of global imbalances would be the equivalent of a force five storm," he said.
That the recent credit crunch caused only "isolated incidents" in Europe - losses at two relatively small German banks and the UK's Northern Rock - he credited partly to the European Central Bank's strategy of injecting extra liquidity into the markets.
But he cautioned that "further improvements" were needed in cross-border cooperation and said that despite the "uneasy calm" it would be "premature to rule out further problems emerging in the weeks or even months ahead."
There are "lean times ahead" likely for the financial sector, but also in the wider European economy, as the available data "suggest that the current cycle has peaked," said Almunia.
"It is already clear that the economic outlook for the next two years appears less favourable than before the financial turbulence," he said.
Policy response to the turbulence must look at issues surrounding transparency, valuation of assets, strengthening risk management and supervision, and more analysis on financial market functioning, with a particular scrutiny of the role of credit rating agencies, added Almunia. rosalba.obrien@thomson.com ro/wash
If you were the Fed chair, what would you do?
Mark
Close it down and tell the UH Congang to follow the friggin Constitution.
If they say no, then do a Volker and jam interest rates up to 10-12%, force the gov't to start balancing; with an inverted yield curve, force those arm debtors to try and refi to fixed, and force liquidation of those that can't; punish banksters and help responsible 30yr fixed mortgage holders holding 6-7% loans; and liquidate including with bankruptcies the foolish pig men.
Many of you here seem to realize that the economy is slowing but then you criticize him for cutting. Does any body here have a "magic bullet" to get us out of this mess?
If you were the Fed chair, what would you do?
Mark | 10.18.07 - 8:00 pm | #
Let's have the damn recession. There has been a terrible monumental misallocation of capital. There has also been a grotesque misallocation of human resources to the finance industry.
Remember all that crap about how we were moving to a finance economy? What kind of fantasy is that. Right, the rest of the world is going to let us shuffle their money forever while they work making stuff and polluting their environments extracting resources. Hello! They can do finance too. It is not that hard. Anyway, only so many ticks can live off of one dog.
I don't think a recession is something to be avoided at all costs and certainly not the cost of debasing our currency and destroying trust in our institutions(the most precious thing of all in my opinion). I think, it is something we absolutely have to have to get back to something remotely resembling a healthy economy.
Anonymous, I am inclined to agree until I remember that recessions are regressive. Because the middle-class and poor will hurt most, calculating the macroeconomic reparations that would result is a fool's errand.
Agreed that we need (or needed some time ago) a recession to reduce the leverage and crazy risk taking. I believe that we have put it off so long that, at this point, the result will be a very painful experience. I also think that it is all but inevitable. I just don't think that the Fed can "do nothing" when they see this train wreck coming (even though it will get the result here quicker and probably get it over quicker).
Thanks Crispy, good to see the wise old Buffett shoot down those bogus rumors. I guess the crooks will have to think up a new one the next time one of their calls goes down and they need to unwind their positions.
Back on topic - no way the Fed cuts with oil flirting with $100. Any beneficial effects on rates would be vastly outweighed by $5.00 a gallon gas and foreigners fleeing our markets like rats off a burning freighter. It would be the equivalent of the Fed giving the finger to the world.
Google had another blow-out quarter. Surprisingly per-click prices actually rose. The reason this is a surprise is that mortgage/real estate related ads were probably shrinking, and those were some of the highest paying categories, so I would have expected some shrinkage in per-click prices.
I am familiar with a fairly sizable ($5+ million/year) non-financial non-real-estate Google advertiser, and know that they track their ROI to the percentage point. They still seem to be spending, because the folks tell me the ROI is there for them. They tell me they will slow down if they see ROI fall, but so far at least, that hasn't happened.
Not sure where this is all heading, but I thought I would throw that out there.
What do you all expect him to do? Fiddle while the economy tanks? No, he will cut - hard and fast. Unfortunately, due to all the excesses that have built up over the past many years the cuts will have little effect. It will be painful and a painfully slow process that may take many years. Many of you here seem to realize that the economy is slowing but then you criticize him for cutting. Does any body here have a "magic bullet" to get us out of this mess?
If you were the Fed chair, what would you do?
Mark,
If I were Fed chair, I would end the real problem, and not focus on the symptoms.
We have a cancer growing in the economy. Businesses based on a leveraged ponzi finance model (that produces no real wealth, just paper welath) are proliferating through the economy and crowding out legitimate wealth producing business.
Gamblin' fever is taking over the global markets.
We are convincing ourselves that we're getting richer with paper promises while increasingly neglecting the economic pursuits that produce real wealth.
Priority One is to stop this ASAP, or more and more damage will be done, and instead of tanking now the economy will super-tank at some point in the future.
I would raise rates immediately and put an end to the growing speculative plague. Economic chemotherapy. Without real trauma the get-rick-quick schemes will come right back.
So raze a good part of the hedge fund industry and the proliferating ponzi schemes Volcker style.
Then start pumping liquidity back in the economy.
The Fed has been screwing up since 1998 by lowering rates and fostering a financial industry that's more like a giant tumor.
All because we can't handle short term pain and think we deserve an easy life just by virtue of having a pulse.
Is it any coincidence that the best years in US history followed the twin horrors of the Great Depression and WWII? And then the "Great Recession" of the early 80s?
The things that matter are made during hard times. The quick and easy way out is the surest path to irrelevance.
Agreed that - long term - getting the excesses out of the system would be a good thing. Raising rates would do that, but with all the debt burden, it would likely put us into a deep recession (or depression). I think the choice is between a very deep, painful, recession (or depression) that is overwith in 2 to 3 years by raising rates as you suggest, or a long, slow Japanese style malaise (in and out of recession) lasting maybe a decade or so if we go the rate cutting route. Neither is a good choice. However, if the Fed raises as you suggest they may be "blamed" for the outcome. (even though we know here that it is most likely coming anyway).
Liquidate, mark to market, rip the band aid off fast. It's done. A LOT of pain. 20 years of mal-invested physical and human capital needs to be re-aligned. Japan IS STILL wallowing in the '92 fallout. Volker caused two severe recessions in 5 years righting the economy. It's much worse now. But a massive hike would remove the contagion.
Yes it would hurt much. But the creep along Japan style way just rewards the pig men. A sharp increase and severe pain slaughters the pig men. Such a move benefits the prudent and punishes the gamblers. It would realign REAL capital with the savers.
The Irony
Interest Cut->weaker dollar -> higher energy and raw materials cost -> lower spending on service-> lower income-> weaker sub-prime housing market.
Who [aside from a small minority who lose their jobs (for a while) and people who lose their houses] is suffering from all this? The economy seems to putter along, not great, but not a disaster either, the stock market stays in the stratosphere, gas prices cause no complaint. I have to say I won't be alarmed until the pain begins to show, lots of people start losing their jobs permanently, and some banks go under and inflation roars upward and the market sinks rapidly by 30%. So far none of this seems to even be on the horizon.
Of course. It just matters who gets burned. Cut...the middle and lower classes... big hike the people who caused the problem. I like the hike option.Cheers,Misean
Its not that clear cut. A hike definitely helps the people that own Long T-bonds though.
I agree that the "raise the rates" way would "clean out the system" much faster and would obviously benefit the savers. Unfortunately, it appears the number of spenders and gamblers far outweigh the number of savers. I absolutely agree that the current "system" rewards greed, fraud, borrowing, risk taking and free spending and that something must change to get us on the path to a more prudent, fair future. I am all for the greedy hedgies getting their "due", and the savers and middle class getting ahead for a change. I just think the politicians and many "regular" American think that rate cuts will solve the problems, and that will be the route the Fed takes.
Anyone ever capture a video of the old WIN theme (Whip Inflation Now)? I remember a guy singing it while playing a piano as the buttons were being handed out....
"It was Ford who commissioned the legendary Meredith Willson to compose the theme song for the Administration's "Whip Inflation Now!" campaign, which the Broadway composer himself performed on nationwide television after Ford launched the campaign in an historic address to Congress on October 8, 1974. The music didn't quite rise to the level of "The Music Man" or "It's Beginning to Look a Lot Like Christmas," but the lyrics are literally unforgettable:
Let's WIN together, WIN together:
That's the American Way today.
Who needs inflation?
Not this nation!
Who's going to pass it by?
You are! And so am I!
So WIN together. Lose? Never!
If you can win, so can I!"
We don't think industry fundamentals support oil prices near $60 (a barrel), let alone $90, but with excessive speculation and lack of government scrutiny, prices could go even higher, before they crash, eventually, in our view," said Fadel Gheit, an analyst at Oppenheimer & Co
the whole oil futures complex is trading at 75 and up, but he thinks the fundies equate under 60...
weird..
drill a whole and it comes up free...
now price the dripp , the pipe, the labor, the transit, the transit pipe, the protection, the distribution, the marketing, the admin, the etc...
Who [aside from a small minority who lose their jobs (for a while) and people who lose their houses] is suffering from all this? The economy seems to putter along, not great, but not a disaster either, the stock market stays in the stratosphere, gas prices cause no complaint. I have to say I won't be alarmed until the pain begins to show, lots of people start losing their jobs permanently, and some banks go under and inflation roars upward and the market sinks rapidly by 30%. So far none of this seems to even be on the horizon. [James]
I believe the pain has started for a lot of middle class people. There has been an erosion of security in terms of health insurance and pensions. Also, where are the job opportunies for our young adults? What is America's place in the world? Are we doomed to be overhead in the world economy?
and foreigners fleeing our markets like rats off a burning freighter.
It ain't just foreigners, debasing your currency has always been a road to disaster. There is no reason to leave ones capital invested in a country that is basically telling you they are going to give you the shaft.
I am with Mark and Clyde. The FED will cut because they are convinced that it will help. And yes, the spenders and investors outnumber savers by several factors.
Saving too much and not investing is just as Dumb as investing too much.
drill a whole and it comes up free...
now price the dripp , the pipe, the labor, the transit, the transit pipe, the protection, the distribution, the marketing, the admin, the etc...
Oil trades on supply / demand just like any other commodity cost has little to do with it. I think they proved that in the 80s oil bust.
Saudia cost of production is a few dollars a BBL.
As I have said before, I believe that the Fed will hold this time and agree with Dryfly. I think that the Fed will want to send a message that the market is strong enough to handle this, that the housing market will recover in time, and that the economy is strong and flexible enough to handle the issue.
Of course,..... the Fed will be wrong and will have to do an emergency cut of .5 basis points before the December 11th meeting. By that time, the market will have drop 15% due to financial and economic concerns.
Either way, I have placed my money to handle both long and short plays with international and resource plays. Some money is currently in cash but it bothers me to have the cash in a money market fund. But I should not be greedy as my two year returns have been outstanding.
It ain't just foreigners, debasing your currency has always been a road to disaster. There is no reason to leave ones capital invested in a country that is basically telling you they are going to give you the shaft.
Exactly. Jon Stewart nailed it in the interview with Alan Greenspan( lots of links in lots of places ) . Excerpt:
"
Stewart: When you lower interest rates, it drives money to stocks and lowers the return people get on savings.
Greenspan: Yes, indeed.
Stewart: So theyve made a choice - We would like to favor those who invest in the stock market and not those who [save]...
Greenspan: Thats the way it comes out, but thats not the way [to?] think about it.
"
I just love the NewSpeak: "that's not the way to think about it
Oil trades on supply / demand just like any other commodity cost has little to do with it. I think they proved that in the 80s oil bust.
Saudia cost of production is a few dollars a BBL.
Anonymous
that may be the most ridiculous thing i've ever read on CR's site, including sebastians' comments
"I just think the politicians and many "regular" American think that rate cuts will solve the problems, and that will be the route the Fed takes.
Mark"
Wholeheartedly agree. I was just saying what SHOULD be done, not what will.
"Saving too much and not investing is just as Dumb as investing too much.
DH"
Erm...huh? How can one save TOO much. If you don't need it don't spend it. When you do need it you'll have a larger cache to draw from.
Me: one debt 62,000 mortgage. Cash and gold..enough to pay that off and still have plenty for a new car and several plasmas. "Investments" (in paper) ~75k. < 15%.
I nominate Marriner Eccles as Fed chairman. The Fed building is named after him. The only problem is that he's dead, so I'll have to consult with Conjure Bag on the problem.
Nope, only allcald stainless steel ( or should I say steal). My wife works part time so I ususally buy my pieces when they go on sale. With her 40% employee discount, I usually get them about 60% off retail. So.. for me, it is all about value and financial opportunity.
As far as my investing, I have double my net assets in two years and have help my coworkers gain 20% this year. No, I don't work in the financial markets and have been able to do this in my 401K even with the 90 day rules to limit day trading.
Personally, am I worried about the market? Of course I am, it is not making sense. However, I can only trade based on the market and my research such as CR, Bullnotbull, etc. Right now, it is working well.
How can one save TOO much. If you don't need it don't spend it. When you do need it you'll have a larger cache to draw from.
savings comes from labor...
at a certin point along the graph, your savings(capital) should be put to work... at a point further along the graph, if one allocates wisely, the capital gains will far outpace any further labor efforts, and the savings that come from it...
at tht point , you switch from an empoyee to an entrenprenuer.
"that may be the most ridiculous thing i've ever read on CR's site, including sebastians' comments"
I lived through the oil bust in the 80s, I managed to keep my job and retired in 05 but a whole hell of a lot of people I worked with went down the road. Some of the same arsine things went on then, when oil plunged it was the money in the bank and not the oil in the tank that mattered.
If you don't understand supply/demand maybe you need to go threw one of these abandoned housing projects or ask a builder how it works.
at a certin point along the graph, your savings(capital) should be put to work... at a point further along the graph, if one allocates wisely, the capital gains will far outpace any further labor efforts, and the savings that come from it...
at tht point , you switch from an empoyee to an entrenprenuer.
Censured
Yes, but within a fiat system, it is extremely difficult to invest the fruits of one's labor and come up golden. In a speculative gambling casino of today's markets...it's nigh on impossible. Just treading water is difficult.
If one is laboring, one does not have time to play in the casino. I got a bit lucky, and as an Austrian economist, saw gold at $250 and silver ~ $4 in '99 as a HUGE bargain and bought all I could. Smart? yes. A gamble..YES! Markets should not behave this way.
do you have any evidence that proves that statement above...
any ratio that explains 'little' in regards to futures prices that require delivery 30 days after settelment?
Well, think about it. Who Saves too much?
Someone who Hoards. Hoarding is motivated by deep feelings of insecurity. If you are gonna be a good economist, you should do some
extra reading on Psychology. Hoarding is neurotic behaviour, so is
frivolous spending,So is using 10-1
leverage to buy mortgage-backed securities. i will go on later.
how is cutting rates help the housing market..go back to dot com bubble-I (right now we have II) and what happened to fiber optics /telecom that were overbuilt..it needed firesale afterwards.
Cutting rates will only make things worse as emrging market cash inflows once again will zoom..commodities will do a parabolic rise...fanning the flames of inflation even more.
I would stay the course and tell the speculators that fed is watching dollar as well as commoditi prices.
Cutting rates stimulates the economy
in general, people will borrow money
to start businesses and hire people.
Cutting rates may not help overnite,
but it will eventually. There are other things the FED can do stimulate the economy too, like accepting Mortgage backed securities
as collateral. This will give the banks money again in order to make new loans. Don't forget, it is just paper.
Dictionary.com Unabridged (v 1.1) - Cite This Source - Share This
hoard /hɔrd, hoʊrd/ Pronunciation Key - Show Spelled Pronunciation[hawrd, hohrd] Pronunciation Key - Show IPA Pronunciation
noun
1.\ta supply or accumulation that is hidden or carefully guarded for preservation, future use, etc.: a vast hoard of silver.
verb (used with object)
2.\tto accumulate for preservation, future use, etc., in a hidden or carefully guarded place: to hoard food during a shortage.
verb (used without object)
3.\tto accumulate money, food, or the like, in a hidden or carefully guarded place for preservation, future use, etc.
[Origin: bef. 900; ME hord(e), OE hord; c. ON hodd, OHG hort, Goth huzd treasure; see hide1, hide2]
"Cutting rates stimulates the economy
in general, people will borrow money
to start businesses and hire people...
DH"
That's just silly. Dropping rates causes people to consume on debt. That's why we're in the state we're in. False interest rates distort the economy and create mal-investments...too much of some things...not enough of others. Low greenspan rates tossed massive human and physical capital into building and trading houses and the paper that financed that. Where was the investment in productive assets? Hellmost of the stuff going into housing is:
1. Consumption goods
2. Produced elsewhere.
Take of the Keynsian Rose colored glasses and look at what low rates hath rout.
There is way too much focus on the Fed. Far, far more than ever before, and it's a bad, bad sign.
It shows how much our financial system is propped up by a belief in cheap money and government intervention.
The stock market began this year with a litany of alleged strengths...earnings, GDP, takeovers, mergers, private equity, housing turnaround, etc. Now, the stock market is down to one prop -- the Fed. Nobody even pretends those other things are happening any more.
It's amazing how many supposedly smart investors believe the Fed can keep juicy the markets forever. It's become a transparent fool's game. There will be a day, not far away, when stocks will have to pay good dividends to be taken seriously.
Commodities are on track to take the excess liquidity now. If Bernanke inflates, it will inflate food, fuel and precious metals. Vockler not only raised rates but on the way down he made sure a massive amount of liquidity was being directed into the stock market. Why eles would we have 20 years of low inflation and good business development? Greenspan made the market unstable in 1995 when he did not close the reserve requirement loophole of sweeps he opened in 1989 to prevent a big recession. Recent Fed chairmen like to flood liquidity in all the time now, not just when it is needed. They should be draining the excess liquidity when times are good, not adding to it. I guess it is the "me" generation getting greedy.
Vockler not only raised rates but on the way down he made sure a massive amount of liquidity was being directed into the stock market.
The only real way to make sure a massive amount of liquidity is directed into the stock market is to promote economic growth conditions that allow public companies to become profitable.
Look at MSM and you will see that Vockler "primed the pump"
The U.S. economy that Vockler helped to pull out of recession was a smokin' machine with strong manufacturing, declining inflation and energy prices, a fast-growing labor force, and emerging global dominance in financial services and technology.
The U.S. economy today is an invalid on disability.
Perhaps we can get rid of some of our stupid copyright and patent laws and other rules and regulations that have retarded growth. Then we can start building and designing things again.
We must build things in order to create the environment for new designs.
We are a strong nation of many types of people. Its time we get off our sub-prime buttocks and get back to work doing something worthwhile.
The only real way to make sure a massive amount of liquidity is directed into the stock market is to promote economic growth conditions that allow public companies to become profitable.
rich | 10.18.07 - 11:30 pm |
Or to allow companies to show "profits" through fraudulant accounting and have CNBC cheerleaders (and the rest of the MSM) telling the public that you have to buy stocks now because they will be 20% higher in a year and you will be "wealthy" if you buy now. Then print money and make credit easy and the money will get directed to the current bubble. The markets are whispering to Ben "If you print it, they will lever and buy"
Commodities are on track to take the excess liquidity now. If Bernanke inflates, it will inflate food, fuel and precious metals.
Ministry of Truth
Yep...and this bubble will topple the economy. Previous bubbles were based on increasing the amount of paper (fictiscious capital)...commodities and real and will kill the consumer economy.
There are other things the FED can do stimulate the economy too, like accepting Mortgage backed securities
as collateral. This will give the banks money again in order to make new loans.
DH | 10.18.07 - 10:50 pm |
Accepting the crappy mortgages will just reward the excessive risk taking and loose lending standards. MORAL hazard.
Give banks money again to make new loans? We can't service the debt we have, that is the main problem. Just what we need - MORE debt.
Or to allow companies to show "profits" through fraudulant accounting and have CNBC cheerleaders (and the rest of the MSM) telling the public that you have to buy stocks now because they will be 20% higher in a year and you will be "wealthy" if you buy now. Then print money and make credit easy and the money will get directed to the current bubble. The markets are whispering to Ben "If you print it, they will lever and buy"
That's my point. That's not real.
And it won't last. The Fed governors know it's not real. They are under a lot of pressure but they aren't stupid enough to think it would produce anything meaningful or lasting. Things are happening very quickly now. You can't really buy that much time.
Perhaps we can get rid of some of our stupid copyright and patent laws and other rules and regulations that have retarded growth. Then we can start building and designing things again.
If we actually had those protections we wouldn't have a trade deficit.
ok...Google met expectations..US market should move up..but Nikkei is now down 303....carry trade has some unwinding..tomorrow is another day as oil tops $90...
Question: Can the US economy absorb/adjust to oil at $90/brl?
Let's not forget Buffett bought banks in a big way this year and particularly in the August downturn. He's bullish and long stocks, not vice-versa as some posters may want you to make believe.
Some of the posters here also remind of of the old time religious practises of self-inflicting wounds to demonstrae repentence. In as much as such behavior is absurd and wrong, it's also absurd and wrong for a government of central bank to self-inflict economic damage to an economy. Or is it just selfishness of people who missed out on past booms?
Misean,
Yes, I am saying Hoarding is Bad. Besides, it only means you are bullish on cash. Anyhow, a balanced approach to savings,spending, and investments is the way to go. As far as Hoarding goes, I know its bad due to personal experience, sorry, I should have mentioned that earlier.
Could someone explain to me what % that oil would play in terms of draging down this market. I know there's a lot of people on this site that can afford $4-$6 a gallon but long term? Some say people will adjust to it others say it could slow the economy to the extreme. I mean as it is I'm spending $400-600 a month on gas. I can't imagine almost doubling that!
The Fed has been able to stimulate
the economy before through money
creation many times before.China and Japan will gladly forgive all the debt just so they can keep their people working and life going. Again
It may not happen overnight, but based on historical evidence, I would bet that way.
here is my gameplan for S&P 500 investment levels.
"it's also absurd and wrong for a government of central bank to self-inflict economic damage to an economy."
It's not wrong for the Fed to discourage reckless behavior. The US economy is addicted to cheap money and easy credit. Should the Fed encourage more by printing money and loosening lending standards?
Would you give a known, irresponsible alchoholic a trunk full of liquor, the keys to your car and tell him to drive your children across the country - at the highest speed possible?
Are you still sticking by your prediction last week of no cut ?
My predictions are pretty lame lately - I didn't really think they'd cut LAST time either. Thought they'd wait at least another month or two.
BTW - I've been on the road all week. I was in two plants making products for 'infrastructure'... railroad & power equipment and power plant components... it looked like WWII the freaking plants were so busy. I hadn't seen that many assholes butt up welding in probably 15 years.
The mfg engineer I was with told me they need 40 more welders at this site... and can't get them even though they pay $25-30/hr (not including full benefits)... I guess ex-mortgage brokers can't weld.
So they are going to outsource the work to another domestic shop (pays almost as well there too) that has capacity.
Why all the activity? Commodities. $80 oil and $9 wheat - they need more trains, barges and power plants to move & process the shit & the margins are high so they can 'ramp it up'.
Obviously a lot of automotive, consumer products & housing related biz is hurting - badly in some cases. Commodity related stuff is clearly NOT.
BB would be crazy to cut in the face of this... but my guess is most of his contacts don't walk the floors of 'fab shops' too often.
You are sounding like one of those
permabears wearing a bulletproof vest.
No one has died from this credit bubble,OK. one would have to be
in need of some serious therapy
to let themselves get bogged down over this crap. Its only money, The FED will print more of it and life will go on. Yes, there will be more
booms and busts. Again, noone is gonna die.
You have been drinking too much of the CNBC koolaid. Do you not see any of the risks that the current economy is facing? If there is no risk, and everything is sooooo good, why does the Fed need to lower rates? Why are foreclosures up? Why are companies inflating profits by carrying assets at prices that they know are fictitious?
All is good, Kudlow said so!!! ? Cramer's the man!
Based on the above, at 1550 in the S&P, you would be approximately 10% invested in stocks.
I have a similar way of investing, add to my allocation at lower prices, reduce exposure at higher prices, and my numbers aren't much off from yours.
Not a perma bear, just like to invest in the markets when I feel I am being paid properly for the risk I am taking. Feel the risk is too high and the potential payoff is way too low at the current prices & situation.
Yes, the economy can handle $90 oil. I was just up in Canada. Gas at 1.11 / liter. What's that, $4.50 a gallon US or so? Life goes on. Gas goes to $7/gal and then things start to get tough. Someone said gas $3.50 by Christmas? It's practically there already. Gas $4 by Christmas for sure in NW Washington state.
The only Justice in this world is
that the rich cannot let the poor go hungry. That threatens their lifestyle ( think revolution.)
So they will print money, lots of it.
Get yours by investing in undervalued assets and inflation Plays.
I am gonna put my kid to bed now.
I am always around on this site.
Warren Buffett is certainly no bear but he is very conservative, usually investing in boring things like railroads. He does have a stake in some banks but they are respectable and stable institutions like Bank of America and Wells Fargo. When the CFC rumor hit the markets in August, my take was that he wouldn't touch a Countrywide or Hovnanian with a 10 foot pole. Nice to see it confirmed.
Somebody lied to a NY Times reporter in order to unwind their position in CFC at a more favorable price. The SEC should investigate; this kind of shenanigans lowers confidence in the markets.
As of the most recent annual shareholder meeting for Berkshire, the company had approximately $53 billion in cash. Buffett said at the meeting that the risk/reward of many assets, particularly the US stock market was not favorable in his opinion.
That meeting was back in the spring I believe, and I fail to see what could have changed his opinion since then. I'd hardly count Buffett as a bull. Yes he buys some stock here and there, but as percentage of his available capital, both personal and of Berkshire... I'd say he's waiting for the shit to hit the fan.
I just don't see them inflating their way out of this. Oh, they'll try, but they will fail.
Why? Because the economy is fundamentally broken. The people who run the game have ZERO interest in providing anything more than a serf-like existence for the masses. The economy now consists of rich clowns swapping paper and getting paid tens of millions of dollars while laying off, outsourcing, and insourcing everyone they can get rid of. The idea company, in their eyes, consists of just them and a few serfs doing their bidding and toadying up to them. No products, no real work, no job security, no future, and no hope for the masses. And that's just fine by them.
Cutting rates will accomplish nothing. The Pig Men will just keep on gambling while burying the middle class and the poor, while everyone else will get to enjoy higher prices. I think horrific stagflation may be the outcome until we're all poor and the Pig Men can do as they please.
Are we kidding ourselves to believe that, after our last episode, that a 25 bps perception is "reality based". I would not be surprised if a 50 bps is inacted, just to show the "world" that Uncle Ben is ready and willing to continue to court and spark "sporting the six inch hooker heels".
Look out below.
uno
y
marketo is stupido
I think this Saturday's video selection should be something from the Seventies to celebrate the reintroduction of absurdly high inflation. Coming soon to a core near you. Thanks Fed.
...you people are fast. Don't you have jobs?
oh wait, never mind.
$3.50 a gallon gas by Christmas.
Libor rates to the moon!
OK, did I not say a couple days ago that this is EXACTLY what would happen? And what, I get dissed for it. Tough crowd.
Geoff -- Remember it's a sign of genius when you stand against the crowd.
I was wondering why the LIBOR treasury spread got thinner. This explains it I think?
Yes, they need to cut. The stock market is a full percent off of their all time high. I'd say a 200 basis point cut is in store.
In all seriousness, this sickens me. The Fed Reserve has distroyed the dollar for the benefit of the equity markets.
13-week T-bill at 3.64% also seems to be demanding a cut.
And yeah, nice call Geoff.
Houston, we have a problem...
(Although the 10-year and 30-year yields are still a mystery. Stupid question: Can the Fed purchase long bonds? If so, how would we know? Just curious.)
I think this Saturday's video selection should be something from the Seventies to celebrate the reintroduction of absurdly high inflation.
Ball Of Confusion by The Temptations
And the band played on.
Notes on the bond rally:
Short Squeeze Fuels Bond Rally - MarketBeat - WSJ
Right. just 25 bp and the whole SIV mess will go away, the mortgage bond market will re-open, housing prices will rebound, and we'll wake up a realize the last six months was all a bad dream.
Right. just 25 bp and the whole SIV mess will go away, the mortgage bond market will re-open, housing prices will rebound, and we'll wake up a realize the last six months was all a bad dream.
And they'll keep on cutting until it happens.
Now Nemo, for extra credit, we have to figure out what is going to make it revert back to the way it was a few days ago, before the next meeting on the 31st. Any ideas? I'm too tired to think up any at the moment. But it surely could happen, mainly, because there are plenty of people who want to make it so.
The thing is, you can't play this game too many times, because after a few rounds, youve lopped far too many bps off the FF rate. Then what you do you have? Acknowledgement that weze is broken as an economy.
Napolean: you're forgetting:
And because the last 50 basis cut did SUCH a good job of keeping the liquidity crisis contained to subprime mortgages.
Outsider - thx. But sometimes, it's just insanity.
I don't wanna be your friend
I just wanna be your lover
No matter how it ends
No matter how it starts
Forget about your house of cards
And I'll do mine
Forget about your house of cards
And I'll do mine
Fall off the table,
And get swept under
Denial, denial
The infrastructure will collapse
From carpet spikes
Throw your keys in the bowl
Kiss your husband 'good night'
Forget about your house of cards
And I'll do mine
Forget about your house of cards
And I'll do mine
Fall off the table,
And get swept under
Denial, denial
Denial, denial
Your ears are burning
Denial, denial
Your ears should be burning
Denial, denial
YouTube -
Any bets on the % decline of dollar vs euro if a 25 point cut is done?
Outsider said: "...Remember it's a sign of genius when you stand against the crowd."
Thanks. Nice to hear some encouragement every now and again.
Sebastia
Damn. I am going to chech republic next week. Now I have to pay more for european Hookers.
We're so smart we're named it twice!
Homo
Sapiens
And because the last 50 basis cut did SUCH a good job of keeping the liquidity crisis contained to subprime mortgages.
Which is why I'm arguing for at least a 75 bps cut this time. It would really surprise a lot of people, more so than the last 50bps did. Imagine the containment!
Yup. 25bp, eh, whutever. Couple more spills here and there, from afar, still looks contained. 50bp, edge bristles with excitement, is container moving? 75bp, things would practically be fighting each over to stay inside the container. 100bp, implosion. Container vanishes.
Outsider said: "...Remember it's a sign of genius when you stand against the crowd."
Thanks. Nice to hear some encouragement every now and again.
Sebastian
Uhhhhh, Sebastian, you just don't quite get the big picture, do you?
sentiment
- Now, which crowd are you in?
I think we now all understand exactly where your brain is mis-wired, thanks for sharing.
First time 90!
Oil Futures Surpass $90 a Barrel
Expired
"...Remember it's a sign of genius when you stand against the crowd."
It's also a damn Good way to get your ass trampled.
anyone know of a good blog about the oil futures market?
not tod
pretty sure that was the fake seb..
anyway. seb toe's the party line, so he's not really against the crowd(equity) he's with it...
Unfortunately, for the Fed, with the virtuous cycle now in reverse,
Fed cut => inflation fears => bond market sell-off => higher 30 year mortgage rates.
Fed cut => dollar drops => foreign interest in holding US assets (including bonds) drops => higher 30 year mortgage rates + more expensive oil
can GOOG due $25eps in '08?
The Fed can't be pleased with the net effect of the last cut -- a spike in the stock market, a fall in the dollar, a spike in oil, higher mortgage rates, etc. And there was significant disagreement last cut.
So I think they'll hold the line this time...
Plan A
Step 1
Cut rates and destroy dollar
Step 2
Trigger mass selling of U.S. held debt for pennies on the dollar. Capitulate.
Step 3
Raise Rates back up again, never mind the recession, hyperinflation, and all.
Step 4
Retire debt.
Plan B
Default
Warren Buffet - I am not buying CountrySCAM, Bear Stearns or HOVnanian:
Buffett Avoids Bear Stearns, Countrywide Financial (Update3) - Bloomberg.com
Buffet on SIV:
Buffett said he was skeptical about the U.S. Treasury's plan to create an $80 billion fund to buy distressed assets from structured investment vehicles linked to home lending.
I don't see any way that pooling a bunch of mortgages, changing the ownership, is going to change the viability of the mortgage instrument itself -- whether people can make the payments,'' he said.It would be better to have them on the balance sheets so everyone would know what's going on'
What happens after Ben shoots all his ammo and we really have an economic problem?
My homework assignment:
I am trying to figure all this out so here is my conclusions...
I looked up Rhinebridge Plc. and found a list of deals done that same month. Below is just a sample from that. I noticed Rhinebridge had AAA bonds in the mix.I also noticed that these were offered in series. Interesting that a few companies name show up a lot.
So I am figuring that these companies may also be in the news shortly? That this not just a US problem but was done globably? If I understood what I read on Fitch these were bundles of all kinds of mortgage backed bonds?
Capital Mortgages Series 2007-1
Banca di Roma S.p.A.
Arranger
Transaction Summary
The first RMBS transaction from Banca di Roma S.p.A., comes
with an outstanding principal balance of EUR2,479m backed by
22,633 performing residential Italian loans. The transaction is
solely arranged by the head of the group, Capitalia S.p.A.
MBS Bancaja 4, FTA
Originator
Caja de Ahorros de Valencia, Castellón, y Alicante, Bancaja
Arranger
Europea de Titulización, S.G.F.T., S.A., Bancaja
Transaction Summary
This is the fourth MBS transaction brought in the market by
Bancaja. This RMBS backed by Spanish residential loans counts
with an outstanding principal balance of EUR1.85bn. The funds
will be managed by Europea de Titulización S.G.F.T., S.A.
The Malin CLO B.V. transaction will be well-diversified across ten
European countries. The collateral consists of senior secured and
mezzanine loans.
Rhinebridge plc
Region
GLOBAL
Investment Manager
IKB Credit Asset Management GmbH (London Branch)
Transaction Summary
Rhinebridge plc is a three-tier capital structure SIV. The portfolio
will comprise approximately 33% of seasoned AAA, AA and A
bonds, as well as 67% new issue AAA bonds.
I don't see any way that pooling a bunch of mortgages, changing the ownership, is going to change the viability of the mortgage instrument itself -- whether people can make the payments,'' he said.It would be better to have them on the balance sheets so everyone would know what's going on''
Is there any way we can make Warren Buffett Fed Chair?
First, define "all of Ben's ammo"
If you think it is 475 bp, you are probably overestimating. What would be an interesting discussion here is how much is really possible. Im thinking, if the economy continues on a downward trajectory, you've got max two or three 50bp cuts.
But if you look at Ben's speech yesterday, he said something interesting, and that is that he doesn't really give a crap about the purported strong dollar policy. I forget his exact words, but it seemed to me that he is willing to let the dollar tank as he revs up the helicopter, so I could be wrong. We might see 1% FF all over again. But at that point, we are toast, and basically just another version of Japan 1990.
Eh, when was Ben's speech? Two days ago already? Three? Seems like a lifetime. zzzzzzzz.....
I'm starting to wonder if one should interepret the list of participants in the M-LEC as a list of institutions to avoid, when you read stuff like this:
Among the firms offering support for the plan are Fidelity Investments and Federated Investors Inc. Both hold debt issued by an arm of Gordian Knot Ltd., one of the SIVs that could benefit from the fund.
Fidelity's $10.4 billion Prime Money Market Portfolio owned $402 million medium-term notes from Gordian's Sigma Finance Inc. arm as of the end of August. A spokesman said he believed that such holdings "continue to represent minimal credit risk" and said the firm's "money-market funds continue to perform strongly."
Multibillion Bailout - WSJ.com
Also, on Larry Kudlow's show on Monday, Jim Lacamp, an NBC reporter from Dallas who is always bullish, said that he believes that if they can't find a way to do the M-LEC deal or something like it to prop us the marks on this paper, we're going to see NAVs on money markets go below $1.00.
Interesting comments from Buffett on the M-LEC:
Buffett said he was skeptical about the U.S. Treasury's plan to create an $80 billion fund to buy distressed assets from structured investment vehicles linked to home lending.
I don't see any way that pooling a bunch of mortgages, changing the ownership, is going to change the viability of the mortgage instrument itself -- whether people can make the payments,'' he said.It would be better to have them on the balance sheets so everyone would know what's going on''
Buffett Avoids Bear Stearns, Countrywide Financial (Update3) - Bloomberg.com
He also says he was never going to take a stake in Bear, didn't get serious about Countrywide, etc.
Sorry--dupe quotation.
Buffet for FED chairman - I second that!
[Nemo]"(Although the 10-year and 30-year yields are still a mystery. Stupid question: Can the Fed purchase long bonds? If so, how would we know? Just curious.)"
"Can the Fed purchase long bonds?"
"Fed" is too general for me, but the Open Market Desk can buy them.
"If so, how would we know? Just curious."
I take a look starting from here
then, if time permits, go here and scroll waaaaaaay down to the bottom.
"Although the 10-year and 30-year yields are still a mystery."
The best explanation I've seen yet is that its a mystery to You, me, Greenspan and everybody else.
At what point will Bernanke stop acting like he is in a first person shooter game and stop firing away with the rate cuts? They are not working, and they will not work to save his banking buddies, so why destroy the dollar for the rest of us?
Conjure Bag is laughing with derisive glee.
"...Remember it's a sign of genius when you stand against the crowd."
I believe the quote from Johnathan Swift is:
"When a true genius appears in the world, you may know him by this sign, that the dunces are all in confederacy against him."
What do you all expect him to do? Fiddle while the economy tanks? No, he will cut - hard and fast. Unfortunately, due to all the excesses that have built up over the past many years the cuts will have little effect. It will be painful and a painfully slow process that may take many years. Many of you here seem to realize that the economy is slowing but then you criticize him for cutting. Does any body here have a "magic bullet" to get us out of this mess?
If you were the Fed chair, what would you do?
Mark- "Many of you here seem to realize that the economy is slowing but then you criticize him for cutting."
Hell, yes. He's going to run out of ammunition and have none left when he really needs it.
"If you were the Fed chair, what would you do?"
Day 1 AM: Hire CR and Tanta, although not necessarily in that order.
Day 1 PM: Call in all the Wall Street investment banks and tell them to stop crying and start rowing.
Day 2 AM: Demand that all off-the-books transactions go on the books.
Day 2 PM: Demand that Congress reinstate Glass-Steagall.
Day 3 AM: Instruct the FOMC to prepare for a possible helicopter drop.
Day 4 PM: Consult with Conjure Bag and wait.
BTW, Bernanke in response to Malpass' question said that he doesn't think a lower dollar means higher inflation. Doesn't matter whether that is correct or not but you know where he stands with regards to a strong dollar policy.
As elucidated here
mp, I agree. If I am elected president, you are my Fed Chair. CR and Tanta would have high positions in my cabinet. In fact, most of the posters here would be in important positions in my administration. But I am not sure that we would be able to "fix" this mess. We could probably do a better job than what we currently have.
Mark
It is proven that we have a NYT reporter who started a baseless rumor which moved the market, completely denied by the subject of the rumor, WB
Berkshire not buying Bear Stearns stake: Buffett
| Reuters
and we have hedge funds alledgedly reporting fraudulent asset values to boost reported returns and collect higher fees.
Pricing Tactics of Hedge Funds Under Spotlight - WSJ.com
who, in their right #$%^$# mind would allocate a dime into these unregulated, alledgedly fraudulent reporting pools of capital?
a pension near you. we don't need no stinking regulation, hedge funds provide a valuable service and add liquidity, even though we boast the most transparent markets in the world, we endorse the most opaque of investment pools, why?
because the fees generated are %%^&&&$$# enormous and the lap dogs are bought and paid for to support this bullshit.
mpyou have my vote as well,and Buffet is right,putting 5 pounds of shit in a fresh 1 pound bag does not change the nature of what you are dealing with.
Can someone please explain why M-LEC is not an antitrust violation? It sounds like a bunch of alleged competitors gathering together to set prices. What am I missing?
I hope the FED folks do cut by a half pct...maybe got all out and make it at full point...really impress the world.
And thus we have inflation which give me cheap dollars to pay off all my mortgages.
And then a nice stock dip when they figger out that if the original debtors can't/won't pay, then no conduit in the world can cover the naked man forever and I can cover all my shorts.
Thereafter, living happily ever after with my social security enhanced by $24 per month.
Ame
The broader global economy is unlikely to come through the recent turbulence in the financial sector markets unscathed, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said today.
Speaking here at the Center for Transatlantic Relations ahead of the annual meetings of the International Monetary Fund and World Bank, Almunia called for "a concerted and cooperative effort on the part of all governments involved" to safeguard stability.
"If the current financial disruption generates some headwinds to the economic outlook, just remember that a disorderly unwinding of global imbalances would be the equivalent of a force five storm," he said.
That the recent credit crunch caused only "isolated incidents" in Europe - losses at two relatively small German banks and the UK's Northern Rock - he credited partly to the European Central Bank's strategy of injecting extra liquidity into the markets.
But he cautioned that "further improvements" were needed in cross-border cooperation and said that despite the "uneasy calm" it would be "premature to rule out further problems emerging in the weeks or even months ahead."
There are "lean times ahead" likely for the financial sector, but also in the wider European economy, as the available data "suggest that the current cycle has peaked," said Almunia.
"It is already clear that the economic outlook for the next two years appears less favourable than before the financial turbulence," he said.
Policy response to the turbulence must look at issues surrounding transparency, valuation of assets, strengthening risk management and supervision, and more analysis on financial market functioning, with a particular scrutiny of the role of credit rating agencies, added Almunia. rosalba.obrien@thomson.com ro/wash
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
Hey, does anyone know of a Bullish
Blog where I can go and Troll the Bulls? I got nothing better to do than see my fertilizer and gold stocks go up.
Gold is going parabolic like oil. Gold now nearly $770 AN ounce tonight.
If the Fed cuts $800
re:
Warren Buffet - I am not buying CountrySCAM, Bear Stearns or HOVnanian:
Bloomberg.com refer=home
crispy&cole
You missed out the most important part of the article - Excerpt
....he told anchor Liz Claman[Of Fox Business News]
Now we know where sweater-girl Liz Claman went - That was the most important part of the story !
-K
Bullish
see Minyanville -- Stock Market, Investment, Finance, Money, Hoofy & Boo-Minyanville
If you were the Fed chair, what would you do?
Mark
Close it down and tell the UH Congang to follow the friggin Constitution.
If they say no, then do a Volker and jam interest rates up to 10-12%, force the gov't to start balancing; with an inverted yield curve, force those arm debtors to try and refi to fixed, and force liquidation of those that can't; punish banksters and help responsible 30yr fixed mortgage holders holding 6-7% loans; and liquidate including with bankruptcies the foolish pig men.
That should do it.
Cheers,
Many of you here seem to realize that the economy is slowing but then you criticize him for cutting. Does any body here have a "magic bullet" to get us out of this mess?
If you were the Fed chair, what would you do?
Mark | 10.18.07 - 8:00 pm | #
Let's have the damn recession. There has been a terrible monumental misallocation of capital. There has also been a grotesque misallocation of human resources to the finance industry.
Remember all that crap about how we were moving to a finance economy? What kind of fantasy is that. Right, the rest of the world is going to let us shuffle their money forever while they work making stuff and polluting their environments extracting resources. Hello! They can do finance too. It is not that hard. Anyway, only so many ticks can live off of one dog.
I don't think a recession is something to be avoided at all costs and certainly not the cost of debasing our currency and destroying trust in our institutions(the most precious thing of all in my opinion). I think, it is something we absolutely have to have to get back to something remotely resembling a healthy economy.
anonymous was me.
Anonymous | 10.18.07 - 8:47 pm |
you nailed it !
However, this asshat of an administration doesn't give a rat's ass about the US economy and Americans.
They work only for the super rich or perhaps at most 1% of America.
Anonymous, I am inclined to agree until I remember that recessions are regressive. Because the middle-class and poor will hurt most, calculating the macroeconomic reparations that would result is a fool's errand.
"I think this Saturday's video selection should be something from the Seventies"
May we suggest: The Cars, Dangerous Type
YouTube -
"I think this Saturday's video selection should be something from the Seventies"
no no no no no
I still have a hangover from the last 70's fest.
Let's do 80's to honor the last time we had a somewhat sane Fed chairman.
Cheers,
Anony,
Agreed that we need (or needed some time ago) a recession to reduce the leverage and crazy risk taking. I believe that we have put it off so long that, at this point, the result will be a very painful experience. I also think that it is all but inevitable. I just don't think that the Fed can "do nothing" when they see this train wreck coming (even though it will get the result here quicker and probably get it over quicker).
Mark
Thanks Crispy, good to see the wise old Buffett shoot down those bogus rumors. I guess the crooks will have to think up a new one the next time one of their calls goes down and they need to unwind their positions.
Back on topic - no way the Fed cuts with oil flirting with $100. Any beneficial effects on rates would be vastly outweighed by $5.00 a gallon gas and foreigners fleeing our markets like rats off a burning freighter. It would be the equivalent of the Fed giving the finger to the world.
Google had another blow-out quarter. Surprisingly per-click prices actually rose. The reason this is a surprise is that mortgage/real estate related ads were probably shrinking, and those were some of the highest paying categories, so I would have expected some shrinkage in per-click prices.
I am familiar with a fairly sizable ($5+ million/year) non-financial non-real-estate Google advertiser, and know that they track their ROI to the percentage point. They still seem to be spending, because the folks tell me the ROI is there for them. They tell me they will slow down if they see ROI fall, but so far at least, that hasn't happened.
Not sure where this is all heading, but I thought I would throw that out there.
What do you all expect him to do? Fiddle while the economy tanks? No, he will cut - hard and fast. Unfortunately, due to all the excesses that have built up over the past many years the cuts will have little effect. It will be painful and a painfully slow process that may take many years. Many of you here seem to realize that the economy is slowing but then you criticize him for cutting. Does any body here have a "magic bullet" to get us out of this mess?
If you were the Fed chair, what would you do?
Mark,
If I were Fed chair, I would end the real problem, and not focus on the symptoms.
We have a cancer growing in the economy. Businesses based on a leveraged ponzi finance model (that produces no real wealth, just paper welath) are proliferating through the economy and crowding out legitimate wealth producing business.
Gamblin' fever is taking over the global markets.
We are convincing ourselves that we're getting richer with paper promises while increasingly neglecting the economic pursuits that produce real wealth.
Priority One is to stop this ASAP, or more and more damage will be done, and instead of tanking now the economy will super-tank at some point in the future.
I would raise rates immediately and put an end to the growing speculative plague. Economic chemotherapy. Without real trauma the get-rick-quick schemes will come right back.
So raze a good part of the hedge fund industry and the proliferating ponzi schemes Volcker style.
Then start pumping liquidity back in the economy.
The Fed has been screwing up since 1998 by lowering rates and fostering a financial industry that's more like a giant tumor.
All because we can't handle short term pain and think we deserve an easy life just by virtue of having a pulse.
Is it any coincidence that the best years in US history followed the twin horrors of the Great Depression and WWII? And then the "Great Recession" of the early 80s?
The things that matter are made during hard times. The quick and easy way out is the surest path to irrelevance.
ac Economic chemotherapy sounds good in theory but the cancer in the US financial system is systemic.
ac,
Perhaps the tin foil hat is tuned a bit high today...but you could at least give me a shout out. I done essentially this several posts ago.
Maybe I created an invisibility field...that would be so cool.
Cheers,
ac,
Agreed that - long term - getting the excesses out of the system would be a good thing. Raising rates would do that, but with all the debt burden, it would likely put us into a deep recession (or depression). I think the choice is between a very deep, painful, recession (or depression) that is overwith in 2 to 3 years by raising rates as you suggest, or a long, slow Japanese style malaise (in and out of recession) lasting maybe a decade or so if we go the rate cutting route. Neither is a good choice. However, if the Fed raises as you suggest they may be "blamed" for the outcome. (even though we know here that it is most likely coming anyway).
Mark
Mark
Liquidate, mark to market, rip the band aid off fast. It's done. A LOT of pain. 20 years of mal-invested physical and human capital needs to be re-aligned. Japan IS STILL wallowing in the '92 fallout. Volker caused two severe recessions in 5 years righting the economy. It's much worse now. But a massive hike would remove the contagion.
Yes it would hurt much. But the creep along Japan style way just rewards the pig men. A sharp increase and severe pain slaughters the pig men. Such a move benefits the prudent and punishes the gamblers. It would realign REAL capital with the savers.
Cheers,
Conjure Bag is sitting in the corner, jumping up and down screaming:
"Liquidate it all! Let more competent people pick up the pieces!"
He's starting to sound like Andrew Mellon. I'd better give him some Stoly.
mp,
Make sure it is the high proof stuff!
If Bernanke does the right thing, he will be crucified. Let's hope he's up to it, and give him due props...
The Irony
Interest Cut->weaker dollar -> higher energy and raw materials cost -> lower spending on service-> lower income-> weaker sub-prime housing market.
The excesses are going to get burned off no matter what Bernanke does!
If Bernanke does the right thing, he will be crucified. Let's hope he's up to it, and give him due props...
Detroit Dan
He won't. But he should, as those crucified for the beliefs in the past are often honored by following generations for millenia.
Histrionic yes...so what?
Cheers,
Dryfly,
Are you still sticking by your prediction last week of no cut ?
Years of leverage started unwinding in August. The last 3 days of news shows that at least a half a dozen asset classes are at crisis stage.
The excesses are going to get burned off no matter what Bernanke does!
Preserve
Of course. It just matters who gets burned. Cut...the middle and lower classes... big hike the people who caused the problem. I like the hike option.
Cheers,
Who [aside from a small minority who lose their jobs (for a while) and people who lose their houses] is suffering from all this? The economy seems to putter along, not great, but not a disaster either, the stock market stays in the stratosphere, gas prices cause no complaint. I have to say I won't be alarmed until the pain begins to show, lots of people start losing their jobs permanently, and some banks go under and inflation roars upward and the market sinks rapidly by 30%. So far none of this seems to even be on the horizon.
"He's starting to sound like Andrew Mellon. I'd better give him some Stoly."
thank god you're here, fine comic relief
All of the Buffet interviews are here - on the right hand side:
Page Cannot Be Found
Of course. It just matters who gets burned. Cut...the middle and lower classes... big hike the people who caused the problem. I like the hike option.Cheers,Misean
Its not that clear cut. A hike definitely helps the people that own Long T-bonds though.
If you were the Fed chair, what would you do?
I would make it clear that fighting inflation, not full employment or trying to break the business cycle, is the Fed's number one priority.
I'd study everything that Paul Volcker did during his tenure and try to emulate him.
Misean,
I agree that the "raise the rates" way would "clean out the system" much faster and would obviously benefit the savers. Unfortunately, it appears the number of spenders and gamblers far outweigh the number of savers. I absolutely agree that the current "system" rewards greed, fraud, borrowing, risk taking and free spending and that something must change to get us on the path to a more prudent, fair future. I am all for the greedy hedgies getting their "due", and the savers and middle class getting ahead for a change. I just think the politicians and many "regular" American think that rate cuts will solve the problems, and that will be the route the Fed takes.
Mark
Anyone ever capture a video of the old WIN theme (Whip Inflation Now)? I remember a guy singing it while playing a piano as the buttons were being handed out....
"It was Ford who commissioned the legendary Meredith Willson to compose the theme song for the Administration's "Whip Inflation Now!" campaign, which the Broadway composer himself performed on nationwide television after Ford launched the campaign in an historic address to Congress on October 8, 1974. The music didn't quite rise to the level of "The Music Man" or "It's Beginning to Look a Lot Like Christmas," but the lyrics are literally unforgettable:
Let's WIN together, WIN together:
That's the American Way today.
Who needs inflation?
Not this nation!
Who's going to pass it by?
You are! And so am I!
So WIN together. Lose? Never!
If you can win, so can I!"
BLUE IN A RED STATE: Andy Lang's Blog: Gerald Ford's legacy
We don't think industry fundamentals support oil prices near $60 (a barrel), let alone $90, but with excessive speculation and lack of government scrutiny, prices could go even higher, before they crash, eventually, in our view," said Fadel Gheit, an analyst at Oppenheimer & Co
the whole oil futures complex is trading at 75 and up, but he thinks the fundies equate under 60...
weird..
drill a whole and it comes up free...
now price the dripp , the pipe, the labor, the transit, the transit pipe, the protection, the distribution, the marketing, the admin, the etc...
ya get the point...
i'd like to see his model
CLF
iron pellet people
one drill pipe section
600lbs
one ultra deep GOM hole... 7 miles down
that's a lot of steel pipe...
that's the fundies
Who [aside from a small minority who lose their jobs (for a while) and people who lose their houses] is suffering from all this? The economy seems to putter along, not great, but not a disaster either, the stock market stays in the stratosphere, gas prices cause no complaint. I have to say I won't be alarmed until the pain begins to show, lots of people start losing their jobs permanently, and some banks go under and inflation roars upward and the market sinks rapidly by 30%. So far none of this seems to even be on the horizon. [James]
I believe the pain has started for a lot of middle class people. There has been an erosion of security in terms of health insurance and pensions. Also, where are the job opportunies for our young adults? What is America's place in the world? Are we doomed to be overhead in the world economy?
and foreigners fleeing our markets like rats off a burning freighter.
It ain't just foreigners, debasing your currency has always been a road to disaster. There is no reason to leave ones capital invested in a country that is basically telling you they are going to give you the shaft.
psychodave- "thank god you're here, fine comic relief"
Thanks, psychodave. When you think of cynical, disenchanted and derisive Happy Warriors, just think of mp and Conjure Bag.
I am with Mark and Clyde. The FED will cut because they are convinced that it will help. And yes, the spenders and investors outnumber savers by several factors.
Saving too much and not investing is just as Dumb as investing too much.
DH- "Saving too much and not investing is just as Dumb as investing too much."
Huh? That sounds kind of like "you can't put too much water in a nuclear reactor."
drill a whole and it comes up free...
now price the dripp , the pipe, the labor, the transit, the transit pipe, the protection, the distribution, the marketing, the admin, the etc...
Oil trades on supply / demand just like any other commodity cost has little to do with it. I think they proved that in the 80s oil bust.
Saudia cost of production is a few dollars a BBL.
As I have said before, I believe that the Fed will hold this time and agree with Dryfly. I think that the Fed will want to send a message that the market is strong enough to handle this, that the housing market will recover in time, and that the economy is strong and flexible enough to handle the issue.
Of course,..... the Fed will be wrong and will have to do an emergency cut of .5 basis points before the December 11th meeting. By that time, the market will have drop 15% due to financial and economic concerns.
Either way, I have placed my money to handle both long and short plays with international and resource plays. Some money is currently in cash but it bothers me to have the cash in a money market fund. But I should not be greedy as my two year returns have been outstanding.
"I think this Saturday's video selection should be something from the Seventies"
no no no no no
I still have a hangover from the last 70's fest.
Let's do 80's to honor the last time we had a somewhat sane Fed chairman.
Cheers,
Misean | 10.18.07 - 8:59 pm | #
New York Dolls, Personality Crisis.
Apropos.
Franz, Conjure Bag wants to know if you own any TFAL cookware.
RE: Anon
It ain't just foreigners, debasing your currency has always been a road to disaster. There is no reason to leave ones capital invested in a country that is basically telling you they are going to give you the shaft.
Exactly. Jon Stewart nailed it in the interview with Alan Greenspan( lots of links in lots of places ) . Excerpt:
"
Stewart: When you lower interest rates, it drives money to stocks and lowers the return people get on savings.
Greenspan: Yes, indeed.
Stewart: So theyve made a choice - We would like to favor those who invest in the stock market and not those who [save]...
Greenspan: Thats the way it comes out, but thats not the way [to?] think about it.
"
I just love the NewSpeak: "that's not the way to think about it
-K
Oil trades on supply / demand just like any other commodity cost has little to do with it. I think they proved that in the 80s oil bust.
Saudia cost of production is a few dollars a BBL.
Anonymous
that may be the most ridiculous thing i've ever read on CR's site, including sebastians' comments
"I just think the politicians and many "regular" American think that rate cuts will solve the problems, and that will be the route the Fed takes.
Mark"
Wholeheartedly agree. I was just saying what SHOULD be done, not what will.
"Saving too much and not investing is just as Dumb as investing too much.
DH"
Erm...huh? How can one save TOO much. If you don't need it don't spend it. When you do need it you'll have a larger cache to draw from.
Me: one debt 62,000 mortgage. Cash and gold..enough to pay that off and still have plenty for a new car and several plasmas. "Investments" (in paper) ~75k. < 15%.
Hmmm....
Cheers,
franz,
Put your cash in T-Bills or a Treasury only MM Fund.
I think the Fed will opt for the Japanese style economy. Cut, cut, cut, cut til we hit the ZLB.
Mark
I nominate Marriner Eccles as Fed chairman. The Fed building is named after him. The only problem is that he's dead, so I'll have to consult with Conjure Bag on the problem.
Google Videos Error
batting a 1000.
http://www.sprott.com/pdf/marketsataglance/10_2007.pdf
Apropos.
Marcus Aurelius
Naw...i'm thinking 80's...where Volker said of inflation....this
YouTube -
What kinda siter????
Cheers,
Nope, only allcald stainless steel ( or should I say steal). My wife works part time so I ususally buy my pieces when they go on sale. With her 40% employee discount, I usually get them about 60% off retail. So.. for me, it is all about value and financial opportunity.
As far as my investing, I have double my net assets in two years and have help my coworkers gain 20% this year. No, I don't work in the financial markets and have been able to do this in my 401K even with the 90 day rules to limit day trading.
Personally, am I worried about the market? Of course I am, it is not making sense. However, I can only trade based on the market and my research such as CR, Bullnotbull, etc. Right now, it is working well.
How can one save TOO much. If you don't need it don't spend it. When you do need it you'll have a larger cache to draw from.
savings comes from labor...
at a certin point along the graph, your savings(capital) should be put to work... at a point further along the graph, if one allocates wisely, the capital gains will far outpace any further labor efforts, and the savings that come from it...
at tht point , you switch from an empoyee to an entrenprenuer.
OilEquations
"that may be the most ridiculous thing i've ever read on CR's site, including sebastians' comments"
I lived through the oil bust in the 80s, I managed to keep my job and retired in 05 but a whole hell of a lot of people I worked with went down the road. Some of the same arsine things went on then, when oil plunged it was the money in the bank and not the oil in the tank that mattered.
If you don't understand supply/demand maybe you need to go threw one of these abandoned housing projects or ask a builder how it works.
at a certin point along the graph, your savings(capital) should be put to work... at a point further along the graph, if one allocates wisely, the capital gains will far outpace any further labor efforts, and the savings that come from it...
at tht point , you switch from an empoyee to an entrenprenuer.
Censured
Yes, but within a fiat system, it is extremely difficult to invest the fruits of one's labor and come up golden. In a speculative gambling casino of today's markets...it's nigh on impossible. Just treading water is difficult.
If one is laboring, one does not have time to play in the casino. I got a bit lucky, and as an Austrian economist, saw gold at $250 and silver ~ $4 in '99 as a HUGE bargain and bought all I could. Smart? yes. A gamble..YES! Markets should not behave this way.
Cheers,
cost has little to do with it.
do you have any evidence that proves that statement above...
any ratio that explains 'little' in regards to futures prices that require delivery 30 days after settelment?
Well, think about it. Who Saves too much?
Someone who Hoards. Hoarding is motivated by deep feelings of insecurity. If you are gonna be a good economist, you should do some
extra reading on Psychology. Hoarding is neurotic behaviour, so is
frivolous spending,So is using 10-1
leverage to buy mortgage-backed securities. i will go on later.
how is cutting rates help the housing market..go back to dot com bubble-I (right now we have II) and what happened to fiber optics /telecom that were overbuilt..it needed firesale afterwards.
Cutting rates will only make things worse as emrging market cash inflows once again will zoom..commodities will do a parabolic rise...fanning the flames of inflation even more.
I would stay the course and tell the speculators that fed is watching dollar as well as commoditi prices.
Cheers,
Misean
extremely difficult
ahh yes it is,
mistakes will be made...
that is why you continue until such time that your gains Far outpace your labor efforts
never any guarantees
Andiron,
Cutting rates stimulates the economy
in general, people will borrow money
to start businesses and hire people.
Cutting rates may not help overnite,
but it will eventually. There are other things the FED can do stimulate the economy too, like accepting Mortgage backed securities
as collateral. This will give the banks money again in order to make new loans. Don't forget, it is just paper.
DH
Dictionary.com Unabridged (v 1.1) - Cite This Source - Share This
hoard /hɔrd, hoʊrd/ Pronunciation Key - Show Spelled Pronunciation[hawrd, hohrd] Pronunciation Key - Show IPA Pronunciation
noun
1.\ta supply or accumulation that is hidden or carefully guarded for preservation, future use, etc.: a vast hoard of silver.
verb (used with object)
2.\tto accumulate for preservation, future use, etc., in a hidden or carefully guarded place: to hoard food during a shortage.
verb (used without object)
3.\tto accumulate money, food, or the like, in a hidden or carefully guarded place for preservation, future use, etc.
[Origin: bef. 900; ME hord(e), OE hord; c. ON hodd, OHG hort, Goth huzd treasure; see hide1, hide2]
This is bad HOW?
Cheers,
john mccain said he wants zero percent interest rates, so we know what the politicians think solve problems.
"Cutting rates stimulates the economy
in general, people will borrow money
to start businesses and hire people...
DH"
That's just silly. Dropping rates causes people to consume on debt. That's why we're in the state we're in. False interest rates distort the economy and create mal-investments...too much of some things...not enough of others. Low greenspan rates tossed massive human and physical capital into building and trading houses and the paper that financed that. Where was the investment in productive assets? Hellmost of the stuff going into housing is:
1. Consumption goods
2. Produced elsewhere.
Take of the Keynsian Rose colored glasses and look at what low rates hath rout.
Cheers,
There is way too much focus on the Fed. Far, far more than ever before, and it's a bad, bad sign.
It shows how much our financial system is propped up by a belief in cheap money and government intervention.
The stock market began this year with a litany of alleged strengths...earnings, GDP, takeovers, mergers, private equity, housing turnaround, etc. Now, the stock market is down to one prop -- the Fed. Nobody even pretends those other things are happening any more.
It's amazing how many supposedly smart investors believe the Fed can keep juicy the markets forever. It's become a transparent fool's game. There will be a day, not far away, when stocks will have to pay good dividends to be taken seriously.
"There will be a day, not far away, when stocks will have to pay good dividends to be taken seriously.
rich"
Yipee kay yay rich. 100%
Cheers,
Commodities are on track to take the excess liquidity now. If Bernanke inflates, it will inflate food, fuel and precious metals. Vockler not only raised rates but on the way down he made sure a massive amount of liquidity was being directed into the stock market. Why eles would we have 20 years of low inflation and good business development? Greenspan made the market unstable in 1995 when he did not close the reserve requirement loophole of sweeps he opened in 1989 to prevent a big recession. Recent Fed chairmen like to flood liquidity in all the time now, not just when it is needed. They should be draining the excess liquidity when times are good, not adding to it. I guess it is the "me" generation getting greedy.
The only real way to make sure a massive amount of liquidity is directed into the stock market is to promote economic growth conditions that allow public companies to become profitable.
Look at MSM and you will see that Vockler "primed the pump"
The U.S. economy that Vockler helped to pull out of recession was a smokin' machine with strong manufacturing, declining inflation and energy prices, a fast-growing labor force, and emerging global dominance in financial services and technology.
The U.S. economy today is an invalid on disability.
Perhaps we can get rid of some of our stupid copyright and patent laws and other rules and regulations that have retarded growth. Then we can start building and designing things again.
We must build things in order to create the environment for new designs.
We are a strong nation of many types of people. Its time we get off our sub-prime buttocks and get back to work doing something worthwhile.
The only real way to make sure a massive amount of liquidity is directed into the stock market is to promote economic growth conditions that allow public companies to become profitable.
rich | 10.18.07 - 11:30 pm |
Or to allow companies to show "profits" through fraudulant accounting and have CNBC cheerleaders (and the rest of the MSM) telling the public that you have to buy stocks now because they will be 20% higher in a year and you will be "wealthy" if you buy now. Then print money and make credit easy and the money will get directed to the current bubble. The markets are whispering to Ben "If you print it, they will lever and buy"
Mark
Commodities are on track to take the excess liquidity now. If Bernanke inflates, it will inflate food, fuel and precious metals.
Ministry of Truth
Yep...and this bubble will topple the economy. Previous bubbles were based on increasing the amount of paper (fictiscious capital)...commodities and real and will kill the consumer economy.
Cheers,
There are other things the FED can do stimulate the economy too, like accepting Mortgage backed securities
as collateral. This will give the banks money again in order to make new loans.
DH | 10.18.07 - 10:50 pm |
Accepting the crappy mortgages will just reward the excessive risk taking and loose lending standards. MORAL hazard.
Give banks money again to make new loans? We can't service the debt we have, that is the main problem. Just what we need - MORE debt.
Mark
That's my point. That's not real.
And it won't last. The Fed governors know it's not real. They are under a lot of pressure but they aren't stupid enough to think it would produce anything meaningful or lasting. Things are happening very quickly now. You can't really buy that much time.
Perhaps we can get rid of some of our stupid copyright and patent laws and other rules and regulations that have retarded growth. Then we can start building and designing things again.
If we actually had those protections we wouldn't have a trade deficit.
ok...Google met expectations..US market should move up..but Nikkei is now down 303....carry trade has some unwinding..tomorrow is another day as oil tops $90...
Question: Can the US economy absorb/adjust to oil at $90/brl?
Let's not forget Buffett bought banks in a big way this year and particularly in the August downturn. He's bullish and long stocks, not vice-versa as some posters may want you to make believe.
Some of the posters here also remind of of the old time religious practises of self-inflicting wounds to demonstrae repentence. In as much as such behavior is absurd and wrong, it's also absurd and wrong for a government of central bank to self-inflict economic damage to an economy. Or is it just selfishness of people who missed out on past booms?
O-Joe
Misean,
Yes, I am saying Hoarding is Bad. Besides, it only means you are bullish on cash. Anyhow, a balanced approach to savings,spending, and investments is the way to go. As far as Hoarding goes, I know its bad due to personal experience, sorry, I should have mentioned that earlier.
Could someone explain to me what % that oil would play in terms of draging down this market. I know there's a lot of people on this site that can afford $4-$6 a gallon but long term? Some say people will adjust to it others say it could slow the economy to the extreme. I mean as it is I'm spending $400-600 a month on gas. I can't imagine almost doubling that!
Mark,
The Fed has been able to stimulate
the economy before through money
creation many times before.China and Japan will gladly forgive all the debt just so they can keep their people working and life going. Again
It may not happen overnight, but based on historical evidence, I would bet that way.
here is my gameplan for S&P 500 investment levels.
1350 30%
1250 40%
1150 50%
1050 75%
950 120%
800 200%
O-Joe
"it's also absurd and wrong for a government of central bank to self-inflict economic damage to an economy."
It's not wrong for the Fed to discourage reckless behavior. The US economy is addicted to cheap money and easy credit. Should the Fed encourage more by printing money and loosening lending standards?
Would you give a known, irresponsible alchoholic a trunk full of liquor, the keys to your car and tell him to drive your children across the country - at the highest speed possible?
Mark
Dryfly,
Are you still sticking by your prediction last week of no cut ?
My predictions are pretty lame lately - I didn't really think they'd cut LAST time either. Thought they'd wait at least another month or two.
BTW - I've been on the road all week. I was in two plants making products for 'infrastructure'... railroad & power equipment and power plant components... it looked like WWII the freaking plants were so busy. I hadn't seen that many assholes butt up welding in probably 15 years.
The mfg engineer I was with told me they need 40 more welders at this site... and can't get them even though they pay $25-30/hr (not including full benefits)... I guess ex-mortgage brokers can't weld.
So they are going to outsource the work to another domestic shop (pays almost as well there too) that has capacity.
Why all the activity? Commodities. $80 oil and $9 wheat - they need more trains, barges and power plants to move & process the shit & the margins are high so they can 'ramp it up'.
Obviously a lot of automotive, consumer products & housing related biz is hurting - badly in some cases. Commodity related stuff is clearly NOT.
BB would be crazy to cut in the face of this... but my guess is most of his contacts don't walk the floors of 'fab shops' too often.
Mark,
You are sounding like one of those
permabears wearing a bulletproof vest.
No one has died from this credit bubble,OK. one would have to be
in need of some serious therapy
to let themselves get bogged down over this crap. Its only money, The FED will print more of it and life will go on. Yes, there will be more
booms and busts. Again, noone is gonna die.
O Joe,
You have been drinking too much of the CNBC koolaid. Do you not see any of the risks that the current economy is facing? If there is no risk, and everything is sooooo good, why does the Fed need to lower rates? Why are foreclosures up? Why are companies inflating profits by carrying assets at prices that they know are fictitious?
All is good, Kudlow said so!!! ? Cramer's the man!
Mark
Oh one thing before I go to bed...
Worrying about 'hoarding' in a country with debt like we have and a negative savings rate is like worrying about chastity at the Mustang Ranch.
I'd find something else to worry about.
1350 30%
1250 40%
1150 50%
1050 75%
950 120%
800 200%
DH | 10.19.07 - 12:27 am |
DH,
Based on the above, at 1550 in the S&P, you would be approximately 10% invested in stocks.
I have a similar way of investing, add to my allocation at lower prices, reduce exposure at higher prices, and my numbers aren't much off from yours.
Not a perma bear, just like to invest in the markets when I feel I am being paid properly for the risk I am taking. Feel the risk is too high and the potential payoff is way too low at the current prices & situation.
Mark
Yes, the economy can handle $90 oil. I was just up in Canada. Gas at 1.11 / liter. What's that, $4.50 a gallon US or so? Life goes on. Gas goes to $7/gal and then things start to get tough. Someone said gas $3.50 by Christmas? It's practically there already. Gas $4 by Christmas for sure in NW Washington state.
Mark,
we still have that "it's only money"
argument to settle.
DH,
Don't know that I have an argument with you on that one.
But....Tell that to the greedy that lie, cheat, & commit fraud to get $50 Mill bonuses. Yes, it's not as important as most in this country think.
Mark
Mark,
BTW right now, I am -30% on stocks. I will cover around 1400.
rules of Fight Club
1) if it is your first time, you have to fight.
cheers
The only Justice in this world is
that the rich cannot let the poor go hungry. That threatens their lifestyle ( think revolution.)
So they will print money, lots of it.
Get yours by investing in undervalued assets and inflation Plays.
I am gonna put my kid to bed now.
I am always around on this site.
DH,
It looks as though we are not far off at all on our stock strategy.
I am new to blogs, only posted here a few times.
What is Fight Club?
Just testing new comers?
Did I pass?
Mark
[i] Perhaps we can get rid of some of our stupid copyright and patent laws and other rules and regulations that have retarded growth.[/i]I concur.
I think the Fed will opt for the Japanese style economy
You mean a high savings rate, world's biggest creditor, and a big trade and current account surplus?
Just how is that going to happen?
O-Joe,
Warren Buffett is certainly no bear but he is very conservative, usually investing in boring things like railroads. He does have a stake in some banks but they are respectable and stable institutions like Bank of America and Wells Fargo. When the CFC rumor hit the markets in August, my take was that he wouldn't touch a Countrywide or Hovnanian with a 10 foot pole. Nice to see it confirmed.
Somebody lied to a NY Times reporter in order to unwind their position in CFC at a more favorable price. The SEC should investigate; this kind of shenanigans lowers confidence in the markets.
As of the most recent annual shareholder meeting for Berkshire, the company had approximately $53 billion in cash. Buffett said at the meeting that the risk/reward of many assets, particularly the US stock market was not favorable in his opinion.
That meeting was back in the spring I believe, and I fail to see what could have changed his opinion since then. I'd hardly count Buffett as a bull. Yes he buys some stock here and there, but as percentage of his available capital, both personal and of Berkshire... I'd say he's waiting for the shit to hit the fan.
I just don't see them inflating their way out of this. Oh, they'll try, but they will fail.
Why? Because the economy is fundamentally broken. The people who run the game have ZERO interest in providing anything more than a serf-like existence for the masses. The economy now consists of rich clowns swapping paper and getting paid tens of millions of dollars while laying off, outsourcing, and insourcing everyone they can get rid of. The idea company, in their eyes, consists of just them and a few serfs doing their bidding and toadying up to them. No products, no real work, no job security, no future, and no hope for the masses. And that's just fine by them.
Cutting rates will accomplish nothing. The Pig Men will just keep on gambling while burying the middle class and the poor, while everyone else will get to enjoy higher prices. I think horrific stagflation may be the outcome until we're all poor and the Pig Men can do as they please.