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FDIC Quarterly Report:
FDIC: FDIC Quarterly
Hahaha, some hack breached the embargo. I wonder how BB will start his speech: "Moin, since you all know what I'm going to say..."
50 bp cut at next FOMC, some speculation about an emergency cut before that.
How funny is that; the market pops on news that the economy sucks. Although it looks like the pop is already draining off. Maybe people aren't as stupid as I thought.
"However, in light of recent changes in the outlook for and the risks to growth, additional policy easing may well be necessary. "
Definitely cutting by 50 and more.
Why doesnt he even bring up inflation, they clearly dont care about it.
Outlook worsened, weak housing demand, financial calamity... The stock market should ROCKET on this news!
Bad news, no small wonder the market is cheering!
This is a subprime speech. It isn't good for confidence when the Fed Chairman doesn't appear to understand that the issues go far beyond subprime.
The market (and me) jumped on Bernanke's nod to a 50bp cut, but he did express concern about inflation:
"Even as the outlook for real activity has weakened, there have been some important developments on the inflation front. Most notably, the same increase in oil prices that may be a negative influence on growth is also lifting overall consumer prices and probably putting some upward pressure on core inflation measures as well. Last year, food prices also increased exceptionally rapidly by recent standards, further boosting overall consumer price inflation. Thus far, inflation expectations appear to have remained reasonably well anchored, and pressures on resource utilization have diminished a bit. However, any tendency of inflation expectations to become unmoored or for the Feds inflation-fighting credibility to be eroded could greatly complicate the task of sustaining price stability and reduce the central banks policy flexibility to counter shortfalls in growth in the future. Accordingly, in the months ahead we will be closely monitoring the inflation situation, particularly as regards inflation expectations."
Oh well, a little tough talk on inflation mixes well with a 50bp cut.
Best to all.
Gold hits $896
Cool the fed says it is worse than they thought. I see no reason why we can't get a good rally out of the equity market.
in my above sentence, doesn't = does.
Why does he even bring up inflation..
YAY! MORE BUBBLES!!!
Market back in the morning range already.
That 50 point cut was good for about a half hour bounce. Probably won't get even that when they finally announce it.
He seems to be looking at a slowdown as the factor that would control inflation, but then says they will probably cut rates to stop the slowdown. He also knows, of course, that some estimates now put the US in recession.
I think this is mostly talk; I'm sure he knows the limits of Fed action at this point.
It seems to me that the market psychology has changed, perhaps reading Bernanke's promise of aggressive action as a measure of the risks to the economy rather than a reason to party on, dude!
In other words, have that many of the IB's and hedgies gone short?
Go easy on Ben. He's a rookie. He'll get the hang of it some day.
CR said: "...Oh well, a little tough talk on inflation mixes well with a 50bp cut."
I'm surprised at you. The big fall in home prices will put a lid on inflation, so there's no contradiction at all in his statement.
Sebastia
I'm surprised at you - you're still here.
I'm sure the sneak preview he got of next week's PPI & CPI release was of little comfort to him or the hawks on the Fed. I'm looking for 10y to make a run along with GLD and the dollah, well, resume its collapse.
barely,
I was wondering if there was a sneak peek on the retail numbers for BB as well to add a little 'oomph' to the cheerleading routine...
If you read the now famous helicopter drop speech by big Ben, I think you will see that he has to keep talking about inflation because he knows that it is the very threat of inflation that may keep us out of a deflationary spiral. The key iin my opinion is in the paragraph below "credibly threatening."
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
whole paper/speech here
Speech, Bernanke --Deflation-- November 21, 2002
I think you have to understand big Ben's thinking to understand how he is handeling this increasingly large slowdown in our economy. I think he loves the helicopter talk, it helps him fight the biggest economic evil of all deflatio
What's so funny with this situation is that Dr. Ben is now basically saying "Sorry about that stuff we gave you that made you so sick last time. Here, take this stuff instead. It'll make you better... honest this time."
To me it looks like it comes out of the exact same container as that first dose.
I sooo wish I had bought GLD a year ago.... or at least some shorts. Sigh!
He's signaling they may cut rates again? Oh my that's a surprise! No one expected that, right? Time to buy more stocks.
OT: The bulider of the first "subdivision" goes BK.
Builder's Collapse Devastates Florida Community - CNBC
I think people who say rates cuts won't help are missing the point. True, they won't help people who are underwater on their mortgage or have trashed their credit, as Shedlock has pointed out. But there are millions of household with equity and good credit who will be able to re-fi and put hundreds of dollars a month in their pockets that they can spend or invest. And businesses will see a cut in their interest costs, thus enabling them to keep/hire workers.
That ain't chopped liver
Sebastian (errr Kudlow) "I'm surprised at you. The big fall in home prices will put a lid on inflation, so there's no contradiction at all in his statement.:)"
Rocketing home prices never appeared in the inflation readings on the way up. Why would they appear on the way down?
You sound exactly like goldilocks Kudlow. Creepishly hypocritical as he sells the greatest story never told of strong economy with no signs of a slowdown and in the same breath screams for 100bpts cuts. Shameless.
I'll refi when the 30-year mortgage rate is at 4%. I'm happy with my 5% mortgage right now.
Oil and Food can go to the moon. The Fed won't care. Wages tick even modestly up and watch out. This is a clear effort to save remorseless bankers not their customers. THIS is the Fed's true mandate, and it always has been. "Price Stability"...only as far as labor is concerned!
I'm sure the sneak preview he got of next week's PPI & CPI release was of little comfort to him or the hawks on the Fed. I'm looking for 10y to make a run along with GLD and the dollah, well, resume its collapse.
The truth is the current situation is highly deflationary for the consumer, and we're a consumer economy.
The problem is with the shadow banks and credit expansion and inflation going on in the periphery that's swelling up like a tumor and further distorting the economy.
Part of the economy needs aggressive cuts, and part of the economy needs aggresive hikes. I think any half solution probably makes the situation worse -- the economy becomes more and more lopsided and unhealthy. But how can the Fed deal this using monetary policy?
We may start to "bubble laws" and more market regulation as an alternative. Or maybe the shadow banks will take over the economy and gut us all.
" What's so funny with this situation is that Dr. Ben is now basically saying "Sorry about that stuff we gave you that made you so sick last time. Here, take this stuff instead. It'll make you better... honest this time."
ac- not to get in an argument with you, but low rates were necessary but not sufficient. Lack of oversight was the key factor. You can have bad loans at high rates-remember the S & Ls in the late 80s. Now will they improve oversight? That, as Hamlet said is the question.
Wow. I can't believe no one picked up this news yet. It's been all over E!, MTV, and TMZ.
50 Cent aka Fifty Cent is changing his name to 50 Beeps - supposedly in honor of the FED and Ben Bernanke - he figured out that his platinum and gold albums are worth literally their weight in gold and plantinum thanks to the actions of BB....
Worth noting today that BOE and ECB HELD, which puts the Fed out on a pretty flimsy limb. Puts pressure on the dollah and selling treasuries overseas might get a little tricky...
Oil and Food can go to the moon. The Fed won't care.
No they will ultimately. If we maintain these oil prices into the spring and summer, we'll see gas prices head north of $3.50/gal.
Ultimately people can throw their congressmen out if they get upset enough, and the congressmen can throw Bernanke out if they get upset enough.
The rise in oil prices, if sustained, poses a real threat to the Fed.
I'm not sure that the Fed can really impact oil prices, given the supply/demand situation. They went up in 2005 & 2006 while the Fed was raising.
"This is a subprime speech. It isn't good for confidence when the Fed Chairman doesn't appear to understand that the issues go far beyond subprime."
This is striking. Subprime, subprime, subprime -- how many times does he say it? He sounds like he's, what, 6, 9, 12 months behind events?
The banks are going to suffer no matter what the Fed does. Rate cuts cannot create capital out of thin air nor can they help over-extended borrowers. What they will do is put pressure on the dollar, oil, food, and everything else consumers(70% of the economy) need.
Dollar easily fall another 5% to ~1.55 against the Euro over the course of the next 6 months.
Watch for the falling dollars.
Deflation expectations remain contained....
I think "we are all screwed" is right on target with his comments above on Bernanke's helicopter speech. Emphasis is on managing in(de)flation expectations, not in(de)flation itself.
ac- not to get in an argument with you, but low rates were necessary but not sufficient. Lack of oversight was the key factor. You can have bad loans at high rates-remember the S & Ls in the late 80s. Now will they improve oversight? That, as Hamlet said is the question.
It's fine to argue with me. And I don't disagree with you all that much.
But I would ask "Why were the low rates necessary?" If the answer is "Because people screwed up", then I think the next question is "Is it a) better to take away peoples' freedom so they don't screw up or b) let them learn a hard lesson so they don't screw up?"
The answer is probably somewhere in between, but I worry about going too far with oversight and basically telling people they're not fit to make their own decisions. Likewise I don't think we need another Great Depression to "teach people a lesson".
Evidently Bernanke did not read this article.
Americas inflated asset prices must fall
By Stephen Roach
January 7 2008
The US has been the main culprit behind the destabilising global imbalances of recent years. Americas massive current account deficit absorbs about 75 per cent of the worlds surplus saving. (...)Americas current account deficit is due more to bubbles in asset prices than to a misaligned dollar. A resolution will require more of a correction in asset prices than a further depreciation of the dollar.
FT.com / Comment / Opinion - America’s inflated asset prices must fall
What a tool for Wall St....party on !
To me it looks like it comes out of the exact same container as that first dose.
ac | 01.10.08 - 1:03 pm | #
It's different this time though. Trust me....
ac-I hear what you say. But, the fact is societies (not just the US) have seen fit to try to prevent people from screwing up in ways that are prevetable. We regulate restaurants rather than telling the patrons to walk through the kitchen and then eat at their own risk. The FAA monitors airline safety rather than telling passengers to walk around the plane and check out the rivets themselves. Why? Because most of us are not experts in food or aviation safety, so we prefer to have experts look things over. Same with bank lending, to a large extent.
Bernanke: "Things are bad right now, let me tell you all the wonderful steps we've taken recently to end up here."
Cenral bankers starting to think bubbles are not good. Geez...where have these guys been? What books are they reading?
The bubble was not the result of foolish low and extended interest rates in 2003 (real estate was already moving upwards)but the result of a savings glut. Geez...I guess savings gluts, where ever they are, must be bad. Where did this "savings glut" come from?
Let us talk about smoke and mirrors please.
hey, i'll re-fi down. But I won't spend the savings
I count 23 instances of the word "subprime" in the speech.
How about the fundamental question?
Is the Fed subprime now?
I think so. But then, I sure am wondering at the rip in gold and silver today. Not showing any inflationary pressure, are commodities?
Stagflation is making me wait...but hey, all stagflations resolve themselves. I note the bulls seem to be suffering from creeping paradigm shift on these comments;-}
Someday this war's gonna end...
ac-I hear what you say. But, the fact is societies (not just the US) have seen fit to try to prevent people from screwing up in ways that are prevetable. We regulate restaurants rather than telling the patrons to walk through the kitchen and then eat at their own risk.
I acknowledge the usefulness of regulation that's well thought out.
What worries me, though, is that more regulation and oversight gives the Fed and government more power. There's nothing wrong with that per se, but then that creates a bias on the part of these organizations to engage in oversight that's uwise or counterproductive simply because it expands their power base.
I think we could go too far and limit our future economic growth to make a bunch of bureaucrats feel more powerful and important.
Japan's situation also seems to suggest that an economy can be hobbled by too many bailouts and too much government intervention. But it's not conclusive by any means.
The only kind of inflation the Fed cares about is wage inflation. And with unemployment rising, how bad could that get?
In the nod-to-inflation paragraph (and elsewhere), Bernanke says quite clearly that what he really cares about is "inflation expectations". I suppose that means the TIPS spread?
Of course, TIPS are indexed to the official headline CPI number. So what the TIPS spread actually measures is expectations for that...
Enh, close enough for government work.
OMG, did I just hear a reporter ask BB about alternatives to his 'teaser-freezer' plan? Apparently CalculatedRisk has an even wider audience than previously suspected.
ac-There are risks on both sides, no question. Obviously, they were too far on the lax side in recent times. I suppose you put in regulations that seem reasonable and adjust them up or down as time goes on. Real life isn't always neat.
Just cut the damn thing to zero already so we can get past the delusion that the FED can actually fix this rotten mess.
Then we can have serious discussions about what hard work really needs to be done to fix this sham of an economy.
We are a culture of easy fixes, greed, and unwillingness to sacrifice. That needs to change.
Disgusted
AC - I think you can produce a horrific result by throwing buckets of liquidity at failing institutions without oversight. It can allow them simply to get in deeper and deeper.
We truly need more regulatory boots on the ground, and we especially need more regulatory oversight of non-bank institutions. The Fed cannot do this directly without funding and in some cases legislation.
Tanta referred to one of the problem areas a few days ago. State regulations caused more federal preemption, but federal regulation did not keep up with the ground level trends, which left the doors wide open.
AllenM,
oooh I like that - creeping paradigm shift - sounds like something you need a few million units of PCN to get rid of!
To a man who only has a hammer, every problem has to be a nail.
The banks are going to suffer no matter what the Fed does. Rate cuts cannot create capital out of thin air
Yes it does...
Banks borrow short and lend long. Lowering rates at the short end of the yield curve increases banks profits. Retained profits are capital.
aotc-
FED's are obvious dog owners....and people are not much different.
Fat Beagle pictures from pets photos on webshots
Not DH
"In all likelihood, the housing contraction would have been considerably milder had it not been for adverse developments in the subprime mortgage market."
Does this strike anyone else as an inaccurate if not dishonest thing to say?
How did the boom go on so long and get so high? Oh, we can't talk about that. If fact, we didn't talk about that. We didn't warn that this was unsustainable, that the seeds of a bust were being sown.
No, the problem only started because of some bad breaks in subprime. Otherwise, everything would have been OK.
KP said: "The banks are going to suffer no matter what the Fed does. Rate cuts cannot create capital out of thin air nor can they help over-extended borrowers...."
Well, the banks' suffering will be reduced by Fed easing, since they'll then be in a position to borrow at lower rates.
As to not helping out over-extended borrowers, that's leaving out part of the picture, a significant part: For appropriately-extended borrowers like me, a drop in rates is a windfall, found money.
Sebastia
Right as usual Sebastien, you predicted this all along..
yay more inflation!
FU Bernanke!
And now for something completely different - freedom on the march!
FBI wiretaps dropped due to unpaid bills
By LARA JAKES JORDAN, Associated Press Writer
1 hour, 16 minutes ago
WASHINGTON - Telephone companies have cut off FBI wiretaps used to eavesdrop on suspected criminals because of the bureau's repeated failures to pay phone bills on time.
A Justice Department audit released Thursday blamed the lost connections on the FBI's lax oversight of money used in undercover investigations. Poor supervision of the program also allowed one agent to steal $25,000, the audit said.
In at least one case, a wiretap used in a Foreign Intelligence Surveillance Act investigation "was halted due to untimely payment," the audit found. FISA wiretaps are used in the government's most sensitive and secretive criminal investigations, and allow eavesdropping on suspected terrorists or spies.
[snip]
Jawboning is cheap. I think it is wise for Bernanke to do it; he will need flexibility later and cutting too low now destroys his future options.
News of further sovereign wealth funds investment in the financial infrastructure is making me think that banking collapse and deflation are less likely - and stagflation more likely.
The Fed may be powerless to stop deflation with interest rates, but sovereign wealth funds will continue propping up the financial system. It's not in their interest to let the U.S. banking system collapse.
Deflation fear had made me pause moving money out of the $, but now I think I will resume the steady exodus.
Is Canada a good bet? Sitting on $50 trillion worth of oil in its tar sands?
Sebastian- Unfortunately, some here aren't looking for solutions. They think that if things get bad enough it will somehow result in the overthrow of the system.
OK, they like the example of Japan. Has the economic situation there resulted in political change? No, the same party and political clique from 1945 is still in charge.
Well, the banks' suffering will be reduced by Fed easing, since they'll then be in a position to borrow at lower rates.
Isn't that the type of static model analysis that has been discredited? Look at CFC borrowing at 5.45% and lending prime at 5.53%. What evidence is there that competitive pressure won't close any gap?
I'm sure the Saudis and China will be happy to pick up more shares of American companies since their dollar holdings are becoming more worthless.
Hope you all pre-paid those heating oil bills. $4 gas anyone?
For appropriately-extended borrowers like me, a drop in rates is a windfall, found money.
I'm guessing savers are going to see those lower rates, but not borrowers.
Banks balance sheets are over-extended with the shadow banking system rolling onto the balance sheet. Losses are only going to worsen the situation.
And, unlike in the 70's when the biggest thing holding back bank lending was reserve requirements (which the Fed has an easier time manipulating) this time it regulatory capital.
It's going to take a long time before banks balance sheets are strong enough for them to increase lending. I'm guessing the "free money" refi train is over.
The one thing that I don't know is how Basel II will impact this.
Why am I getting the strange urge to withdraw $25K in $100 bills, and bury them in the floorboards along with my $25K in gold coins? Sort of do my part to help along the coming collapse in velocity?
Anyone else getting this urge?
Eric- I follow Canada very closely. Long term their prospects are great-they have a budget and current account surplus. Short-term, their close ties to the US will make it hard for them to decouple. Several forecasts today for 2 % growth or less for 2008.
This page is available to GlobePlus subscribers
$5 gas this year. Fears over global warming and peak oil will rise. The negative impacts of increased ethanol production will become more clear. Unemployment rising. Credit squeeze. Housing oversupply. Deficits in local and national government budgets. Cut backs in consumer spending.
But, hey our exports will go up so everything should be fine.
energyecon gets my vote for his "Surreal Story of the Day" post.
The government's ability to abridge our civil rights isn't halted by internal checks and balances between the branches, but by the capitalist system itself. "You can only illegally wiretap if you pay your bills on time", LOL!
Sebastia
AC - I think you can produce a horrific result by throwing buckets of liquidity at failing institutions without oversight. It can allow them simply to get in deeper and deeper.
We truly need more regulatory boots on the ground, and we especially need more regulatory oversight of non-bank institutions. The Fed cannot do this directly without funding and in some cases legislation.
What gets me is that everybody talks about more and more regulation.
But if this regulation is so vital, how did we get along with it and have a great economy for so many decades?
Do we need this regulation because of new technology and products (e.g. derivatives)? I can actually buy that as an explanation.
But do we need more regulation for the housing market and real estate transactions?
I'd have a harder time buying into that because we didn't need them in the past, and not much has changed in real estate outside of the credit markets.
I am very skeptical of new rules where we didn't need rules before.
energyecon:
Woody Allen was right. The Phone Police are even more fearsome then the FBI and all the Feds.
Seb,
Isn't that a hoot? You just can't make this stuff up!
News of further sovereign wealth funds investment in the financial infrastructure is making me think that banking collapse and deflation are less likely - and stagflation more likely.
SWFs can't do it alone....
The Federal Reserve is the only bank that can create regulatory capital and they've only created about ~1T of it.
If your worried about inflation, watch base money (SOMA + currency + Repos) like a hawk. Inflation lags base money by a couple of years or more.
ac-There is nothing new about regulating lending. It's been done since the 1930s and the record of unregulated lending prior to that was not so good.
Of course it must evolve as technology evolves, just like FDA or FAA or any other regulatory body.
Don't the latest numbers from the Fed G.19 report deserve more attention?
Consumer credit increased at an annual rate of 7-1/2 percent in November. Revolving credit increased at an annual rate of 11-1/4
percent and nonrevolving credit increased at an annual rate of 5 percent.
ac, we had the rules before- see Glass-steagal, etc.
We got rid of the rules in a deregulatory frenzy in the last twenty years. Now we have the bust that the rules were originally designed to avoid.
Ah, well. Does anybody actually think a NINA or a SISA would have passed any regulatory muster 40 years ago?
From either the originating party or the party lodging the asset on the books?
I don't think so.
Ponder that.
Someday this war's gonna end...
OK, if we need more regulation, how to you regulate a global marketplace? China? Russia? We can't even agree with the EU....
Saw 3 minutes of BB speech before going to grocery. GLD up about $11.60 at that point while oil down about $1.30.
Then went to get food staples and found red seedless grapes at $5/lb. Up about 20% over cost at same time last year - since I don't know crap about the Chilean harvest, safe to assume that fair part of rise due to cost of transportation.
I remember the early 70s when housewives were picketing local groceries for rise in cost of food/meats. I wonder if that will happen this time around?
Mebbe I'll sell some bullion for two dozen bananas...
OK, if we need more regulation, how to you regulate a global marketplace? China? Russia? We can't even agree with the EU....
Don | 01.10.08 - 2:09 pm | #
Not by trashing international agreements like Kyoto, Geneva Conventions, Law of the Sea, etc., rather thangood faith negotiations to modify them, if you don't like some aspects.
Don,
You don't regulate China and Russia. You keep your own house clean, and OVER THE LONG HAUL it makes a difference.
That long haul part is really important. Too many folk want it NOW, and are stupid enough to sacrifice tomorrow for today - or more accurately, sacrifice tomorrow for MORE today. (The argument that always pops up is "sometimes you have to get through today to even have a tomorrow. Good argument, false applicability.)
For all the commodity bulls out there:
The London Baltic Exchange's chief dry sea freight index , which gauges the strength of the global seaborne dry commodities trade, sank to a three-month low on Tuesday...
The index, which monitors major trade routes for coal, iron ore, cement and soft commodities such as grains and sugar, slid 109 points, or 1.25 percent, to 8,621.
Closely watched by economists, the index smashed records last year in large part due to strong demand from China and India...It has lost just over 20 percent of its value since hitting an all-time high of 11,039 points in mid-November.
404 Page not found
At this point we are sacrificing today for yesterday, peeps...
A solid read about how Glass Stegall was systematically dismantled by the very people in deep shit now.
Linkage
Tomorrow when the bill comes due...
Total credit card debt outstanding in the U.S. is now $937.5 billion.
And it wasnt just credit cards. Non-revolving debt, like auto and student loans, moved up at an annual rate of 5.1 percent, or $6.2 billion.
Markets heading back down; patient is not responding to the meds. Why, it's almost as if people other than the doom-and-gloom bloggers are beginning to lose faith in the Fed's magical abilities.
And on the Baltic Dry index, the container industry is badly overbuilt, with huge amounts of capacity online and more coming; container rates on the whole have to go down in the near future, even though fuel costs are rising.
A quotation from the link I posted above...
In the spring of 1987, the Federal Reserve Board votes 3-2 in favor of easing regulations under Glass-Steagall Act, overriding the opposition of Chairman Paul Volcker. The vote comes after the Fed Board hears proposals from Citicorp, J.P. Morgan and Bankers Trust advocating the loosening of Glass-Steagall restrictions to allow banks to handle several underwriting businesses, including commercial paper, municipal revenue bonds, and mortgage-backed securities. Thomas Theobald, then vice chairman of Citicorp, argues that three "outside checks" on corporate misbehavior had emerged since 1933: "a very effective" SEC; knowledgeable investors, and "very sophisticated" rating agencies. Volcker is unconvinced, and expresses his fear that lenders will recklessly lower loan standards in pursuit of lucrative securities offerings and market bad loans to the public. For many critics, it boiled down to the issue of two different cultures - a culture of risk which was the securities business, and a culture of protection of deposits which was the culture of banking.
Kp-
...waiting on Seb & aotc spin....
.
OT: Breaking News on WSJ.com: Bank of America is in advanced talks to acquire Countrywide Financial.
what's going on with CFC? up 40%; no news as far as I can tell
Time to short BAC
Could someone please lend me a dollar so i can wipe my ass, I just ran out of toilet paper...wait...Dollar!...Toilet Paper!..Hmm!..is there some kind of correlation there??
FS Editorial: "$53 Trillion and Growing" by James Turk
01/09/2008
We might hope to see the finances of the Union as clear and intelligible as a merchant's books, so that every member of Congress and every man of any mind in the Union should be able to comprehend them, to investigate abuses, and consequently to control them. President Thomas Jefferson to Treasury Secretary Albert Gallatin, 1802
Unfortunately President Jeffersons hope has not been realized. Instead of striving for accuracy and honest reporting, the accounts of the US government have been plagued by all sorts of abuses perpetrated by politicians for decades. Any reasonable person viewing these accounts can only conclude that they have been prepared to obfuscate rather than enlighten, to mislead rather than inform.
For example, the government reports that its deficit for the fiscal year ending September 30, 2007 was $162.8 billion. In other words, expenses exceeded revenue by this amount. This shortfall of course needs to be made up by borrowing, which the report itself acknowledges by saying: The Government borrows from the public to finance the gap between expenditures and revenues. But a little digging into the numbers reveals that the government is borrowing far more than its reported deficit. Total federal debt during the past fiscal year actually grew from $8,530.4 billion in 2006 to $9,030.6 billion in 2007, which is a $500.2 billion increase or more than three-times the reported deficit.
Link on CFC, BAC
WSJ link for BAC, CFC
Countrywide Seeks Rescue Deal - WSJ.com
That's a news story? The WSJ should be ashamed. That belongs on Page Six for gawd's sake.
SELL!
'Just bot 4500 CFC just under $5
i deserve to lose it all'
I'm An Idiot | 01.09.08 - 3:32 pm
.
If they consolidate CFC operations to North Carolina then Ventura County California is screwed.
ac, we had the rules before- see Glass-steagal, etc.
I wasn't in favor of getting rid of that.
Again, you got your good rules and your bad rules.
yes... the object is to brainwash people to spend their brains out...and then to create money when they have spent their brains out to rescue economy.
Dats a good plan.
AC - Your argument is logical, but in fact completely wrong. I don't have the time to explain why because I am gathering docs for a meeting, but I will later.
The fact that a person of your intelligence, good sense and general acumen would advance such an argument is the best possible reason why a blog such as this should exist.
I put in a huge order for CFC a few minutes ago just to make it go up more.
AC - Your argument is logical, but in fact completely wrong. I don't have the time to explain why because I am gathering docs for a meeting, but I will later.
The fact that a person of your intelligence, good sense and general acumen would advance such an argument is the best possible reason why a blog such as this should exist.
I may well be wrong, and I've been wrong many times before. If so, I'd like to find out why -- that's why I come here.
My supermarket is my drug connection:
It got me hooked on seedless grapes at .99 a lb. last summer and now I'm buying them at 5.00 a lb. I think I need to go to grape addict anonymous.
Step One: Admitted we were powerless over peak oil and that our inflation is unmanageable.
"Just cut the damn thing to zero already"
LOL...Egg Salad everywhere
kp- Why would I spin abolition of Glass-Steagall? Getting rid of something that worked for 60 years was dumb.
tedzbear:
Yeah, I can go to GAA, but will they take kids?
LOL
Oh yeah, the bond market is really happy about Helicopter Ben. Ten years up 6bp, 30 years up 10bp. No worries about letting inflation out of the bag here.
The Bernanke "market support" seems early to me (here at Jan 10), nearly 3 weeks from the rate announcement Jan 31.
Can we expect some action in the interim or just more verbal support to keep the investment community (wise up people, this ain't you) placated? [Is there a diminishing return on these assurances?...like this for example, you know??]
The news about TAF being so successful deserves more airplay, no? Does it spell the end of the Discount Window? The PDs who are being circumnavigated by this direct injection system, (who were not willing to lend owing to reservations about the quality of that collateral)[unlike the Fed whose experience is not so jaundiced, not so tainted with experience, but full of youthful generosity...with our money] must be lending their money elsewhere...or happy just not to be losing their stash?
If Tanta is around... I think I remember you having an argument against BoA ever getting government approval to optain CFC's servicing. Will this come into play now? Or has there been a deal cut?
kp- Why would I spin abolition of Glass-Steagall? Getting rid of something that worked for 60 years was dumb.
Aheadofthecurve | 01.10.08 - 3:01 pm | #
FYI - I didn't post as Anon earlier!
" inflation expectations appear to have remained reasonably well anchored "
Ah, the classic statistician's question.
Well anchored... to what???
Dick Cheney?
OT
Dan Gross has an item in Slate on commercial real estate.
Ghost Malls
Is retail real estate about to crash?
Speaking of ghost malls, I was walking around Michigan Ave. yesterday and it was like a ghost town. Must have been the contrast with pre-holiday traffic, but wow, it was just me and a homeless guy ranting, This is blank-blank America. I am a blank-blank American! Maybe he was an out-of-work mortgage broker.
Regards,
thanks Kp | 01.10.08 - 2:16 pm | for the excellent link regarding the history and effect of the torturous destruction of the Glass Steagall banking act...
sad...and required reading for learners like me.
certainly shows us who the defendants should be
frontline: the wall street fix: mr. weill goes to washington: the long demise of glass-steagall | PBS
Worth noting today that BOE and ECB HELD, which puts the Fed out on a pretty flimsy limb. Puts pressure on the dollah and selling treasuries overseas might get a little tricky...
barely | 01.10.08 - 1:13 pm | #
Everybody is trying to gain market share by kicking the company/country that is weak/down. The ECB will use this opportunity to reduce the influence of the dollar and increase the influence of the euro. They would love it if the euro gained market share in the game for the world's reserve currency. They don't care if their masses become unemployed as long as their power and the power of their fellow bankers increase.
Why doesnt he even bring up inflation, they clearly dont care about it.
Chairman Bernanke should take a little trip down to his nearest dollar store. Ask the manager to show him something I just saw... pages and pages of repricing labels for items all over the store... all of them going up.
Hope you all pre-paid those heating oil bills. $4 gas anyone?
Got any good suggestions on how to pre-pay electric bills (esp when used for heating) ? Not everyone heats with oil or LP. Does anyone still use coal ?
Ray, I doubt there are many coal furnaces anymore. That said, electric heat IS coal.
25 years ago we couldn't buy grapes in the winter. It was canned fruit or since we were lucky to live in s.calif it was local. The desire to have fresh fruit in winter is one of reasons for high oil. I bet in Chile you don't see much american produce during thier winters if any at all! It doesn't taste as good as stateside summer fruit to me! Canned or dried fruit in 08, ummmm maybe thats recession talk..It still doesnt look to late to buy metals
OT-if you had a windfall to throw into one investment this year what would it be?
Thanks to all for the education on economics...
Oh well, a little tough talk on inflation mixes well with a 50bp cut.
Best to all.
CalculatedRisk |
CR,
I'm making "Bernanke Breezes" tonight.
1 part tough talk
1 part GLD
1 part SLV
1 bottle Dom Perignon
Mix well and celebrate.
RE ghost malls - i think the Economist had a similar article recently...basic oversupply...
Er, I hate to ask for advice but... how scared should I be about having part of my nascent nest egg in WaMu savings (FDIC) and part in tiny local bank's mutual fund account (hubby's choice based on location)? I do have an education (really) just not in $.
lama said: "Ray, I doubt there are many coal furnaces anymore. That said, electric heat IS coal."
It's enriched uranium where I live.
S.
OT:
There will come a Friday afternoon in 2018 when Moody's will announce a particularly interesting downgrade...
FT.com / US & Canada - Moody’s says spending threatens US rating
Moodys says spending threatens US rating
By Francesco Guerrera, Aline van Duyn and Daniel Pimlott in New York
Published: January 10 2008 18:36 | Last updated: January 10 2008 18:36
The US is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and social security spending, Moodys, the credit rating agency, said on Thursday.
Bilbo,
You bring up a good point about the defict. The answer is that there are two deficits, the unified deficit and the general fund deficit. The unified one is what gets reported on in the press, and it includes the effects of the build up in the SS trust fund. The General fund deficit is how much the govt takes in in regular taxes vs. what it pays out in normal expenditures excl SS. It is odd that those who argue that the deficit is not a big deal (ie only apx 1% of GDP) are the some ones who say SS is doomed since the trust fund only holds worthless IOU's. Well they are only worthless if you intend to have the U.S. govt default on its obligations. ie not pay on a T-bill or T-note. Of all the doomsday scenarios out there that is one of the more extreme. However, paying those IOU's will mean that current resources will have to be used to pay them in a few years, thus taxes will have to go up, regular income, estate type taxes, not SS payroll taxes. If it falls on SS payroll taxes, then every stinking word people like Kudlow say about how the rich pay most of the taxes is an outright lie. Right now excess payroll taxes (the most regressive tax yet devised short of a poll tax) are being used to shore up the general finances of the gov't.
Carlomagno:
The article is simply a threat. Moody's is saying to Congress... if you regulate or threaten us, we will downgrade you.