Your posting on the uber senority of CDS's two threads ago was a gem. Ya would think that it would be common knowledge among all readers of CR, but somehow it slipped past me. What a friggin rigged game!
… Come, my friends,
'Tis not too late to seek a newer world.
Push off, and sitting well in order smite
The sounding furrows; for my purpose holds
To sail beyond the sunset, and the baths
Of all the western stars, until I die.
It may be that the gulfs will wash us down:
It may be we shall touch the Happy Isles,
And see the great Achilles, whom we knew.
Lord how I wish the world were still flat. You can't get off this ball. No way out. Just one way to go, and that is down...
"Shoot Greens" is what I fear, if the mouthbreathers that get their marching orders from the amplitude modulation channels of communication, decide to use the guns and ammo they were persuaded to arm themselves with, by the same concern.
Seems to me though that we've recently seen data that suggests real incomes are weakening and that this has been one the best forward looking indicators of coming economic problems.
These pools that, though in forests, still reflect
The total sky almost without defect,
And like the flowers beside them, chill and shiver,
Will like the flowers beside them soon be gone,
And yet not out by any brook or river,
But up by roots to bring dark foliage on.
The trees that have it in their pent-up buds
To darken nature and be summer woods -
Let them think twice before they use their powers
To blot out and drink up and sweep away
These flowery waters and these watery flowers
From snow that melted only yesterday.
The fix is in. The Feds (gov and reserve) have printed enough to generate a short term recovery. The question remains, how will they extricate themselves from the various markets in which they are now the dominant players. Trying to fight this market is madness.
"Even though the public’s initial attempt to reduce its debt burden was foiled, the reduction in debt nonetheless did have an impact: it drove the economy into Depression. In the credit-driven real world in which we live, aggregate demand is the sum of GDP plus the change in debt. The public’s attempt to reduce debt meant that the reductions in debt substantially reduced demand, and this deleveraging was the unstoppable force that made the Great Depression “great”.
During the depression, the feds instituted farm subsidies as a temporary aid to the agricultural sector. 70 years later, they are still with us.
How long will the subsidies to banks, auto companies, the housing industry, CRE and insurance be with us? How will these market distortions affect the economy long term?
The next generation of knife catchers, do the new owners really think the investors put 50k into their newly purchase home?
As interest rates fell, the Whitmans were able to increase their price limit. They ended up buying from investors. A syndicate had bought a three-bedroom foreclosure on a cul-de-sac in eastern Sacramento last fall for $172,000, made a few improvements and was flipping it — another boom-era element that is back. The Whitmans bought it three weeks ago for $224,500.
This is not good news for us today, for three reasons. Firstly, debt levels today are far higher than they were prior to the Great Depression–the force of deleveraging is thus likely to be greater now than it was in the 1930s. Secondly, given this higher level of debt, the correlation between the debt-financed proportion of aggregate demand and unemployment is even stronger now than it was during the Great Depression. Thirdly, given the greater dependence on debt today than ever before, and the social changes that have gone with the Ponzification of Capitalism, the lag between a fall in the debt-financed component of demand and a rise in unemployment has dropped to just two months.
It is spring. The madness has shown itself. I fear it will take autumn leaves falling before these green shoots die. It is going to be a long depressing summer. We are all Casandra here bleating warning no one understands or heads. If this trend continues, this will be touted as a success for the president, and when things start looking like the emperor has no clothes in the fall, there is always the second wave of swine flu to blame it on I suppose. I hope I am wrong.
Now we are sitting on the precipice of a mountain of debt twice as high as in the Great Depression, with low inflation turning into deflation as Fisher warned, and with Central Bankers who do not have a clue why the economy has suddenly gone from “the Great Moderation” to “the Greatest Crisis Since the Great Depression”.
Over-confidence in the face of rising debt did beguile us during the long boom. Confidence in the face of deleveraging will not save us during the coming Depression.
ac - short answer, yes. Debt burden is largely fixed or growing, and personal income has become variable, and increasingly uncertain.
If the direction of income is ulimately down, whether through unemployment or erosion of hours/rates, people who were formerly prosperous become marginal, the marginal deficient, and the already impoverished fail utterly.
And at roughly one trillion dollars per green shoot, the Fed is spinning a really small salad meant to feed a lot of hungry dinner guests!
On the upside, once the Big Pigs push back from the trough, you are welcome to any green shoots you can find in the dregs.
(Just sort of brush off the leftover trampled shoots on your pants leg, or something.)
Even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while, implying that the current slack in resource utilization will increase further.
Seems like debt clearing has always been a prerequisite of sustainable economic growth.
Those who have read here for several years watched the indexes climb against fundamentals far longer than this recent iteration. And CR was called every kind of thing for detailing fundamental problems which even now aren't accepted broadly.
Those earlier buttes and pinnacles brought out many posts all but identical to your own. And they were very confident and, though very mistaken - were quite understandable in fact, given the chorus of support from the majority of public coverage.
If there is a consensus here, it's that the deterioration of the US economy has slowed in the recent quarter. The fix is visible. But it isn't 'in' by a long shot.
ac - short answer, yes. Debt burden is largely fixed or growing, and personal income has become variable, and increasingly uncertain.
If the direction of income is ulimately down, whether through unemployment or erosion of hours/rates, people who were formerly prosperous become marginal, the marginal deficient, and the already impoverished fail utterly.
It almost seems like the US worker is going into sort of a "secular decline".
Maybe we'll talk about the "American Disease" as we once talked about the "British Disease".
People from the United States will go visit China and they'll giggle and whisper amongst themselves about our bad teeth.
Arbitrage_Macht_Frei (profile) wrote on Tue, 5/5/2009 - 10:10 am
"Shoot Greens" is what I fear, if the mouthbreathers that get their marching orders from the amplitude modulation channels of communication, decide to use the guns and ammo they were persuaded to arm themselves with, by the same concern.
Yeah, the guns should be with responsible people like the Hanktator, Nancy, the W and Little Timmy Geithner. Professional leadership by technicians is clearly the answer, as we've see from the competence and independence shown by our leaders during this crisis.
Ginning up hate and persuading your listeners that they must go out and arm themselves against the possibility that somehow our government is going to take away hundreds of millions of weapons from hundreds of millions of citizens is about par for the course, sadly.
bleh, Christmas should be interesting this year. General populace will have some savings (if layoffs haven't wiped them out), little or no credit, and I suspect on-line shopping will be a hit since retail stores are becoming a rare species. Extreme exaggeration, but I wonder what the hit gift will be. I am asking for a spare can opener for my stocking.
The fix is in. The Feds (gov and reserve) have printed enough to generate a short term recovery. The question remains, how will they extricate themselves from the various markets in which they are now the dominant players. Trying to fight this market is madness.
Their funding conduit has an extremely short roll period. They will blow a rollover and have to bow.
Arbitrage_Macht_Frei (profile) wrote on Tue, 5/5/2009 - 10:41 am
Ginning up hate and persuading your listeners that they must go out and arm themselves against the possibility that somehow our government is going to take away hundreds of millions of weapons from hundreds of millions of citizens is about par for the course, sadly.
Whenever they have opinions you differ with, they are poor little lambs, with no minds of their own, poured full of lies by those you dislike.
You can see the problem, but your solution is more problem.
My point wasn't blue skies and green shoots. It was that the Feds have sunk upwards of 3 trillion into the economy (over 20%) in the last 6 months. A short term recovery is in the works. Now, the Feds own large portions of the finance, real estate and auto industries. I am concerned about the short term. It is like Iraq. After March 2003, we owned the country. The real question (that we still haven't fully answered, 6 years later) is what do we do with all of it.
I'm content to let the market sort itself out, and soon thanks to both plunging advertising and the realization by the republican party, that they've hitched themselves to a cancerous growth, they'll be gone, not unlike Father Coughlin and Joe McCarthy.
Bernanke - "We don't expect to lose any money on any of our holdings"
They have ALL the recent GSE paper, the only mortgage financing source. The Fed has BOTH the Credit risk and the interest rate risk (which is already under water). They will lose money and a lot.
"It was that the Feds have sunk upwards of 3 trillion into the economy (over 20%) in the last 6 months."
Bwahahahahhahahahahahahahahahahahahahahahaha!
Ahem....sorry. This kind of collectivist twaddle is just starting to drive me insane. The gov't pissed $3T down a rat hole of insolvent companies. There's no machine or entity "ECONOMY".
Sorry, but lack of clear thinking, and "we need to..." and "our society should..." and blah blah blah horsespit is getting old.
At its peak in the early 1930s, Coughlin's radio show was phenomenally popular. His office received up to 80,000 letters per week from listeners, and his listening audience was estimated to rise at times to as much as a third of the nation. Coughlin is often credited as one of the major demagogues of the 20th century for being able to influence politics through broadcasting, without actually holding a political office himself.
"Final demand should also be supported by fiscal and monetary stimulus." - Ben
Translation:the American government will buy as much makeup and plastic surgery as it takes to make this pig look like a beauty queen. And by next fall, the trainers will have her down to model size, and ready for her closeup.
In other words, resistance is futile, don't fight the Fed, etc.
AMF, I love Ron Paul. Talked to him personally several times. Having said that, I don't want him as Commander and Chief. I wish he could start a third party movement, be a John the Baptist for someone else. People are beginning to feel the need, but don't know what direction to take. I would like a national holiday where it was required we all go sit in a room by ourselves, completely disconnected, for the day to examine our lives and country. There I go day dreaming again.
Basically Bernanke has no idea what will happen so will offer vague ambiguous comments that could be interpreted either way so that he can look back and say - see? I was right!
"Looking ahead, prognosticators this year have divided into several different camps. Some believe that high unemployment necessarily will lead to continually falling inflation for several years, and they are concerned about the risk of outright deflation. I personally have thought the risk of deflation was overstated, and for the first three months of this year, inflation has averaged 2 ¼ percent – both core prices and overall prices. Another camp places significant weight on the public’s expectations, and as near as we can figure, those are fairly well anchored around 2 percent. And finally, a third camp sees the rapid growth in our balance sheet, notes the historical association between rapid money growth and subsequent inflation, and wonders whether inflation will accelerate when the economy begins to recover."
Didn't catch up on all CDS discussion of previous thread, but collateral retained on swaps at head of bankruptcy line applies to writers of CDS. Chrysler in all likelihood never wrote any CDS, being a car company. If Cerberus or individual bondholders wrote or bought CDS, that's not relevant to Chrysler's BK.
The hope was that the stress tests would be the start of a process that would lead to a cleansing of the financial system. But using a market-based scenario in the stress tests would have given worse results than the adverse scenario chosen by the regulators. For example, the first quarter's unemployment rate of 8.1% is higher than the regulators' "worst case" scenario of 7.9% for this same period. At the rate of job losses in the U.S. today, we will surpass a 10.3% unemployment rate this year -- the stress test's worst possible scenario for 2010.
The stress tests' conclusions are too optimistic about the banks' absolute health, although their relative assessment is more precise, because consistent valuation methods were used. Still, with Thursday's announcement of the results, it shouldn't be a surprise when the usual suspects emerge. We fear that we are back to bailout purgatory, for lack of a better term. Here are some suggestions for how to extricate ourselves.
Actually, Arbitrage, pretty much all the amplitude modulation "listeners" you refer to wouldn't need to go out and arm themselves. They already are. Take a trip inland sometime.
""For example, consider the fact that the government, while providing aid to banks, did not restrict their dividend payments. A recent academic study by Viral Acharya, Irvind Gujral and Hyun Song Shin (http://www.voxeu.org) notes that banks only marginally reduced dividends in the first 15 months of the crisis, paying out a staggering $400 billion in 2007 and 2008. While many banks have been reducing their dividends more recently, bank bailout money had been literally going in one door and out the other.""
OT from earlier thread re Chrysler: Is there any way the Chrysler BK doesn't wind up at the Supreme Court? Given the stakes and number of parties, it seems to me some party will have the motive to appeal the BK judge's decision.
Bernanke - "We don't expect to lose any money on any of our holdings"
He is correct, he will sell it all to the treasury for the taxpayers to take the losses
Taxpayers won't bear the burden - consumers will via future inflation.
The treasury won't have taxpayers pay - they'll directly monetize those losses - push them off into forever like the 'lock box'. The money they spilled out all over saving the banks will remain out there virtually FOREVER... at a permanently high plateau so to speak. Every time an attempt is made to mop it back up - the economy will shudder and the mops will be put away 'temporarily'... and more money will be spilled. Repeat over and over.
I could be wrong - have been plenty of times in the past - but I see no way they painlessly get the genie back in the bottle and pain is something we will not endure voluntarily.
"wonders whether inflation will accelerate when the economy begins to recover."
And not just our economy; we are foolish to think that the US economy is the only thing driving prices in the US economy.
The prices of finished goods in this country may not rise very quickly as everyone down the distribution chain takes lower margins. But the costs of raw materials could rise quickly as foreign demand picks up, and in fact this is already happening. So gas at the pump, heating oil, food, building materials, etc could all rise.
As someone else said here: an inflation in the things you need, deflation in the things you don't.
The link you have on your homepage, Andy Xie: If China looses faith the dollar will collapse, is pretty interesting. Looks like we might be starting to see the first signs of that given recent Treasury sales. Just thought I'd throw this into the hoi polloi cage.
[BTW, the text-to-voice option pronounces Mr Xie's last name, "ZEE" (like the letter), though when I first read it, my brain thought 'pinyin' and transliterated it "SHE-uh." I'm curious which it is if anyone's familiar with this gentleman.]
Kung Fu, as I recall from discussion of bankruptcy here last year, BK moves through its own, discreet system of appeals. I believe this means the SCOTUS would have to agree to take an appeal, in the event one is filed.
Bernanke - "We don't expect to lose any money on any of our holdings"
?????? Who is going to pay par for all those 4% MBS they are buying?
Surely he means they won't take any credit losses on their holdings? I am not sure that is even accurate, but in terms of the MBS that may be true, but there is no way in hell he will be able to sell those MBS at what he paid.
This guy is a real scumball IMHO. In some ways I prefer Greenspan, at least he really believed what he was saying, even if it was misguided. Bernanke is just a liar.
So we fixed this with monetary and fiscal outpour, finally bypassing congress' outlays when public sentiment got too hot, and began outright printing. Just restructured debt with but little real default, dilated time frame, shifted obligations to public balance sheet and diluted/devalued currency.
No stunning new technologies. No new must-have products. No increased output. No sizeable or foreseeable growth.
Just endless empty buildings, unfinished lots, debt of scale throughout, newer debt instruments, currency and market manipulation.
CRISIS OVER!
Check kiting pathological drunkards and liars all.
It's an entirely different world from the 70's and early 80's...
There was no common European currency, and communist and 3rd world countries had neutered themselves as to be financially impotent. Japan & Taiwan were the only tigers earning their stripes, and most importantly, information flowed like molasses, compared to today.
The weapons argument is one I have talked a lot to my neighbors about. We have a lot of hunters, almost everyone has firearms on my street. I am a military brat, but don't have any weapons because my father taught me that you are your own greatest weapon. We lived in Alaska and people would go to Kodiak Island to bag them a big bear with high powered rifles from very far away. I don't know if it was the Indian in both my parents bloodlines, but it just seemed wrong. One of my greatest memories of childhood was picking berries in the woods with black bear cubs. As an adult the thought scares me to death, but the mother bear didn't find me offensive and we just all went about our own business. I guess because I was a kid and not trying to pet her babies I wasn't a threat, but it was one of those innocent moments of childhood that I remember fondly. I am not against hunters, I just wish bear hunting was limited to bow and knife. Back to now after getting off topic, several neighbors are stocking up on firearms because they want to be ready for collapse to defend their gardens from roving gangs. I pointed out that you can only shoot one or two guns at one time, and your time would be better spent trying to bring the neighbor hood together to act and plan for such a thing. Response from most is that all you can depend on is family, and they were expecting family to move in with them if times got hard. I don't know what to make of this yet. The idea of roving gangs of armed vegetable thieves is amusing, but probably not to be underestimated.
unearthly - in an area not far from where I am in Sac you can see examples of the absurdity. Sold often recently, then foreclosed....guy fixed it up with some duct tape, etc, and listed it just below the price that most of the nice stuff in the area would sell for, even though it is off pitch and crappy looking still, and Im pretty sure some moron picked it up recently at or maybe below the listed price of $298k.
Meanwhile, the house in a nicer area I live in nearby, is still heading down from its $450k peak to $330k. First a big drop, then a slow volatile downward grind. And heading lower. But dont let that stop the cheerleaders in the NYTimes.
Here is the house info off zillow for the foreclosure :
Sale History
11/12/2008: $155,000 *
07/29/2008: $271,054 *
07/25/2006: $317,000 - this is sad...if you saw where this house is (by a noisy school) you'd think someone insane to buy this. Come to think of it, the place has fraud written all over from day 1.
No other sale data is available
* Transaction not included in Zestimate.
Talk about a wide swath:
-------------------------------------------Previous Consensus Consensus Range
Nonfarm Payrolls - M/M change -663,000 -630,000 -810,000 to -580,000
Actually the buyers (holders) get to "freeze" any collateral they're holding of the bankrupt writer. Any CDS paper held by the bankrupt reference entity is just another asset to be carved up. I don't know whether Chrysler took out CDS on itself, or bought them second hand from another holder although there are no regulations to prevent it and it would be a nice way to fleece a counterparty.
From: Steve Ballmer
Sent: Tuesday, May 05, 2009
To: Microsoft - All Employees
Subject: Update: Realigning Resources and Reducing Costs
In January, in response to the global economic downturn, I announced our plan to adjust the company’s cost structure through spending reductions and job eliminations. Today, we are implementing the second phase of this plan.
This is difficult news to share. Because our success at Microsoft has always been the direct result of the talent, hard work, and commitment of our people, eliminating positions is hard. .......
Were actually blackberries I think. It was right after the river in Fairbanks started breaking up for Spring. Bears used to come pretty close in back then. I guess they still do when they get hungry.
Vonbek, what I find most interesting is that people are factoring in the armed vegetable thieves as one of the possible future scenarios.
(Not saying that people necessarily think it is the most likely, just that they believe it to be an actually possible future world.)
The powers that be can continue to speak of green shoots, and Congress can continue hearings on steroids in baseball and the college football national championship scheme, but a lot of people are quietly preparing for at least the possibility of absolute collapse.
The seller of the CDS is the counterparty. Right?
The holder of the CDS is the buyer of the CDS. Right?
So if there are two primary (first level) lienholders but only one has a CDS on the bonds that it holds, then that lienholder takes priority over the other lienholder, who doesn't own a CDS. But both are still within the primary level of lienholders.
The link you have on your homepage, Andy Xie: If China looses faith the dollar will collapse, is pretty interesting. Looks like we might be starting to see the first signs of that given recent Treasury sales. Just thought I'd throw this into the hoi polloi cage.
If I were running things over in China I would be tempted to dump every long bond I have in Bernanke's lap every time he comes into the treasury market and then use the proceeds to buy claims on natural resources and their production (e.g. oil and farm land).
Again, Bernanke is basically saying: "Here, it's open season on the wealth of the US taxpayer. Come and take some!"
Somewhere, a center of higher learning is missing it's tweedy professor, who i'm sure wishes he could do a do over and give back his 15 minutes of fame.
With regards to Chrylser and CDS, you guys are mixing stuff up a bit.
The parties that bought and sold Chrysler CDS will not appear in Chrylser's bankruptcy court. Chrylser was not a counterparty to the CDS, it was merely the reference entity.
Lehman was an entirely different case, because Lehman was a counterparty to a lot of CDS (although hopefully not CDS written on itself).
Two examples for clarity
Example #1
Party A buys protection on 100 Lehman from Party B.
Lehman goes BK. Party B pays Party A some $$$. That's it. No court, no lines.
Example #2
Party A buys protection on 100 Party B from Lehman.
Lehman goes BK. Lehman can no longer pay Party A. Party A is now a "creditor" of Lehman in BK proceedings, and due to the new laws, Party A gets paid out ahead of everyone else. Party B is not a consideration here.
The Chrysler case would be example #1, unless Chrysler was a large writer of CDS (it was not).
My point by point commentary on the testimoney should be up soon on Zacks.com I could cut and paste it here, but it is pretty long. If you folks want me to I will
"If I were running things over in China I would be tempted to dump every long bond I have in Bernanke's lap every time he comes into the treasury market and then use the proceeds to buy claims on natural resources and their production (e.g. oil and farm land)."
homedad, very rough analogy here, but think of the holder of a CDS as similar to the holder of an insurance policy. (Protectioin from default of the underlying entity.)
If the insurance company goes bankrupt (the writer of the swap goes bankrupt) the policyholders get paid for claims ahead of creditors (bondholders).
Thus, for example, if BigInsCo goes belly-up, people who have BigInsCo insurance policies get paid first. (Like FDIC pays depositors first.)
So in your Chrysiat example, if Chrysiat WROTE swaps (seems unlikely, but possible) those swaps-holders are at the head of the line in the event of a pay-out scenario. Those HOLDING Chrysiat swaps (written, say, by BigInsCo) are at the head of BigInsCo's bankruptcy line.*
*Disclaimer: Your mileage may vary. Analogies and models are not to be confused with the actual sun, sea, or sky. If your malaise and worry last longer than 3 hours, please consult a trained econometrics modeler. Any similarity to actual corporate entities, whether bankrupt or going concerns, is purely coincidental. Modeled results do not in all cases take into account the highly uncertain effects of government intervention.
burnside (profile) wrote on Tue, 5/5/2009 - 8:38 am replyIgnore userKung Fu, as I recall from discussion of bankruptcy here last year, BK moves through its own, discreet system of appeals. I believe this means the SCOTUS would have to agree to take an appeal, in the event one is filed.
The appeal from the BK court runs to the local Federal District Court, then the area District Court of Appeals, and finally to the SCOTUS. The appeals process is completely regular to other actions. Any appeals court can accept/reject appeal. A rejected appeal can be appealed to the next higher level (and either accepted for review or not).
SCOTUS appeals that are accepted for review are very unusual. Appeals from BK to District Court are routine, even as to matters of process.
Generally appeals courts review application of the law, not review of the facts. There are exceptions in the lower levels of appeal, but SCOTUS almost never reviews fact review.
I have one more question about Chinese-to-English: I remember reading some time back that "pinyin" spelling came to the Roman alphabet via the Cyrillic alphabet. This makes sense to me and accounts for a lot of unexpected sounds (eg, zhou - "joe" instead of zh like "s" in pleasure + Fr ou as in "you"). Comments?
Ben Bernanke "In this environment, we anticipate that inflation will remain low"
Yeah right when...
1) The projected budget deficit for 2009 is $2 trillion
2) The debt-drowned United States debt is already 350 percent of G.D.P and rising fast !
3) The Fed is now holding $10 Trillion of ‘assets’ ( mostly toxic ) transferred from too big to fail banks.
4) Other countries are now buying less of our debt
Is Ben Bernanke living in
a) an alternate reality environment
b) the outer limits
c) the Twilight Zone
Unless Chrysler sold CDS against Chrysler default, buyers of Chrysler CDS don't have any claims against Chrysler !!! Any claim they may have would be against their counterparty !!!
Samdog, in the US, following the example for the French name "Xavier", which is corrected pronounced "ZAY vyer" but in the US is pronounced "X av yer" ... Xie should be pronounced "X ee". And probably is by many newscasters.
km4 (profile) wrote on Tue, 5/5/2009 - 12:12 pm
Ben Bernanke "In this environment, we anticipate that inflation will remain low"
...
4) Other countries are now buying less of our debt
...
"the French name "Xavier", which is corrected pronounced "ZAY vyer""
In French it is 'Zah viay'. In English there is no "correct" pronunciation of a French name, only convention. 'Ex ay vier' is a s good as 'Zay-vier'. There is no reason for a Chinese name spelled in English to be pronounced according to phonetic rules for letters used for pronunciation in English of a French name.
Don’t know about Russian antecedents in modern Chinese pinyin, but it would not matter much.
In spoken Mandarin there are initial sounds that are on the two far sides of the palatal / retroflex spectrum, and most Western initials are somewhere in the middle. So they had to make up new renderings of initials to cover the gap, and some of them are pretty unhelpful to the student. Wade Giles fudged it and used apostrophes, inconsistently.
The finals are another story, but happily a simpler one. What you see is kinda what you get.
No effective shortcuts in romanization, and relearning the phonetic values of the alphabet is a must.
Thanks to Bernanke, its all looking good now. NITWIT !
Article from AFP.
China has 'canceled US credit card': lawmaker
5 days ago
WASHINGTON (AFP) — China, wary of the troubled US economy, has already "canceled America's credit card" by cutting down purchases of debt, a US congressman said Thursday.
China has the world's largest foreign reserves, believed to be mostly in dollars, along with around 800 billion dollars in US Treasury bonds, more than any other country.
But Treasury Department data shows that investors in China have sharply curtailed their purchases of bonds in January and February.
Representative Mark Kirk, a member of the House Appropriations Committee and co-chair of a group of lawmakers promoting relations with Beijing, said China had "very legitimate" concerns about its investments.
"It would appear, quietly and with deference and politeness, that China has canceled America's credit card," Kirk told the Committee of 100, a Chinese-American group.
"I'm not sure too many people on Capitol Hill realize that this is now happening," he said.
The Republican lawmaker said that China was justified in concerns about returns from finance giants Fannie Mae and Freddie Mac, which were bailed out by the US government due to the financial crisis.
Kirk said he was the first member of Congress to tour the Bureau of Public Debt, which trades bonds, and was alarmed at how much debt was being bought by the US Federal Reserve due to absence of foreign investors.
"There will come a time where the lack of Chinese participation may have a significant impact," Kirk said.
"We should track that, because up until last month they were the number one provider of currency to the United States and now they're gone."
With China's economy also hit by the global economic crisis, Premier Wen Jiabao has openly voiced concern about the status of his country's investments in the United States.
China has also floated replacing the dollar as the key international currency with a basket of units bringing in the euro, sterling and yen.
I will wait with bated breath.
gentlemen: place your bets before the 10:00 AM kickoff
EMT's standing by for Tom Stone
this looks like its going to be a very busy day.
Nice a song and dance this morning. I bet he is dressed up as Annie and will sing "The Sun Will Come Out Tomorrow"
Bernanke? Bernanke who? Oh, I remember now. Hoenig's predecessor.
Bernanke is worth 100 points on the Dow.
Congress doesn't know how to ask follow-up questions, not to mention probing questions.
Comrade Kristina,
Your posting on the uber senority of CDS's two threads ago was a gem. Ya would think that it would be common knowledge among all readers of CR, but somehow it slipped past me. What a friggin rigged game!
Best,
U.S. April ISM nonmanufacturing 43.7 vs 40.8 March
10:01 AM ET, May 05, 2009
Bernanke is introducing a new facility, TFPDAE (Throw Freshly Printed Dollars At Everything).
Ministry of Truth,
It will be worse than that, I think he will also read from The Sun Also Rises....
Bernankes for the memory
Of a tweedy professor's guess
How to best fix this mess
Now here we are at a behest
(somebody get the next verse...)
Here's summary/preview: Green shoots everywhere! Dow 36000!
iceman,
LOL!
"Bernanke is worth 100 points on the Dow."
Won't he eventually turn into a buy the rumor, sell the news event?
Well I need some Tennyson this morning,
… Come, my friends,
'Tis not too late to seek a newer world.
Push off, and sitting well in order smite
The sounding furrows; for my purpose holds
To sail beyond the sunset, and the baths
Of all the western stars, until I die.
It may be that the gulfs will wash us down:
It may be we shall touch the Happy Isles,
And see the great Achilles, whom we knew.
Lord how I wish the world were still flat. You can't get off this ball. No way out. Just one way to go, and that is down...
NateTG (profile) wrote on Tue, 5/5/2009 - 10:09 am reply Ignore user "Bernanke is worth 100 points on the Dow."
Won't he eventually turn into a buy the rumor, sell the news event?
Yes, but up or down?...wait, doesn't matter.
Never mind.
--bh
"Shoot Greens" is what I fear, if the mouthbreathers that get their marching orders from the amplitude modulation channels of communication, decide to use the guns and ammo they were persuaded to arm themselves with, by the same concern.
Seems to me though that we've recently seen data that suggests real incomes are weakening and that this has been one the best forward looking indicators of coming economic problems.
No?
Spring Pools
These pools that, though in forests, still reflect
The total sky almost without defect,
And like the flowers beside them, chill and shiver,
Will like the flowers beside them soon be gone,
And yet not out by any brook or river,
But up by roots to bring dark foliage on.
The trees that have it in their pent-up buds
To darken nature and be summer woods -
Let them think twice before they use their powers
To blot out and drink up and sweep away
These flowery waters and these watery flowers
From snow that melted only yesterday.
Robert Frost
The fix is in. The Feds (gov and reserve) have printed enough to generate a short term recovery. The question remains, how will they extricate themselves from the various markets in which they are now the dominant players. Trying to fight this market is madness.
Very soon, there will be an ad hoc floating minimum hourly wage that only goes down, as unemployment goes up.
I am relieved a genius like Bernanke is our president.
Speaking on the GD
"Even though the public’s initial attempt to reduce its debt burden was foiled, the reduction in debt nonetheless did have an impact: it drove the economy into Depression. In the credit-driven real world in which we live, aggregate demand is the sum of GDP plus the change in debt. The public’s attempt to reduce debt meant that the reductions in debt substantially reduced demand, and this deleveraging was the unstoppable force that made the Great Depression “great”.
Debtwatch No 34: The Confidence Trick | Steve Keen's Debtwatch
During the depression, the feds instituted farm subsidies as a temporary aid to the agricultural sector. 70 years later, they are still with us.
How long will the subsidies to banks, auto companies, the housing industry, CRE and insurance be with us? How will these market distortions affect the economy long term?
This is what I would ask Bernanke.
The next generation of knife catchers, do the new owners really think the investors put 50k into their newly purchase home?
As interest rates fell, the Whitmans were able to increase their price limit. They ended up buying from investors. A syndicate had bought a three-bedroom foreclosure on a cul-de-sac in eastern Sacramento last fall for $172,000, made a few improvements and was flipping it — another boom-era element that is back. The Whitmans bought it three weeks ago for $224,500.
Where Home Prices Crashed Early, Signs of a Rebound
The next leg down will be devastating as suckers are parted from their cash (or credit).
This is not good news for us today, for three reasons. Firstly, debt levels today are far higher than they were prior to the Great Depression–the force of deleveraging is thus likely to be greater now than it was in the 1930s. Secondly, given this higher level of debt, the correlation between the debt-financed proportion of aggregate demand and unemployment is even stronger now than it was during the Great Depression. Thirdly, given the greater dependence on debt today than ever before, and the social changes that have gone with the Ponzification of Capitalism, the lag between a fall in the debt-financed component of demand and a rise in unemployment has dropped to just two months.
Debtwatch No 34: The Confidence Trick | Steve Keen's Debtwatch
I'd ask him:
Fed Chairman Bernanke: The foreigners that used to buy our treasuries are active sellers of same now. Will this effect our economy?
It is spring. The madness has shown itself. I fear it will take autumn leaves falling before these green shoots die. It is going to be a long depressing summer. We are all Casandra here bleating warning no one understands or heads. If this trend continues, this will be touted as a success for the president, and when things start looking like the emperor has no clothes in the fall, there is always the second wave of swine flu to blame it on I suppose. I hope I am wrong.
Now we are sitting on the precipice of a mountain of debt twice as high as in the Great Depression, with low inflation turning into deflation as Fisher warned, and with Central Bankers who do not have a clue why the economy has suddenly gone from “the Great Moderation” to “the Greatest Crisis Since the Great Depression”.
Over-confidence in the face of rising debt did beguile us during the long boom. Confidence in the face of deleveraging will not save us during the coming Depression.
Debtwatch No 34: The Confidence Trick | Steve Keen's Debtwatch
ac - short answer, yes. Debt burden is largely fixed or growing, and personal income has become variable, and increasingly uncertain.
If the direction of income is ulimately down, whether through unemployment or erosion of hours/rates, people who were formerly prosperous become marginal, the marginal deficient, and the already impoverished fail utterly.
And at roughly one trillion dollars per green shoot, the Fed is spinning a really small salad meant to feed a lot of hungry dinner guests!
On the upside, once the Big Pigs push back from the trough, you are welcome to any green shoots you can find in the dregs.
(Just sort of brush off the leftover trampled shoots on your pants leg, or something.)
On the bright side, higher unemployment means more people can stay at home and clap for Bernanke's glorious policies.
Even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while, implying that the current slack in resource utilization will increase further.
Seems like debt clearing has always been a prerequisite of sustainable economic growth.
Maybe this time it's different.
Pravda shall set us free, apparently.
Nuke,
Those who have read here for several years watched the indexes climb against fundamentals far longer than this recent iteration. And CR was called every kind of thing for detailing fundamental problems which even now aren't accepted broadly.
Those earlier buttes and pinnacles brought out many posts all but identical to your own. And they were very confident and, though very mistaken - were quite understandable in fact, given the chorus of support from the majority of public coverage.
If there is a consensus here, it's that the deterioration of the US economy has slowed in the recent quarter. The fix is visible. But it isn't 'in' by a long shot.
AMF,BB's answer would be "Palau is still part of the coalition of the willing and a loyal ally"
In the first GD Willie Sutton said " I rob banks because the money is there".Another change for the worse
ac - short answer, yes. Debt burden is largely fixed or growing, and personal income has become variable, and increasingly uncertain.
If the direction of income is ulimately down, whether through unemployment or erosion of hours/rates, people who were formerly prosperous become marginal, the marginal deficient, and the already impoverished fail utterly.
It almost seems like the US worker is going into sort of a "secular decline".
Maybe we'll talk about the "American Disease" as we once talked about the "British Disease".
People from the United States will go visit China and they'll giggle and whisper amongst themselves about our bad teeth.
Green shoots !
Linda Blair shoots.
Arbitrage_Macht_Frei (profile) wrote on Tue, 5/5/2009 - 10:10 am
"Shoot Greens" is what I fear, if the mouthbreathers that get their marching orders from the amplitude modulation channels of communication, decide to use the guns and ammo they were persuaded to arm themselves with, by the same concern.
Yeah, the guns should be with responsible people like the Hanktator, Nancy, the W and Little Timmy Geithner. Professional leadership by technicians is clearly the answer, as we've see from the competence and independence shown by our leaders during this crisis.
remember its not that bad, things will turn around, probably late 2009. Christmas will save us too.
Yada, yada, yada,...problems contained, inflation not an issue,...yada, yada, yada,....yada, yada, yada.
Ginning up hate and persuading your listeners that they must go out and arm themselves against the possibility that somehow our government is going to take away hundreds of millions of weapons from hundreds of millions of citizens is about par for the course, sadly.
Too big to fail. I don't buy it. That said, Bernanke is definitely NOT in the too big to fail category.
Too Big, Too Fail.
Ask Goliath
bleh, Christmas should be interesting this year. General populace will have some savings (if layoffs haven't wiped them out), little or no credit, and I suspect on-line shopping will be a hit since retail stores are becoming a rare species. Extreme exaggeration, but I wonder what the hit gift will be. I am asking for a spare can opener for my stocking.
Nuke (profile) wrote on Tue, 5/5/2009 - 10:16 am
The fix is in. The Feds (gov and reserve) have printed enough to generate a short term recovery. The question remains, how will they extricate themselves from the various markets in which they are now the dominant players. Trying to fight this market is madness.
Their funding conduit has an extremely short roll period. They will blow a rollover and have to bow.
Nuke,
. . . or do I need my irony detector recalibrated?
bankers are terrorists,
check out "Suicide Banker's Bluff" by me as sparkler chopsticks bombface for input on your damage comparisons.
Existing Home Sales Decline to 4.49 million in January | Hoocoodanode?
Arbitrage_Macht_Frei (profile) wrote on Tue, 5/5/2009 - 10:41 am
Ginning up hate and persuading your listeners that they must go out and arm themselves against the possibility that somehow our government is going to take away hundreds of millions of weapons from hundreds of millions of citizens is about par for the course, sadly.
Whenever they have opinions you differ with, they are poor little lambs, with no minds of their own, poured full of lies by those you dislike.
You can see the problem, but your solution is more problem.
Burnside:
My point wasn't blue skies and green shoots. It was that the Feds have sunk upwards of 3 trillion into the economy (over 20%) in the last 6 months. A short term recovery is in the works. Now, the Feds own large portions of the finance, real estate and auto industries. I am concerned about the short term. It is like Iraq. After March 2003, we owned the country. The real question (that we still haven't fully answered, 6 years later) is what do we do with all of it.
ISM services above consensus. More green shoots, or dead cat bounce ?
Byz,
I'm content to let the market sort itself out, and soon thanks to both plunging advertising and the realization by the republican party, that they've hitched themselves to a cancerous growth, they'll be gone, not unlike Father Coughlin and Joe McCarthy.
Bob Pisani said Jazz Fest in New Orleans was busy thus the BULL MARKET is ALIVE.
interesting (to me anyway) that the CRVIX is actually pretty high, yet the number of comments is very low.
also interesting is the difference in tone between the day shift and the night shift. the day shift seems way more "whipped".
given the day shift is more skewed towards traders, i view this as a positive (from a contrarian standpoint).
only when the last bear is dragged, beaten and bloodied, from the field of play, can the next leg down commence.
Bernanke - "We don't expect to lose any money on any of our holdings"
They have ALL the recent GSE paper, the only mortgage financing source. The Fed has BOTH the Credit risk and the interest rate risk (which is already under water). They will lose money and a lot.
"It was that the Feds have sunk upwards of 3 trillion into the economy (over 20%) in the last 6 months."
Bwahahahahhahahahahahahahahahahahahahahahaha!
Ahem....sorry. This kind of collectivist twaddle is just starting to drive me insane. The gov't pissed $3T down a rat hole of insolvent companies. There's no machine or entity "ECONOMY".
Sorry, but lack of clear thinking, and "we need to..." and "our society should..." and blah blah blah horsespit is getting old.
Nostroiva,
Nuke, they've declined, in their acquisitions, to accept even a minimum of control. Very hands-off.
The comparison to Iraq is apt.
"not unlike Father Coughlin and Joe McCarthy."
Oh, can't we get an honorable mention for Uncle Joe and Mr Po?
Nostrovia,
Well Business As Usual---
All that was needed was to suspend the laws of thermodynamics, and get this puppy growing again!
Sound like anybody you know?
(from wiki)
At its peak in the early 1930s, Coughlin's radio show was phenomenally popular. His office received up to 80,000 letters per week from listeners, and his listening audience was estimated to rise at times to as much as a third of the nation. Coughlin is often credited as one of the major demagogues of the 20th century for being able to influence politics through broadcasting, without actually holding a political office himself.
By the way, is he still talking? Seems to have taken some of the plate off the dow. I see base metal.
Bernanke - "We don't expect to lose any money on any of our holdings"
He is correct, he will sell it all to the treasury for the taxpayers to take the losses
BR,
"Their funding conduit has an extremely short roll period. They will blow a rollover and have to bow."
well said, people are surprised in the short term with the Fed's ability to manage the crisis....
let's not kid ourselves, this is a large moving mass and the sheer inertia is a overwhelming force....
The tone will sour once again when we've drifted far enough.
If only Ron Paul could bring his A game to speeches...
"Final demand should also be supported by fiscal and monetary stimulus." - Ben
Translation:the American government will buy as much makeup and plastic surgery as it takes to make this pig look like a beauty queen. And by next fall, the trainers will have her down to model size, and ready for her closeup.
In other words, resistance is futile, don't fight the Fed, etc.
Ben's doing a balance-sheet lunch with Senators...
I feel safer now.
AMF, I love Ron Paul. Talked to him personally several times. Having said that, I don't want him as Commander and Chief. I wish he could start a third party movement, be a John the Baptist for someone else. People are beginning to feel the need, but don't know what direction to take. I would like a national holiday where it was required we all go sit in a room by ourselves, completely disconnected, for the day to examine our lives and country. There I go day dreaming again.
Basically Bernanke has no idea what will happen so will offer vague ambiguous comments that could be interpreted either way so that he can look back and say - see? I was right!
Our brightest financial mind is clueless.
"Looking ahead, prognosticators this year have divided into several different camps. Some believe that high unemployment necessarily will lead to continually falling inflation for several years, and they are concerned about the risk of outright deflation. I personally have thought the risk of deflation was overstated, and for the first three months of this year, inflation has averaged 2 ¼ percent – both core prices and overall prices. Another camp places significant weight on the public’s expectations, and as near as we can figure, those are fairly well anchored around 2 percent. And finally, a third camp sees the rapid growth in our balance sheet, notes the historical association between rapid money growth and subsequent inflation, and wonders whether inflation will accelerate when the economy begins to recover."
The Economic Outlook, May 2009
May 4, 2009
Remarks by Jeffrey Lacker, President, Federal Reserve Bank of Richmond
The Economic Outlook, May 2009 - Federal Reserve Bank of Richmond
Didn't catch up on all CDS discussion of previous thread, but collateral retained on swaps at head of bankruptcy line applies to writers of CDS. Chrysler in all likelihood never wrote any CDS, being a car company. If Cerberus or individual bondholders wrote or bought CDS, that's not relevant to Chrysler's BK.
Bernanke's smart enough to deflect queries from people that all too willingly tell him that they have no idea what he's talking about.
We Can't Subsidize the Banks Forever
Government has to show it can handle major insolvencies.
We Can't Subsidize the Banks Forever - WSJ.com
New from Nouriel...
The hope was that the stress tests would be the start of a process that would lead to a cleansing of the financial system. But using a market-based scenario in the stress tests would have given worse results than the adverse scenario chosen by the regulators. For example, the first quarter's unemployment rate of 8.1% is higher than the regulators' "worst case" scenario of 7.9% for this same period. At the rate of job losses in the U.S. today, we will surpass a 10.3% unemployment rate this year -- the stress test's worst possible scenario for 2010.
The stress tests' conclusions are too optimistic about the banks' absolute health, although their relative assessment is more precise, because consistent valuation methods were used. Still, with Thursday's announcement of the results, it shouldn't be a surprise when the usual suspects emerge. We fear that we are back to bailout purgatory, for lack of a better term. Here are some suggestions for how to extricate ourselves.
My impression is Bernanke seems a tad more agitated today.
Ben is RIGHT. Were in the "Deflationary DEATH Spiral"......No way Out.....
Actually, Arbitrage, pretty much all the amplitude modulation "listeners" you refer to wouldn't need to go out and arm themselves. They already are. Take a trip inland sometime.
Big B got a 1590 on his SAT score and he doesn't appear to suffer fools, himself notwithstanding.
Shtick,
There's nothing wrong with people spending grocery money on their 4th and 5th weapons, is it?
""For example, consider the fact that the government, while providing aid to banks, did not restrict their dividend payments. A recent academic study by Viral Acharya, Irvind Gujral and Hyun Song Shin (http://www.voxeu.org) notes that banks only marginally reduced dividends in the first 15 months of the crisis, paying out a staggering $400 billion in 2007 and 2008. While many banks have been reducing their dividends more recently, bank bailout money had been literally going in one door and out the other.""
OT from earlier thread re Chrysler: Is there any way the Chrysler BK doesn't wind up at the Supreme Court? Given the stakes and number of parties, it seems to me some party will have the motive to appeal the BK judge's decision.
Bernanke - "We don't expect to lose any money on any of our holdings"
He is correct, he will sell it all to the treasury for the taxpayers to take the losses
Taxpayers won't bear the burden - consumers will via future inflation.
The treasury won't have taxpayers pay - they'll directly monetize those losses - push them off into forever like the 'lock box'. The money they spilled out all over saving the banks will remain out there virtually FOREVER... at a permanently high plateau so to speak. Every time an attempt is made to mop it back up - the economy will shudder and the mops will be put away 'temporarily'... and more money will be spilled. Repeat over and over.
I could be wrong - have been plenty of times in the past - but I see no way they painlessly get the genie back in the bottle and pain is something we will not endure voluntarily.
"wonders whether inflation will accelerate when the economy begins to recover."
And not just our economy; we are foolish to think that the US economy is the only thing driving prices in the US economy.
The prices of finished goods in this country may not rise very quickly as everyone down the distribution chain takes lower margins. But the costs of raw materials could rise quickly as foreign demand picks up, and in fact this is already happening. So gas at the pump, heating oil, food, building materials, etc could all rise.
As someone else said here: an inflation in the things you need, deflation in the things you don't.
I think stagflation is a certainty.
CR,
The link you have on your homepage, Andy Xie: If China looses faith the dollar will collapse, is pretty interesting. Looks like we might be starting to see the first signs of that given recent Treasury sales. Just thought I'd throw this into the hoi polloi cage.
Andy Xie: "If China loses faith the dollar will collapse" « naked capitalism
[BTW, the text-to-voice option pronounces Mr Xie's last name, "ZEE" (like the letter), though when I first read it, my brain thought 'pinyin' and transliterated it "SHE-uh." I'm curious which it is if anyone's familiar with this gentleman.]
Kung Fu, as I recall from discussion of bankruptcy here last year, BK moves through its own, discreet system of appeals. I believe this means the SCOTUS would have to agree to take an appeal, in the event one is filed.
Ben is RIGHT. Were in the "Deflationary DEATH Spiral"......No way Out.....
If that is the case then he can print at will - forever. No worries...
My Congressmoron Baloney still trying to take credit for helping consumers get more cheap credit.
bernanke is a pig.
Yogi:
Ahh. Now I get it with the CDS...
The writers of the CDS - those who have to make the payment on the CDS - are the ones who get sent to the head of the class.
Took me for-*******-ever, but now I get it. Thanks.
Kung-fu Panda:
Yep, I think that it's going to end up at the Supreme Court.
It's a blogger's wet dream.
Bernanke - "We don't expect to lose any money on any of our holdings"
?????? Who is going to pay par for all those 4% MBS they are buying?
Surely he means they won't take any credit losses on their holdings? I am not sure that is even accurate, but in terms of the MBS that may be true, but there is no way in hell he will be able to sell those MBS at what he paid.
This guy is a real scumball IMHO. In some ways I prefer Greenspan, at least he really believed what he was saying, even if it was misguided. Bernanke is just a liar.
So we fixed this with monetary and fiscal outpour, finally bypassing congress' outlays when public sentiment got too hot, and began outright printing. Just restructured debt with but little real default, dilated time frame, shifted obligations to public balance sheet and diluted/devalued currency.
No stunning new technologies. No new must-have products. No increased output. No sizeable or foreseeable growth.
Just endless empty buildings, unfinished lots, debt of scale throughout, newer debt instruments, currency and market manipulation.
CRISIS OVER!
Check kiting pathological drunkards and liars all.
It's an entirely different world from the 70's and early 80's...
There was no common European currency, and communist and 3rd world countries had neutered themselves as to be financially impotent. Japan & Taiwan were the only tigers earning their stripes, and most importantly, information flowed like molasses, compared to today.
I have accomplished nothing and produced nothing this morning.
Might as well work for the Federal Reserve.
The weapons argument is one I have talked a lot to my neighbors about. We have a lot of hunters, almost everyone has firearms on my street. I am a military brat, but don't have any weapons because my father taught me that you are your own greatest weapon. We lived in Alaska and people would go to Kodiak Island to bag them a big bear with high powered rifles from very far away. I don't know if it was the Indian in both my parents bloodlines, but it just seemed wrong. One of my greatest memories of childhood was picking berries in the woods with black bear cubs. As an adult the thought scares me to death, but the mother bear didn't find me offensive and we just all went about our own business. I guess because I was a kid and not trying to pet her babies I wasn't a threat, but it was one of those innocent moments of childhood that I remember fondly. I am not against hunters, I just wish bear hunting was limited to bow and knife. Back to now after getting off topic, several neighbors are stocking up on firearms because they want to be ready for collapse to defend their gardens from roving gangs. I pointed out that you can only shoot one or two guns at one time, and your time would be better spent trying to bring the neighbor hood together to act and plan for such a thing. Response from most is that all you can depend on is family, and they were expecting family to move in with them if times got hard. I don't know what to make of this yet. The idea of roving gangs of armed vegetable thieves is amusing, but probably not to be underestimated.
I feel as if I wasted an hour dining on green shoots in my stone soup.
Might as well work for the Federal Reserve.
My guess is the pay at the FRB is better too.
One of my greatest memories of childhood was picking berries in the woods with black bear cubs
I remember that book. "Blueberries for Vonbek777"
Strong stuff from Dr Doom:
WSJ
unearthly - in an area not far from where I am in Sac you can see examples of the absurdity. Sold often recently, then foreclosed....guy fixed it up with some duct tape, etc, and listed it just below the price that most of the nice stuff in the area would sell for, even though it is off pitch and crappy looking still, and Im pretty sure some moron picked it up recently at or maybe below the listed price of $298k.
Meanwhile, the house in a nicer area I live in nearby, is still heading down from its $450k peak to $330k. First a big drop, then a slow volatile downward grind. And heading lower. But dont let that stop the cheerleaders in the NYTimes.
Here is the house info off zillow for the foreclosure :
Sale History
11/12/2008: $155,000 *
07/29/2008: $271,054 *
07/25/2006: $317,000 - this is sad...if you saw where this house is (by a noisy school) you'd think someone insane to buy this. Come to think of it, the place has fraud written all over from day 1.
No other sale data is available
* Transaction not included in Zestimate.
Talk about a wide swath:
-------------------------------------------Previous Consensus Consensus Range
Nonfarm Payrolls - M/M change -663,000 -630,000 -810,000 to -580,000
Might as well work for the Federal Reserve.
My guess is the pay at the FRB is better too.
And the Governors don't piss at you about why they have to wear long pants and shoes in 55 degree weather.
Dr Doom must hate America because its essential we save bankers. They need to vacation in the Caymans...or they will die.
Actually the buyers (holders) get to "freeze" any collateral they're holding of the bankrupt writer. Any CDS paper held by the bankrupt reference entity is just another asset to be carved up. I don't know whether Chrysler took out CDS on itself, or bought them second hand from another holder although there are no regulations to prevent it and it would be a nice way to fleece a counterparty.
OT- Not much of a green shoot here ....
From: Steve Ballmer
Sent: Tuesday, May 05, 2009
To: Microsoft - All Employees
Subject: Update: Realigning Resources and Reducing Costs
In January, in response to the global economic downturn, I announced our plan to adjust the company’s cost structure through spending reductions and job eliminations. Today, we are implementing the second phase of this plan.
This is difficult news to share. Because our success at Microsoft has always been the direct result of the talent, hard work, and commitment of our people, eliminating positions is hard. .......
probably around 3,000 today.
Today's Bernanke Blue Plate Special
Nothing-burger & stone soup $6.66
Were actually blackberries I think. It was right after the river in Fairbanks started breaking up for Spring. Bears used to come pretty close in back then. I guess they still do when they get hungry.
Samdog, Xie is a common surname. It's usually romanized Hsieh in Taiwan, and that spelling is more helpful phonetically. Think dipthong "hsee-ah".
Never met the guy but he has shown a lot of integrity over the years.
Bernanke and his stupid house on fire analogy. Get him Cummings.
oh, BTW, same xie as xie xie = thanks.
Vonbek, what I find most interesting is that people are factoring in the armed vegetable thieves as one of the possible future scenarios.
(Not saying that people necessarily think it is the most likely, just that they believe it to be an actually possible future world.)
The powers that be can continue to speak of green shoots, and Congress can continue hearings on steroids in baseball and the college football national championship scheme, but a lot of people are quietly preparing for at least the possibility of absolute collapse.
The idea of roving gangs of armed vegetable thieves is amusing, but probably not to be underestimated.
Unfortunately not far from the truth in Argentina. Do a little reading... SURVIVING IN ARGENTINA
Dammit, Yogi.
Now you're confusing me again.
Okay, so the language is this as I understand it.
The seller of the CDS is the counterparty. Right?
The holder of the CDS is the buyer of the CDS. Right?
So if there are two primary (first level) lienholders but only one has a CDS on the bonds that it holds, then that lienholder takes priority over the other lienholder, who doesn't own a CDS. But both are still within the primary level of lienholders.
Drop the turnip nice and easy like and turn around, hands up-no funny business...
[Surely he means they won't take any credit losses on their holdings? ]
Please rewind to 2007 for some perspective on Bernanke's keen ability to predict all things financial.
"Credit losses are contained to the subprime market"
"Total credit losses are expected to be $100B"
"Our financial institutions are well capitalized"
I bet that in the dark, any CNBC correspondent couldn't tell a parsnip from a nightstand cowboy.
which begs the question if enough people believe that collapse is inevitable, is collapse inevitable?
The link you have on your homepage, Andy Xie: If China looses faith the dollar will collapse, is pretty interesting. Looks like we might be starting to see the first signs of that given recent Treasury sales. Just thought I'd throw this into the hoi polloi cage.
If I were running things over in China I would be tempted to dump every long bond I have in Bernanke's lap every time he comes into the treasury market and then use the proceeds to buy claims on natural resources and their production (e.g. oil and farm land).
Again, Bernanke is basically saying: "Here, it's open season on the wealth of the US taxpayer. Come and take some!"
So I would come and take some.
Somewhere, a center of higher learning is missing it's tweedy professor, who i'm sure wishes he could do a do over and give back his 15 minutes of fame.
Yeah, ac, but I'm not giving up my vegetables without a fight.
They can have my turnip when they pry it from my cold, dead hand.
With regards to Chrylser and CDS, you guys are mixing stuff up a bit.
The parties that bought and sold Chrysler CDS will not appear in Chrylser's bankruptcy court. Chrylser was not a counterparty to the CDS, it was merely the reference entity.
Lehman was an entirely different case, because Lehman was a counterparty to a lot of CDS (although hopefully not CDS written on itself).
Two examples for clarity
Example #1
Party A buys protection on 100 Lehman from Party B.
Lehman goes BK. Party B pays Party A some $$$. That's it. No court, no lines.
Example #2
Party A buys protection on 100 Party B from Lehman.
Lehman goes BK. Lehman can no longer pay Party A. Party A is now a "creditor" of Lehman in BK proceedings, and due to the new laws, Party A gets paid out ahead of everyone else. Party B is not a consideration here.
The Chrysler case would be example #1, unless Chrysler was a large writer of CDS (it was not).
My point by point commentary on the testimoney should be up soon on Zacks.com I could cut and paste it here, but it is pretty long. If you folks want me to I will
daddyo:
thank you.
"If I were running things over in China I would be tempted to dump every long bond I have in Bernanke's lap every time he comes into the treasury market and then use the proceeds to buy claims on natural resources and their production (e.g. oil and farm land)."
Rio Tinto?
We need some really bad news to bring this market up! Waiting for DOW 9000...
homedad, very rough analogy here, but think of the holder of a CDS as similar to the holder of an insurance policy. (Protectioin from default of the underlying entity.)
If the insurance company goes bankrupt (the writer of the swap goes bankrupt) the policyholders get paid for claims ahead of creditors (bondholders).
Thus, for example, if BigInsCo goes belly-up, people who have BigInsCo insurance policies get paid first. (Like FDIC pays depositors first.)
So in your Chrysiat example, if Chrysiat WROTE swaps (seems unlikely, but possible) those swaps-holders are at the head of the line in the event of a pay-out scenario. Those HOLDING Chrysiat swaps (written, say, by BigInsCo) are at the head of BigInsCo's bankruptcy line.*
*Disclaimer: Your mileage may vary. Analogies and models are not to be confused with the actual sun, sea, or sky. If your malaise and worry last longer than 3 hours, please consult a trained econometrics modeler. Any similarity to actual corporate entities, whether bankrupt or going concerns, is purely coincidental. Modeled results do not in all cases take into account the highly uncertain effects of government intervention.
burnside (profile) wrote on Tue, 5/5/2009 - 8:38 am replyIgnore userKung Fu, as I recall from discussion of bankruptcy here last year, BK moves through its own, discreet system of appeals. I believe this means the SCOTUS would have to agree to take an appeal, in the event one is filed.
The appeal from the BK court runs to the local Federal District Court, then the area District Court of Appeals, and finally to the SCOTUS. The appeals process is completely regular to other actions. Any appeals court can accept/reject appeal. A rejected appeal can be appealed to the next higher level (and either accepted for review or not).
SCOTUS appeals that are accepted for review are very unusual. Appeals from BK to District Court are routine, even as to matters of process.
Generally appeals courts review application of the law, not review of the facts. There are exceptions in the lower levels of appeal, but SCOTUS almost never reviews fact review.
Anak,
Thanks for the feedback.
I have one more question about Chinese-to-English: I remember reading some time back that "pinyin" spelling came to the Roman alphabet via the Cyrillic alphabet. This makes sense to me and accounts for a lot of unexpected sounds (eg, zhou - "joe" instead of zh like "s" in pleasure + Fr ou as in "you"). Comments?
Ben Bernanke "In this environment, we anticipate that inflation will remain low"
Yeah right when...
1) The projected budget deficit for 2009 is $2 trillion
2) The debt-drowned United States debt is already 350 percent of G.D.P and rising fast !
3) The Fed is now holding $10 Trillion of ‘assets’ ( mostly toxic ) transferred from too big to fail banks.
4) Other countries are now buying less of our debt
Is Ben Bernanke living in
a) an alternate reality environment
b) the outer limits
c) the Twilight Zone
For those of you Dow trodden from your most recent losses in the gambling pits, just how brown are your shorts?
Unless Chrysler sold CDS against Chrysler default, buyers of Chrysler CDS don't have any claims against Chrysler !!! Any claim they may have would be against their counterparty !!!
Samdog, in the US, following the example for the French name "Xavier", which is corrected pronounced "ZAY vyer" but in the US is pronounced "X av yer" ... Xie should be pronounced "X ee". And probably is by many newscasters.
best quip of the day, AMF.
"But it is a parsnip, not a turnip"
km4 (profile) wrote on Tue, 5/5/2009 - 12:12 pm
Ben Bernanke "In this environment, we anticipate that inflation will remain low"
...
4) Other countries are now buying less of our debt
...
km4,
Who needs "other countries"?
You see, Ben & Tim have this 'thang' goin' on ...
I'll have my people kohlrabi your people, and we'll do lunch.
Jim,
I really hate it when my memory is intact, but what I remembered was incorrect.
So, thanks for sorting out appeals.
Q: When is a parsnip not a turnip?
A: Always.
@ Samdog
The denial of reality + hype + obfuscation from BB is just plain sickening
"the French name "Xavier", which is corrected pronounced "ZAY vyer""
In French it is 'Zah viay'. In English there is no "correct" pronunciation of a French name, only convention. 'Ex ay vier' is a s good as 'Zay-vier'. There is no reason for a Chinese name spelled in English to be pronounced according to phonetic rules for letters used for pronunciation in English of a French name.
So X can mean anything, as in algebra.
Unlikely to be read, but I am late to respond:
Don’t know about Russian antecedents in modern Chinese pinyin, but it would not matter much.
In spoken Mandarin there are initial sounds that are on the two far sides of the palatal / retroflex spectrum, and most Western initials are somewhere in the middle. So they had to make up new renderings of initials to cover the gap, and some of them are pretty unhelpful to the student. Wade Giles fudged it and used apostrophes, inconsistently.
The finals are another story, but happily a simpler one. What you see is kinda what you get.
No effective shortcuts in romanization, and relearning the phonetic values of the alphabet is a must.
Thanks to Bernanke, its all looking good now. NITWIT !
Article from AFP.
China has 'canceled US credit card': lawmaker
5 days ago
WASHINGTON (AFP) — China, wary of the troubled US economy, has already "canceled America's credit card" by cutting down purchases of debt, a US congressman said Thursday.
China has the world's largest foreign reserves, believed to be mostly in dollars, along with around 800 billion dollars in US Treasury bonds, more than any other country.
But Treasury Department data shows that investors in China have sharply curtailed their purchases of bonds in January and February.
Representative Mark Kirk, a member of the House Appropriations Committee and co-chair of a group of lawmakers promoting relations with Beijing, said China had "very legitimate" concerns about its investments.
"It would appear, quietly and with deference and politeness, that China has canceled America's credit card," Kirk told the Committee of 100, a Chinese-American group.
"I'm not sure too many people on Capitol Hill realize that this is now happening," he said.
The Republican lawmaker said that China was justified in concerns about returns from finance giants Fannie Mae and Freddie Mac, which were bailed out by the US government due to the financial crisis.
Kirk said he was the first member of Congress to tour the Bureau of Public Debt, which trades bonds, and was alarmed at how much debt was being bought by the US Federal Reserve due to absence of foreign investors.
"There will come a time where the lack of Chinese participation may have a significant impact," Kirk said.
"We should track that, because up until last month they were the number one provider of currency to the United States and now they're gone."
With China's economy also hit by the global economic crisis, Premier Wen Jiabao has openly voiced concern about the status of his country's investments in the United States.
China has also floated replacing the dollar as the key international currency with a basket of units bringing in the euro, sterling and yen.
Copyright © 2009 AFP. All rights reserved. More »
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