Even if you wiped out the bond holders the banks would need money twice as large as the TARP.
The IMF estimates were only based on the $27 trillion in U.S.-originated assets.
This is not counting Eastern Europe, UK, Australia, Ireland, etc...
[So the Fed will release the losses and loss rates for each of the 12 categories ]
Are 1 of the categories losses on CA, NV, AZ HELOCs or PayOption ARMs after ANOTHER 20% decline ? Do they share where the loans are marked NOW , so we can at least get a cheap laugh out of the silly exercise ?
Geither should start by claiming ALL US Financial institutions are well capitalized.
I see green shoots. It's Timmay! He's picked up Hank's bazooka and is shooting greenbacks from Ben's helicopter. They keep firing uncontrollably but they're only blanks.
Why doesn't it strike everyone with a modicum of common sense that the banks' stress test results are being cooked to look plausible.
I say this because it is clear that the models used by the Fed must have a large margin of error or they would have seen the current crisis ahead of time.
Given that, if they think a bank is undercapitalized by a fraction of a percent, why bother asking a bank to raise the capital when the margin of modeling error must be many, many times greater?
It is absolutely amazing the level of obfuscation the government is stooping to; the only thing more remarkable is how gullible the investing public appears to be.
Stimulus won't work- people sit around waiting for the government for a handout or assistance- give one person a handout the guy next to him will want one too. Sitmulus is also temporary unless taxes are raised to pay for the government spending. Higher taxes will stifle spending and growth going foward
This is what happened to Detroit. They never reinvented themselves even after year after year of loss of market share because they always believed that the American auto industry was too important and too big to fail.
The US will have to figure out how to replace n 80% consumption based economy. They have to get down and dirty with the rest of the world and compete for manufacturing jobs at price and quality.
Stress test results are all ok until the giant monster darling called Derilla comes again to visit Wall Street, made of toxic derivative contracts. It will crash bank assets easily with its left pinky toe. Then it will ask "what's up?"
"The US will have to figure out how to replace n 80% consumption based economy. They have to get down and dirty with the rest of the world and compete for manufacturing jobs at price and quality."
Last year, the average salary in Beijing reached 39,867 yuan (5,679.1 U.S. dollars) That's what 2.75$ an hr? U.S. is at 20$? That is some monster dollar dilution or productivity gains needed.
I understand following the stress test story-line is important for purposes of historical documentation, but I know I'm not the only one to realize they cannot be honest about a problem that is too big for them to clean up — on behalf of everyone that was tired of the stress test before they finished pre-announcing the plan to develop it: here's a toast to when no one will have to cover the latest press release or leak on it
"The US will have to figure out how to replace n 80% consumption based economy. They have to get down and dirty with the rest of the world and compete for manufacturing jobs at price and quality."
Asia is already filled with factories from Japan to India. Those factories can satisfy any possible global demand EASILY. Even Thailand, traditionally in the west considered just be just another tourist destination, has many large factory towns, making everything from chemicals to cars to electronics and doing it very cheaply.
If the cost of shipping exceeds the added cost of local manufacture (or if it exceeds what the local consumer can pay) protectionism will not be necessary.
Printing press activity soon to be surpassed by the shredder? Does an SEC employee even show up for work on most days? Perhaps they should start by taking a look at these "stress tests?" One might classify them as a material event.
Oh right, you got Martha. Good one. Never mind the Trillions going out the back door via MBS, CDO, CDS and Ponzi's. To be fair, it sure would have been hard to find someone at justice to prosecute under the previous admin. Nah, they were too busy getting fired for not going after political opponents. Hey, when are we going to see some perp walks on that one or was Scooter commuted for that too? Oh, wait. That's right, we are only looking forward now.
With no disrespect to CR, why is it that I don't really care about the details?
When the stress tests were first announced, I had high hopes for what sounded like a logical, analytical way to determine what was going on with the major players in the financial system. That seemed a far more reasonable approach that just giving huge checks to Hank's best friends.
Somehow, over the two months or so since then, it's all begun to look like a bad charade. Perhaps it's just been the constant pounding of CR's commenters combined with my own feeling that I wouldn't buy a used car from the Secretary of the Treasury, but the result has been that I'm left to assume the details will just support whatever conclusion was preordained.
I understand that Obama made the strategic decision not to allow a major bank to fail at this time. Do the details really matter?
Coffee could be interesting. It has become central to the culture but you can't grow it here. Good proxy for whether the spice will flow.
Starbucks was nice while it lasted, but the number of locations that can support benefits for the counter staff is going to be much smaller in the very near future.
"If the cost of shipping exceeds the added cost of local manufacture (or if it exceeds what the local consumer can pay) protectionism will not be necessary."
Dream on. Container ship capacity is measured in THOUSANDS of 20 feet containers. Largest ones carry 12000-15000. The cost is mere pennies for a pair of Nike running shoes. The biggest logistics cost for products is always the domestic trucking, not international shipping. That is just shipping, the costs for air cargo are also very competitive with FedEx, UPS etc and their giant cargo plane fleets.
Given that most western people have very limited genetic diversity compared to many other groups, who can and will respond in kind- it might not end well.
The government will keep funding the banks for 2 months of cash burn at a time, nothing changed, for as long as it can. The only difference might be the pretence for one last trip to the private market to take anything they can get.
Investors with half a brain know the stress test is a sham.
So who's buying stocks based on these "reassuring results"??? Foolish Ma & Pa investors, plus speculators. The latter will take the money from the former.
"The government will keep funding the banks for 2 months of cash burn at a time, nothing changed, for as long as it can. The only difference might be the pretence for one last trip to the private market to take anything they can get."
One way or another, the government will subsidize much of what appears to be private capital invested in the banks.
Farmers are going to love that. Caterpillar and John Deere too. Boeing. Refineries. ADM, Pharma. Hah, even TV and Movies. Microsoft. Intel. All IP really. Open season.
It is possible some information does escape in their results:
- they could consistently lie, and allow the interested to work backwards from isolated accurate data on a single bank's line item
- they could go out of their way to ignore certain details
- the assets with the most favourable treatment between actual performance and estimated performance, would imply they are the biggest dangers
- others?
i remember an article which was titled 'the death of distance' or something to that effect. it basically said anything non-perishable can be shipped for about 1% of its cost....
+1 cars and big ticker items are a different story esp when it comes to fuel, insurance to put over water, currency, labor at ports etc. Production will move to Mexico. when that gets expensive it will move overseas or further south of El Paso.
"The cost is mere pennies for a pair of Nike running shoes."
OK, so everybody in LA can have all the Nikes they want. Kobe Bryant will be pleased. What about the rest of the country?
The Chinese have been shipping us cement and steel and three-foot-wide ceramic flowerpots that cost much less than a pair of Nikes. That probably can't continue.
Especially not if nobody here is buying cement and steel and three-foot-wide flower pots in quantity.
When the dollar rolls over and dies in the not-so-distant future, our "trading partners" are not going to willingly surrender any trading advantage. Either they join us in a race to the bottom -- "global competitive devaluation" -- or they engage in protectionist policies themselves.
The United States, like Britain before it, has been a net job loser for the past two decades, hence the ever-greater reliance on debt instead of income.
It really looks like everything is stacked against Americans. Take for example education. Some bright American kid goes all the way to university and after graduation has 100 000 dollar big student loan. Meanwhile, in Asia some kid did the same but even university costs there are fraction of the costs in the US. He/She there can realistically expect maybe about 1000 dollar monthly salary, in many cases less.
Now how the hell American kid is expected to compete with that? He/she cannot take similar 1000 dollar job and start paying back that huge student loan, not to mention rent and other living expenses...
That this is all done ad hoc (June 9 to come up with plan, Nov. 9 to implement, e.g.) with coordinated action among the Fed, Treasury, FDIC and Comptroller not according to any legislative scheme makes me sick. The decision to put a bank into receivership or to prop it up with public capital injection should be done under a set of published rules. Any decision requiring judgment should be publicly explained in detail. Anything less and there will be no confidence. Transparency now. (lackluster, I know)
"Among other things, regulators accepted banks' bullish arguments about their profit outlooks. The Fed initially planned to use banks' lackluster 2008 revenues as a jumping-off point to predict future incomes, according to people familiar with the matter. But many big banks logged robust first-quarter profits and argued that should serve as the "run rate" for the stress-test period."
Oh my God! These are the results massaged through AIG CDS-related one-time gifts. Even Geithner in his supposed mathematically illiterate stupor couldn't possibly have bought that at face value. This tells me that there isn't even a smattering of sincerity at the Treasury and the Fed.
What confuses me is that the real loss rates are going to rise to the surface soon enough - within a quarter or two - at which point the whole drama will replay, so why are they even bothering?
I hate to entertain conspiracy theorist notions about whether the stock markets are being artificially supported but is there any chance that that is their modus operandi now? Buy equities to keep consumers confident and operating?
The only way this makes sense is if Summers thinks they can actually reflate to the old levels. If that's the case, he must be a religious man or have amazing faith in the ingenuity of the U.S. population - to believe that enough productivity will spontaneously develop to replace the lost credit.
TJ and the Bear
Honestly? The USA's trading partners can hold their breath until they turn blue and it won't matter. US manufacturing can expand just be replacing imports, and the US has a great mix of natural resources/labor/technology so they are not too vulnerable in total trade war. The one talked about most would also not be in danger: oil. Oil exporting countries are not the ones who will have the biggest problem with manufacturing competition. Sure it's not an ideal long term status, but it needn't be because it is a winning hand
"Now how the hell American kid is expected to compete with that?"
That's why we had a gold standard. Over the past couple of decades, governments have taken upon themselves to place a greater value on economic growth than honoring monetary promises. That's one major fallacy of the "free marketeers" who believe the investors (and investor money) reigns supreme. It pretty obviously doesn't, irregardless of Mish's constant barrage of disinformation.
ShortCourage
It was a form of stock price manipulation. A pool of guys all chipped in, taking turns bidding the price of RCA higher and selling. They built a critical mass so to speak, and there was a net inflow of cash at ultimately very elevated prices. Stock pool operators cash out first, and walk away with all that new money.
The story is not so important, it's just that there exists a basic mechanism — which you cannot prevent — that can create very profitable distortions. I used the story reference instead of detailing the process, or getting into how it can spontaneously arise. Similar thing happened in the oil market last year. Zero Hedge: Goldman Sachs Now Hiring: Replacement Oracle Of Delphi The prices can sustain themselves for now, but they are by no means real prices
Sure it's not an ideal long term status, but it needn't be because it is a winning hand
EHP, that looks like the rhetorical version of a green shoot.
Sure the U.S. has a lot of cards to play in a total trade war, but the American people aren't really big on personal sacrifice if they don't think the country's existence is threatened. Look how long it took the U.S. to enter WWI and WWII.
When it comes to sacrificing so that the uberwealthy can maintain their accustomed lifestyles in the Hamptons, I don't think so.
EHP: I agree with the chinavortex guy that the rural Chinese will get those dollars or there will be trouble, but is he a hopeless idealist like me?
"# The companies which will survive and prosper are the swift pivoters who can quickly learn how to sell to the “local local economy”. This means that they made some money in export manufacturing, but now switch to sell domestically to Chinese consumers in the new inland towns and cities. Not many companies can do this, but those that do will do well. Most will be entirely new businesses, and local Chinese brands will have an advantage.
This next stage of development will require a lot of money. Those foreign exchange reserves of US2T will be needed by China. Now, if you ruled China and you had the choice of 1) lending the money to the west, which has just acted about as irresponsibly as anyone can imagine or 2) investing the money in China to narrow the wealth gap between rich and poor, city and countryside and keeping your regime in power for more than a half century, what would you do? I think that it’s a pretty easy choice."
sportsfan
That's not a green shoot. That implies an effective default. It implies manufacturing becoming a relatively much more important to the economy, and not because manufacturing is becoming more valued itself. That means a lower standard of living overall, albeit with a closing of the gap between rich and poor. It also implies a great loss of face, having to dramatically cut its armed forces and withdraw from foreign bases and embassies while losing influence at WTO/UN/WB/IMF/etc, that in turn implies losing diplomatically secured lucrative easy business deals...
However, as the UK has shown, it can always be a long drawn out loss of prestige. Similarly, as Russia has shown, that outcome may be the extreme of optimism
yogi,
regarding the use of its reserves, he is beyond optimistic. the only way those reserves got to be so big, was with the implicit knowledge the value at redemption would be significantly less than at receipt. people go out of their way to avoid acknowledging a loss, what can I say
Blackhalo: you overstate your case, one of the problems with the neo-con approach. Iran won't. The Forlorn straddling the Kyber Pass has one mission and one mission only--delay, block and degrade any attempt by PRC to bring forces to bear.
Here's another way of looking at this. There are about $10 trillion of US bank assets. Most of those assets are residential mortgages, commercial mortgages, construction loans, corporate loans, credit cards, auto loans, or other consumer loans.
If the value of that portfolio goes down by 1%, $100 billion of new capital is gone.
GM seen posting deep loss as deadline looms
| Reuters
Analysts, on average, expect GM to post a first-quarter loss of $11.05 per share before items, far wider than the 62 cent per share loss a year earlier,
(o_0)
EHP, okay, if that suggests an effective default, it essentially means the U.S. starts the trade war with protectionism which I guess is the point TJ was making.
I think manufacturing needs to become more important in the U.S. If that implies a lower overall standard of living, so be it.
I don't see a narrowing of the gap between rich and poor. What I do see is the destruction of the American middle class, that last great bastion of perceived upward mobility while living a comfortable life. The rich will stay rich, by and large, but what we like to think of as the middle class will become the working class, a more European class structure, as it were.
If we ever get to vote on maintaining military bases in 130 or so countries for the purpose of obtaining more lucrative business deals for a select few, I have no doubt how my vote would be cast, but a loss of face, no, I don't think so. We have no shame.
With $1.1 trillion of assessed value for residential, commercial and industrial properties in 2008, LA County will probably cause another $200 billion+ of losses. Some of it will go to MBS holders, Fannie, Freddie, the owners, and mortgage insurers. However, Fannie and Freddie didn't have a large market share in LA during the bubble. Most of the losses have already dropped below the mortgage insurance and owner downpayment layers. Each time losses go down another percent, more and more of the new loss goes to lenders.
the stress tests were never about solvency, from a nationalization perspective. Instead, they were about control. Raise X dollars privately, or be prepared under go a conversion. By the way, did anyone notice that the WSJ piece mentioned that it would be conversion from the current bastardized preferred shares to a newer class, which presumably, will be Tier 1. If I recalled correctly, the conversion was supposed to be common stock at prices set in February. I guess those feb prices would be too low, and therefore too dilutive. sacre bleu!
the more i think about housing right now, the more i realize it's a big circle jerk with very little trickling down to the real economy. basically, the creditor class, or BB, lends to the banks, who then lends it to the buyer, to buy an existing home. Sure, there's some fees or commissions that trickle into the real economy, but most of the proceeds are going to savings, which given the balance sheet of America, means paying down existing debt (i.e. the creditor class).
I don't think that there will be a new bubble to reinflate the economy. Given modern corporate financing, any new bubble would be usurped immediately by the masters of finance and priced accordingly. The solution may be redistributive. Of course, the problem is that the R-word is highly political; but redistribution doesn't have to be explicit. It's done every day sub rosa, between regions via appropriations (blue state to red state) or from individuals via the tax code. But more importantly, i think the redistribution needs to occur via a "temporal" default, whereby a class is actually defaulting against its own future claim. I hate to use the example of Chrysler pension fund, because it's so politically charged, but it gives the example more flesh. For the most part, the fund is adequately funded with respect to the current retirees. However, where it fails is projection the solvency of the fund for current workers down the road. So then Chrysler must absorb the legacy costs (which are more accurately future costs), which renders its products non-competitive. The finance premiums incurred in the Chrysler LBO bondholders created the same temporal mismatch. And of course, one of the nuggets from the Chrysler fiasco was that many of the complaining bondholders were actually fiduciaries for other pension funds, which in effect meant that a future claim was crammed down. The debt loss, whether it be from foreclosure or cramdown, will further impair future solvency of many of these funds.
interestingly, when the under funding happens to a public fund, then you have the potential for another circle jerk. future claim by the government (either via borrowing or taxes) to pay for a present claim (current funding) to pay for a future claim (distribution).
now im rambling. good nite. got an ethics exam tomorrow morning.
However, as the UK has shown, it can always be a long drawn out loss of prestige. Similarly, as Russia has shown, that outcome may be the extreme of optimism.
True on both counts. Whatever it is here, I can guarantee you we'll wrap it in the flag.
EHP: I was driving south on a four lane US Route yesterday. A driving rain, a lot of water. I'm old and had slowed to 45 MPH. I was passed by a little white car that spun left, right then did a 360 and a half into the median and about two feet of muddy water. Later turned off onto intra city feeder and within 1/4 mile a head on between two rather beefy looking pick up trucks. A real cruncher.
That's what I see, a major shit storm with some spin outs and head ons that won't end well. When? what form? Where? Shit, I wish I knew. The pace and rate of change does seem to be accelerating.
Few days ago FRE said they are bundling mortgages and HELOC's in the government-backed refi scheme. That should help WFC, no?
On the other hand, people losing money in the market today are well known anti-US shorters. Try to generate some sympathy by complaining about the government pushing 401k balances up.
I long for Joe Shmoe's posts. It has to be a part of a great plan, or else...
"Analysts, on average, expect GM to post a first-quarter loss of $11.05 per share before items, far wider than the 62 cent per share loss a year earlier,"
Funny how the losses balloon as BK becomes more likely...
"Some of your post is disingenuous in that your removal of all doubt happened only recently."
There is a difference between entertaining a hypothesis based on ideas from the comments section on a blog versus having facts confirmed by quotes from officials on the record in articles in mainstream publications.
In the case of the former, I might entertain a suspicion but not fully believe it, whereas with the latter I tend to take the claim at face value till an equally credible refutation is provided.
Or perhaps I misunderstood what you're trying to communicate, in which case I'd appreciate a clarification.
"Financials would have to drop by 85% for FAZ to reach 100. (And that's not counting volatility decay.)
You expect that to happen by October?"
"Direxion Daily Financial Bear 3x Shares (the Fund), formerly Direxion Financial Bear 3X Shares, seeks daily investment results of 300% of the inverse (or opposite) of the price performance of the Russell 1000 Financial Services Index"
A 32.33% drop of the Russel 1000 to get it back to where it was on May 6th, exactly two short months ago, at which point FAZ was at 104.07. So, yeah, I would consider that a non-zero possibility. Where my OCT 30 Calls would be worth $37,035 on face value not counting time value.
"Whomever said shipping was '...mere pennies...' speaks nonsense."
Canadian study:
"The average price for shipping a 40-foot container from Shanghai to Chicago or Toronto is about $4,000. The price for returning a container of exports is about $2,800. ". How many pair of Nike shoes could be put into one 40-foot?
Source:
Pacific Coast Container Terminal Competitiveness Study - TP 14837E
Transport Canada - Welcome Page | Page d'accueil
One plea on legal ethics: [Do not put on your exam] If you 're involved with important political cases (sounds like you will be), ignore confidentiality in favor of public interest. Find a venue to safely publish the truth anonymously.
Scott McLellan's father, a Dallas attorney, wrote a book (horribly edited) in which he deliberately flouted confidentiality privileges to support his claim that LBJ had JFK assassinated. Whatever the facts, his decision made ethical sense.
Given the industrial base Americans still have left (about 12,5 million jobs out of 150), the average lifestyle must be lowered down that of Polish workmen nowadays. One 10-year-old car, one quite old tv and tiny apartment roughly.
Then maybe with hard and smart work American could be again competitive in manufacturing.
ffdic
I'm not worried, I told everyone who comes to me about the outsized risk:reward money market funds have and I think the financial system is going to break one way or another
not to say your concerns are not valid of course. Would there ever even be a way to know the health of a money market fund unless you were an insider or a broker that knew how many redemptions they were getting? Reserve Primary is being sued by the SEC right now because they were able to keep the impaired state of the fund secret up until the end including the board of directors
The closing price (after hours) of FAZ was $5.15. Let's assume your target is $100. That means RIFIN.X has to drop by a factor of 2^(log_3 (100/5.14)). This would leave it 100 x 1/2^(2.7) = 15% of its current value - requiring an 85% drop.
Although RIFIN.X was $350 on March 6, which is 53% of $660 (where it closed today) - which might make one think that a 47% drop was required, the decay from the volatility kills - making the 85% drop in RIFIN.X necessary, even if no further volatility occurred - if RIFIN.X just dropped straight down.
Re: Senate Bill that Passed with FDIC up to $500B
You guys heard it here first this weekend. It's obvious the MSM correspondents on Capital Hill don't bother a) watching C-SPAN, or b) reading Congressional Record. Of course, everything is posted with a day lag; but the full details of the Dodd bill were available over the weekend and the result was pretty much that it would pass since his bill was the "compromise" to the Durbin bill.
What's more valuable is identifying who voted against this bill... interesting discussion...
More from Dodd: I am not unmindful of the fact that we are in uncharted waters. We all recognize as well that we are in uncharted waters in a larger sense. We
are in a time that none of us in this Chamber--with the exception of my colleague from West Virginia and a couple others--can recall. Our parents and
grandparents talked to us about times like these almost a century ago.
We have tried, as we know, in numerous ways over the last many months to figure out ways to get at the root of this foreclosure problem. Every
idea you can come up with has its shortcomings. We have yet to find the perfect one that everybody agrees on. If somebody has it, please let us
know because we are looking for it to get us to the point where we can put the brakes on foreclosures, not because you impose a moratorium but
because people can afford their mortgages, lenders are being paid, the economy is moving, credit is flowing, businesses are growing, and joblessness
is no longer increasing but declining--all of the things we want to see.
Didn't we have this discussion regarding ponies and pot'o'golds at the end of the rainbow a year ago?
If RIFIN goes back to 350. I am a VERY happy camper. Not sure why volatility would come in to play. I would of course be taking money off the table, long before then.
Wow, Thune introduced an Amendment summarized as follows: Mr. President, very briefly, to summarize, what my amendment does is reduce TARP authority by any amount of principal returned by a
financial institution to the Treasury Department. This amendment, as I said before, is necessary because until the December 31, 2009, expiration
date, and possibly longer if the Secretary is granted an extension without this legislation, Treasury can continue to use TARP funds, including those
repaid, in any manner they see fit.
These are taxpayers' dollars. They should not become a discretionary slush fund. These are dollars that, when they are repaid to the Treasury by
the financial institutions, ought to be used to reduce the amount of TARP funding authority that is available.
As of May 1, the new administration has accumulated $580 billion of new debt. That is about $5.5 billion new debt per day. I understand we should
not be tying Treasury's hands when we are still in the midst of a financial crisis, but Congress has the responsibility to decide how the tax money is
spent, not the administration. If more money is needed in the financial sector, then Treasury needs to present a plan to the Congress and let those of
us elected by the taxpayers decide whether additional tax dollars should be placed at risk or spent.
On January 20th a local college radio station (KCR?) played about 20 different versions of the song, all by Cooke, for several hours. Not exactly one of my favorites, but so powerful.
Hey, Chris, old boy, here's a suggestion: stop it. Stop it now. You've done more than enough.
All this horseshit posted here about our degraded manufacturing and how we're going to be living like Pollocks in some ghetto is spewed by those without basis for fact.
And then to have to read through tortuous formulae for scamming money from nothing leaves me reinforced with my decision to drop all but off the radar.
You people I swear. Quantitative analysis is what got us here. That and greed absent morality.
And then, the Negative Nortons would have us give up on the potential free living people possess to the exclusion of any force, be it nature or man. Further, they would have us believe that there is a way to prosperity other than producing something real. Once more, Marx had it right when he said that the only capital is your labor. From that inspiration to today, men and women have been subjugated, divided, distracted and denied privilege for reasons arcane , archaic, and wrong.
sportsfan,
I'm just saying... by reading it you can ascertain the intentions and reasons behind the misguided votes.
Boxer-Ensign even got together on an Amendment that modifies the PPIP program.
The second amendment I will be offering is one that Senator Ensign will be offering a second-degree amendment to. It is a very friendly second-
degree amendment. Again, I thank the Banking staff on both sides of the aisle for working with us--Senator Dodd, in particular--to make this a very
good amendment.
What we are basically saying is, as we go into a new program which is the Public-Private Investment Program, which basically says that when we
take toxic assets off the books of the banks, we want the private sector to come in and give a value to those assets, we do not want the Government
doing it.
The private sector plays a very important role. What Senator Ensign and I believe is very important, and Chairman Dodd has agreed, is to make
sure it is a very clean process, and there is not a process for collusion between the parties, and no chance to defraud, frankly, the taxpayers.
How could that happen? Hypothetically, you can have a bank that is trying to unload a toxic asset. They want the most they can get for it. They can
go to a private party and say: Hey, between us, bid a little bit more for this toxic asset, we will give you a kickback later. They could not call it that.
We will take care of you later. That is clearly a no-no. You cannot do that.
Under the Boxer-Ensign language, that would not be allowed. The Treasury would put forward regulations to make sure it is not allowed. We would
give the TARP inspector general $15 million to perform audits of selected recipients so we can make sure we are following up with audits and making
sure there is no collusion.
We would guarantee there is access to financial data from the Public-Private Investment fund that is necessary to perform these audits, and we
would require regulations that are very clear, so that--listen to this--the private sector cannot use money they have borrowed from other Federal
programs to pump into the system.
They might be able to use some loans, but we do not want 100 percent of that money being recycled again. In other words, they could take a loan
from the Government, then they go buy an asset, and all of the money being used in the program is Government money.
So far Vitter and Demint both offered amendments that would scuttle some of what the government wanted to do... Demint wants to block using TARP funds to buy common stock. Here is Dodd's response (is it correct?).
First, understanding what preferred stock is, and common stock--preferred stock is almost a debt obligation on which dividends are paid. The whole
point is the value of it is in the dividend. With common stock, of course, the value changes based on how well the company is doing. If the company
is doing well, the common stock goes up. If they are not doing well, the common stock goes down, unlike preferred shares. So in terms of what is
real capital, what is real capital is common stock. Preferred shares are not seen as being real capital.
"Treasury can continue to use TARP funds, including those repaid, in any manner they see fit."
So, are there any firms with a market cap of <700BB or is this administration the worlds largest investor too? In addition to being the largest insurer and lender? The opportunities for the admin to manipulate markets would be irresistible I should think, as absolute power corrupts absolutely.
Yup, Dodd really understands the ponzi stock market.
You don't get money back necessarily with preferred shares. You get it back with common shares. In anycase, if we are looking to see the Government realize any gain on the sale of its common shares after the economy recovers, as we all hope and believe it will, the Government's upside potential is far greater with common shares than it would be under an amendment offered by the Senator from South Carolina where we would not be allowed to convert preferred to common.
"Upside potential"!? We've gone from "hope and change" to "hope and believe!".
The votes yesterday:
- Increase PPIP oversight to ensure there is no fraud (approved 96-0)
- Restrict TARP funds from buying common stock (nay, party line vote)
Coburn put up an interesting amendment to run a pilot program to sell Federal land (cost $1B) and I think the Dem's blocked it for god-knows-whatever reason.
Grassley asking for GAO authority to audit the Fed... apparently it was watered down in one of the bills.
Heck, Bernie Sanders even took the Credit Card industry to shed during this debate.
A lot of the bills were voted on today; and the whole Record is not up.
Watching "Nader: An Unreasonable Man" and assessing Obama thus far makes me more comfortable than ever with my 2000 Nader vote. (Gore was a shoo-in in NY anyway).
The best vote I ever made for Pres. was my first, in 1980. Remember the Citizen's Party?
The candidate:
"The peak of the campaign happened in Albuquerque, where a local reporter said to me, "Dr. Commoner, are you a serious candidate or are you just running on the issues?"
anonymous1:
Was reading from work... no problem. I was wrong though; I guess most of the $500B will be used for the PPIP? I can't remember the size of the program. At least they got $70B more to play with though at the FDIC.
Just had an odd thought that China might somehow trigger an event to cause massive dollar deflation... doesn't China also benefit from deflation as USA will repay them in very strong dollars? Isn't deflation the one thing everyone is so afraid of... I think China might be crazy enough to trigger it somehow... even if it doesn't hurt America as much as it will clearly hurt the rest of the world... no? Just a thought, I don't have any inside scoop or anything...
My buddy is happy since his Delphi Corp stock has gone up 15% since he bought it on his "inside information"...
I see the GAO auditing the Fed amendment sponsored by Grassley did not make it into the bill. Of course the GAO will be able to audit the Fed, but only in limited fashion... why Congress wouldn't try to expand their power as much as possible when it seems like Presidents have done so recently (did Clinton do it as much as W?) seems strange to me. I guess only reason they won't do a full-audit-probe is so they can say, "We didn't know that!" when stuff starts to fall.
It'll be interesting when someone comes in and we get the Jenga! moment...
"Whomever said shipping was '...mere pennies...' speaks nonsense."
Doubtless there are other factors, but,...
When a buddy was selling inexpensive bird cages on Ebay, we figured (less the wholesaler's cut) the metal was cut, bent, assembled, painted, packaged, and shipped for less than a quarter, and that included the plastic bottom tray. Just don't see how that was possible, but shipping can be amazingly cheap on a per item basis.
Hymns for the Lord: There is a difference between entertaining a hypothesis based on ideas from the comments section on a blog versus having facts confirmed by quotes from officials on the record in articles in mainstream publications.
Yeah, and the difference is being about 6-9 months behind the Boyd Curve on the issue.
Somebody better wake up Bernanke. He needs to start buying the 10-Year fast and furious....yield is up to 3.23 and is waiting for him to make his Open Market operations a daily ritual.
"All this horseshit posted here about our degraded manufacturing and how we're going to be living like Pollocks in some ghetto is spewed by those without basis for fact."
And what is it exactly that makes American workers better than Polish ones? Hundreds of thousands worked in the UK and now most of them are going back. They are mostly hard working and skillful and much cheaper than Americans. They also do not have delusions of grandeur and out of control narsistic disorders like with some Americans.
70 percent of US economy is based on consumption, that is a world record. Bloated shopping mall economy based on ever-increasing deficit spending and world reserve currency status. Manufacturing have been outsourced mostly to Asia by the American captain of industries.
What is it that justifies double or trible living standard moneywise when compared to a Polish worker?
Absolutely nothing and the collapse is coming.
I guess its official now, the banks represent are whole economy... main street seems to be just a dollhouse of growing poor people...we are but a nuisance. as long as we have walmart and mcdonalds.... all is well!
curious (profile) wrote on Thu, 5/7/2009 - 10:19 am
Supervisory Capital Assessment Program
The stress test had a name? Surely, they meant to say Supervisory Capital Assessment Banking (SCAB) program.
The stress test's name should be Supervisory Capital Assessment Metric (SCAM).
Who helped out your farmers turned into bumbling "soldiers" against disciplined British ones a couple of hundreds years before? The French.
BTW, how is defeating the Nazis relevant today? Just like WWI today, it will be soon another forgotten war. Ironically it is the Germans and Italians who actually have an healthy attitude towards ancient wars meaning "who gives a shit". Meanwhile, Americans and British endlessly wanna talk about those glory days. Wonder why?
Some of those Israelis who displaced those Palestinians had tried to go back to their Polish communities after being liberated from camps, only to be viciously attacked by the locals who had done nothing to stop the deportations. Hardworking? Easier to steal from a minority. Careful of generalizations.
I know all about the French bailing out the US to screw the British. I would never say who gives a shit because I want to know as much history as I can. You evidently want to forget WWII.
I'd be happy to see US military power restrained. But as for arrogance, Northern Europeans take the cake, if you're going to generalize. That includes Poland.
"1945 is ancient to you? The US is settling land claims much more ancient than that.Who gives a shit? Go enjoy prosperity in Poland."
WWII seems to be Maginot line for Americans. Greatest generation and all that BS. Unable to change to the everchanging world, hanging on to the previous victories.
Yogi,
Concerning your comment on AIG. I heard a mention by an econ prof that we really don't know how much of the AIG bailout money was for losses and how much goes for margin. CDOs require huge margins because the risks are huge, but that doesn't mean that all or most of the CDOs will end up in default and the government money lost.
1 currency now -yogi (profile) wrote on Thu, 5/7/2009 - 7:13 am
1945 is ancient to you?
It is. Everyone who was there is dead or enfeebled by age. It's as relevant to the modern age as Napoleon or Rome. It made the neocolonial context, which gave way to the vendor financing context, which is now giving way to the post-vendor-financing context.
So yes, it's a long time ago. Most of the global population was born long decades after the event. Other than America, which legitimates its imperial reign with that rhetoric, and Israel, which flogs it to death because without it they'd be South Africa with a much worse location, nobody cares.
Frankly, after our behavior in the neocolonial era, I don't see why anyone would feel any gratitude to us about it at all. Yeah, we overthrew Hitler. We also overthrew Moussadeq, Guzman and everyone else who dared to speak out against out exploitation of the world as a raw materials feed for our industrial base. If the tiger economies hadn't proved that the international development framework was a useless POS designed to leave nations prostrate and indebted, we'd still be using it to rape them now.
It's a little late to harvest the political capital for that, early post-war national security advisors pretty much chewed it down to the ground and then some.
It's my understanding that many CDO's are highly leveraged and thus "marginal" losses can wipe out all the equity. If the US ever gets back the AIG money it will probably be in hugely devalued dollars.
Nemo (homepage, profile) wrote on Thu, 5/7/2009 - 12:46 am
"They have already been released, and the market has already delivered its judgment.
What's the old saying? "Buy the rumor, buy the news"? Something like that. "
Correct, it's already been priced in. "Buy the rumor, sell the news."
He asked why Americans have allegedly 3 times the standard of living as Poles. I think 1945 is relevant. Is the German standard of living higher than Poland's? Why not complain about that. I am not bragging about past American glories. But the reality is economic might is largely derived from military might. Poland did not put up much of a fight against the Nazis. The US did.
Yogi,
I think you're right that the price at which they trade can cause "marked to the market losses", but in the end (if the contract is held to expiration) either the contract goes into default and AIG loses or it doesn't, in which case AIG gets the premium. In either case since the contract has ended, margin money is no longer needed and could be returned to the government.
I could ask (and sometimes do) why Poland's workers deserve 10 times the standard of living of the Third World's? But I wouldn't make general insults about a population.
The Bank of England left interest rates at a record low 0.5 percent for a second month running on Thursday and said it would increase the size of its asset purchase programme by 50 billion pounds.
The announcement raises its quantitative easing programme to 125 billion pounds.
Just watching Spitzer on CNBC. Damm why did that boy have to get caught screwing overpriced hookers? Would love to have him back in the thicj of things. He would be a great choice to be the new Peccora, but will not happen cuz he had to get his pecker wet. Maybe we can have Liz Warren in that role soon.
I just realized that AIG also has a margin requirement on the short bond or short stock side of the hedge (if AIG is hedged). That margin money is also "freed up" when the CDO contract expires.
"But the reality is economic might is largely derived from military might. Poland did not put up much of a fight against the Nazis. The US did."
Read your history again. Believe me, they put up a good fight but horses and brave officers were basically bulldozed with tanks. Also, the notion that France just cowardly surrended is absurd. That massive 41 000 tanks and other armored vehicles armada coming from Germany...they basically went all-in. Not to mention Germans basically invented modern warfare.
In a way WWII is still relevant in some circles but today the world is so completely different. For example, next decade there will be the mother of all baby boomers, the Asian Boomers. 1 000 000 000 youngsters coming to the working age, triple the population of USA and double of EU. The challenges are huge.
when goldman's trading desk decides to reverse course, this could be ugly. but you know what they say, the market can stay irrational longer than you can stay solvent.
AIG is not hedged, which is why they lost so many billions. It wasn't all just posting collateral, they had to pay claims they never intended. Bonuses were paid instead of keeping reserves.
No matter how you slice it, toxic assets need to be replaced with fresh capital and the creation of new capital will require existing bank shareholders to take a hit.
yes, aig was massively naked selling CDS, perhaps not unintentionally. my theory is that AIG was a sacrificial lamb for the other banks, much like fannie and freddie are. so much easier to have the losses centralized...
"None of these 19 banks are at risk for insolvency," Mr Geithner said, He believed that the majority of the banks would be able to raise money from private sources but if they were unable to do so the government may have to provide them with more taxpayer money.
Some analysts have been critical of the stress tests.
Professor Nouriel Roubini and Professor Matthew Richardson of New York University say that the doomsday scenario that the banks' books have been subjected to is actually no worse than the current economic situation.
They are too kind....this is simply premeditated whitewash sham !
American taxpayers bend over a bit more for Wall St crooks and rampant crony capitalism in Wash DC.
Horses against tanks is not much of a fight. Bravery has nothing to do with it. Native American warriors are called braves. Now they fight in court, and sometimes win.
....it's all just a series of docu-dramas. Throw into the mix the idea that the schools are teaching our kids SQUAT, and even more frustrating, the kids coming through high school today, can't play baseball worth a shi*! Baseball! Who ever heard of a kid not learning the game of baseball - AND the best players on HS teams across the US pretty much suck! No sense in fighting it anymore - America's pasttime played like and by a bunch of wusses. - we're doomed.
Odey European Inc., the hedge fund run by Crispin Odey, posted the biggest monthly gain in its 17-year history after betting that “junk” shares would be the biggest beneficiaries in a market rally.
The 67 companies in the Stoxx 600 with debt-to-equity ratios above 50 percent and a return on assets of less than zero added an average of 33 percent in April, more than double the increase for the European benchmark index, according to data compiled by Bloomberg.
But the reality is economic might is largely derived from military might.
I would say it's ambiguous and probably hinges tightly on what you define as "might". It's certainly true that being too strong to get raped is an absolute must in the global prison yard that we call the international milieu. Beyond that, I think the benfits of power-projection type might are oversold. It's not good at all to be the rape victim; ask say, Iraq or the Chinese during the Opium Prostration.
But being that raper is not necessarily profitable. You are pushed the idea as a citizen of a nation-state, but really, only bankers and industrial magnates ever benefit directly from it, you mostly provide machine-gun fodder, tax base, and real estate / legal cover. And that's only from a winning perspective. For every America or Britain there's a France, Belgium, Germany, Japan, Italy, etc for whom empire was unquestionably an expensive mistake.
They'll tell you what a blast it is, but given the end-state, when you take what America has paid for the post-war empire, versus what we got, do you really think in the abstract it was better than practical isolationism? It seems to me it's just socializing expense and privatizing profit on a geopolitical scale, so the expense can be line-itemed as patriotic sacrifice and the private profits can have the "private" part soft-pedaled under "it brings national prosperity". There's no doubt that the US empire's overthrow of Guzman benefited the United Fruit Company and the Dullese family immensely. Everyone else in America? Not so much.
Plus there's that whole, how can the Republic that is supposed to be the world's bastion of freedom, democracy and liberty really feel comfortable about booking economic profits based on unfair exploitation of production factors extracted at gunpoint. Kinda shit end to a revolutionary state, and the complacency with which we accept our decline, from armed missionaries to global strawboss, is no more acceptable "because we shot the Nazis" than for any other reason. The lack of a "why" being part of all this is something I can't underline enough. Expediency justifies everything and nothing.
"Horses against tanks is not much of a fight. Bravery has nothing to do with it. Native American warriors are called braves. Now they fight in court, and sometimes win."
So when that TerminatorDrone kills you from five miles away and you got only rifles that are effective only up to 2 miles? The robot can say, it had nothing to do with bravery?
"And once defeated, the French and Poles were generally willing collaborators, compared to the Hungarians or Czechs. "
Care to back up that with actually facts? It was a whole underground world against Nazis in France. Once again American Exceptionalism there. Boo-haa!
"Several observers believe that at some point in the 2002-2004 period, Cassano and his colleagues at AIG began to realize that state insurance regulators and the FBI where on to the reinsurance/side letter scam. A number of experts had been speaking and writing about the issue within the accounting and fraud communities, and this attention apparently made AIG move most of its shell game into the world of CDS. By no coincidence, at around this time side letters began to disappear in the insurance industry, suggesting to many observers that the industry finally realized that the jig was up.
It appears to us that, seeing the heightened attention from regulators and federal law enforcement agencies such as the FBI on side letters, AIG began to move its shell game to the CDS markets, where it could continue to falsify the balance sheets and income statements of non-insurers all over the world, including banks and other financial institutions.
AIG's Cassano even managed to hide the activity in a bank subsidiary of AIG based in London and under the nominal supervision of the Office of Thrift Supervision in the US, this it is suggested to hide this ongoing activity from US insurance regulators. Even though AIG had been investigated and sanctioned by the SEC, Cassano and his colleagues at AIG apparently were recalcitrant and continued to build the CDS pyramid inside AIG, a financial pyramid that is now collapsing. The rest, as they say is history. "
"Over the past two years, as the economy has weakened, states found their tax revenues were coming in below estimates. These shortfalls led to a cumulative budget gap exceeding $100 billion for fiscal year 2009"
601K new claims, 4wk 623.5K. Looks like about a 80% chance that the recession is over folks. Not saying a strong recovery, but at least we have reached to horizontal. Now, is it a Lor a U. Cont claims still ugly, but that is to be expected.
Circuit City's store closing by state. "Unlike many retailers which own a significant part of the stores they operate, Circuit City leased all but 5 of its domestic stores at the end of FY 2008."
Did you see above where I said I stand with Lafollette? He was the only Senator who stood up and said America's entry into WWI was the road to imperialism. Do I believe in dollar hegemony? Read my name. I just can't stand stupid generalizations like,
"the Germans and Italians who actually have an healthy attitude towards ancient wars meaning "who gives a shit". Meanwhile, Americans and British endlessly wanna talk about those glory days."
And how come US army still have difficulties to recruit all you hotshot wanna-be-soldiers? Mere, what 100 000 per year OUT OF 300 000 000? Americans are mostly "all hat, no cattle". Coward idiots.
Well, I guess it relates to HS kids not being able to play baseball or read or comprehend or think while walking or doing anything but be led - like a "walking box of rocks".
BSR, I'm sure CR will put up the chart of 4wk average and recessions. When that line moves down significantly, recessions end. I am talking about when the NBER will date the end. Not when we see UE come down, not when everything feels good again. Horizontal does not mean moving back up. Still a big chance that the is a head fake, and the new claims will start to increase again as Chrysler/GM BK's kick in. If that starts to happen I will be rethinking my position. I have to say this is much earlier than I thought it would happen, I had been thinking the end would not be until 4Q. Seems like all the extraordinary actions are working. Not that there will not be HUGE costs for those actions, but those costs will be paid later, indeed much later (higher tazes/lower services for our kids). But I have to say I am very encouraged by this number.
Oh my God! These are the results massaged through AIG CDS-related one-time gifts. Even Geithner in his supposed mathematically illiterate stupor couldn't possibly have bought that at face value.
And why not? Next we will have results massaged through PPIP-hedge fund-collusion-one-time gifts.
The stress tests were the guy who bumps into you on the subway to distract you while his partner picks your pocket.
timmyone (profile) wrote on Thu, 5/7/2009 - 8:40 am
And how come US army still have difficulties to recruit all you hotshot wanna-be-soldiers?
Not interested in sending Arab guys to torture chambers until I get my nuts blown off by a command detonated offroute mine, all so that Dick Cheney can grow rich therefrom. Wake me up when the real enemy comes.
Dirk, you are much more intelligent in this area than I. What has been done to correct all the problems that has caused us this turmoil? Nothing. Granted, unemployment is a lagging indicator. To state "everything is all better now - recession over", is a "crock". Multiple bandaids have been laid upon the many wounds and they're still bleeding - since the 1970s.
The irony is that Americans made up their own enemies while having two friendly countries close, Canada and Mexico. They are really scary, aren't they?
For example during cold war there were TWO MILLION mines between Hungary and Austria, two hundred miles small border. Not to mention guard towers and "dead zones" every so often. Imagine that between the thousands of miles of border between US and Mexico.
I have to agree with BSR, Dirk. You might be able to call the NBER because anything, anything at all will be enough for them to say "it's all good" but if you are calling the actual economic downturn over, you are crazy.
The government's stress tests for banks, while aimed at shoring up public confidence, have turned into what some investors are calling an exercise in smoke and mirrors.
The tests are not stressful enough, these investors say. The 19 large banks targeted by Treasury were subjected to worst-case scenarios in which unemployment rises to a 9 percent rate this year from 8.5 percent today - but many economists say 10 percent or higher is a more realistic scenario.
"The federal bank stress tests are inadequate and misleading," said Martin D. Weiss, founder of Weiss Research, an investment research group. "The overwhelming majority of the 19 banking institutions are at risk of failure or borderline, and very few are currently strong enough to weather a worst-case scenario" envisioned by investors outside of Washington, who think the unemployment rate could go as high as 12 percent.
Wall Street titan Morgan Stanley and CreditSights, an investor research firm that has conducted its own stress tests on banks, also say the government is assuming a milder economic downturn than is likely to occur.
"The stress test run by regulators seems to be less severe than our test," which conservatively assumes that unemployment will rise and the economy will shrink much like it does under the government's supposedly worst-case scenario, said CreditSights analyst David Hendler.
"They may be too soft on the banks," he said. "The bottom line is that credit is bad and will continue to get worse before it gets better."
"I could ask (and sometimes do) why Poland's workers deserve 10 times the standard of living of the Third World's? But I wouldn't make general insults about a population."
They have already been released, and the market has already delivered its judgment.
What's the old saying? "Buy the rumor, buy the news"? Something like that.
They will show us the whole tip of the iceberg. The losses are only beginning to be revealed.
Only one bank needs more than 2% of assets in new capital?
Dream on.
losses and loss rates across select categories of loans
I wonder if 'select' equals 12 OR some number more than 1 but not necessarily 12?
Let me elaborate. The banks which are in trouble will need about 1/2% of assets per month of new capital for a while.
"Dream on."
"Only one bank needs more than 2% of assets in new capital?"
Did I not see that the reserve requirements were bumped from 1 in 12 to 1 in 12.5? So, they've got that going for them...
YouTube - Aerosmith-Dream On
Even if you wiped out the bond holders the banks would need money twice as large as the TARP.
The IMF estimates were only based on the $27 trillion in U.S.-originated assets.
This is not counting Eastern Europe, UK, Australia, Ireland, etc...
Not counting the loans made over the past year
[So the Fed will release the losses and loss rates for each of the 12 categories ]
Are 1 of the categories losses on CA, NV, AZ HELOCs or PayOption ARMs after ANOTHER 20% decline ? Do they share where the loans are marked NOW , so we can at least get a cheap laugh out of the silly exercise ?
Geither should start by claiming ALL US Financial institutions are well capitalized.
More adverse.
Than what?
More adverse than the rosy scenarios the folks who designed the TARP have predicted every few months.
Oh, OK then.
Thanks.
I guess I will sell my gold and buy GM shares at $1.66 since things are looking up.
I see green shoots. It's Timmay! He's picked up Hank's bazooka and is shooting greenbacks from Ben's helicopter. They keep firing uncontrollably but they're only blanks.
Why doesn't it strike everyone with a modicum of common sense that the banks' stress test results are being cooked to look plausible.
I say this because it is clear that the models used by the Fed must have a large margin of error or they would have seen the current crisis ahead of time.
Given that, if they think a bank is undercapitalized by a fraction of a percent, why bother asking a bank to raise the capital when the margin of modeling error must be many, many times greater?
It is absolutely amazing the level of obfuscation the government is stooping to; the only thing more remarkable is how gullible the investing public appears to be.
Why Stimulus won't work
Stimulus won't work- people sit around waiting for the government for a handout or assistance- give one person a handout the guy next to him will want one too. Sitmulus is also temporary unless taxes are raised to pay for the government spending. Higher taxes will stifle spending and growth going foward
This is what happened to Detroit. They never reinvented themselves even after year after year of loss of market share because they always believed that the American auto industry was too important and too big to fail.
The US will have to figure out how to replace n 80% consumption based economy. They have to get down and dirty with the rest of the world and compete for manufacturing jobs at price and quality.
Stress test results are all ok until the giant monster darling called Derilla comes again to visit Wall Street, made of toxic derivative contracts. It will crash bank assets easily with its left pinky toe. Then it will ask "what's up?"
"The US will have to figure out how to replace n 80% consumption based economy. They have to get down and dirty with the rest of the world and compete for manufacturing jobs at price and quality."
Last year, the average salary in Beijing reached 39,867 yuan (5,679.1 U.S. dollars) That's what 2.75$ an hr? U.S. is at 20$? That is some monster dollar dilution or productivity gains needed.
Average salary increase of urban workers rises to six-year high -- china.org.cn
Albrt
How much are 10 dollar GM calls?
"During this period of extraordinary economic uncertainty"
?!? WHAT ?? I thought the economy was recovering ? The recession was over... green shoots and all that... are we being lied to or something ?!
sigh I think we all can smell the unrelenting bulls#!t
Uh, Beijing salaries are much higher than other manufacturing centers in China, no?
Blackhalo wrote:
"Last year, the average salary in Beijing reached 39,867 yuan (5,679.1 U.S. dollars) That's what 2.75$ an hr?"
I guess there's some big cuts in pay required to stay competitive.
-splat
"They have to get down and dirty with the rest of the world and compete for manufacturing jobs at price and quality."
Why?
The market for shipping cheap manufactured crap all over the place isn't any more profitable than anything else.
The real choice is do we want to be like the Somali pirates or do we want to grow our own food.
Mad Max or Kunstler.
I understand following the stress test story-line is important for purposes of historical documentation, but I know I'm not the only one to realize they cannot be honest about a problem that is too big for them to clean up — on behalf of everyone that was tired of the stress test before they finished pre-announcing the plan to develop it: here's a toast to when no one will have to cover the latest press release or leak on it
season 1 of the Stress Test show was a success.
season finale a real cliff hanger.
the next show is going to have to be really good to hold our interest.
ALBRT
Cheapest alternative is protectionism. BHO is a big fan
"season 1 of the Stress Test show was a success.
season finale a real cliff hanger"
Just add a little more yelling and stabbing and slot it right after "Lost."
"The US will have to figure out how to replace n 80% consumption based economy. They have to get down and dirty with the rest of the world and compete for manufacturing jobs at price and quality."
Asia is already filled with factories from Japan to India. Those factories can satisfy any possible global demand EASILY. Even Thailand, traditionally in the west considered just be just another tourist destination, has many large factory towns, making everything from chemicals to cars to electronics and doing it very cheaply.
next season:
California Showdown, the weed chronicles
How do distribution of wealth and relative tax rates compare in China and the US?
"Cheapest alternative is protectionism."
If the cost of shipping exceeds the added cost of local manufacture (or if it exceeds what the local consumer can pay) protectionism will not be necessary.
timmyone
Precisely why this is not going to be a real recovery. We will have to subsidize our overpaid Union labor and CEO's
"hey have to get down and dirty with the rest of the world and compete for manufacturing jobs at price and quality."
Why choose the hard path?
We have biowar weapons for a reason.
"SEC enforcement operation under scrutiny"
Yahoo! 404 - Page Not Found
Printing press activity soon to be surpassed by the shredder? Does an SEC employee even show up for work on most days? Perhaps they should start by taking a look at these "stress tests?" One might classify them as a material event.
Oh right, you got Martha. Good one. Never mind the Trillions going out the back door via MBS, CDO, CDS and Ponzi's. To be fair, it sure would have been hard to find someone at justice to prosecute under the previous admin. Nah, they were too busy getting fired for not going after political opponents. Hey, when are we going to see some perp walks on that one or was Scooter commuted for that too? Oh, wait. That's right, we are only looking forward now.
Moral hazard.
Albrt
The most expensive part of your Starbucks latte is labor. You can't get much more local than that. Of course the coffe is imported from plantations
History providing insights again....
James Madison had this to say about the Stress Tests and our future in general....
4best4worst’s Blog
Maximus
4best4worst’s Blog
yogi,
Couldn't remember the exact numbers I used to have in memory, but I came up with some internet results.
About 3 to 4x higher labor cost in coastal manufacturing areas vs the rural/west/interior China: Recession and Migration - Migration News | Migration Dialogue
Also stumbled on to this blog which lays out the real challenges from China's perspective, it's more than a top line GDP number Why China Won’t Throw A Lifeline To The West » The China Vortex
There is much more ...
With no disrespect to CR, why is it that I don't really care about the details?
When the stress tests were first announced, I had high hopes for what sounded like a logical, analytical way to determine what was going on with the major players in the financial system. That seemed a far more reasonable approach that just giving huge checks to Hank's best friends.
Somehow, over the two months or so since then, it's all begun to look like a bad charade. Perhaps it's just been the constant pounding of CR's commenters combined with my own feeling that I wouldn't buy a used car from the Secretary of the Treasury, but the result has been that I'm left to assume the details will just support whatever conclusion was preordained.
I understand that Obama made the strategic decision not to allow a major bank to fail at this time. Do the details really matter?
Coffee could be interesting. It has become central to the culture but you can't grow it here. Good proxy for whether the spice will flow.
Starbucks was nice while it lasted, but the number of locations that can support benefits for the counter staff is going to be much smaller in the very near future.
"If the cost of shipping exceeds the added cost of local manufacture (or if it exceeds what the local consumer can pay) protectionism will not be necessary."
Dream on. Container ship capacity is measured in THOUSANDS of 20 feet containers. Largest ones carry 12000-15000. The cost is mere pennies for a pair of Nike running shoes. The biggest logistics cost for products is always the domestic trucking, not international shipping. That is just shipping, the costs for air cargo are also very competitive with FedEx, UPS etc and their giant cargo plane fleets.
Do the details really matter?
Yes and No. Yes, because it does give us insight into how deep the rabbit hole goes; No, in that any current shortfalls will be totally papered over.
Given that most western people have very limited genetic diversity compared to many other groups, who can and will respond in kind- it might not end well.
//We have biowar weapons for a reason.//
sportsfan,
I know why you don't care.
The government will keep funding the banks for 2 months of cash burn at a time, nothing changed, for as long as it can. The only difference might be the pretence for one last trip to the private market to take anything they can get.
Investors with half a brain know the stress test is a sham.
So who's buying stocks based on these "reassuring results"??? Foolish Ma & Pa investors, plus speculators. The latter will take the money from the former.
"The government will keep funding the banks for 2 months of cash burn at a time, nothing changed, for as long as it can. The only difference might be the pretence for one last trip to the private market to take anything they can get."
One way or another, the government will subsidize much of what appears to be private capital invested in the banks.
why cant the ones who passed give the capital to the ones who failed.... why do i have to get involved.... i'd prefer to stay out of this one....
"Cheapest alternative is protectionism."
Farmers are going to love that. Caterpillar and John Deere too. Boeing. Refineries. ADM, Pharma. Hah, even TV and Movies. Microsoft. Intel. All IP really. Open season.
Fastest path to 40% U3.
It is possible some information does escape in their results:
- they could consistently lie, and allow the interested to work backwards from isolated accurate data on a single bank's line item
- they could go out of their way to ignore certain details
- the assets with the most favourable treatment between actual performance and estimated performance, would imply they are the biggest dangers
- others?
Can TPTB blow another bubble (in Treasury bonds)???
Well, the Fed departed from their normal buying schedule (Mondays and Fridays?) by buying $7B+ in Treasury bonds today.
And yet the yield on the 10-Year is showing as 3.18% on Bloomberg right now.
I think they lose this battle, and the war, this time. But I'm not certain enough to bet on it.
i remember an article which was titled 'the death of distance' or something to that effect. it basically said anything non-perishable can be shipped for about 1% of its cost....
Timmyone
+1 cars and big ticker items are a different story esp when it comes to fuel, insurance to put over water, currency, labor at ports etc. Production will move to Mexico. when that gets expensive it will move overseas or further south of El Paso.
But I'm not certain enough to bet on it.
I am, and have.
The only difference might be the pretence for one last trip to the private market to take anything they can get.
Anyone in the private marketplace who thinks those institutions merit additional funds deserves to lose.
The problem, of course, is that we can't stop the government from financing them "two months at a time."
ShortCourage
Are you familiar with the stock pool for RCA in 1929?
"The cost is mere pennies for a pair of Nike running shoes."
OK, so everybody in LA can have all the Nikes they want. Kobe Bryant will be pleased. What about the rest of the country?
The Chinese have been shipping us cement and steel and three-foot-wide ceramic flowerpots that cost much less than a pair of Nikes. That probably can't continue.
Especially not if nobody here is buying cement and steel and three-foot-wide flower pots in quantity.
Regarding protectionism...
When the dollar rolls over and dies in the not-so-distant future, our "trading partners" are not going to willingly surrender any trading advantage. Either they join us in a race to the bottom -- "global competitive devaluation" -- or they engage in protectionist policies themselves.
Either way the results will not be pretty.
"Fastest path to 40% U3."
You mean for China?
The United States, like Britain before it, has been a net job loser for the past two decades, hence the ever-greater reliance on debt instead of income.
It really looks like everything is stacked against Americans. Take for example education. Some bright American kid goes all the way to university and after graduation has 100 000 dollar big student loan. Meanwhile, in Asia some kid did the same but even university costs there are fraction of the costs in the US. He/She there can realistically expect maybe about 1000 dollar monthly salary, in many cases less.
Now how the hell American kid is expected to compete with that? He/she cannot take similar 1000 dollar job and start paying back that huge student loan, not to mention rent and other living expenses...
That this is all done ad hoc (June 9 to come up with plan, Nov. 9 to implement, e.g.) with coordinated action among the Fed, Treasury, FDIC and Comptroller not according to any legislative scheme makes me sick. The decision to put a bank into receivership or to prop it up with public capital injection should be done under a set of published rules. Any decision requiring judgment should be publicly explained in detail. Anything less and there will be no confidence. Transparency now. (lackluster, I know)
EHP said, "Are you familiar with the stock pool for RCA in 1929?"
I read Galbraith's The Great Crash, but I don't recall the details on the RCA stock pool. Refresh my memory...
Timmyone Salaries must come down. Somewhere inline with Germany and Japan IMO
From the WSJ:
"Among other things, regulators accepted banks' bullish arguments about their profit outlooks. The Fed initially planned to use banks' lackluster 2008 revenues as a jumping-off point to predict future incomes, according to people familiar with the matter. But many big banks logged robust first-quarter profits and argued that should serve as the "run rate" for the stress-test period."
Oh my God! These are the results massaged through AIG CDS-related one-time gifts. Even Geithner in his supposed mathematically illiterate stupor couldn't possibly have bought that at face value. This tells me that there isn't even a smattering of sincerity at the Treasury and the Fed.
What confuses me is that the real loss rates are going to rise to the surface soon enough - within a quarter or two - at which point the whole drama will replay, so why are they even bothering?
I hate to entertain conspiracy theorist notions about whether the stock markets are being artificially supported but is there any chance that that is their modus operandi now? Buy equities to keep consumers confident and operating?
The only way this makes sense is if Summers thinks they can actually reflate to the old levels. If that's the case, he must be a religious man or have amazing faith in the ingenuity of the U.S. population - to believe that enough productivity will spontaneously develop to replace the lost credit.
TJ and the Bear
Honestly? The USA's trading partners can hold their breath until they turn blue and it won't matter. US manufacturing can expand just be replacing imports, and the US has a great mix of natural resources/labor/technology so they are not too vulnerable in total trade war. The one talked about most would also not be in danger: oil. Oil exporting countries are not the ones who will have the biggest problem with manufacturing competition. Sure it's not an ideal long term status, but it needn't be because it is a winning hand
Whatever happened to the Basel capital standards?
"Now how the hell American kid is expected to compete with that?"
That's why we had a gold standard. Over the past couple of decades, governments have taken upon themselves to place a greater value on economic growth than honoring monetary promises. That's one major fallacy of the "free marketeers" who believe the investors (and investor money) reigns supreme. It pretty obviously doesn't, irregardless of Mish's constant barrage of disinformation.
Isn't China already gearing up for their own version of protectionism? I was under the impression they were stockpiling commodities.
Comrade Kristina
They are protecting themselves... hedging their dollar exposure.
ShortCourage
It was a form of stock price manipulation. A pool of guys all chipped in, taking turns bidding the price of RCA higher and selling. They built a critical mass so to speak, and there was a net inflow of cash at ultimately very elevated prices. Stock pool operators cash out first, and walk away with all that new money.
The story is not so important, it's just that there exists a basic mechanism — which you cannot prevent — that can create very profitable distortions. I used the story reference instead of detailing the process, or getting into how it can spontaneously arise. Similar thing happened in the oil market last year. Zero Hedge: Goldman Sachs Now Hiring: Replacement Oracle Of Delphi The prices can sustain themselves for now, but they are by no means real prices
Sure it's not an ideal long term status, but it needn't be because it is a winning hand
EHP, that looks like the rhetorical version of a green shoot.
Sure the U.S. has a lot of cards to play in a total trade war, but the American people aren't really big on personal sacrifice if they don't think the country's existence is threatened. Look how long it took the U.S. to enter WWI and WWII.
When it comes to sacrificing so that the uberwealthy can maintain their accustomed lifestyles in the Hamptons, I don't think so.
EHP: I agree with the chinavortex guy that the rural Chinese will get those dollars or there will be trouble, but is he a hopeless idealist like me?
"# The companies which will survive and prosper are the swift pivoters who can quickly learn how to sell to the “local local economy”. This means that they made some money in export manufacturing, but now switch to sell domestically to Chinese consumers in the new inland towns and cities. Not many companies can do this, but those that do will do well. Most will be entirely new businesses, and local Chinese brands will have an advantage.
This next stage of development will require a lot of money. Those foreign exchange reserves of US2T will be needed by China. Now, if you ruled China and you had the choice of 1) lending the money to the west, which has just acted about as irresponsibly as anyone can imagine or 2) investing the money in China to narrow the wealth gap between rich and poor, city and countryside and keeping your regime in power for more than a half century, what would you do? I think that it’s a pretty easy choice."
On the RCA stock pool in 1929, remember that RCA in 1929 had the technology that only Google has today.
Oh, wait, Google's stock price is . . .never mind.
sportsfan
That's not a green shoot. That implies an effective default. It implies manufacturing becoming a relatively much more important to the economy, and not because manufacturing is becoming more valued itself. That means a lower standard of living overall, albeit with a closing of the gap between rich and poor. It also implies a great loss of face, having to dramatically cut its armed forces and withdraw from foreign bases and embassies while losing influence at WTO/UN/WB/IMF/etc, that in turn implies losing diplomatically secured lucrative easy business deals...
However, as the UK has shown, it can always be a long drawn out loss of prestige. Similarly, as Russia has shown, that outcome may be the extreme of optimism
"The USA's trading partners can hold their breath until they turn blue and it won't matter."
Yeah it will be tons of fun when China supported Iran rolls into Bagdad.
Hymns for the Lord: place your trust in God. Some of your post is disingenuous in that your removal of all doubt happened only recently.
Whomever said shipping was '...mere pennies...' speaks nonsense.
EHP: whither exchange rates now FOREX wise?
Jackrabbit: hahahaha, Basel this!
broward: we share a disdain for the Great One Who Knows All.
Comrade Kristina: China is rightly colluding with others to create an alternative monetary unit.
EHP,
Tricky (and scary) buying into the stock pool, not knowing if you'll get out in time, eh?
yogi,
regarding the use of its reserves, he is beyond optimistic. the only way those reserves got to be so big, was with the implicit knowledge the value at redemption would be significantly less than at receipt. people go out of their way to avoid acknowledging a loss, what can I say
Was US existence threatened by WWI? I stand with Lafollette.
Blackhalo: you overstate your case, one of the problems with the neo-con approach. Iran won't. The Forlorn straddling the Kyber Pass has one mission and one mission only--delay, block and degrade any attempt by PRC to bring forces to bear.
volker the viking
i dunno, what do u think?
blackhalo said:
"If we ever re-test the low, well then it is time for my European vacation as FAZ went to 100 last time."
Financials would have to drop by 85% for FAZ to reach 100. (And that's not counting volatility decay.)
You expect that to happen by October?
"Blackhalo: you overstate your case"
Perhaps. My point is that historically, trade wars tend to become real ones.
Here's another way of looking at this. There are about $10 trillion of US bank assets. Most of those assets are residential mortgages, commercial mortgages, construction loans, corporate loans, credit cards, auto loans, or other consumer loans.
If the value of that portfolio goes down by 1%, $100 billion of new capital is gone.
GM seen posting deep loss as deadline looms
| Reuters
Analysts, on average, expect GM to post a first-quarter loss of $11.05 per share before items, far wider than the 62 cent per share loss a year earlier,
(o_0)
some investor guy
Lets look at it this way IMF says there are 27 trillion of US originated assets.
"broward: we share a disdain for the Great One Who Knows All."
I like Mish and he's been exceptionally good in his predictions.
He's far too confident and dogmatic about his religious beliefs, though.
EHP: Nominal value aside, his point that a change is gonna come seems valid.
EHP, okay, if that suggests an effective default, it essentially means the U.S. starts the trade war with protectionism which I guess is the point TJ was making.
I think manufacturing needs to become more important in the U.S. If that implies a lower overall standard of living, so be it.
I don't see a narrowing of the gap between rich and poor. What I do see is the destruction of the American middle class, that last great bastion of perceived upward mobility while living a comfortable life. The rich will stay rich, by and large, but what we like to think of as the middle class will become the working class, a more European class structure, as it were.
If we ever get to vote on maintaining military bases in 130 or so countries for the purpose of obtaining more lucrative business deals for a select few, I have no doubt how my vote would be cast, but a loss of face, no, I don't think so. We have no shame.
With $1.1 trillion of assessed value for residential, commercial and industrial properties in 2008, LA County will probably cause another $200 billion+ of losses. Some of it will go to MBS holders, Fannie, Freddie, the owners, and mortgage insurers. However, Fannie and Freddie didn't have a large market share in LA during the bubble. Most of the losses have already dropped below the mortgage insurance and owner downpayment layers. Each time losses go down another percent, more and more of the new loss goes to lenders.
the stress tests were never about solvency, from a nationalization perspective. Instead, they were about control. Raise X dollars privately, or be prepared under go a conversion. By the way, did anyone notice that the WSJ piece mentioned that it would be conversion from the current bastardized preferred shares to a newer class, which presumably, will be Tier 1. If I recalled correctly, the conversion was supposed to be common stock at prices set in February. I guess those feb prices would be too low, and therefore too dilutive. sacre bleu!
the more i think about housing right now, the more i realize it's a big circle jerk with very little trickling down to the real economy. basically, the creditor class, or BB, lends to the banks, who then lends it to the buyer, to buy an existing home. Sure, there's some fees or commissions that trickle into the real economy, but most of the proceeds are going to savings, which given the balance sheet of America, means paying down existing debt (i.e. the creditor class).
I don't think that there will be a new bubble to reinflate the economy. Given modern corporate financing, any new bubble would be usurped immediately by the masters of finance and priced accordingly. The solution may be redistributive. Of course, the problem is that the R-word is highly political; but redistribution doesn't have to be explicit. It's done every day sub rosa, between regions via appropriations (blue state to red state) or from individuals via the tax code. But more importantly, i think the redistribution needs to occur via a "temporal" default, whereby a class is actually defaulting against its own future claim. I hate to use the example of Chrysler pension fund, because it's so politically charged, but it gives the example more flesh. For the most part, the fund is adequately funded with respect to the current retirees. However, where it fails is projection the solvency of the fund for current workers down the road. So then Chrysler must absorb the legacy costs (which are more accurately future costs), which renders its products non-competitive. The finance premiums incurred in the Chrysler LBO bondholders created the same temporal mismatch. And of course, one of the nuggets from the Chrysler fiasco was that many of the complaining bondholders were actually fiduciaries for other pension funds, which in effect meant that a future claim was crammed down. The debt loss, whether it be from foreclosure or cramdown, will further impair future solvency of many of these funds.
interestingly, when the under funding happens to a public fund, then you have the potential for another circle jerk. future claim by the government (either via borrowing or taxes) to pay for a present claim (current funding) to pay for a future claim (distribution).
now im rambling. good nite. got an ethics exam tomorrow morning.
However, as the UK has shown, it can always be a long drawn out loss of prestige. Similarly, as Russia has shown, that outcome may be the extreme of optimism.
True on both counts. Whatever it is here, I can guarantee you we'll wrap it in the flag.
EHP: I was driving south on a four lane US Route yesterday. A driving rain, a lot of water. I'm old and had slowed to 45 MPH. I was passed by a little white car that spun left, right then did a 360 and a half into the median and about two feet of muddy water. Later turned off onto intra city feeder and within 1/4 mile a head on between two rather beefy looking pick up trucks. A real cruncher.
That's what I see, a major shit storm with some spin outs and head ons that won't end well. When? what form? Where? Shit, I wish I knew. The pace and rate of change does seem to be accelerating.
Few days ago FRE said they are bundling mortgages and HELOC's in the government-backed refi scheme. That should help WFC, no?
On the other hand, people losing money in the market today are well known anti-US shorters. Try to generate some sympathy by complaining about the government pushing 401k balances up.
I long for Joe Shmoe's posts. It has to be a part of a great plan, or else...
broward, yeah he's a good read and hasn't been too far from what is, his pedantic way is my turn off
"Analysts, on average, expect GM to post a first-quarter loss of $11.05 per share before items, far wider than the 62 cent per share loss a year earlier,"
Funny how the losses balloon as BK becomes more likely...
Get those claws out, Mr. Pres.
yogi
kitchen sink quarter... along with the tub, the mattress and the rotunda
Basel Too writes: "...got an ethics exam tomorrow morning."
Of course you must study for this. Such a complicated matter. So many hairs, so finely split and all that.
volker the viking said:
"Some of your post is disingenuous in that your removal of all doubt happened only recently."
There is a difference between entertaining a hypothesis based on ideas from the comments section on a blog versus having facts confirmed by quotes from officials on the record in articles in mainstream publications.
In the case of the former, I might entertain a suspicion but not fully believe it, whereas with the latter I tend to take the claim at face value till an equally credible refutation is provided.
Or perhaps I misunderstood what you're trying to communicate, in which case I'd appreciate a clarification.
"Financials would have to drop by 85% for FAZ to reach 100. (And that's not counting volatility decay.)
You expect that to happen by October?"
"Direxion Daily Financial Bear 3x Shares (the Fund), formerly Direxion Financial Bear 3X Shares, seeks daily investment results of 300% of the inverse (or opposite) of the price performance of the Russell 1000 Financial Services Index"
A 32.33% drop of the Russel 1000 to get it back to where it was on May 6th, exactly two short months ago, at which point FAZ was at 104.07. So, yeah, I would consider that a non-zero possibility. Where my OCT 30 Calls would be worth $37,035 on face value not counting time value.
Hymns for the Lord: In the words of Ms Edwards: I don't know, maybe it is his kid.
"Whomever said shipping was '...mere pennies...' speaks nonsense."
Canadian study:
"The average price for shipping a 40-foot container from Shanghai to Chicago or Toronto is about $4,000. The price for returning a container of exports is about $2,800. ". How many pair of Nike shoes could be put into one 40-foot?
Source:
Pacific Coast Container Terminal Competitiveness Study - TP 14837E
Transport Canada - Welcome Page | Page d'accueil
One plea on legal ethics: [Do not put on your exam] If you 're involved with important political cases (sounds like you will be), ignore confidentiality in favor of public interest. Find a venue to safely publish the truth anonymously.
Scott McLellan's father, a Dallas attorney, wrote a book (horribly edited) in which he deliberately flouted confidentiality privileges to support his claim that LBJ had JFK assassinated. Whatever the facts, his decision made ethical sense.
Ethics is easy. You just gotta do the right thing.
yogi said: his point that a change is gonna come seems valid.
Harder is finding Sam Cooke's original of A Change is Gonna Come on youtube. Some intellectual property nerd, no doubt.
But Luther does a good cover:
YouTube - Luther Vandross Sings In Church - "Change Is Gonna Come"
Damn, I miss Luther.
timmyone: shipping costs are not fixed and never constant, and your number is only a part of the freight
timmyone shipping costs are set the day of.
They're putting kitchen sinks in Cadillacs now?
They all try, but no one can really cover Sam Cooke.
I worried about the money market funds no one is talking about. Silence about the safety of our money is never good.
yogi
Just fridges and televisions, although if you buy an SUV/truck crossover I think the bed doubles as a kitchen sink
Given the industrial base Americans still have left (about 12,5 million jobs out of 150), the average lifestyle must be lowered down that of Polish workmen nowadays. One 10-year-old car, one quite old tv and tiny apartment roughly.
Then maybe with hard and smart work American could be again competitive in manufacturing.
timmyone: better you should suffer in silence
ffdic
I'm not worried, I told everyone who comes to me about the outsized risk:reward money market funds have and I think the financial system is going to break one way or another
not to say your concerns are not valid of course. Would there ever even be a way to know the health of a money market fund unless you were an insider or a broker that knew how many redemptions they were getting? Reserve Primary is being sued by the SEC right now because they were able to keep the impaired state of the fund secret up until the end including the board of directors
Volker: Then give us an example of shipping costs if you know better.
Blackhalo:
The closing price (after hours) of FAZ was $5.15. Let's assume your target is $100. That means RIFIN.X has to drop by a factor of 2^(log_3 (100/5.14)). This would leave it 100 x 1/2^(2.7) = 15% of its current value - requiring an 85% drop.
Although RIFIN.X was $350 on March 6, which is 53% of $660 (where it closed today) - which might make one think that a 47% drop was required, the decay from the volatility kills - making the 85% drop in RIFIN.X necessary, even if no further volatility occurred - if RIFIN.X just dropped straight down.
Note: Calculation updated.
They all try, but no one can really cover Sam Cooke.
yogi, yeah. For all we agree on and for all we disagree on, we're both purists by nature.
So I've got to put the man on even though it's in two track glory and the video is political.
Basically, I just wanted to hear him sing the song:
YouTube - Sam Cooke -- Change Gon' Come [VOTE 2008]
Funny how he died 45 years ago, but was a big fan of Bob Dylan, who is still doing tours.
Re: Senate Bill that Passed with FDIC up to $500B
You guys heard it here first this weekend. It's obvious the MSM correspondents on Capital Hill don't bother a) watching C-SPAN, or b) reading Congressional Record. Of course, everything is posted with a day lag; but the full details of the Dodd bill were available over the weekend and the result was pretty much that it would pass since his bill was the "compromise" to the Durbin bill.
What's more valuable is identifying who voted against this bill... interesting discussion...
More from Dodd:
I am not unmindful of the fact that we are in uncharted waters. We all recognize as well that we are in uncharted waters in a larger sense. We
are in a time that none of us in this Chamber--with the exception of my colleague from West Virginia and a couple others--can recall. Our parents and
grandparents talked to us about times like these almost a century ago.
We have tried, as we know, in numerous ways over the last many months to figure out ways to get at the root of this foreclosure problem. Every
idea you can come up with has its shortcomings. We have yet to find the perfect one that everybody agrees on. If somebody has it, please let us
know because we are looking for it to get us to the point where we can put the brakes on foreclosures, not because you impose a moratorium but
because people can afford their mortgages, lenders are being paid, the economy is moving, credit is flowing, businesses are growing, and joblessness
is no longer increasing but declining--all of the things we want to see.
Didn't we have this discussion regarding ponies and pot'o'golds at the end of the rainbow a year ago?
YLSP
Please inform Mr Dodd that I have the best solutions possible as per his request
YLSP, I'm not sure exactly who, besides you, reads the Congressional Record. More Power to You for doing so.
Goodnight, all.
Hymns for the Lord:
If RIFIN goes back to 350. I am a VERY happy camper. Not sure why volatility would come in to play. I would of course be taking money off the table, long before then.
Wow, Thune introduced an Amendment summarized as follows:
Mr. President, very briefly, to summarize, what my amendment does is reduce TARP authority by any amount of principal returned by a
financial institution to the Treasury Department. This amendment, as I said before, is necessary because until the December 31, 2009, expiration
date, and possibly longer if the Secretary is granted an extension without this legislation, Treasury can continue to use TARP funds, including those
repaid, in any manner they see fit.
These are taxpayers' dollars. They should not become a discretionary slush fund. These are dollars that, when they are repaid to the Treasury by
the financial institutions, ought to be used to reduce the amount of TARP funding authority that is available.
As of May 1, the new administration has accumulated $580 billion of new debt. That is about $5.5 billion new debt per day. I understand we should
not be tying Treasury's hands when we are still in the midst of a financial crisis, but Congress has the responsibility to decide how the tax money is
spent, not the administration. If more money is needed in the financial sector, then Treasury needs to present a plan to the Congress and let those of
us elected by the taxpayers decide whether additional tax dollars should be placed at risk or spent.
That one was only defeated by a 48-47 margin...
On January 20th a local college radio station (KCR?) played about 20 different versions of the song, all by Cooke, for several hours. Not exactly one of my favorites, but so powerful.
More audacious hope way back then.
leave it to Dodd to invoke a triple negative
Hey, Chris, old boy, here's a suggestion: stop it. Stop it now. You've done more than enough.
All this horseshit posted here about our degraded manufacturing and how we're going to be living like Pollocks in some ghetto is spewed by those without basis for fact.
And then to have to read through tortuous formulae for scamming money from nothing leaves me reinforced with my decision to drop all but off the radar.
You people I swear. Quantitative analysis is what got us here. That and greed absent morality.
And then, the Negative Nortons would have us give up on the potential free living people possess to the exclusion of any force, be it nature or man. Further, they would have us believe that there is a way to prosperity other than producing something real. Once more, Marx had it right when he said that the only capital is your labor. From that inspiration to today, men and women have been subjugated, divided, distracted and denied privilege for reasons arcane , archaic, and wrong.
sportsfan,
I'm just saying... by reading it you can ascertain the intentions and reasons behind the misguided votes.
Boxer-Ensign even got together on an Amendment that modifies the PPIP program.
The second amendment I will be offering is one that Senator Ensign will be offering a second-degree amendment to. It is a very friendly second-
degree amendment. Again, I thank the Banking staff on both sides of the aisle for working with us--Senator Dodd, in particular--to make this a very
good amendment.
What we are basically saying is, as we go into a new program which is the Public-Private Investment Program, which basically says that when we
take toxic assets off the books of the banks, we want the private sector to come in and give a value to those assets, we do not want the Government
doing it.
The private sector plays a very important role. What Senator Ensign and I believe is very important, and Chairman Dodd has agreed, is to make
sure it is a very clean process, and there is not a process for collusion between the parties, and no chance to defraud, frankly, the taxpayers.
How could that happen? Hypothetically, you can have a bank that is trying to unload a toxic asset. They want the most they can get for it. They can
go to a private party and say: Hey, between us, bid a little bit more for this toxic asset, we will give you a kickback later. They could not call it that.
We will take care of you later. That is clearly a no-no. You cannot do that.
Under the Boxer-Ensign language, that would not be allowed. The Treasury would put forward regulations to make sure it is not allowed. We would
give the TARP inspector general $15 million to perform audits of selected recipients so we can make sure we are following up with audits and making
sure there is no collusion.
We would guarantee there is access to financial data from the Public-Private Investment fund that is necessary to perform these audits, and we
would require regulations that are very clear, so that--listen to this--the private sector cannot use money they have borrowed from other Federal
programs to pump into the system.
They might be able to use some loans, but we do not want 100 percent of that money being recycled again. In other words, they could take a loan
from the Government, then they go buy an asset, and all of the money being used in the program is Government money.
So far Vitter and Demint both offered amendments that would scuttle some of what the government wanted to do... Demint wants to block using TARP funds to buy common stock. Here is Dodd's response (is it correct?).
First, understanding what preferred stock is, and common stock--preferred stock is almost a debt obligation on which dividends are paid. The whole
point is the value of it is in the dividend. With common stock, of course, the value changes based on how well the company is doing. If the company
is doing well, the common stock goes up. If they are not doing well, the common stock goes down, unlike preferred shares. So in terms of what is
real capital, what is real capital is common stock. Preferred shares are not seen as being real capital.
Really; preferred stock is not "real capital"...
Does anyone know if the Safe Harbor will apply to future mortgage/MBS purchases? If so, the servicers could thoroughly game it!
Senate Passes Servicer Safe Harbor : HousingWire || financial news for the mortgage market
YLSP (profile) wrote on Thu, 5/7/2009 - 12:20 am
Re: Senate Bill that Passed with FDIC up to $500B
You guys heard it here first this weekend.
Indeed. I mistakenly accused Yalt earlier today.
"Treasury can continue to use TARP funds, including those repaid, in any manner they see fit."
So, are there any firms with a market cap of <700BB or is this administration the worlds largest investor too? In addition to being the largest insurer and lender? The opportunities for the admin to manipulate markets would be irresistible I should think, as absolute power corrupts absolutely.
Wouldn't a prudent lawyer just advise everyone involved to plead the fifth?
Yup, Dodd really understands the ponzi stock market.
You don't get money back necessarily with preferred shares. You get it back with common shares. In anycase, if we are looking to see the Government realize any gain on the sale of its common shares after the economy recovers, as we all hope and believe it will, the Government's upside potential is far greater with common shares than it would be under an amendment offered by the Senator from South Carolina where we would not be allowed to convert preferred to common.
"Upside potential"!? We've gone from "hope and change" to "hope and believe!".
The votes yesterday:
- Increase PPIP oversight to ensure there is no fraud (approved 96-0)
- Restrict TARP funds from buying common stock (nay, party line vote)
Coburn put up an interesting amendment to run a pilot program to sell Federal land (cost $1B) and I think the Dem's blocked it for god-knows-whatever reason.
Grassley asking for GAO authority to audit the Fed... apparently it was watered down in one of the bills.
Heck, Bernie Sanders even took the Credit Card industry to shed during this debate.
A lot of the bills were voted on today; and the whole Record is not up.
Watching "Nader: An Unreasonable Man" and assessing Obama thus far makes me more comfortable than ever with my 2000 Nader vote. (Gore was a shoo-in in NY anyway).
The best vote I ever made for Pres. was my first, in 1980. Remember the Citizen's Party?
The candidate:
"The peak of the campaign happened in Albuquerque, where a local reporter said to me, "Dr. Commoner, are you a serious candidate or are you just running on the issues?"
[W was the shoe-in]
"Yup, Dodd really understands the ponzi stock market."
I am sure his grasp of level III derivatives is just as sound.
Stress tests are all fun and games until someone loses a bank.
"You don't get money back necessarily with preferred shares. You get it back with common shares."
I think random drug testing should be mandatory in the Senate.
"assessing Obama thus far makes me more comfortable than ever with my 2000 Nader vote"
I feel the same about my Perot vote in '92, and then abstaining from voting since.
"I think random drug testing should be mandatory in the Senate."
I think microphone and mini-cam implants should be mandatory, too.
Perhaps an explosive charge which detonates at 51% disapproval rating.
anonymous1:
Was reading from work... no problem. I was wrong though; I guess most of the $500B will be used for the PPIP? I can't remember the size of the program. At least they got $70B more to play with though at the FDIC.
Just had an odd thought that China might somehow trigger an event to cause massive dollar deflation... doesn't China also benefit from deflation as USA will repay them in very strong dollars? Isn't deflation the one thing everyone is so afraid of... I think China might be crazy enough to trigger it somehow... even if it doesn't hurt America as much as it will clearly hurt the rest of the world... no? Just a thought, I don't have any inside scoop or anything...
My buddy is happy since his Delphi Corp stock has gone up 15% since he bought it on his "inside information"...
I see the GAO auditing the Fed amendment sponsored by Grassley did not make it into the bill. Of course the GAO will be able to audit the Fed, but only in limited fashion... why Congress wouldn't try to expand their power as much as possible when it seems like Presidents have done so recently (did Clinton do it as much as W?) seems strange to me. I guess only reason they won't do a full-audit-probe is so they can say, "We didn't know that!" when stuff starts to fall.
It'll be interesting when someone comes in and we get the Jenga! moment...
Remember, no one is more angry than [appointed or elected official responsible for bailout] about the situation at AIG.
"Whomever said shipping was '...mere pennies...' speaks nonsense."
Doubtless there are other factors, but,...
When a buddy was selling inexpensive bird cages on Ebay, we figured (less the wholesaler's cut) the metal was cut, bent, assembled, painted, packaged, and shipped for less than a quarter, and that included the plastic bottom tray. Just don't see how that was possible, but shipping can be amazingly cheap on a per item basis.
Hymns for the Lord:
There is a difference between entertaining a hypothesis based on ideas from the comments section on a blog versus having facts confirmed by quotes from officials on the record in articles in mainstream publications.
Yeah, and the difference is being about 6-9 months behind the Boyd Curve on the issue.
Somebody better wake up Bernanke. He needs to start buying the 10-Year fast and furious....yield is up to 3.23 and is waiting for him to make his Open Market operations a daily ritual.
Taxes in are insanely low. People who don't work in offices don't pay taxes at all (there would be no way to track it.)
FYI Citi is expanding its outsourcing in China right now in a big way.
Yep, Treasury prices are headed down. On the other hand, equity futures are up slightly.
Investors seem to be predicting high inflation sooner rather than later.
From Bloomberg rate page Thursday morning (2:30am):
30 Year Fixed Mortgage 5.03%
30 Year Treasury Yield 4.17%
One or both of these will need to change..
" He needs to start buying the 10-Year fast and furious"
Why do you believe that he's not already buying?
"All this horseshit posted here about our degraded manufacturing and how we're going to be living like Pollocks in some ghetto is spewed by those without basis for fact."
And what is it exactly that makes American workers better than Polish ones? Hundreds of thousands worked in the UK and now most of them are going back. They are mostly hard working and skillful and much cheaper than Americans. They also do not have delusions of grandeur and out of control narsistic disorders like with some Americans.
70 percent of US economy is based on consumption, that is a world record. Bloated shopping mall economy based on ever-increasing deficit spending and world reserve currency status. Manufacturing have been outsourced mostly to Asia by the American captain of industries.
What is it that justifies double or trible living standard moneywise when compared to a Polish worker?
Absolutely nothing and the collapse is coming.
Supervisory Capital Assessment Program
The stress test had a name? Surely, they meant to say Supervisory Capital Assessment Banking (SCAB) program.
I guess its official now, the banks represent are whole economy... main street seems to be just a dollhouse of growing poor people...we are but a nuisance. as long as we have walmart and mcdonalds.... all is well!
"What is it that justifies double or trible living standard moneywise when compared to a Polish worker?"
Who defeated the Nazis again? And if you say it was the Soviets, did the Polish workers have it better before Solidarity?
1 currency now -yogi (profile) wrote on Thu, 5/7/2009 - 6:37 am
Who defeated the Nazis again?
OMG, get a job Sgt. Rock.
curious (profile) wrote on Thu, 5/7/2009 - 10:19 am
Supervisory Capital Assessment Program
The stress test had a name? Surely, they meant to say Supervisory Capital Assessment Banking (SCAB) program.
The stress test's name should be Supervisory Capital Assessment Metric (SCAM).
Oh don't worry, with a single world currency Polish workers can earn their due.
"They also do not have delusions of grandeur and out of control narsistic disorders like with some Americans."
Horseshit. Does that include Polish-Americans? Or is there something special about the saintly Polish Poles?
It's so easy. People speak out of both sides of their mouth (some anyway). It's like poking a crippled frog with a blunt stick. Too easy.
"Who defeated the Nazis again?"
Who helped out your farmers turned into bumbling "soldiers" against disciplined British ones a couple of hundreds years before? The French.
BTW, how is defeating the Nazis relevant today? Just like WWI today, it will be soon another forgotten war. Ironically it is the Germans and Italians who actually have an healthy attitude towards ancient wars meaning "who gives a shit". Meanwhile, Americans and British endlessly wanna talk about those glory days. Wonder why?
Some of those Israelis who displaced those Palestinians had tried to go back to their Polish communities after being liberated from camps, only to be viciously attacked by the locals who had done nothing to stop the deportations. Hardworking? Easier to steal from a minority. Careful of generalizations.
" "They also do not have delusions of grandeur and out of control narsistic disorders like with some Americans."
Horseshit. Does that include Polish-Americans? Or is there something special about the saintly Polish Poles? "
How many times here some American says something along the lines, "At least the rest of world must be much worse off than us".
Seriously, most Americans need a good butt whipping for being such a global pain in the ass. Big narsistic children with big guns.
1945 is ancient to you? The US is settling land claims much more ancient than that.
Who gives a shit? Go enjoy prosperity in Poland.
I know all about the French bailing out the US to screw the British. I would never say who gives a shit because I want to know as much history as I can. You evidently want to forget WWII.
I'd be happy to see US military power restrained. But as for arrogance, Northern Europeans take the cake, if you're going to generalize. That includes Poland.
"1945 is ancient to you? The US is settling land claims much more ancient than that.Who gives a shit? Go enjoy prosperity in Poland."
WWII seems to be Maginot line for Americans. Greatest generation and all that BS. Unable to change to the everchanging world, hanging on to the previous victories.
Yogi,
Concerning your comment on AIG. I heard a mention by an econ prof that we really don't know how much of the AIG bailout money was for losses and how much goes for margin. CDOs require huge margins because the risks are huge, but that doesn't mean that all or most of the CDOs will end up in default and the government money lost.
This was intended solely for public consumption from the very beginning. Panem et circenses.
1 currency now -yogi (profile) wrote on Thu, 5/7/2009 - 7:13 am
1945 is ancient to you?
It is. Everyone who was there is dead or enfeebled by age. It's as relevant to the modern age as Napoleon or Rome. It made the neocolonial context, which gave way to the vendor financing context, which is now giving way to the post-vendor-financing context.
So yes, it's a long time ago. Most of the global population was born long decades after the event. Other than America, which legitimates its imperial reign with that rhetoric, and Israel, which flogs it to death because without it they'd be South Africa with a much worse location, nobody cares.
Frankly, after our behavior in the neocolonial era, I don't see why anyone would feel any gratitude to us about it at all. Yeah, we overthrew Hitler. We also overthrew Moussadeq, Guzman and everyone else who dared to speak out against out exploitation of the world as a raw materials feed for our industrial base. If the tiger economies hadn't proved that the international development framework was a useless POS designed to leave nations prostrate and indebted, we'd still be using it to rape them now.
It's a little late to harvest the political capital for that, early post-war national security advisors pretty much chewed it down to the ground and then some.
It's my understanding that many CDO's are highly leveraged and thus "marginal" losses can wipe out all the equity. If the US ever gets back the AIG money it will probably be in hugely devalued dollars.
Nemo (homepage, profile) wrote on Thu, 5/7/2009 - 12:46 am
"They have already been released, and the market has already delivered its judgment.
What's the old saying? "Buy the rumor, buy the news"? Something like that. "
Correct, it's already been priced in. "Buy the rumor, sell the news."
He asked why Americans have allegedly 3 times the standard of living as Poles. I think 1945 is relevant. Is the German standard of living higher than Poland's? Why not complain about that. I am not bragging about past American glories. But the reality is economic might is largely derived from military might. Poland did not put up much of a fight against the Nazis. The US did.
Yogi,
I think you're right that the price at which they trade can cause "marked to the market losses", but in the end (if the contract is held to expiration) either the contract goes into default and AIG loses or it doesn't, in which case AIG gets the premium. In either case since the contract has ended, margin money is no longer needed and could be returned to the government.
I could ask (and sometimes do) why Poland's workers deserve 10 times the standard of living of the Third World's? But I wouldn't make general insults about a population.
No, if it's in default, the margin, or "collateral", never gets returned.
BoE leaves rates steady, increases QE program
The Bank of England left interest rates at a record low 0.5 percent for a second month running on Thursday and said it would increase the size of its asset purchase programme by 50 billion pounds.
The announcement raises its quantitative easing programme to 125 billion pounds.
So is this increase called the QE2 program?
Just watching Spitzer on CNBC. Damm why did that boy have to get caught screwing overpriced hookers? Would love to have him back in the thicj of things. He would be a great choice to be the new Peccora, but will not happen cuz he had to get his pecker wet. Maybe we can have Liz Warren in that role soon.
Yogi,
I just realized that AIG also has a margin requirement on the short bond or short stock side of the hedge (if AIG is hedged). That margin money is also "freed up" when the CDO contract expires.
wow. the financials are exploding again this morning. you would have thought it was all priced in...
"But the reality is economic might is largely derived from military might. Poland did not put up much of a fight against the Nazis. The US did."
Read your history again. Believe me, they put up a good fight but horses and brave officers were basically bulldozed with tanks. Also, the notion that France just cowardly surrended is absurd. That massive 41 000 tanks and other armored vehicles armada coming from Germany...they basically went all-in. Not to mention Germans basically invented modern warfare.
In a way WWII is still relevant in some circles but today the world is so completely different. For example, next decade there will be the mother of all baby boomers, the Asian Boomers. 1 000 000 000 youngsters coming to the working age, triple the population of USA and double of EU. The challenges are huge.
The bezzle will continue until a new bezzle is invented.
Rinse, repeat.
when goldman's trading desk decides to reverse course, this could be ugly. but you know what they say, the market can stay irrational longer than you can stay solvent.
AIG is not hedged, which is why they lost so many billions. It wasn't all just posting collateral, they had to pay claims they never intended. Bonuses were paid instead of keeping reserves.
This explains it:
The Institutional Risk Analyst: AIG: Before Credit Default Swaps, There Was Reinsurance
No matter how you slice it, toxic assets need to be replaced with fresh capital and the creation of new capital will require existing bank shareholders to take a hit.
But it's all good.
yes, aig was massively naked selling CDS, perhaps not unintentionally. my theory is that AIG was a sacrificial lamb for the other banks, much like fannie and freddie are. so much easier to have the losses centralized...
BBC NEWS | Business | US banks 'safe from insolvency' "Some analysts have been critical of the stress tests.
BBC NEWS | Business | US banks 'safe from insolvency'
"None of these 19 banks are at risk for insolvency," Mr Geithner said, He believed that the majority of the banks would be able to raise money from private sources but if they were unable to do so the government may have to provide them with more taxpayer money.
Some analysts have been critical of the stress tests.
Professor Nouriel Roubini and Professor Matthew Richardson of New York University say that the doomsday scenario that the banks' books have been subjected to is actually no worse than the current economic situation.
They are too kind....this is simply premeditated whitewash sham !
American taxpayers bend over a bit more for Wall St crooks and rampant crony capitalism in Wash DC.
Horses against tanks is not much of a fight. Bravery has nothing to do with it. Native American warriors are called braves. Now they fight in court, and sometimes win.
Basel Too,
Do we really know for sure that they were naked short? I maybe missed it, but could you cite a source?
Big question to be answered in about 10 min,:do initial claims continue to fall? If so it will be very significant.
....it's all just a series of docu-dramas. Throw into the mix the idea that the schools are teaching our kids SQUAT, and even more frustrating, the kids coming through high school today, can't play baseball worth a shi*! Baseball! Who ever heard of a kid not learning the game of baseball - AND the best players on HS teams across the US pretty much suck! No sense in fighting it anymore - America's pasttime played like and by a bunch of wusses. - we're doomed.
And once defeated, the French and Poles were generally willing collaborators, compared to the Hungarians or Czechs.
This article nicely summarizes the current rally.
Odey Hedge Fund Posts Record Gain in April After Bets on Rally
Odey European Inc., the hedge fund run by Crispin Odey, posted the biggest monthly gain in its 17-year history after betting that “junk” shares would be the biggest beneficiaries in a market rally.
The 67 companies in the Stoxx 600 with debt-to-equity ratios above 50 percent and a return on assets of less than zero added an average of 33 percent in April, more than double the increase for the European benchmark index, according to data compiled by Bloomberg.
But the reality is economic might is largely derived from military might.
I would say it's ambiguous and probably hinges tightly on what you define as "might". It's certainly true that being too strong to get raped is an absolute must in the global prison yard that we call the international milieu. Beyond that, I think the benfits of power-projection type might are oversold. It's not good at all to be the rape victim; ask say, Iraq or the Chinese during the Opium Prostration.
But being that raper is not necessarily profitable. You are pushed the idea as a citizen of a nation-state, but really, only bankers and industrial magnates ever benefit directly from it, you mostly provide machine-gun fodder, tax base, and real estate / legal cover. And that's only from a winning perspective. For every America or Britain there's a France, Belgium, Germany, Japan, Italy, etc for whom empire was unquestionably an expensive mistake.
They'll tell you what a blast it is, but given the end-state, when you take what America has paid for the post-war empire, versus what we got, do you really think in the abstract it was better than practical isolationism? It seems to me it's just socializing expense and privatizing profit on a geopolitical scale, so the expense can be line-itemed as patriotic sacrifice and the private profits can have the "private" part soft-pedaled under "it brings national prosperity". There's no doubt that the US empire's overthrow of Guzman benefited the United Fruit Company and the Dullese family immensely. Everyone else in America? Not so much.
Plus there's that whole, how can the Republic that is supposed to be the world's bastion of freedom, democracy and liberty really feel comfortable about booking economic profits based on unfair exploitation of production factors extracted at gunpoint. Kinda shit end to a revolutionary state, and the complacency with which we accept our decline, from armed missionaries to global strawboss, is no more acceptable "because we shot the Nazis" than for any other reason. The lack of a "why" being part of all this is something I can't underline enough. Expediency justifies everything and nothing.
"Horses against tanks is not much of a fight. Bravery has nothing to do with it. Native American warriors are called braves. Now they fight in court, and sometimes win."
So when that TerminatorDrone kills you from five miles away and you got only rifles that are effective only up to 2 miles? The robot can say, it had nothing to do with bravery?
"And once defeated, the French and Poles were generally willing collaborators, compared to the Hungarians or Czechs. "
Care to back up that with actually facts? It was a whole underground world against Nazis in France. Once again American Exceptionalism there. Boo-haa!
From my link:
"Several observers believe that at some point in the 2002-2004 period, Cassano and his colleagues at AIG began to realize that state insurance regulators and the FBI where on to the reinsurance/side letter scam. A number of experts had been speaking and writing about the issue within the accounting and fraud communities, and this attention apparently made AIG move most of its shell game into the world of CDS. By no coincidence, at around this time side letters began to disappear in the insurance industry, suggesting to many observers that the industry finally realized that the jig was up.
It appears to us that, seeing the heightened attention from regulators and federal law enforcement agencies such as the FBI on side letters, AIG began to move its shell game to the CDS markets, where it could continue to falsify the balance sheets and income statements of non-insurers all over the world, including banks and other financial institutions.
AIG's Cassano even managed to hide the activity in a bank subsidiary of AIG based in London and under the nominal supervision of the Office of Thrift Supervision in the US, this it is suggested to hide this ongoing activity from US insurance regulators. Even though AIG had been investigated and sanctioned by the SEC, Cassano and his colleagues at AIG apparently were recalcitrant and continued to build the CDS pyramid inside AIG, a financial pyramid that is now collapsing. The rest, as they say is history. "
"Reeling states hit by April tax shortfalls"
"Over the past two years, as the economy has weakened, states found their tax revenues were coming in below estimates. These shortfalls led to a cumulative budget gap exceeding $100 billion for fiscal year 2009"
State budget gaps widen as tax revenue falls - May. 7, 2009
..........and they have seen nothing yet.
601K new claims, 4wk 623.5K. Looks like about a 80% chance that the recession is over folks. Not saying a strong recovery, but at least we have reached to horizontal. Now, is it a Lor a U. Cont claims still ugly, but that is to be expected.
blonderengel (homepage, profile) wrote on Thu, 5/7/2009 - 7:08 am
* edit
* reply
The bezzle will continue until a new bezzle is invented.
Rinse, repeat.
I'd rather lather.
CRE:
"Data Drill Down: Circuit City’s Store Closings Focus on Specific Markets"
Data Drill Down: Circuit City’s Store Closings Focus on Specific Markets - Retailer Daily
Circuit City's store closing by state. "Unlike many retailers which own a significant part of the stores they operate, Circuit City leased all but 5 of its domestic stores at the end of FY 2008."
"Looks like about a 80% chance that the recession is over folks. "
Geeze, Dirk - you seem more evolved than that.
BSR: It all depends so much upon the game of baseball.
Same as so much depends upon a red wheelbarrow.
When we strip away all else it is clear, even to the most casual observer.
Did you see above where I said I stand with Lafollette? He was the only Senator who stood up and said America's entry into WWI was the road to imperialism. Do I believe in dollar hegemony? Read my name. I just can't stand stupid generalizations like,
"the Germans and Italians who actually have an healthy attitude towards ancient wars meaning "who gives a shit". Meanwhile, Americans and British endlessly wanna talk about those glory days."
And how come US army still have difficulties to recruit all you hotshot wanna-be-soldiers? Mere, what 100 000 per year OUT OF 300 000 000? Americans are mostly "all hat, no cattle". Coward idiots.
"600K new job losses is NOT horizontal!"
Well, I guess it relates to HS kids not being able to play baseball or read or comprehend or think while walking or doing anything but be led - like a "walking box of rocks".
BSR, I'm sure CR will put up the chart of 4wk average and recessions. When that line moves down significantly, recessions end. I am talking about when the NBER will date the end. Not when we see UE come down, not when everything feels good again. Horizontal does not mean moving back up. Still a big chance that the is a head fake, and the new claims will start to increase again as Chrysler/GM BK's kick in. If that starts to happen I will be rethinking my position. I have to say this is much earlier than I thought it would happen, I had been thinking the end would not be until 4Q. Seems like all the extraordinary actions are working. Not that there will not be HUGE costs for those actions, but those costs will be paid later, indeed much later (higher tazes/lower services for our kids). But I have to say I am very encouraged by this number.
"Americans are mostly "all hat, no cattle".
.....yep, timmyone........it's tough to even get up to give an asswhuppin' anymore. We sometimes still get psyched up for the important games though.
Oh my God! These are the results massaged through AIG CDS-related one-time gifts. Even Geithner in his supposed mathematically illiterate stupor couldn't possibly have bought that at face value.
And why not? Next we will have results massaged through PPIP-hedge fund-collusion-one-time gifts.
The stress tests were the guy who bumps into you on the subway to distract you while his partner picks your pocket.
timmyone (profile) wrote on Thu, 5/7/2009 - 8:40 am
And how come US army still have difficulties to recruit all you hotshot wanna-be-soldiers?
Not interested in sending Arab guys to torture chambers until I get my nuts blown off by a command detonated offroute mine, all so that Dick Cheney can grow rich therefrom. Wake me up when the real enemy comes.
How many of you are still in cash? This is a generational bull market. We will be higher than 1650 on the S&P by the end of 2010.
Dirk, you are much more intelligent in this area than I. What has been done to correct all the problems that has caused us this turmoil? Nothing. Granted, unemployment is a lagging indicator. To state "everything is all better now - recession over", is a "crock". Multiple bandaids have been laid upon the many wounds and they're still bleeding - since the 1970s.
"Same as so much depends upon a red wheelbarrow. "
Don't forget the white chickens. (No slur, the poultry)
"Wake me up when the real enemy comes. "
The irony is that Americans made up their own enemies while having two friendly countries close, Canada and Mexico. They are really scary, aren't they?
For example during cold war there were TWO MILLION mines between Hungary and Austria, two hundred miles small border. Not to mention guard towers and "dead zones" every so often. Imagine that between the thousands of miles of border between US and Mexico.
I have to agree with BSR, Dirk. You might be able to call the NBER because anything, anything at all will be enough for them to say "it's all good" but if you are calling the actual economic downturn over, you are crazy.
Investors say stress test too easy on banks
Investors say stress test too easy on banks - Washington Times
The government's stress tests for banks, while aimed at shoring up public confidence, have turned into what some investors are calling an exercise in smoke and mirrors.
The tests are not stressful enough, these investors say. The 19 large banks targeted by Treasury were subjected to worst-case scenarios in which unemployment rises to a 9 percent rate this year from 8.5 percent today - but many economists say 10 percent or higher is a more realistic scenario.
"The federal bank stress tests are inadequate and misleading," said Martin D. Weiss, founder of Weiss Research, an investment research group. "The overwhelming majority of the 19 banking institutions are at risk of failure or borderline, and very few are currently strong enough to weather a worst-case scenario" envisioned by investors outside of Washington, who think the unemployment rate could go as high as 12 percent.
Wall Street titan Morgan Stanley and CreditSights, an investor research firm that has conducted its own stress tests on banks, also say the government is assuming a milder economic downturn than is likely to occur.
"The stress test run by regulators seems to be less severe than our test," which conservatively assumes that unemployment will rise and the economy will shrink much like it does under the government's supposedly worst-case scenario, said CreditSights analyst David Hendler.
"They may be too soft on the banks," he said. "The bottom line is that credit is bad and will continue to get worse before it gets better."
more
"at least we have reached to horizontal."
I do not think that word means what you think it means. We may have reached terminal velocity, but it is the sudden stop that kills you.
"I could ask (and sometimes do) why Poland's workers deserve 10 times the standard of living of the Third World's? But I wouldn't make general insults about a population."
Not from around Chicago? How about Aggie jokes?
hey this is AWESOME!
can you send that to
seenit@fourmonthsago.com?
thx dude.