“We got $600,000 for the first unit, which was sold during the pre-construction phase,” he said. “By the time we sold the last, in late 2008, the price had plunged to $340,000.”
Beyond my ken, but given my underlying belief/knowledge that the economy is anything but healthy I'm inclined to think the worst before buying any evidence of real improvement.
Juvenal Delinquent (profile) wrote on Mon, 5/18/2009 - 9:12 am
reply ignore user
We need a obstructition to induce LIBOR on this pregnant pause in the market.
No, we need an obstetrician because we are about to give birth to the unrelated twins of inflation and depression. Ben Bernanke, midwife and suspected father of one of them.
California is in the midst of a drought with no end, and it wouldn't be a problem seeing as there's a bit of water off the coast and desalination plants could get online, but the NIMBY's (surfrider group) caused massive delays, so yes, for the time being Californians alternative aqua options are limited to drinking unfiltered seawater.
"Right now" is the appropriate fine print here - the liquidity improvement is all due to massive injections of liquidity by the government (Treasury, Fed, FDIC) in exchange for toxic assets. Happiness with LIBOR ARM will be soon more than balanced by higher taxes and later by stagflation.
Last week, FDIC Sheila Bair said "the liquidity crisis is over for good". That might be a little optimistic (some ARS markets are still frozen), but it does appear the Fed has eased the liquidity crisis for now.
Again, notice that this new found liquidity isn't going to the consumer.
And why would it? We haven't removed the excess debt from the consumer sector.
This isn't 1935 we're dealing with where new debt can translate into productive new spending - we're still a long way off from that point.
MrM: "Right now" is the appropriate fine print here - the liquidity improvement is all due to massive injections of liquidity by the government (Treasury, Fed, FDIC) in exchange for toxic assets. Happiness with LIBOR ARM will be soon more than balanced by higher taxes and later by stagflation.
"Right now" has to last at least 2 years for the duration in the wave of Alt-As, unemployment, etc.
Blackhalo (homepage, profile) wrote on Mon, 5/18/2009 - 4:32 pm
Really? Even if it is because a US of AIG is insuring interbank loans again? Despite those banks still being insolvent?
I would rather say that the insurer is over-rated (it can always print its way out of insolvency)
Speaking of which - Moody's downgraded Japan's foreign debt rating to Aa2 (not even Aa1!).
There is no telling what G7 country might come next!
This is good news and shouldn't be ridiculed. The story's not over, but the plot took a turn for the better.
Byzantine_Ruins says:
Sunday, October 12, 2008, 6:33:05 PM
“There we go everyone, that's a wrap. We'll just guarantee everything. Crisis solved.
Scene: An anonymous central banker has his hands in two puppets. He is stimulating interbank lending. One puppet passes a billion dollars to the other. Then the second puppet passes it back to the first.
Won't you come play the lending game with him, I mean, them? He'd really, really like your foreign exchange reserves.
Anybody considering a gamble on Wall*Street, ought to just go to Atlantic City instead. You get much better odds on the craps table, and they give you free drinks.
The financial con job on American taxpayers by Bush admin ( Greenspan, Paulson, Wall St, etc ) is even more egregious now with the Obama admin ( Bernanke, Giethner, Wall St, etc ) because they're re running a very impressive well coordinated con ( and fooling big majority of Americans ) to pump up great big chunks of the "impaired," "illiquid," or "distressed Big Shitpile that are essentially worthless unless the peak real estate values of the bubble can be miraculously restored.
warlock (homepage, profile) wrote (in reply to...) on Mon, 5/18/2009 - 11:40 am
They're just blowing up a bigger and bigger balloon from financial instruments in the financial sector.
I wonder what will happen when it goes pop?
-- w
The same game is playing over and over and over. The market drops a bit, the bears are lured in, and the big boys (with unlimited government liquidity) orchestrate another short squeeze. It is nuts. Who is buying shares of financials and REITs today? How long can this game of "find the greater fool" last? It seems obvious that GS/MS/MER et. al can push this sham of a market wherever they want it to go.
At some point it will crash spectacularly. But when???
"Well, now that they do not have to worry about getting paid back... by Timmy G"
Yeah, I'm trying to buy a homeowners' policy today. I told my wife to tell our insurance agent that we're shopping around. I want the agent to sell us on why we should stay with them. It hit me that the agent really doesn't have any incentive to try and keep us. If enough customers like us leave b/c they are too expensive (or whatever), they'll just get an infusion of cash from Uncle Sam to keep operating. After all, they are TBTF.
That is the new paradigm and it's coming to a town near you... soon.
If anyone is tired of US Congress shenanigans, there's always a nice UK Parliament scandal to read up on. Yes its pennies in the big picture, but the sense of entitlement is just as strong
"Since liquidity never was the problem, they will have to invent a new non-issue distraction."
I suspect it will have something to do with bond premiums. They US Gov may be dumb enough to give these guys NINJA loans, but the bond guys tend to do a little bit more due diligence and it is unlikely that the banks are going to be forthcoming with their financial information.
So now that liquidity is fixed, we should be getting those TARP funds back? And we can stop giving money to AIG?
I sure wish someone would call Timmy on his "liquidity" problem, when the reason that banks were not lending to each other was because they are broke and getting more so.
Why do we bail out the banks that have a proven inability to assess and price risk? Surely there are institutions out there that could replace them?
At some point in the not too distant future, this process will end. Frighteningly for the Fed, as more dollar claims are destroyed (the collapse of asset prices in dollar terms, better known as deflation) the speed at which dollar liquidity is shrinking will slow relative to its next most popular cousin - the euro.
It is difficult to predict at what point we will reach the dollar/euro inflection point. As the QE results imply, the Fed is running out of arrows to even manipulate the first two tiers of the liquidity pyramid, and as deflation accelerates, it is very feasible that the dollar's appreciation will soon be limited. One thing that is certain, is that market participants will soon move from focusing on dollar claims to those denominated in euros, leading to a squeeze in the euro (granted of less violence and strength than the dollar's).
Both articles have me reexamining my expectations regarding inflation/deflation. I hope one or both authors will take this a step further and examine the pricing implications of contraction in the shadow money supply (the securitization and derivatives tiers) and expansion in the real money supply (base money and straight lending). Seems possible that some asset classes and products will be more affected by shadow money contraction (deflation), while other asset classes and products will be more influenced by real money expansion (inflation). This would seem to support the "inflation in things you need, deflation in things you own" theory that I've seen others put forward.
I'm beginning to believe that the deflation in shadow money supply is going to be rather more prolonged than I had thought and probably more than offset the base money expansion for the short term (18 months or so). It's kind of ironic that the Fed is probably trying to stoke inflation fears to get people to move/invest their money (accelerated velocity), but their refusal to address the illiquid assets in the financial system is prolonging the shadow money unwind.
Rocky -- My puts are getting crushed daily. What is happening now is multiple standard deviations away from normal. The only possible explanation I can think of is government actively pumping up equities (focusing on REITs and financials). Either that or their liquidity is being used by the dark pool players to do the same thing.
This could not happen without an obscene amount of liquidity and leverage. If the dam bursts it will be historic. But I no longer have any notion of what is possible, nor any sense of how long this farce can continue. Uncharted territory indeed.
Remember the frantic, end of the world chaos, the terrifying lack of information, the worry nobody knows how this is going to end and the lack of confidence in the market that was Oct 2008 to early 2009??
I do see that we've improved greatly from that period.
Compare back, we've now transitioned from this great unknown (who's going to bankrupt next? How's the ripple effect going to tear down the fabric of finance) into a well defined problem ( Govt, Fed is going to bear most of the damage, and the private investors will get carrot, very little sticks, to help find/fund the solution ) with a well defined set of outcomes (Either inflation or everything as we know it collapse at once, no more messy bankruptcy in isolation)
Thus, I'm not surprised if liquidity is no longer a problem.
As for solvency, it depends if the world can pull together a Japan redux. If we're lucky, we'll lose 30 or so years and a whole generation of new grads will live in abject poverty, but damn-it the baby boomers will get their "deserved" retirement and pension, 401K, SS.
In the most optimistic case, some miraculous technology breakthrough occurs somewhere in this next 30 years and sparks another age of development / prosperity and washes the past sins clean.
Call me a skeptic, I no longer think financial engineering can "improve" anything, merely spread around the pain. True improvements in human lives have to come from elsewhere, most likely some future improvements in technology. We do need more Engineers and Scientists and less Financial Wall Streeters.
The only possible explanation I can think of is government actively pumping up equities (focusing on REITs and financials). Either that or their liquidity is being used by the dark pool players to do the same thing.
TARP money has to go somewhere, why not back into financials
@Gav - I think this could go on for a few year, to be honest. I've hedged my short positions and closing them slowly. Once I'm out, I'll be out for awhile. Can't deal with the irrationality. Playing the lottery gives me the same odds of a big payout is a lot less painful.
The whisper last week on short term trading desks (yes, I work across from one) was that LIBOR was being manipulated. Banks arent borrowing as much in the interbank market now, and no regulator is going to object to bogus self-reported rates in this environment. Amazingly, considering that such deceit was widely reported and investigated last year, this line of the day gets repeated everywhere without any skepticism. Citi issued 10-year paper today at nearly 8.8%, more than 500 over swaps, hardly a rate “artificially suppressed by implicit government support” (though this might have been a group not bank issued bond).
No?
Good to see that liquidity problem is resolved. Now about solvency...
triple digit gains!!!
I marvel at the regularity of the pulse and respirations of the patient on the heart/lung machine...
Great, now that the banks are free to lend each other funny money...everything will go back to normal.
Just found this one:
Developer’s bankruptcy filing a tale of caution - NJBIZ.com
“We got $600,000 for the first unit, which was sold during the pre-construction phase,” he said. “By the time we sold the last, in late 2008, the price had plunged to $340,000.”
We need a obstructition to induce LIBOR on this pregnant pause in the market.
the money flows freely between the ponzi units
There may be something less that wonderful lurking beneath the surface re: LIBOR:
THE PRAGMATIC CAPITALIST » » LIBOR FALLING = LIQUIDITY TRAP?
Beyond my ken, but given my underlying belief/knowledge that the economy is anything but healthy I'm inclined to think the worst before buying any evidence of real improvement.
Liquidity? We are drinking seawater!
[CRVIX 708]
Here comes Mr. Bond again to put a damper on the market. Where is Ben?
no problemo, bulls gnaw off their leg when caught in a liquidity trap
Juvenal Delinquent (profile) wrote on Mon, 5/18/2009 - 9:12 am
reply ignore user
We need a obstructition to induce LIBOR on this pregnant pause in the market.
No, we need an obstetrician because we are about to give birth to the unrelated twins of inflation and depression. Ben Bernanke, midwife and suspected father of one of them.
mmmmm.... free lunch is mighty tasty!!!
CR: There has been improvement in the A2P2 spread. This has declined to 0.47.
Why is a smaller risk premium good when low risk premiums (underpriced risk) started the bubble?
This is good news and shouldn't be ridiculed. The story's not over, but the plot took a turn for the better.
"Great, now that the banks are free to lend each other funny money...everything will go back to normal."
Well, now that they do not have to worry about getting paid back... by Timmy G.
"Liquidity? We are drinking seawater!"
California is in the midst of a drought with no end, and it wouldn't be a problem seeing as there's a bit of water off the coast and desalination plants could get online, but the NIMBY's (surfrider group) caused massive delays, so yes, for the time being Californians alternative aqua options are limited to drinking unfiltered seawater.
Anyone with a LIBOR ARM is happy right now.
"Right now" is the appropriate fine print here - the liquidity improvement is all due to massive injections of liquidity by the government (Treasury, Fed, FDIC) in exchange for toxic assets. Happiness with LIBOR ARM will be soon more than balanced by higher taxes and later by stagflation.
Market is on crazy pills. Check out SPG. Getting pumped by the big boys. This just gets more ludicrous by the day.
Blackhalo (homepage, profile) wrote on Mon, 5/18/2009 - 4:07 pm
Good to see that liquidity problem is resolved. Now about solvency...
Since liquidity never was the problem, they will have to invent a new non-issue distraction.
What will it be? Baby trapped in a well? Cougar trapped in a sewer?
Police taser stuffed animal: Police Taser Stuffed Animal | wltx.com
Last week, FDIC Sheila Bair said "the liquidity crisis is over for good". That might be a little optimistic (some ARS markets are still frozen), but it does appear the Fed has eased the liquidity crisis for now.
Again, notice that this new found liquidity isn't going to the consumer.
And why would it? We haven't removed the excess debt from the consumer sector.
This isn't 1935 we're dealing with where new debt can translate into productive new spending - we're still a long way off from that point.
Cougar trapped in a sewer?
Why doesn't she just leave Detroit...
MrM: "Right now" is the appropriate fine print here - the liquidity improvement is all due to massive injections of liquidity by the government (Treasury, Fed, FDIC) in exchange for toxic assets. Happiness with LIBOR ARM will be soon more than balanced by higher taxes and later by stagflation.
"Right now" has to last at least 2 years for the duration in the wave of Alt-As, unemployment, etc.
otishertz
This S&P earnings graph is still around in cyberspace
http://2.bp.blogspot.com/_H2DePAZe2gA/Sg40XzkGCaI/AAAAAAAAJF8/4r8nmbxBxws/s1600-h/20090515.gif
"This is good news and shouldn't be ridiculed. The story's not over, but the plot took a turn for the better."
Really? Even if it is because a US of AIG is insuring interbank loans again? Despite those banks still being insolvent?
Blackhalo (homepage, profile) wrote on Mon, 5/18/2009 - 4:32 pm
Really? Even if it is because a US of AIG is insuring interbank loans again? Despite those banks still being insolvent?
Despite the insurer being insolvent.
Anybody catch ex-GS alumni Liddy on 60 Minutes last night?
It was a puff-piece full of packaged air...
Despite the insurer being insolvent.
I would rather say that the insurer is over-rated (it can always print its way out of insolvency)
Speaking of which - Moody's downgraded Japan's foreign debt rating to Aa2 (not even Aa1!).
There is no telling what G7 country might come next!
ac (profile) wrote:
Again, notice that this new found liquidity isn't going to the consumer.
And why would it? We haven't removed the excess debt from the consumer sector.
This isn't 1935 we're dealing with where new debt can translate into productive new spending - we're still a long way off from that point.
Exactly.
They're just blowing up a bigger and bigger balloon from financial instruments in the financial sector.
I wonder what will happen when it goes pop?
-- w
Mel (profile) wrote on Mon, 5/18/2009 - 12:23 pm
This is good news and shouldn't be ridiculed. The story's not over, but the plot took a turn for the better.
Byzantine_Ruins says:
Sunday, October 12, 2008, 6:33:05 PM
“There we go everyone, that's a wrap. We'll just guarantee everything. Crisis solved.
Scene: An anonymous central banker has his hands in two puppets. He is stimulating interbank lending. One puppet passes a billion dollars to the other. Then the second puppet passes it back to the first.
Won't you come play the lending game with him, I mean, them? He'd really, really like your foreign exchange reserves.
Anybody considering a gamble on Wall*Street, ought to just go to Atlantic City instead. You get much better odds on the craps table, and they give you free drinks.
Liquidity trap and lack of demand
"I wonder what will happen when it goes pop?"
I think the plan is simply to blow faster than it 'leaks'.
"They're just blowing up a bigger and bigger balloon from financial instruments in the financial sector.
I wonder what will happen when it goes pop?" w
find out it's full of green shoots?
The financial con job on American taxpayers by Bush admin ( Greenspan, Paulson, Wall St, etc ) is even more egregious now with the Obama admin ( Bernanke, Giethner, Wall St, etc ) because they're re running a very impressive well coordinated con ( and fooling big majority of Americans ) to pump up great big chunks of the "impaired," "illiquid," or "distressed Big Shitpile that are essentially worthless unless the peak real estate values of the bubble can be miraculously restored.
warlock (homepage, profile) wrote (in reply to...) on Mon, 5/18/2009 - 11:40 am
They're just blowing up a bigger and bigger balloon from financial instruments in the financial sector.
I wonder what will happen when it goes pop?
-- w
that's the way the money goes
pop goes the weasel
The same game is playing over and over and over. The market drops a bit, the bears are lured in, and the big boys (with unlimited government liquidity) orchestrate another short squeeze. It is nuts. Who is buying shares of financials and REITs today? How long can this game of "find the greater fool" last? It seems obvious that GS/MS/MER et. al can push this sham of a market wherever they want it to go.
At some point it will crash spectacularly. But when???
The emperor has no closure.
"Well, now that they do not have to worry about getting paid back... by Timmy G"
Yeah, I'm trying to buy a homeowners' policy today. I told my wife to tell our insurance agent that we're shopping around. I want the agent to sell us on why we should stay with them. It hit me that the agent really doesn't have any incentive to try and keep us. If enough customers like us leave b/c they are too expensive (or whatever), they'll just get an infusion of cash from Uncle Sam to keep operating. After all, they are TBTF.
That is the new paradigm and it's coming to a town near you... soon.
If anyone is tired of US Congress shenanigans, there's always a nice UK Parliament scandal to read up on. Yes its pennies in the big picture, but the sense of entitlement is just as strong
United Kingdom Parliamentary expenses scandal - Wikipedia, the free encyclopedia
@ Not One Cent
"Since liquidity never was the problem, they will have to invent a new non-issue distraction."
I suspect it will have something to do with bond premiums. They US Gov may be dumb enough to give these guys NINJA loans, but the bond guys tend to do a little bit more due diligence and it is unlikely that the banks are going to be forthcoming with their financial information.
So now that liquidity is fixed, we should be getting those TARP funds back? And we can stop giving money to AIG?
I sure wish someone would call Timmy on his "liquidity" problem, when the reason that banks were not lending to each other was because they are broke and getting more so.
Why do we bail out the banks that have a proven inability to assess and price risk? Surely there are institutions out there that could replace them?
I wonder what will happen when it goes pop?"
So what is next
At some point in the not too distant future, this process will end. Frighteningly for the Fed, as more dollar claims are destroyed (the collapse of asset prices in dollar terms, better known as deflation) the speed at which dollar liquidity is shrinking will slow relative to its next most popular cousin - the euro.
It is difficult to predict at what point we will reach the dollar/euro inflection point. As the QE results imply, the Fed is running out of arrows to even manipulate the first two tiers of the liquidity pyramid, and as deflation accelerates, it is very feasible that the dollar's appreciation will soon be limited. One thing that is certain, is that market participants will soon move from focusing on dollar claims to those denominated in euros, leading to a squeeze in the euro (granted of less violence and strength than the dollar's).
Zero Hedge: The Exuberance Glut Or The Dollar-Euro Short Squeeze Race
Words calculated to catch everyone may catch no one.
Adlai Stevenson, Jr.
"The market drops a bit, the bears are lured in,"
My puts are getting crushed. So much for spectacular gains this year!
Comrade Coinz,
Thanks for posting that piece on Shadow Money originally from Zero Hedge's Tyler Durden Zero Hedge: Chasing The Shadow Of Money . It was very similar to an older article by Mish Fiat World Mathematical Model that somone else linked a while ago.
Both articles have me reexamining my expectations regarding inflation/deflation. I hope one or both authors will take this a step further and examine the pricing implications of contraction in the shadow money supply (the securitization and derivatives tiers) and expansion in the real money supply (base money and straight lending). Seems possible that some asset classes and products will be more affected by shadow money contraction (deflation), while other asset classes and products will be more influenced by real money expansion (inflation). This would seem to support the "inflation in things you need, deflation in things you own" theory that I've seen others put forward.
I'm beginning to believe that the deflation in shadow money supply is going to be rather more prolonged than I had thought and probably more than offset the base money expansion for the short term (18 months or so). It's kind of ironic that the Fed is probably trying to stoke inflation fears to get people to move/invest their money (accelerated velocity), but their refusal to address the illiquid assets in the financial system is prolonging the shadow money unwind.
energyecon (homepage, profile) wrote on Mon, 5/18/2009 - 9:09 am
"I marvel at the regularity of the pulse and respirations of the patient on the heart/lung machine..."
Exactly, the important information is not the numbers associated with indexes, it is the actions of central banks and large institutions.
It is a no brainer to bet on an increased heartrate if I can see the technician turn the knob to the right.
Those of you gambling with insider information about how dire things are, are getting creamed by the insiders on Wall*Street.
appropriate....
Rocky -- My puts are getting crushed daily. What is happening now is multiple standard deviations away from normal. The only possible explanation I can think of is government actively pumping up equities (focusing on REITs and financials). Either that or their liquidity is being used by the dark pool players to do the same thing.
This could not happen without an obscene amount of liquidity and leverage. If the dam bursts it will be historic. But I no longer have any notion of what is possible, nor any sense of how long this farce can continue. Uncharted territory indeed.
FINANCIAL CRISIS FIXED ACCORDING OT EXPERTS???
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajgUp7xQIn6c&refer=home
http://iamned.com/blog/
Remember the frantic, end of the world chaos, the terrifying lack of information, the worry nobody knows how this is going to end and the lack of confidence in the market that was Oct 2008 to early 2009??
I do see that we've improved greatly from that period.
Compare back, we've now transitioned from this great unknown (who's going to bankrupt next? How's the ripple effect going to tear down the fabric of finance) into a well defined problem ( Govt, Fed is going to bear most of the damage, and the private investors will get carrot, very little sticks, to help find/fund the solution ) with a well defined set of outcomes (Either inflation or everything as we know it collapse at once, no more messy bankruptcy in isolation)
Thus, I'm not surprised if liquidity is no longer a problem.
As for solvency, it depends if the world can pull together a Japan redux. If we're lucky, we'll lose 30 or so years and a whole generation of new grads will live in abject poverty, but damn-it the baby boomers will get their "deserved" retirement and pension, 401K, SS.
In the most optimistic case, some miraculous technology breakthrough occurs somewhere in this next 30 years and sparks another age of development / prosperity and washes the past sins clean.
Call me a skeptic, I no longer think financial engineering can "improve" anything, merely spread around the pain. True improvements in human lives have to come from elsewhere, most likely some future improvements in technology. We do need more Engineers and Scientists and less Financial Wall Streeters.
The only possible explanation I can think of is government actively pumping up equities (focusing on REITs and financials). Either that or their liquidity is being used by the dark pool players to do the same thing.
TARP money has to go somewhere, why not back into financials
@Gav - I think this could go on for a few year, to be honest. I've hedged my short positions and closing them slowly. Once I'm out, I'll be out for awhile. Can't deal with the irrationality. Playing the lottery gives me the same odds of a big payout is a lot less painful.
Nobody is going to admit they work on Wall*Street, in just a year or 2, as the word "investment" will have such nasty CONnotations.
They'll make up flimsy lies, like they work @ 7-11, or the dry cleaners...
mortgage pig says: you suck
"Stocks surged after the CEO of Lowe's mentioned 'signs of a bottom' in housing."
Looks like they are saying today's rally is the fault of all the Doomers, spending big on thier Mad Max victory gardens....
The whisper last week on short term trading desks (yes, I work across from one) was that LIBOR was being manipulated. Banks arent borrowing as much in the interbank market now, and no regulator is going to object to bogus self-reported rates in this environment. Amazingly, considering that such deceit was widely reported and investigated last year, this line of the day gets repeated everywhere without any skepticism. Citi issued 10-year paper today at nearly 8.8%, more than 500 over swaps, hardly a rate “artificially suppressed by implicit government support” (though this might have been a group not bank issued bond).
This post was about LIBOR dropping right?