Law enforcement agencies and the FED are the only entities that can print money, and from all accounts many municipalities are turning to ticketry, to pick up the slack.
I know of a place where the coppers lie in wait of people sans seatbelt or avec cell phone, $168 1st offense, $300 for 2-timers.
Overall it appears the credit crisis has eased significantly.
I'm noticing the TNX is up 130 bps from its lows so far. If that movement continues while incomes remain flat and house prices fall, then that suggests the credit crisis is simply moving into government debt.
EDIT: As of the close TNX yields are up 141 bps from the low in December.
EDIT: As of the close TYX yields are up 187 bps from the low in December.
These charts were interesting when they were meaningful, back in November. Since they now do not remove or crrect for the massive distortions of direct gov't action, they are more amusing than anything else.
I mean, these charts are screen readouts from the "economic model". See, if we twist this know, and push this button, then the readout says what our modely wants, thus prosperity is right around the corner, and all malinvestment can be corrected by fiddling with these knobs and buttons to get the readout numbers to align with the print out from the model.
Two indicators: CC delinquancies and defaults, & Treasuries.
Unemployment will be its own feedback loop to systemic failure.
I can't even compare 1980s post-vietnam inflation and military/industrial complex ramp-down to the 70% hock-and-swap economy we've been relying on for fake growth now deflating. Structural realignment of production and demand will take years.
"I know of a place where the coppers lie in wait of people sans seatbelt or avec cell phone"
So use your seat belt. I know of instances where it's saved lives, and possibly mine as well, or at least some face surgery. Now I will not leave the curb if my wife is riding with me until she has buckled up.
As for cell phones - it's been shown that using one while driving is the equivalent of being intoxicated.
I'm noticing the TNX is up 130 bps from its lows so far. If that movement continues while incomes remain flat and house prices fall, then that suggests the credit crisis is simply moving into government debt.
I agree with ac. The public credit crisis is over and really has been for several months. It's now a national balance sheet issue.
I really trying hard to keep using these indicators and indexes as predictive, but they only seem to work given a particular set of variables--because this is deflationary demand destruction and over-capacity, I don't think these indicators (aside from the other problem of government distortion) mean much.
The credit-risk premium is distorted and as soon as treasuries implode with bonds we'll see "true" price-risk return.
Here's what I believe - The Fed has shifted all the credit & interest rate risk from the global financial markets and super-hyper-concentrated the entire mess onto its balance sheet. So the spreads will become evident in treasuries and the USD. When the bond market forces the Fed to retreat from the massive financial market intervention then we'll see how much recovery there actually is.
Losses HAVE to be taken & realized. Can't fake it forever.
o.k. ac + BR, I can agree with that, which is to say we've aggrated and centralized the risk to the national balance sheet. Now for that nation to get whacked by its creditors.
late last night, about 2 am or 3 pm EST they had a guy on CNBC who they brought on to talk about the secret Plunge Protection Team created under Reagan
in '87. did any of you see this guy... he was a currency trader and when they asked him if he had any proof he pointed to a time frame where
currency moves behaved strangely in its relationship to the S&P... he came off as a dolt and they spent 5 minutes making fun of him...
About 25 years ago I was driving from Melbourne to Sydney, and got off the main road (Hume Hwy. I think) and was on a secondary road, when the pavement stopped all of the sudden, and I was too close to the car in front of me, and it spit a rock at my windshield and shattered it. The dirt road continued for about a kilometer, and I had to stick my head out the side window to see anything. I approached a little town that had about 6 windshield stores and a population of perhaps 1,000 people.
I imagined that schoolchildren each day, would go place perfect sized rocks in the roadbed...
A variation of the crooked town in the south, where you have to pay your ticket, immediately.
The remarkable thing is that the volume of loans being made to private entities appears to be between 10% and 25% of 2007 levels. The spreads are moderate, although higher than these government manipulated interbank spreads.
The obvious inference is that there is no shortage of money available - there is a shortage of productive investments that people want to borrow money for. I don't see how either the banks or the real economy can be making a comeback if there are so few productive investment opportunities.
I am in Phoenix and most of my information concerns commercial real estate loans. But I'm not hearing much different from anywhere else.
I wonder (besides the distortion of government intervention on these indicators) what volume of credit is flowing in the various channels. The chart numbers look sorta 'normal', but these seem to me to be "if we were going to lend/borrow" rates, NOT, "this is what we ARE doing".
BTW: the alternative weekly here in Portland tracks restaurant closures: last week no closures. Guess happy days are here again, right?......
These charts were interesting when they were meaningful, back in November. Since they now do not remove or crrect for the massive distortions of direct gov't action, they are more amusing than anything else.
More generally this could be said about all USD denominated financial instruments.
That's the real crisis IMO - the "nervous system" of the economy no longer transmits signals about actual economic activity, only signals about government mandates and political desires.
One of our economy's vital organs has been co-opted by politicians and ideologues and has lost its basic utility. Poverty is ensuing as a result.
It's as if your GPS stopped telling you where you were and just started sending you advertisements about retail establishments.
"Here's what I believe - The Fed has shifted all the credit & interest rate risk from the global financial markets and super-hyper-concentrated the entire mess onto its balance sheet."
Agreed. Well, onto its balance sheet and that of the US govt via the Treasury and FDIC.
I don't understand why people look at LIBOR as an indicator anymore, since the FDIC started guaranteeing inter-bank lending, and the govts around the world have clearly chosen their winners and losers and will backstop any systemic risk. And what do LIBOR spreads measure? Systemic risk, basically.
"Banks are still reluctant to lend and are hoarding a record $1.1 trillion of cash even after the Treasury and central bank made emergency capital injections, the Fed said in a quarterly survey of banks’ senior loan officers released May 4. More than 70 percent of respondents on net said bad loans will rise, the Fed said. The drop in Libor is being fueled by surging customer deposits as much as increased confidence among banks, Jim Vogel, an analyst at FTN Financial said last week."
"That's the real crisis IMO - the "nervous system" of the economy no longer transmits signals about actual economic activity, only signals about government mandates and political desires."
Another excellent point. Same as I have been writing about in the MBS market. Spreads there tell you nothing but what the Fed is willing to pay, they are in no way an indicator of liquidity, prepayment expectations, etc. Even the private label MBS - that market has rallied as expectations rise the FDIC will fund underpriced debt via the PPIP.
The real indicators today, IMHO, are Treasury rates, Gold, the Dollar, and Commodities (especially oil). Even corporate bond rates are becoming useless, because, after all, is there really an industry the govt ISN'T going to deem too-big-to-fail?
"The Fed has been pumping cash into the system through a variety of new programs since late 2007, and analysts say this financial drip-feed is crucial to completing the market's convalescence.
With Fed support, lending rates between banks have fallen to record lows and may slide more over the next six months, and market risk premiums should also contract.
While analysts welcome the improved conditions as a sign the worst of the global financial crisis may be over, they doubt it could continue without massive central bank aid.
"There is quite a bit going on behind the scenes, and reliance on the Fed is still pretty high," said Sergey Bondarchuk, U.S. interest rate strategist with BNP Paribas in New York."
"The obvious inference is that there is no shortage of money available - there is a shortage of productive investments that people want to borrow money for."
Again, totally agree. The problem is, all this money, if it isn't going into productive investments, where is it going? Staying on the "sidelines"? Some of it, sure. But also speculation in commodities, currencies, even stocks.
Regarding the Albanian pyramid scheme of mid 1990's...
An English friend of mine that had the traveling bug. used to tell me back in the early 1980's, that the destination he desired to go to the most, was Europe's version of present-day North Korea, Albania. Around 1984, I received a drab black & white postcard from him that had a picture of some building in Tirana. Aside from my address, there were only 5 words from him:
"I made it.
Cheers!, Mike"
The pyramid schemes unwound as did Albania, with a minimum of 2,000 people dead (Albania has 3.5 million people) from gun violence. It was estimated that 2/3rds of the country invested in these schemes.
You might ask, "aside from being right next to Albania alphabetically, How could one compare an utterly backwards country to America?"
Here's the comparison:
Albania was a lone-wolf communist country similar to the former Yugoslavia, and they received most of their financial support from China, and their dictator for 4 decades, Enver Hoxha, was more than a little paranoid about things, and as a result, Albania was armed to the teeth, in anticipation of a potential invasion from either the west or the Soviet Union. When the pyramid schemes went bad and people lost their shirts, they expressed their displeasure vis a vis AK- 47's, of which about a million were stolen from armories across the country.
We are armed to the teeth as well, but one need not loot an armory, a credit card proffered @ Wal*Mart will suffice when the pyramid schemes here go bad.
Just looked at the Zerohedge video re FED Inspector General.
This poor woman is the one who has to clean up after the elephants. Everything was done on the fly with no thought of oversight and it's been dumped in her lap to monitor. Doubtful that she has the staff to really look into it yet, but there could be some job openings in the near future for those who like forensic accounting.
While it might have "eased"...continuing to use the TED spread dropping as a legitimate indicator that it is "getting better" is too funny. WAKE UP! TED is a survey and nothing more.
Don't you think they know how to game that??
"so mr. banker did you lend any money to your peers?"
"of course we did......;-)"
Since the TED requires absolutely no evidence WHATSOEVER it's just another happy number that gets pushed to a level that makes everyone feel better about themselves while accomplishing nothing.
ghostfaceinvestah (profile) wrote on Fri, 5/22/2009 - 11:21 am
Even corporate bond rates are becoming useless, because, after all, is there really an industry the govt ISN'T going to deem too-big-to-fail?
I think this is one of the things that I think we can derive interesting but probably useless data from. Corporate bond rates are going to be part of the tug of war between the fact that everything is TBTF, and the fact that bond seniority has gone out the window in the tarponomic age.
I approached a little town that had about 6 windshield stores and a population of perhaps 1,000 people.
That is like an old form of piracy sometimes called "wreckers" (I believe), although wreckers often stole and killed rather than overcharge to repair engineered accidents.
China holds a record $744.2 billion of the U.S. debt, the latest figures from the U.S. Treasury show. Japan, the second- largest owner outside the U.S., owns $661.9 billion of the securities.
Central bank data indicates continued foreign demand for U.S. assets. The Fed’s custodial holdings of Treasuries for foreign accounts including central banks rose for to a record $1.89 trillion, according to the Fed. Foreign holders added $26.7 billion of Treasuries for the week ended May 20, the largest increase since December.
The cost to hedge against losses on U.S. government bonds for five years climbed to a three-week high, indicating perceptions the nation’s credit quality is deteriorating. Credit-default swaps on U.S. debt rose 3.5 basis points to 41, the highest since April 29, according to prices from CMA Datavision in New York. Five-year contracts on Japan’s
/ensnip
What assurance could we possibly give China & Japan?
"Corporate bond rates are going to be part of the tug of war between the fact that everything is TBTF, and the fact that bond seniority has gone out the window in the tarponomic age."
Good point. On the one hand, if you are a bank bond holder, not only did the govt come in junior to your position, but then guaranteed debt that came in with equal priority. Tons of cushion there (and for that matter, I wonder if the FDIC debt is included in those spread numbers).
On the other hand, you could be a GM bondholder...
I'm still getting credit card offers of ridiculous size, and my neighbors are building additions to their homes, of ridiculous size. OTOH, the best refi I can find, with over 800 FICO, is 5%. So, pump up the banks with 'free money,' lend out at good rates, only to the best FICO scores, and keep CD rates super low. And then tax the hell out of people to pay for the 'free money.' Wow, even I could make money with a slick operation like that.
What's coming is most definitely a devaluation hyperinflation, only the extent of it not being known.
Do we have a soft landing, where the dollar loses 2/3rds of it's value and stays there, like Argentina?
Or does it just get progressively worse like Mexico in the 70's through the early 90's, when the Peso was worth 1/800th of it previous value in the mid 70's?
It's hard to tell what the markets are pricing in for risk with the Fed 15%+ of the entire commercial paper market. What would spreads be without them in the market?
Byz wrote:
"and the fact that bond seniority has gone out the window in the tarponomic age."
This frightens me. I was reading Bogle's book last night (soul of capitalism), and wondering: If he saw this sort of problem coming, why didn't he (or some fund manager) create a fund that avoided the well-documented problems? Instead, Vanguard focused on index inventing. Someone could create a fund that focused on companies that:
1. Don't have unfunded pensions
2. Aren't being looted my the management
3. Pay dividends
etc.
Thursday
16:07 ET 10-Yr: -1-15/32..3.366%.. USD/JPY: 94.2905.. EUR/USD: 1.3902
Bam. Pow. Whack: The market crushed the longer end today as it confronted the reality of supply and its attendant problems while the Fed's semi-supportive buying program worked as a prop...for a while, until it wasn't. The one-two-punch of upcoming record levels of treasuries hitting and the dashing of hopes that trade might see some further indications that the Fed is truly willing to expand its buyback operations. Dealers came in with a large chunk of paper to unload in the 4-to-7-yr durations and were bummed to see the Fed only willing to eat smaller amounts, inline with the previous similar operation. The early safety buying helped along by threats to the UK's credit ratings was sucked out fairly quickly as those concerns were sidelined for a stretch. The day actually saw a decent bump in volume as prices thrashed around and spreads were sent screaming well steeper as the short end activity was relatively tame.
.....the thievery will continue to flow "downhill". Now that the FedGov is feeling the pinch, they've thrown the States under the bus - no bailout money. States start "borrowing" from Counties and Cities through property tax revenue, throwing them under the same bus. Counties start eyeing empty and foreclosed property to fee, tax, & lien sale. Our County SO has bought those "23-pics around you at a time and run registration checks on all" camera systems for their squad cars. Many Big Brothers with 23-eyes driving down the road looking for scofflaws.
o.k. you have top 5 Soveriegn holders of US Treasuries in order:
1) China
2) Japan
3) Russia
4) UK
5) Brazil
Which one of you dumps them first? You can try to ease out of them, but the others will catch on and might try easing out of theirs. Or you could try to be first to dump them, causing a crash, but getting some capital preservation you wouldn't get otherwise if your the last one holding the T-bill bag.
My vote is Russia first, China second, Brazil third. Japan and UK will shocked, just shocked.
--bh
Mar Feb Jan Dec Nov Oct Sep Aug Jul Jun Jun May Apr Mar
blackhat,
I've been trying to access stetzer from cfr, but it won't load. He has an excellent article on China's dollar position. Wait ... it is coming up .... back in a minute
you notice that UK has been buying less treasuries? Russian demand dispalced them to 4th. Interesting move for an oil rich country with no other economic diversity whose prized asset is priced in dollars to put more of its currency reserves in USD at a time when it's possible that currency gets trashed...? Yes, I think so too.
I'm just wondering what the Chinese & Japanese have planned if Russia spooks the stable by dumping treasuries all of sudden, and peel of a few more USD holders that cash out the same...it becomes a run on the dollar. Should be very interesting. Do China & Japan stay the course, work together, hold the line and value of the dollar, or do they press the sell button?
"If the 1st world realigned to say $3 an hour minimum wage, it would level the playing field, which is what i'd want, if I was China.
Thus, a devaluation of the greenback by 2/3rds against the Yuan is in order."
Strange road they are on. Devaluing their own currency as fast as we are. I hope they filled up the tank before heading down it, as oil is going to get pretty pricey.
Thus, a devaluation of the greenback by 2/3rds against the Yuan is in order. ~JD
a 150% increase in the Yuan would send half the workers back to the country and would create massive UE and economic issues in China....
I'd never heard of Blue & Red states until maybe a decade ago, when they decided to split us in a most Gerrymandered fashion, along cultural lines...
It's as if they were thinking of the "Blue & Grey" way back when we weren't so civil to one another. The bonus here being, that never has an army willingly paid for their own weaponry and ammunition stores like the current colors have.
Gov. Ahnold's fiscal solutions:
.....reduce spending on Education (5.3-billion),
....."borrow" local property tax revenue (2-billion),
.....increase personal income tax withholding by 10% (1.7-billion),
.....reduce Medicaid (1.1-billion),
.....what a joke.
I don't see any other choice than to trash millions of state employees or sell any assets. The sale of assets probably has challenges in regards to previous loan/bonds collateral?
Juvenal Delinquent (profile) wrote on Fri, 5/22/2009 - 12:21 pm reply Ignore user I think a major rethinking of the role America used to play is in order in China...
Substitute 'entire planet' for 'China' and you'll be much closer
Florida-based BankUnited (BKUNA.O), which was closed by the U.S. government and sold to investors, was conducting business as usual on Friday and there was no sign of panic among customers, its new chief executive said.
Banking industry veteran John Kanas, who also took over as chairman, told Reuters that BankUnited planned no immediate layoffs among its work force of 1,100 and expected to expand branches in its Miami base while closing branches outside the city.
How is Ben pulling this off? I thought for sure there would be a pop after yesterday. How much MBS can he buy and at what price is he buying it? The Fed balance sheet must be off the chart.
"Law enforcement agencies and the FED are the only entities that can print money, and from all accounts many municipalities are turning to ticketry, to pick up the slack.
I know of a place where the coppers lie in wait of people sans seatbelt or avec cell phone, $168 1st offense, $300 for 2-timers. "
cars are four wheeled jail cells. you give up most of your freedoms when you get behind the wheel.
i love passing cop cars in the portland streetcar, wearing no seatbelt, talking on the phone.
J.D.: I think a major rethinking of the role America used to play is in order in China...
If I understand dryfly correctly, and I do my damndest, it happens when the slowdown of our purchase orders for tools and toys looks to be chronic. Since that appears to have happened, I can only conclude that there are dark matter forces at work. Cue Jay D. and Michael fer details.
All those steps were outlined in Arnold's plan B if the props failed. I think selling assets is a bad idea, because it is a one time revenue hit and does nothing to address the structural deficit. Cash flow has to be neutral or positive and the only way that happens is by laying off thousands of state workers (there are not millions, about 235,000). Most of the layoffs will come from teachers, education administrators, social workers. I expect prison guards, state police, and fire services to be hurt the least, but there will have to be a reduction there as well.
All of those layoffs will ripple through a state that already has 11.2%+ UE. CA may hit 15% UE by the end of the year.
--- - .. ... .... . .-. - --.. (homepage, profile) wrote on Fri, 5/22/2009 - 8:15 am
the fed will not account for 9 trillion dollars. Blogger: Page not found...
is this 9 trillion the money that is buying up the stock market?
where are all these stock purchases going?
in what account do they land?
Yup this is the biggest story not being addressed.
Apparently nobody at the Federal Reserve has any clue where the trillions of dollars that have come from the Fed's expanded balance sheet have gone. Additionally, nobody there seems to have any idea what the losses on the Fed's $2 trillion portfolio really are.
As for the pittance of $9 trillion in Fed off-balance sheet transactions over the past 8 months, well, yeah, that's also somewhere out there... Just don't ask the Federal Reserve where.
Rep. Alan Grayson summarizes it best "I am shocked to find out that nobody at the Federal Reserve is keeping track of anything."
Geithner plan is a scam, plain and simple. A brilliant scheme concocted again by Goldman and other big investment banks to enrich themselves with free government money.
- comment by Sam
hoedad says,
"Just looked at the Zerohedge video re FED Inspector General.
This poor woman is the one who has to clean up after the elephants. Everything was done on the fly with no thought of oversight and it's been dumped in her lap to monitor. Doubtful that she has the staff to really look into it yet, but there could be some job openings in the near future for those who like forensic accounting."
did you notice her ventriloquist handlers operating her from behind...
The difference btwn the G plan and the Paulson plan is that the G plan backs up the common equity as well as liabilities. The Paulson plan made no specific attempt to back up the common
if the assets are really toxic (the gap between book value and long-term expected value is big), the subsidy just isn’t big enough. He also shows that if the assets are only a little toxic, the government subsidy induces private sector bidders to overbid, making the subsidy bigger than it needs to be.
Kinda reinforces what I've been saying i.e. Obama's #1 economic mission ( in collusion with the 19 too big to fail banks that got trillions in TARP ) is to pump up great chunks of the Big Shitpile that's essentially worthless unless the peak real estate values of the bubble can be miraculously restored.
Blackhalo (homepage, profile) wrote on Fri, 5/22/2009 - 11:55 am
Quite the buying opportunity for any T-bugs.
Sorry, Mr. Jain can't take your phone call right now. He's busy putting the gun to his temple after fearlessly writing all those naked puts he talked about.
black hat,
I still can't access Setser's blog. I assume it will be back up later. You will probably want to take note of the working paper entitled "China's $1.5 Trillion Bet: Understanding China's External Portfolio" which is linked in the blog. It is the May update to the January paper.
Quite good imho.
Take a name asswipe: It is better to be feared than loved. Therein lies the rub for the US going forward.
the rub or the grace?
7th fleet in HK and a fieind of a friend of the CG invited me for a sub ride. Said to duplicate that crash surface operation that overturned a Japanese fishing trawler some years ago. I always regreted sending my regrets. He was so chuffed, coming back, as he did.
This highlights the fact that this is an issue of solvency and not liquidity. All the liquidity in the world will not save the banks without taking the whole system down with it.
This plan will not work and Timmay/BHO will try to drag this out until the banks "earn" their way out.
BH - thanks. I really value & respect MP's opinion. I just don't see a "recovery" happening until we address the underlying problems. MP focuses on measurable indicators. I focus on macro trends and longer term/historical patterns.
I saw this rebound coming, but I dramatically underestimated its power and longevity. With the strains in the bond/currency market, I just don't see how they can get the deflation genie back in the bottle.
I'm reminded of MrBeach's myfreelunch.gov site. Somehow I'm thinkin' those funding the venture might become a little less charitable, as the USD sinks and Treasuries plummet.
I like to listen to the neo-Goebbels on righty-tighty radio when i'm driving (thus a captive audience) for about 10-20 minutes at a stretch until the stench means I have to defenestrate my right to partake, by opening a window and threatening to jump out. I always manage to make it to another pre-set in time, but yesterday was as close as it comes to me jumping out.
Seething Pre-Secessionists are they, a cornered beast that nobody on the far right right, middle right right o far left right dare discuss openly...
Anak (profile) wrote on Fri, 5/22/2009 - 12:45 pm reply Ignore user Take a name asswipe: It is better to be feared than loved. Therein lies the rub for the US going forward.
the rub or the grace?
Fear is used, and is more effective in other ways than a threat of violence
"One of the challenges that the US Treasury’s debt mangers face is that central banks — China included — aren’t buying ten year Treasury bonds at their old pace, only short-term bills. At some point though I would bet that higher yields on longer-term notes tempt central banks to switch out of bills and into longer term notes."
"I think selling assets is a bad idea, because it is a one time revenue hit and does nothing to address the structural deficit."
....true UP TO THE POINT of repair, staffing & maintenance of the properties. With a State so far upside down, properties and its attached costs should be sold. They serve no purpose other then to use as "show" - likened to shelved trophies.
The State of California has only 9-pieces of surplus property available listed for sale. I call bullshit.
I agree with the comments made by many posters above: comparing a data series from an older pre-government backstop world with stats from today is really meaningless. Those old series may as well be abandoned now.
Given the explicit government guarantees given to the largest banks, banks are no longer what they were even a year or two ago and credit markets do not reflect much of anything. Any attempt by the government to withdraw those guarantees (IF IT EVER HAPPENS) will be the next crisis point. Having once extended funds in amounts of trillions to "fix" this crisis, the government will now be fully expected to do a similar thing in the future, each and every time and for lesser and lesser threats.
Not much headroom there for the risk premium or profits on those MBS. Particulaly when you throw any inflation into the bargain. What idiot besides the Fed and USGov would buy that over T-Bills.
The US financial ponzi scheme is a racket.....Only a small 'inside' group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of US financial ponzi scheme a few people make huge fortunes like the 19 too big to fail banks that were given trillions in TARP by Obama admin.
@ dum luk not a question of being right....its ALL about being thought provoking enough allowing people to think and see through the ruse like the mind numbing drivel propaganda we get from MSM and gov agencies like the Fed
Arnold's attempt to increase withholding will generate a negative return because IF he tries it every W-2 in the State is going to be amended to the nearest number of deductions commensurate with zero refund. That is far less withholding than is seen now. There's the magic of the California situation. We have reached the maximum taxation limit. Higher taxes will not produce higher revenues. It is kind of nice that we are doing it with 18th of our economy rather than the whole thing.
I'm gonna devise something called the hearing aid shoppe indicator.
They--at least 4 of them on Merritt Island are apparently totally desperate.
The Miracle ear at Sears cut their hours and cut their hours, and then moved (or
were moved out of Sears) and closed for 6 weeks whilst moving somewhere else.
We visited a couple more today, and in one the guy had a McDonald's shirt on--first shift
at Mickey D's?--and was desperate to sell my mom something.
She left a brush they gave her so we went to another store after lunch in the mall.
Desperation even more obvious.
One would think that hearing aids are pretty recession proof, but I guess not.
A couple of empty stores at the MI mall, some few customers with a few packages.
We felt like the people in the kiosks were vultures ready to swoop down on us, and
drag our cash/cards out of our pockets. Foolish to make eye contact.
Bonds
3 Month 0.16% +0.01 (6.67%)
6 Month 0.28% +0.01 (3.70%)
2 Year 0.88% +0.01 (1.15%)
5 Year 2.21% +0.04 (1.84%)
10 Year 3.45% +0.08 (2.37%)
30 Year 4.39% +0.07 (1.62%)
So, hold a 30 year mortgage or a 30 year bond? Presumably there is a bit of work and cost to put a mortgage together and to MBS it into a security, to get it into a capital gain. When you could much more easily just buy a Treasury holding mutual fund, that reinvests the earnings and accomplish the same thing for much less risk.
Re credit markets,and the collapse of Treasury bonds:
“The big lesson from the crisis is that it morphs,” El- Erian said in a CNBC interview today. “It morphs from one balance sheet to another, and the concern out there right now is that the next area that it could morph to is the public balance sheet.” Pimco’s El-Erian Says Government Debt Draws Concern (Update2) - Bloomberg.com
Bob_in_MA (profile) wrote on Fri, 5/22/2009 - 1:46 pm
“The big lesson from the crisis is that it morphs,” El- Erian said in a CNBC interview today. “It morphs from one balance sheet to another, and the concern out there right now is that the next area that it could morph to is the public balance sheet.”
Byzantine_Ruins says: 10/12/2008, 06:33:05 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.
How much do they pay him at Pimco to be 7 months behind the most obvious thing in the world?
This is a repost, hoping for response from Rob Dawg or Nate, or anyone in Cali. Is this likely....NY state is heading down the same road, just at a slower speed.
"Treasury Secretary Timothy Geithner told a House committee in Washington the U.S.’s $700 billion financial rescue package can’t be used to aid cities and states facing budget crises...
Programs that would be eliminated include the California Healthy Families program, which provides health insurance to children of low-income families; CalGrants, which provides college tuition money to low-income families, and CalWorks, which provides assistance to low-income families. She said child welfare services programs also would face cuts, as would the state’s two public university systems. Schwarzenegger also may eliminate all funding for state parks, she said."
from Bloomberg this a.m.
So, hold a 30 year mortgage or a 30 year bond? Presumably there is a bit of work and cost to put a mortgage together and to MBS it into a security, to get it into a capital gain. When you could much more easily just buy a Treasury holding mutual fund, that reinvests the earnings and accomplish the same thing for much less risk.
Crisis is so over.
I'm getting a lot of credit card offers in the mail, if that means anything.
Credit is so over.
Got offaled last thread...
Law enforcement agencies and the FED are the only entities that can print money, and from all accounts many municipalities are turning to ticketry, to pick up the slack.
I know of a place where the coppers lie in wait of people sans seatbelt or avec cell phone, $168 1st offense, $300 for 2-timers.
Those first 2 graphs look like the shark from Jaws is paying a visit...
Treasury yields could quickly become the most important credit crisis indicator now.
Yeah, I applied for a 2% cashback card about a month ago online.
Did not get "instant approval", because I've been self-employed for the past year. Figured it was a "no-go".
Got the card last week. $20,000 limit.
Credit is still out there......
Yes, it has eased significantly because the government is now backstopping everyone, except for responsible people.
Overall it appears the credit crisis has eased significantly.
I'm noticing the TNX is up 130 bps from its lows so far. If that movement continues while incomes remain flat and house prices fall, then that suggests the credit crisis is simply moving into government debt.
EDIT: As of the close TNX yields are up 141 bps from the low in December.
EDIT: As of the close TYX yields are up 187 bps from the low in December.
CR: There has been improvement in the A2P2 spread. This has declined to 0.48.
Why is it an "improvement" to lower the risk premium when low risk premium (underpriced risk) caused the bubble and crisis?
Because we can drink ourselves sober?
Gold to Go ATMs
German firm plans gold ATMs to meet growing demand
| Funds
| Reuters
These charts were interesting when they were meaningful, back in November. Since they now do not remove or crrect for the massive distortions of direct gov't action, they are more amusing than anything else.
I mean, these charts are screen readouts from the "economic model". See, if we twist this know, and push this button, then the readout says what our modely wants, thus prosperity is right around the corner, and all malinvestment can be corrected by fiddling with these knobs and buttons to get the readout numbers to align with the print out from the model.
ac,
Two indicators: CC delinquancies and defaults, & Treasuries.
Unemployment will be its own feedback loop to systemic failure.
I can't even compare 1980s post-vietnam inflation and military/industrial complex ramp-down to the 70% hock-and-swap economy we've been relying on for fake growth now deflating. Structural realignment of production and demand will take years.
--bh
"I know of a place where the coppers lie in wait of people sans seatbelt or avec cell phone"
So use your seat belt. I know of instances where it's saved lives, and possibly mine as well, or at least some face surgery. Now I will not leave the curb if my wife is riding with me until she has buckled up.
As for cell phones - it's been shown that using one while driving is the equivalent of being intoxicated.
Yeah, I am a spoil sport.
Just got an unsolicited bump in the limit on one of my corporate cards.
I never carry a balance, so they must be hoping that given enough rope...
CR:
Why do you consider these "indicators" useful when they are all distorted by government intervention?
ac (profile) wrote on Fri, 5/22/2009 - 11:02 am
I'm noticing the TNX is up 130 bps from its lows so far. If that movement continues while incomes remain flat and house prices fall, then that suggests the credit crisis is simply moving into government debt.
I agree with ac. The public credit crisis is over and really has been for several months. It's now a national balance sheet issue.
I really trying hard to keep using these indicators and indexes as predictive, but they only seem to work given a particular set of variables--because this is deflationary demand destruction and over-capacity, I don't think these indicators (aside from the other problem of government distortion) mean much.
The credit-risk premium is distorted and as soon as treasuries implode with bonds we'll see "true" price-risk return.
Florida's BankUnited fails, will cost FDIC $4.9B
Yahoo! 404 - Page Not Found
Here's what I believe - The Fed has shifted all the credit & interest rate risk from the global financial markets and super-hyper-concentrated the entire mess onto its balance sheet. So the spreads will become evident in treasuries and the USD. When the bond market forces the Fed to retreat from the massive financial market intervention then we'll see how much recovery there actually is.
Losses HAVE to be taken & realized. Can't fake it forever.
GM has been quite a roller coaster today....
GM: Summary for - Yahoo! Finance
o.k. ac + BR, I can agree with that, which is to say we've aggrated and centralized the risk to the national balance sheet. Now for that nation to get whacked by its creditors.
--bh
+bearly +ac+BR...give credit where credit due...
--bh
The flip side of S&P Earnings, graphically illustrated over at Chart of the Day.
Bungee jumping with a jet pack?
late last night, about 2 am or 3 pm EST they had a guy on CNBC who they brought on to talk about the secret Plunge Protection Team created under Reagan
in '87. did any of you see this guy... he was a currency trader and when they asked him if he had any proof he pointed to a time frame where
currency moves behaved strangely in its relationship to the S&P... he came off as a dolt and they spent 5 minutes making fun of him...
About 25 years ago I was driving from Melbourne to Sydney, and got off the main road (Hume Hwy. I think) and was on a secondary road, when the pavement stopped all of the sudden, and I was too close to the car in front of me, and it spit a rock at my windshield and shattered it. The dirt road continued for about a kilometer, and I had to stick my head out the side window to see anything. I approached a little town that had about 6 windshield stores and a population of perhaps 1,000 people.
I imagined that schoolchildren each day, would go place perfect sized rocks in the roadbed...
A variation of the crooked town in the south, where you have to pay your ticket, immediately.
Yep, the thing has grown from a seedling in the subprime mortgage biz to a giant freaking weed that affects our national debt load and currency.
I think that bankers should all be required to take a special class on the law of unintended consequences.
And since I'm grilling tonight and this weekend, I'm having some bankers for dinner.
Bankers, the other white meat.
The fact that no one wants to borrow (de-lever in current parlance) goes a long way in reducing the LIBOR
The remarkable thing is that the volume of loans being made to private entities appears to be between 10% and 25% of 2007 levels. The spreads are moderate, although higher than these government manipulated interbank spreads.
The obvious inference is that there is no shortage of money available - there is a shortage of productive investments that people want to borrow money for. I don't see how either the banks or the real economy can be making a comeback if there are so few productive investment opportunities.
I am in Phoenix and most of my information concerns commercial real estate loans. But I'm not hearing much different from anywhere else.
the fed will not account for 9 trillion dollars.
Zero Hedge: The Federal Reserve Can Not Account For $9 Trillion In Off-Balance Sheet Transactions
is this 9 trillion the money that is buying up the stock market?
where are all these stock purchases going?
in what account do they land?
perhaps, you already discussed it in an earlier thread - ooops, it was during Power Lunch...
I wonder (besides the distortion of government intervention on these indicators) what volume of credit is flowing in the various channels. The chart numbers look sorta 'normal', but these seem to me to be "if we were going to lend/borrow" rates, NOT, "this is what we ARE doing".
BTW: the alternative weekly here in Portland tracks restaurant closures: last week no closures. Guess happy days are here again, right?......
These charts were interesting when they were meaningful, back in November. Since they now do not remove or crrect for the massive distortions of direct gov't action, they are more amusing than anything else.
More generally this could be said about all USD denominated financial instruments.
That's the real crisis IMO - the "nervous system" of the economy no longer transmits signals about actual economic activity, only signals about government mandates and political desires.
One of our economy's vital organs has been co-opted by politicians and ideologues and has lost its basic utility. Poverty is ensuing as a result.
It's as if your GPS stopped telling you where you were and just started sending you advertisements about retail establishments.
"Here's what I believe - The Fed has shifted all the credit & interest rate risk from the global financial markets and super-hyper-concentrated the entire mess onto its balance sheet."
Agreed. Well, onto its balance sheet and that of the US govt via the Treasury and FDIC.
I don't understand why people look at LIBOR as an indicator anymore, since the FDIC started guaranteeing inter-bank lending, and the govts around the world have clearly chosen their winners and losers and will backstop any systemic risk. And what do LIBOR spreads measure? Systemic risk, basically.
"Banks are still reluctant to lend and are hoarding a record $1.1 trillion of cash even after the Treasury and central bank made emergency capital injections, the Fed said in a quarterly survey of banks’ senior loan officers released May 4. More than 70 percent of respondents on net said bad loans will rise, the Fed said. The drop in Libor is being fueled by surging customer deposits as much as increased confidence among banks, Jim Vogel, an analyst at FTN Financial said last week."
"Libor Has Biggest Drop This Year as Bank Woes Ease"
Libor Has Biggest Drop This Year as Bank Woes Ease (Update2) - Bloomberg.com
video of the day looks like fellatio.
RE: "Overall it appears the credit crisis has eased significantly."
Yes, some of the credit indicators have improved.
But IMHO the bigger question remains whether the massive interventions will work in achieving sustainable prosperity.
My thoughts are seen in "“My Overall Thoughts on the Bailouts/Stimulus Measures/Interventions” found below:
Prosperity By Pen - Articles Overview
"That's the real crisis IMO - the "nervous system" of the economy no longer transmits signals about actual economic activity, only signals about government mandates and political desires."
Another excellent point. Same as I have been writing about in the MBS market. Spreads there tell you nothing but what the Fed is willing to pay, they are in no way an indicator of liquidity, prepayment expectations, etc. Even the private label MBS - that market has rallied as expectations rise the FDIC will fund underpriced debt via the PPIP.
The real indicators today, IMHO, are Treasury rates, Gold, the Dollar, and Commodities (especially oil). Even corporate bond rates are becoming useless, because, after all, is there really an industry the govt ISN'T going to deem too-big-to-fail?
"Overall it appears the credit crisis has eased significantly
...aside from the estimated $1 Trillion more needed by the big banks.
anyone remember the $20 billion in bonuses payed with bailout money?
hell, that is enough to save california!!!!!!!!!!!!!!!!!!!
"The Fed has been pumping cash into the system through a variety of new programs since late 2007, and analysts say this financial drip-feed is crucial to completing the market's convalescence.
With Fed support, lending rates between banks have fallen to record lows and may slide more over the next six months, and market risk premiums should also contract.
While analysts welcome the improved conditions as a sign the worst of the global financial crisis may be over, they doubt it could continue without massive central bank aid.
"There is quite a bit going on behind the scenes, and reliance on the Fed is still pretty high," said Sergey Bondarchuk, U.S. interest rate strategist with BNP Paribas in New York."
"Fed support still key to healing U.S. money market"
Fed support still key to healing U.S. money market
| Reuters
ac,
"More generally this could be said about all USD denominated financial instruments."
That was pretty much my point, however, my all thumbs and low caffeine approach to typing earlier was a bit unclear.
'It's as if your GPS stopped telling you where you were and just started sending you advertisements about retail establishments."
Hmmm, yes....or as if your GPS decided that it would no longer give directions via roads, but still presented things on a 2 dimentional map.
"The obvious inference is that there is no shortage of money available - there is a shortage of productive investments that people want to borrow money for."
Again, totally agree. The problem is, all this money, if it isn't going into productive investments, where is it going? Staying on the "sidelines"? Some of it, sure. But also speculation in commodities, currencies, even stocks.
Ultimately that is all unsustainable.
Regarding the Albanian pyramid scheme of mid 1990's...
An English friend of mine that had the traveling bug. used to tell me back in the early 1980's, that the destination he desired to go to the most, was Europe's version of present-day North Korea, Albania. Around 1984, I received a drab black & white postcard from him that had a picture of some building in Tirana. Aside from my address, there were only 5 words from him:
"I made it.
Cheers!, Mike"
The pyramid schemes unwound as did Albania, with a minimum of 2,000 people dead (Albania has 3.5 million people) from gun violence. It was estimated that 2/3rds of the country invested in these schemes.
You might ask, "aside from being right next to Albania alphabetically, How could one compare an utterly backwards country to America?"
Here's the comparison:
Albania was a lone-wolf communist country similar to the former Yugoslavia, and they received most of their financial support from China, and their dictator for 4 decades, Enver Hoxha, was more than a little paranoid about things, and as a result, Albania was armed to the teeth, in anticipation of a potential invasion from either the west or the Soviet Union. When the pyramid schemes went bad and people lost their shirts, they expressed their displeasure vis a vis AK- 47's, of which about a million were stolen from armories across the country.
We are armed to the teeth as well, but one need not loot an armory, a credit card proffered @ Wal*Mart will suffice when the pyramid schemes here go bad.
Just looked at the Zerohedge video re FED Inspector General.
This poor woman is the one who has to clean up after the elephants. Everything was done on the fly with no thought of oversight and it's been dumped in her lap to monitor. Doubtful that she has the staff to really look into it yet, but there could be some job openings in the near future for those who like forensic accounting.
While it might have "eased"...continuing to use the TED spread dropping as a legitimate indicator that it is "getting better" is too funny. WAKE UP! TED is a survey and nothing more.
Don't you think they know how to game that??
"so mr. banker did you lend any money to your peers?"
"of course we did......;-)"
Since the TED requires absolutely no evidence WHATSOEVER it's just another happy number that gets pushed to a level that makes everyone feel better about themselves while accomplishing nothing.
Ciao
MS
ghostfaceinvestah (profile) wrote on Fri, 5/22/2009 - 11:21 am
Even corporate bond rates are becoming useless, because, after all, is there really an industry the govt ISN'T going to deem too-big-to-fail?
I think this is one of the things that I think we can derive interesting but probably useless data from. Corporate bond rates are going to be part of the tug of war between the fact that everything is TBTF, and the fact that bond seniority has gone out the window in the tarponomic age.
I approached a little town that had about 6 windshield stores and a population of perhaps 1,000 people.
That is like an old form of piracy sometimes called "wreckers" (I believe), although wreckers often stole and killed rather than overcharge to repair engineered accidents.
Yep, the thing has grown from a seedling in the subprime mortgage biz to a giant freaking weed that affects our national debt load and currency.
I was looking for the "Feed Me Seymour" youtube link I posted some time back, but this little guy says it all so much better...
YouTube - Feed Me Seymour
This conversation re reliability of data flows directly back to mp's commentary yesterday that the system is stabilizing.
Honestly, I wonder if we aren't seeing a receding of the water level before the onset of the tsunami wave. Is this the sound of the oncoming wave?
Simon says American Idologarchy is all about talents, not talent.
/snip
China, the biggest creditor to the U.S., is “worried” about its holdings of Treasuries and wants assurances that the investment is safe, Premier Wen Jiabao said at a briefing in Beijing on March 13.
U.S. 10-Year Note Falls Most Since June on Supply, Credit - Bloomberg.com
China, Japan
China holds a record $744.2 billion of the U.S. debt, the latest figures from the U.S. Treasury show. Japan, the second- largest owner outside the U.S., owns $661.9 billion of the securities.
Central bank data indicates continued foreign demand for U.S. assets. The Fed’s custodial holdings of Treasuries for foreign accounts including central banks rose for to a record $1.89 trillion, according to the Fed. Foreign holders added $26.7 billion of Treasuries for the week ended May 20, the largest increase since December.
The cost to hedge against losses on U.S. government bonds for five years climbed to a three-week high, indicating perceptions the nation’s credit quality is deteriorating. Credit-default swaps on U.S. debt rose 3.5 basis points to 41, the highest since April 29, according to prices from CMA Datavision in New York. Five-year contracts on Japan’s
/ensnip
What assurance could we possibly give China & Japan?
Anyone?
We promise...because...????
--bh
"Corporate bond rates are going to be part of the tug of war between the fact that everything is TBTF, and the fact that bond seniority has gone out the window in the tarponomic age."
Good point. On the one hand, if you are a bank bond holder, not only did the govt come in junior to your position, but then guaranteed debt that came in with equal priority. Tons of cushion there (and for that matter, I wonder if the FDIC debt is included in those spread numbers).
On the other hand, you could be a GM bondholder...
I'm still getting credit card offers of ridiculous size, and my neighbors are building additions to their homes, of ridiculous size. OTOH, the best refi I can find, with over 800 FICO, is 5%. So, pump up the banks with 'free money,' lend out at good rates, only to the best FICO scores, and keep CD rates super low. And then tax the hell out of people to pay for the 'free money.' Wow, even I could make money with a slick operation like that.
Like anybody in the world is anxious to buy our promise sorry notes @ present?
2. Movement by China and others to establish trade deals denominated outside of dollars.
"Brazil, China Plan to Drop Dollar Is ‘Idle Talk’ "
Bloomberg.com:
News
Apparently Zeno of Praxteles was wrong: You can sheer the same sheep twice...
--bh
"Property taxes are going to be the next thing eyed, once sales/income taxes fall thru the floor.
....they already are being "eyed" by Ahnold to be "borrowed" by the State under a 2004 law. Cities & Counties are FURIOUS!.....
California Cities Irked by Borrowing Plan - WSJ.com
o.k. dum luk,
I've been reading the same idle talk articles since last year. So who sold yesterday?
China or Japan?
--bh
What's coming is most definitely a devaluation hyperinflation, only the extent of it not being known.
Do we have a soft landing, where the dollar loses 2/3rds of it's value and stays there, like Argentina?
Or does it just get progressively worse like Mexico in the 70's through the early 90's, when the Peso was worth 1/800th of it previous value in the mid 70's?
It's hard to tell what the markets are pricing in for risk with the Fed 15%+ of the entire commercial paper market. What would spreads be without them in the market?
Byz wrote:
"and the fact that bond seniority has gone out the window in the tarponomic age."
This frightens me. I was reading Bogle's book last night (soul of capitalism), and wondering: If he saw this sort of problem coming, why didn't he (or some fund manager) create a fund that avoided the well-documented problems? Instead, Vanguard focused on index inventing. Someone could create a fund that focused on companies that:
1. Don't have unfunded pensions
2. Aren't being looted my the management
3. Pay dividends
etc.
Thursday
16:07 ET 10-Yr: -1-15/32..3.366%.. USD/JPY: 94.2905.. EUR/USD: 1.3902
Bam. Pow. Whack: The market crushed the longer end today as it confronted the reality of supply and its attendant problems while the Fed's semi-supportive buying program worked as a prop...for a while, until it wasn't. The one-two-punch of upcoming record levels of treasuries hitting and the dashing of hopes that trade might see some further indications that the Fed is truly willing to expand its buyback operations. Dealers came in with a large chunk of paper to unload in the 4-to-7-yr durations and were bummed to see the Fed only willing to eat smaller amounts, inline with the previous similar operation. The early safety buying helped along by threats to the UK's credit ratings was sucked out fairly quickly as those concerns were sidelined for a stretch. The day actually saw a decent bump in volume as prices thrashed around and spreads were sent screaming well steeper as the short end activity was relatively tame.
Briefing.com: Bond Market Update
My guess is Japan, but that only a guess.
"Overall it appears the credit crisis has eased significantly. "
Its pretty calm in the eye of a Cat 5 hurricane too.
Google "Rudlof Havenstein" to have a looksee @ Bernanke's mad-money-printing-predecessor during Weimar German Hyperinflation.
Benjamins does it all with a mouse clicque, however.
"Who is selling China of Japan?"
My guess is Japan too. It would help explain unusual strength in the Yen this year.
Cali munis up today, of course.
10 year at 3.40, ya this is going real well.
.....the thievery will continue to flow "downhill". Now that the FedGov is feeling the pinch, they've thrown the States under the bus - no bailout money. States start "borrowing" from Counties and Cities through property tax revenue, throwing them under the same bus. Counties start eyeing empty and foreclosed property to fee, tax, & lien sale. Our County SO has bought those "23-pics around you at a time and run registration checks on all" camera systems for their squad cars. Many Big Brothers with 23-eyes driving down the road looking for scofflaws.
"The Fed has been pumping cash into the system.."
Let's define the word "system". No doubt they have been pumping cash. You can pump air into a punctured tire all day long.
o.k. you have top 5 Soveriegn holders of US Treasuries in order:
1) China
2) Japan
3) Russia
4) UK
5) Brazil
Which one of you dumps them first? You can try to ease out of them, but the others will catch on and might try easing out of theirs. Or you could try to be first to dump them, causing a crash, but getting some capital preservation you wouldn't get otherwise if your the last one holding the T-bill bag.
My vote is Russia first, China second, Brazil third. Japan and UK will shocked, just shocked.
--bh
Mar Feb Jan Dec Nov Oct Sep Aug Jul Jun Jun May Apr Mar
Country 2009 2009 2009 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
China, Mainland 767.9 744.2 739.6 727.4 713.2 684.1 618.2 573.7 550.0 535.1 503.8 506.8 502.0 490.6
Japan 686.7 661.9 634.8 626.0 625.2 629.6 617.5 630.3 637.6 628.0 580.4 575.3 588.8 597.4
Carib Bnkng Ctrs 4/ 213.6 189.1 176.6 197.5 205.0 203.5 169.3 132.9 117.6 106.6 122.4 104.5 117.4 108.7
Oil Exporters 3/ 192.0 181.7 186.6 186.2 187.2 176.7 171.2 169.6 162.9 159.5 170.3 164.2 153.8 150.7
Russia 138.4 130.1 119.6 116.4 108.0 110.8 99.6 104.2 104.0 95.2 65.3 63.7 60.2 42.4
United Kingdom 2/ 128.2 129.1 123.9 130.9 132.4 133.2 112.8 82.5 66.1 55.0 279.1 271.2 246.8 200.1
Brazil 126.6 130.8 133.5 127.0 136.1 141.0 148.3 152.6 154.8 158.0 151.6 151.4 149.5 149.1
Luxembourg 106.1 92.3 87.2 97.4 94.4 100.8 104.7 90.4 89.7 102.6 83.2 75.2 81.8 89.8
Hong Kong 78.9 76.3 71.7 77.2 70.6 69.8 65.5 65.8 65.2 65.8 61.2 61.4 63.1 60.5
Taiwan 74.8 72.6 73.3 71.8 70.2 65.9 63.0 66.2 67.9 66.5 39.6 38.9 42.2 40.8
Switzerland 67.7 68.2 62.1 62.3 63.8 62.0 49.7 45.9 45.7 45.1 44.3 41.9 42.4 41.2
Germany 55.0 56.6 56.4 56.1 54.0 53.7 51.6 51.8 51.7 51.6 40.8 44.9 43.6 42.1
Ireland 54.7 54.5 50.0 54.3 41.3 35.1 32.9 18.9 16.9 19.9 13.9 15.6 18.3 17.6
Singapore 39.1 39.4 38.3 40.8 38.8 34.0 32.2 31.9 32.8 31.7 30.3 30.6 33.5 33.3
India 38.2 34.6 32.5 29.2 22.3 18.3 20.3 20.2 19.0 17.7 11.7 10.3 10.5 11.8
Mexico 36.3 37.9 34.9 34.8 33.8 32.2 32.5 32.6 34.3 41.1 41.9 39.6 37.3 38.3
Korea 33.1 33.3 31.3 31.3 32.7 36.2 40.2 42.1 39.4 40.6 36.4 38.4 40.4 40.7
Turkey 30.2 32.4 31.3 30.8 29.0 27.9 31.5 34.3 32.7 30.5 30.3 28.9 31.1 28.7
France 27.1 16.8 17.9 16.8 18.4 20.5 19.3 21.2 17.1 15.4 -- -- -- 1.5
Norway 26.2 21.1 21.9 23.1 20.2 11.5 13.2 2.4 2.8 4.4 43.3 47.1 45.3 44.5
Thailand 26.0 39.7 37.2 32.4 33.9 33.6 27.4 30.4 30.6 31.2 32.4 32.8 27.9 25.7
Israel 19.4 17.4 16.9 18.8 13.8 12.4 8.7 7.6 8.1 9.8 5.9 5.3 6.2 6.5
Egypt 18.5 19.1 16.9 17.2 16.8 16.7 15.5 14.5 15.1 14.1 12.3 12.8 12.7 12.7
Netherlands 17.6 16.1 16.8 15.4 15.6 15.7 15.6 16.9 17.8 17.8 15.0 15.6 15.5 15.0
Italy 16.6 16.5 15.6 16.0 15.9 15.3 11.6 12.9 11.0 11.4 10.2 11.3 10.3 11.1
Chile 15.5 15.2 15.2 15.2 15.1 15.4 13.4 13.0 13.6 12.2 11.7 11.1 10.2 9.7
Belgium 15.4 14.5 15.5 15.9 15.3 15.8 15.4 14.8 15.0 15.4 12.4 12.4 12.5 12.8
Sweden 12.5 12.7 12.4 12.7 13.1 13.5 13.6 14.7 14.4 14.4 12.4 13.2 13.1 13.2
Philippines 12.4 12.6 11.6 11.7 11.5 12.1 12.0 12.3 12.4 12.4 8.8 9.0 9.9 10.8
Canada 11.9 10.9 9.0 8.2 12.7 14.0 16.0 23.5 22.3 23.8 28.4 30.3 25.8 21.9
Colombia 11.2 11.4 11.3 11.1 11.5 11.3 9.9 9.0 9.3 9.2 7.6 7.6 6.5 6.7
Malaysia 10.6 8.4 8.0 8.4 8.8 8.6 9.4 10.1 10.5 10.4 8.3 8.5 8.7 9.2
All Other 156.7 164.9 162.5 156.5 156.2 149.1 137.8 139.2 135.6 134.7 118.3 117.7 119.1 120.7
“It’s almost worth the Great Depression to learn how little our big men know.”
~ Will Rogers
"It's as if your GPS stopped telling you where you were and just started sending you advertisements about retail establishments."
ac, making it up on the fly, crikey you're good.....now where was I?
"The problem is, all this money, if it isn't going into productive investments, where is it going?"
Probably to prop up existing projects that need to refinance but can't pass underwriting based on current conditions.
"The problem is, all this money, if it isn't going into productive investments, where is it going?"
Pay off obligations to themselves, citizens, business contracts, bills...
"The spreads are still high, especially for lower rated paper."
Treasuries sure are trying to catch up...
3.42 Up 0.0620 (1.85%)
Quite the buying opportunity for any T-bugs.
blackhat,
I've been trying to access stetzer from cfr, but it won't load. He has an excellent article on China's dollar position. Wait ... it is coming up .... back in a minute
GM-well they just creamed the bagholders who didn't sell in the morning on 7% pump
Chart | GM - Yahoo! Finance
USTitanic's are like a 24 person lifeboat, in which thousands of people are trying to get aboard all at once because there are sharks in the water...
Nancy Pelosi has "Nothing More To Say"
.....my gawd.....this is a first.............
All Other 156.7 164.9 162.5 156.5 156.2 149.1 137.8 139.2 135.6 134.7 118.3 117.7 119.1 120.7
Point in aggreate is that less treasuries are being bought and held.
--bh
OT-market
srs actually diverging today from market..could next week finally be breakout?
sometimes before you sit at the blackjack table it looks like everyone is winning too....
"My vote is Russia first, China second, Brazil third. Japan and UK will shocked, just shocked."
I thought UK used to be #3?
blackhat,
I've been trying to access stetzer from cfr
Setser is a tool of the CFR. He will extrapolate, massage data and hypothesize in order to arrive at a conclusion that pleases his minders.
blackhat,
Couldn't get it directly - something is wrong with cfr's site. Got it through a Google cache:
"On China, the dollar and China’s call for a new global reserve currency."
Brad Setser: Follow the Money
blackhalo,
you notice that UK has been buying less treasuries? Russian demand dispalced them to 4th. Interesting move for an oil rich country with no other economic diversity whose prized asset is priced in dollars to put more of its currency reserves in USD at a time when it's possible that currency gets trashed...? Yes, I think so too.
--bh
No, that version is incomplete. Whether asswipe likes it or not, the article is on point and fairly detailed.
What's the difference between somebody working @ KFC in Shanghai, vs. somebody working @ KFC in D.C.?
$1 vs $8 an hour.
Only because of tyranny of distance, is there any different in job pay.
dum luk,
Thanks for the link.
I'm just wondering what the Chinese & Japanese have planned if Russia spooks the stable by dumping treasuries all of sudden, and peel of a few more USD holders that cash out the same...it becomes a run on the dollar. Should be very interesting. Do China & Japan stay the course, work together, hold the line and value of the dollar, or do they press the sell button?
--bh
If the 1st world realigned to say $3 an hour minimum wage, it would level the playing field, which is what i'd want, if I was China.
Thus, a devaluation of the greenback by 2/3rds against the Yuan is in order.
We may have more guns than Albanians, but what we don't have is their blood feuds.
(sound of bomb dropping)
INO Equities Stocks Indexes - US DOLLAR INDEX (NYBOT:DX) Price Chart and Quote
Some say the sovereign wealth funds are already selling....
"If the 1st world realigned to say $3 an hour minimum wage, it would level the playing field, which is what i'd want, if I was China.
Thus, a devaluation of the greenback by 2/3rds against the Yuan is in order."
Strange road they are on. Devaluing their own currency as fast as we are. I hope they filled up the tank before heading down it, as oil is going to get pretty pricey.
dum luk (profile) wrote on Fri, 5/22/2009 - 12:05 pm reply Ignore user No, that version is incomplete. Whether asswipe likes it or not
Like or dislike has nothing to do with my statement.
KFC in SH: Only because of tyranny of distance, is there any different in job pay.
the rents in Shanghai will be higher, but the buns are different, trust me.
We may have more guns than Albanians, but what we don't have is their blood feuds.
Obviously you have never been to the mountains of eastern Kentucky and southern West Virginia.
Thus, a devaluation of the greenback by 2/3rds against the Yuan is in order. ~JD
a 150% increase in the Yuan would send half the workers back to the country and would create massive UE and economic issues in China....
I'd never heard of Blue & Red states until maybe a decade ago, when they decided to split us in a most Gerrymandered fashion, along cultural lines...
It's as if they were thinking of the "Blue & Grey" way back when we weren't so civil to one another. The bonus here being, that never has an army willingly paid for their own weaponry and ammunition stores like the current colors have.
Gov. Ahnold's fiscal solutions:
.....reduce spending on Education (5.3-billion),
....."borrow" local property tax revenue (2-billion),
.....increase personal income tax withholding by 10% (1.7-billion),
.....reduce Medicaid (1.1-billion),
.....what a joke.
I don't see any other choice than to trash millions of state employees or sell any assets. The sale of assets probably has challenges in regards to previous loan/bonds collateral?
"Thus, a devaluation of the greenback by 2/3rds against the Yuan is in order."
Who's going to love a junkie without cash?
.....increase personal income tax withholding by 10% BSR
It's never felt sooooo good to be unemployed....
I think a major rethinking of the role America used to play is in order in China...
a Take-Out, if you will.
Juvenal Delinquent (profile) wrote on Fri, 5/22/2009 - 12:21 pm reply Ignore user I think a major rethinking of the role America used to play is in order in China...
Substitute 'entire planet' for 'China' and you'll be much closer
Florida-based BankUnited (BKUNA.O), which was closed by the U.S. government and sold to investors, was conducting business as usual on Friday and there was no sign of panic among customers, its new chief executive said.
Banking industry veteran John Kanas, who also took over as chairman, told Reuters that BankUnited planned no immediate layoffs among its work force of 1,100 and expected to expand branches in its Miami base while closing branches outside the city.
BankUnited sees expansion ahead, no layoffs
| Reuters
.......
Who bought them again..... Ohhh... thats right.....
I totally don't understand why Cali muni debt is up here where it is. Anticipation of a Federal-level stick-save?
Europeans look fit and trim, but their finances look they overdosed on twinkies, lots of twinkies...
"30 Year Fixed 4.98% 4.98%"
How is Ben pulling this off? I thought for sure there would be a pop after yesterday. How much MBS can he buy and at what price is he buying it? The Fed balance sheet must be off the chart.
I totally don't understand why Cali muni debt is up here where it is. Anticipation of a Federal-level stick-save?
PIMCO frontrunning the intervention? That is Gross's MO...
"Law enforcement agencies and the FED are the only entities that can print money, and from all accounts many municipalities are turning to ticketry, to pick up the slack.
I know of a place where the coppers lie in wait of people sans seatbelt or avec cell phone, $168 1st offense, $300 for 2-timers. "
cars are four wheeled jail cells. you give up most of your freedoms when you get behind the wheel.
i love passing cop cars in the portland streetcar, wearing no seatbelt, talking on the phone.
J.D.: I think a major rethinking of the role America used to play is in order in China...
If I understand dryfly correctly, and I do my damndest, it happens when the slowdown of our purchase orders for tools and toys looks to be chronic. Since that appears to have happened, I can only conclude that there are dark matter forces at work. Cue Jay D. and Michael fer details.
GH,
Wanted to complement you on some interesting dialgue between you and mp last night. Nuanced and civil and damn interesting.
Now back to watching treasuries, perhaps the only indicator after unemployment worth guaging.
--bh
Those 19 Too Big Too Fail Hijackers are really into De-Nihilism...
@black star ranch,
All those steps were outlined in Arnold's plan B if the props failed. I think selling assets is a bad idea, because it is a one time revenue hit and does nothing to address the structural deficit. Cash flow has to be neutral or positive and the only way that happens is by laying off thousands of state workers (there are not millions, about 235,000). Most of the layoffs will come from teachers, education administrators, social workers. I expect prison guards, state police, and fire services to be hurt the least, but there will have to be a reduction there as well.
All of those layoffs will ripple through a state that already has 11.2%+ UE. CA may hit 15% UE by the end of the year.
It is better to be feared than loved. Therein lies the rub for the US going forward.
--- - .. ... .... . .-. - --.. (homepage, profile) wrote on Fri, 5/22/2009 - 8:15 am
the fed will not account for 9 trillion dollars.
Blogger: Page not found...
is this 9 trillion the money that is buying up the stock market?
where are all these stock purchases going?
in what account do they land?
Yup this is the biggest story not being addressed.
Apparently nobody at the Federal Reserve has any clue where the trillions of dollars that have come from the Fed's expanded balance sheet have gone. Additionally, nobody there seems to have any idea what the losses on the Fed's $2 trillion portfolio really are.
As for the pittance of $9 trillion in Fed off-balance sheet transactions over the past 8 months, well, yeah, that's also somewhere out there... Just don't ask the Federal Reserve where.
Rep. Alan Grayson summarizes it best "I am shocked to find out that nobody at the Federal Reserve is keeping track of anything."
"We may have more guns than Albanians, but what we don't have is their blood feuds.
Obviously you have never been to the mountains of eastern Kentucky and southern West Virginia."
I think you might underestimate the power and persistence of an Albanian vendetta. A recent book about Albania has the title The Cursed Mountains.
Our army is tired and so is our weaponry...
The playing field militarily is even, even if it looks like we have a huge advantage.
Since WW2, all it's been capable of, is Pyrrhic Victories.
Geithner speaks with forked tongue but you already knew that !
Geithner Plan vs. Paulson Plan
Page not found « The Baseline Scenario
Geithner plan is a scam, plain and simple. A brilliant scheme concocted again by Goldman and other big investment banks to enrich themselves with free government money.
- comment by Sam
Maybe one of those charts ought to be the TNX... or better yet, TBT.
hoedad says,
"Just looked at the Zerohedge video re FED Inspector General.
This poor woman is the one who has to clean up after the elephants. Everything was done on the fly with no thought of oversight and it's been dumped in her lap to monitor. Doubtful that she has the staff to really look into it yet, but there could be some job openings in the near future for those who like forensic accounting."
did you notice her ventriloquist handlers operating her from behind...
"this poor woman?"
give me a break!
km4
The difference btwn the G plan and the Paulson plan is that the G plan backs up the common equity as well as liabilities. The Paulson plan made no specific attempt to back up the common
LOL clean up after elephants!
Damn look at that 10 year. The end my friends?
Tim waiting for 2012 did you read and digest Page not found « The Baseline Scenario
if the assets are really toxic (the gap between book value and long-term expected value is big), the subsidy just isn’t big enough. He also shows that if the assets are only a little toxic, the government subsidy induces private sector bidders to overbid, making the subsidy bigger than it needs to be.
Kinda reinforces what I've been saying i.e. Obama's #1 economic mission ( in collusion with the 19 too big to fail banks that got trillions in TARP ) is to pump up great chunks of the Big Shitpile that's essentially worthless unless the peak real estate values of the bubble can be miraculously restored.
And they are doing a great con job !
“It’s almost worth the Great Depression to learn how little our big men know.”
~ Will Rogers"
"Molodets!"
OT, but one for Lawyerliz, on how/why BankUnited failed: RGE - BankUnited’s Sordid History
Blackhalo (homepage, profile) wrote on Fri, 5/22/2009 - 11:55 am
Quite the buying opportunity for any T-bugs.
Sorry, Mr. Jain can't take your phone call right now. He's busy putting the gun to his temple after fearlessly writing all those naked puts he talked about.
California, the only proposition that passed was the one preventing the legislature from
getting pay increases if there is a budget deficit.
Some odd observations that I had this morning (I'm in Boston, we have a budget issue of our
own, so I was comparing it to the problems in California):
California budget deficit, 21 billion. Massachusetts budget deficit, 1 billion. Ratio of
California population to MA population: 5.65:1.
A new bull market? No more Financial Crisis? Does Buy & Hold Work?
as written in more detail Maybe Buy And Hold Does Work
very compelling
black hat,
I still can't access Setser's blog. I assume it will be back up later. You will probably want to take note of the working paper entitled "China's $1.5 Trillion Bet: Understanding China's External Portfolio" which is linked in the blog. It is the May update to the January paper.
Quite good imho.
TNX may put a little crimp on some of Obama's Health Care, muni bailout or stimulus V3 plans.
Take a name asswipe: It is better to be feared than loved. Therein lies the rub for the US going forward.
the rub or the grace?
7th fleet in HK and a fieind of a friend of the CG invited me for a sub ride. Said to duplicate that crash surface operation that overturned a Japanese fishing trawler some years ago. I always regreted sending my regrets. He was so chuffed, coming back, as he did.
Sorry I didn't read it before I commented.
This highlights the fact that this is an issue of solvency and not liquidity. All the liquidity in the world will not save the banks without taking the whole system down with it.
This plan will not work and Timmay/BHO will try to drag this out until the banks "earn" their way out.
BH - thanks. I really value & respect MP's opinion. I just don't see a "recovery" happening until we address the underlying problems. MP focuses on measurable indicators. I focus on macro trends and longer term/historical patterns.
I saw this rebound coming, but I dramatically underestimated its power and longevity. With the strains in the bond/currency market, I just don't see how they can get the deflation genie back in the bottle.
I'm reminded of MrBeach's myfreelunch.gov site. Somehow I'm thinkin' those funding the venture might become a little less charitable, as the USD sinks and Treasuries plummet.
@ Tim waiting for 2012
This plan will not work and Timmay/BHO will try to drag this out until the banks "earn" their way out.
BINGO !
I like to listen to the neo-Goebbels on righty-tighty radio when i'm driving (thus a captive audience) for about 10-20 minutes at a stretch until the stench means I have to defenestrate my right to partake, by opening a window and threatening to jump out. I always manage to make it to another pre-set in time, but yesterday was as close as it comes to me jumping out.
Seething Pre-Secessionists are they, a cornered beast that nobody on the far right right, middle right right o far left right dare discuss openly...
oops
9 TRILLION dollars
.
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$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
anyone? anyone?
Speaking of submarine rides, if 80 is the water line, the USD is below the waves.
Anak (profile) wrote on Fri, 5/22/2009 - 12:45 pm reply Ignore user Take a name asswipe: It is better to be feared than loved. Therein lies the rub for the US going forward.
the rub or the grace?
Fear is used, and is more effective in other ways than a threat of violence
black hat,
Setser is back up: Setser
"One of the challenges that the US Treasury’s debt mangers face is that central banks — China included — aren’t buying ten year Treasury bonds at their old pace, only short-term bills. At some point though I would bet that higher yields on longer-term notes tempt central banks to switch out of bills and into longer term notes."
http://blogs.cfr.org/setser/2009/05/21/the-heavyweights-chime-in-…/#more-5434
hey if anyone is interested in following the dollar real time and you don't have a trading account you can do so here:
here
you can right click on the chart and get a pop up with real time rates of whatever currency that will remain on top of your other windows.
i don't have an account with these people but have been using their chart to follow currencies in my browser for years. it's real time and freee.
It is definitely better to be loved than feared, it is just much more difficult to achieve
As we say in CA gracias
At some point though I would bet that higher yields on longer-term notes tempt central banks to switch out of bills and into longer term notes."
Then Gentle Ben will monetise the short end. If he can.
"Fear is used, and is more effective in other ways than a threat of violence "
And how more graceful can you get than that?
Back to basics when faced with so much conflicting information
US will lose AAA rating: Pimco
And how more graceful can you get than that?
What puts fear in you?
"I think selling assets is a bad idea, because it is a one time revenue hit and does nothing to address the structural deficit."
....true UP TO THE POINT of repair, staffing & maintenance of the properties. With a State so far upside down, properties and its attached costs should be sold. They serve no purpose other then to use as "show" - likened to shelved trophies.
The State of California has only 9-pieces of surplus property available listed for sale. I call bullshit.
paulo,
Is America still AAA?
Não
May 21st 2009 | SÃO PAULO
The Economist print edition
Premium content | Economist.com
3.45%? Tick Tock. Your turn, Ben.
I agree with the comments made by many posters above: comparing a data series from an older pre-government backstop world with stats from today is really meaningless. Those old series may as well be abandoned now.
Given the explicit government guarantees given to the largest banks, banks are no longer what they were even a year or two ago and credit markets do not reflect much of anything. Any attempt by the government to withdraw those guarantees (IF IT EVER HAPPENS) will be the next crisis point. Having once extended funds in amounts of trillions to "fix" this crisis, the government will now be fully expected to do a similar thing in the future, each and every time and for lesser and lesser threats.
TAKE THE MARKET ON THAT!
you can't see what is ahead by walking backwards
you will trip gazing at historical stats.
there are major obstacles ahead that preclude a return to normalcy any time in the next several years.
Re-read the late night thread and the frustration amongst commentariat.
Ironically, while that was happening, I was writing this:
Practical Dad
Keep pluggin' mp.
For what its worth (admittedly not much), given what's happening to BAC and the 10 year, my guess is that the Dow sells off into the close.
LIBOR doesn't mean what you think it means (anymore).
"What puts fear in you?"
The raging inferno that was my country. And you?
OK, I LINKED THE WRONG SETSER ARTICLE. THIS IS THE ONE TO WHICH I INTENDED TO REFER {It bears a new title - hence some confusion}:
Brad Setser: Follow the Money » Blog Archive » China’s new barbell portfolio: Treasuries and commodities?
originally posted Thursday, May 21, 2009
And how more graceful can you get than that?
What puts fear in you?
Setting the ball on the tee at a tee-ball game...
Ten year yield now up to 3.45%
This is the link to the working paper: "China's $1.5 Trillion Bet"
http://www.cfr.org/content/publications/attachments/CGS_WorkingPaper_6_China_update0509.pdf
[Ten year yield now up to 3.45%]
Green shoot , or herbicide?
For what its worth (admittedly not much), given what's happening to BAC and the 10 year, my guess is that the Dow sells off into the close.
If I was a gambler, I'd bet the house on it.
Thanks dum luk.
Reading.
--bh
"Setting the ball on the tee at a tee-ball game... "
Fearful? Perfect! Nothing scarier than being a daddy, but somehow you get up there.
Jas, say it isn't true...you didn't did you?
"Green shoot , or herbicide?"
Not much headroom there for the risk premium or profits on those MBS. Particulaly when you throw any inflation into the bargain. What idiot besides the Fed and USGov would buy that over T-Bills.
"The end of FDIC guaranteed issuance,which was a high yielding alternative to the Treasury market, has forced the central banks back into Treasuries."
Across the Curve » Blog Archive » Some Treasury Market Thoughts
Does bond trading run a full day today?
dum luk (profile) wrote on Fri, 5/22/2009 - 9:59 am
The Economist Is America still AAA? Não
Hmmm did you hear that huge FED ( not FIR ) tree fall in the forest ?
The US financial ponzi scheme is a racket.....Only a small 'inside' group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of US financial ponzi scheme a few people make huge fortunes like the 19 too big to fail banks that were given trillions in TARP by Obama admin.
km4,
I post stuff I find interesting. I never assert that it's right.
price anecdotes from today:
12-packs of coke at 5 for $11.00 ($0.18 per can)
men's polo shirts at Land's End online: $13.65 each (30% off) plus free shipping
@ dum luk not a question of being right....its ALL about being thought provoking enough allowing people to think and see through the ruse like the mind numbing drivel propaganda we get from MSM and gov agencies like the Fed
Arnold's attempt to increase withholding will generate a negative return because IF he tries it every W-2 in the State is going to be amended to the nearest number of deductions commensurate with zero refund. That is far less withholding than is seen now. There's the magic of the California situation. We have reached the maximum taxation limit. Higher taxes will not produce higher revenues. It is kind of nice that we are doing it with 18th of our economy rather than the whole thing.
An interesting perspective on Fed reflation is this: the author argues that deflation is over based on TIPS prices.
I'm gonna devise something called the hearing aid shoppe indicator.
They--at least 4 of them on Merritt Island are apparently totally desperate.
The Miracle ear at Sears cut their hours and cut their hours, and then moved (or
were moved out of Sears) and closed for 6 weeks whilst moving somewhere else.
We visited a couple more today, and in one the guy had a McDonald's shirt on--first shift
at Mickey D's?--and was desperate to sell my mom something.
She left a brush they gave her so we went to another store after lunch in the mall.
Desperation even more obvious.
One would think that hearing aids are pretty recession proof, but I guess not.
A couple of empty stores at the MI mall, some few customers with a few packages.
We felt like the people in the kiosks were vultures ready to swoop down on us, and
drag our cash/cards out of our pockets. Foolish to make eye contact.
Hey, cool! Google Finance added a Bonds section.
Bonds
3 Month 0.16% +0.01 (6.67%)
6 Month 0.28% +0.01 (3.70%)
2 Year 0.88% +0.01 (1.15%)
5 Year 2.21% +0.04 (1.84%)
10 Year 3.45% +0.08 (2.37%)
30 Year 4.39% +0.07 (1.62%)
So, hold a 30 year mortgage or a 30 year bond? Presumably there is a bit of work and cost to put a mortgage together and to MBS it into a security, to get it into a capital gain. When you could much more easily just buy a Treasury holding mutual fund, that reinvests the earnings and accomplish the same thing for much less risk.
Re credit markets,and the collapse of Treasury bonds:
“The big lesson from the crisis is that it morphs,” El- Erian said in a CNBC interview today. “It morphs from one balance sheet to another, and the concern out there right now is that the next area that it could morph to is the public balance sheet.”
Pimco’s El-Erian Says Government Debt Draws Concern (Update2) - Bloomberg.com
Bob_in_MA (profile) wrote on Fri, 5/22/2009 - 1:46 pm
“The big lesson from the crisis is that it morphs,” El- Erian said in a CNBC interview today. “It morphs from one balance sheet to another, and the concern out there right now is that the next area that it could morph to is the public balance sheet.”
Byzantine_Ruins says:
10/12/2008, 06:33:05 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.
How much do they pay him at Pimco to be 7 months behind the most obvious thing in the world?
This is a repost, hoping for response from Rob Dawg or Nate, or anyone in Cali. Is this likely....NY state is heading down the same road, just at a slower speed.
"Treasury Secretary Timothy Geithner told a House committee in Washington the U.S.’s $700 billion financial rescue package can’t be used to aid cities and states facing budget crises...
Programs that would be eliminated include the California Healthy Families program, which provides health insurance to children of low-income families; CalGrants, which provides college tuition money to low-income families, and CalWorks, which provides assistance to low-income families. She said child welfare services programs also would face cuts, as would the state’s two public university systems. Schwarzenegger also may eliminate all funding for state parks, she said."
from Bloomberg this a.m.
So, hold a 30 year mortgage or a 30 year bond? Presumably there is a bit of work and cost to put a mortgage together and to MBS it into a security, to get it into a capital gain. When you could much more easily just buy a Treasury holding mutual fund, that reinvests the earnings and accomplish the same thing for much less risk.
I thought Treasury = Chrysler transmission.