CR, what defines a bank failure. In the '30s many of the banks had a single branch. Failure was counted as one. How about banks with multiple branches? Still counted as 'one?'
Thanks,
MiTurn
CR - (we have lots of questions tonight) - heard anymore about Sovereign? And what happens if a foreign-owned bank goes under - not that Sovereign will of course - but is it just like any other US bank?
Bond Girl
There are different kinds of tests based on different theories of intelligence.
I think the idea of testing intelligence is BS, personally.
I in general agree with you, but if you take a whole battery of tests with personality profiling thrown in, it can be revelatory. I learned a lot about myself. In no way should you let the tests define you though. I have a high IQ, but am a stay-at-home dad. I think the rat race is for suckers, but my choice isn't seen as 'smart' and I don't think most men are capable of doing what I do. Nor do I want them too. I am an aberration to the norm. The old adage of Thinker/Doer/Watcher is pretty apt. People have bits of all, but most fall into one category. I am equally divided into the Thinker/Watcher role. Nothing would get done, if my personality were more common.
Hey Rocky - a little late replying on the last thread - in case you were wondering:
Yah, Mook. I think you're right. But, I think the inflation trade is coming in vogue now. Who wants to play chicken with the USG?
Oh, Wall Street does. You can be sure of that. These are, after all, the same people who live and work in America and yet are cheerfully buying up CDS's on the US government. We're talking a level of amorality that would render Richard Nixon speechless with awe.
The problem I see with that trade is that, if it comes down to brass tacks, the Fed and Treasury will throw every last one of those banks overboard to save their own skins. If it's between putting all of Wall Street out of business and being unable to finance the national debt, I have to believe that even a group as beholden to those idiots as our government seems to be will find the stones to opt for the former and hope for the best.
And that level of credit destruction would mean instant deflationary depression. Which is why I'm not sold on the inflation trade, at least in the near term. But at the same time, I can't have all that much confidence that (a) Ben, Timmy, and Obama will swallow that pill if it comes to that and (b) it would ultimately work. It didn't for Great Britain in '92. So maybe the inflationistas are on the right track.
Bottom line ... if I were trading for a living in this market, I'd probably make Jeff Macke look like the Dalai Lama.
MiTurn, my bank here has a cease and desist as of two months ago, is no longer microfishing their checks as they can't afford the 600 bucks to get it fixed and they just shut down four branches...of course it is not technically a "bank failure"...
"Oh, Wall Street does. You can be sure of that. These are, after all, the same people who live and work in America and yet are cheerfully buying up CDS's on the US government. We're talking a level of amorality that would render Richard Nixon speechless with awe."
I'm assuming you are talking about Government Sachs?
Well broward it is just a checking account and it doesn't have much in it. I've already cashed my CDs with them. It's too bad, because they were a good bank for the most part, community oriented and local...CRE has killed them/
You should add another bar with a different color on the deposits/assets graph that includes the stuff RockyR mentioned (11T fed, 1T TARP, 1T stimulus thing), plus add in the PPIP, loan guarantees, and AIG pass-throughs to get a true measure of the cost to the taxpayers. Just counting FDIC DIF losses does not begin to measure the extent of the damage in the last year.
the folly of using other measures for PE is illustrated in this e-mail sent to me by the WSJ defending their use of operating earnings PE as massaged by Birinyi associates. note where they say "S&P classifies some one time changes as operating expenses and Birinyi does not."
date Thu, May 21, 2009 at 12:53 PM
subject RE: SP 500 PE is 62, not 15 (KMM19898265I72L0KM)
mailed-by wsj.com
hide details May 21 (1 day ago)
Reply
Follow up message
Dear (otis),
Thak you for contacting Daniel Bernard of The Wall Street Journal
Online. Mr. Bernard has requested that the WSJ.com Customer Service
dept. acknowledge receipt of your email.
We forwarded your comments to our Markets Data Group, which replied with
the following explanation:
"Our source, Birinyi, has verified their figure to be correct based on
their methodology. Birinyi’s explanation as to why their number differs
from S&P is how S&P classifies some one time changes as operating
expenses and Birinyi does not. This will lead to different values.
Neither method is “wrong”, it is just different methodologies. In the
end it is really at the analyst’s discretion as how to categorize
one-time charges. Birinyi & S&P differ on how this is done.
We use Birinyi as our source for P/E data for the S&P 500, Russell 2000,
and NASDAQ so we have a consistent methodology from one source used
across all three indexes so an apples-to-apples comparison can be made."
Thank you.
Best Regards,
Wall Street Journal Online Customer Support
Please email your comments or questions to:
email address: onlinejournal@wsj.com"
who is birinyi?
"Birinyi Says S&P 500 May Surge 88% in Three Years (Update1) - Bloomberg.com"
The history of my bank is a local "boy" made good. I've heard the good, the bad and the ugly across the bar about him. The bottom line is, they got sucked into the dream that property on the beach that was worth 20K an acre before the boom suddenly became worth several hundred thousand an acre during the boom. The St. Joe Corporation perpetuated that dream by selling a whole lot of swamp acreage for the new and improved airport to nowhere...Interestingly enough the lead contractor is...budddumpdabum...KBR..
LOL broward, I doubt my piddly little CDs hurt them, they shouldn't have offered that "one time cash out no fee option"...I took full advantage when I saw where this crap was heading.
homeday, nah, you could have added insight I'm sure
For a reference point on Real Estate here, my parents paid 76K for this house in '98. Granted the house in piss poor condition, had been taken in a divorce by a redneck exwife and her two spawn. She moved out and left her spawn. They proceeded to destroy everything they could including wood ceilings. My parents put at least 100K in before all was said and done but they did a great job. When I had it appraised two years ago to refinance Mom's mortgage into my name when she died they appraised for 210K. Granted that was bubble price, but Zillow is still giving me 173K and feasibly I could sell for 150K. I'm above water by 20-30K with no other debt. I love the house, the location and the amenities here. I have almost a full acre, inground pool, sunken living room with monstrous stone fireplace, three bedrooms, two baths, inlaw apartment that is all but finished and storage building. All on a dead end street with two retired neighbors.
Avl Dao,
It might help you understand what I say if you know I have degrees first in electrical engineering, and then in economics. I am not an apologist, and I try not to be a reactionary who dismisses everything based on association.
Economics is not a science, let alone a dismal science. It should be the meeting of math and psychology, but it is mostly a platform for ideologues who search for support in their positions with econometrics without even bothering to question if the system is in steady state. Economics as a field has a lot it can learn from other fields that handle the same challenges so much better.
However, when you find yourself unfamiliar with the terms — a language or system of units in its own right — it is your fault and not the system's for the misunderstanding.
As for the distribution of debt, I did find what I was thinking of. It shows the debt by quintile but the catch is the survey is triennial which is why I probably mentioned the subject of credit is too often neglected. Link here
If you want to find some data, I don't think there is a country in the world that provides as much or as good data in a freely accessible manner as the United States. If you hang around this blog, you can't help but picking up great data sources.
As for my comment about how the distribution of debt "does not matter at this point". I would break the scenarios down into 3 regions.
- Debt is very low, distribution does not matter because at its most concentrated the impact on the economy is inconsequential
- Big middle area where debt is moderate and distribution of it matters to understanding the economy
- Debt is very high, distribution does not matter. The thing about debt growth, is that it also provides income growth to someone, somewhere in the economy. Even if you yourself were the model credit-prude and had zero debt with high savings, your income is jeopardized because it depended on someone, somewhere who wasn't prudent. We've crossed a critical point/a pole/there is sustained positive feedback. The losses are just much bigger than you comprehend at this point apparently.
There are endless analogies for this. Consider one car hitting another stationary car.
- at low speed, vector doesn't matter, no injuries
- at moderate speeds, vector does matter, side-impact could cause a lot more damage than head on
- at high speeds, vector doesn't matter, everyone dies
MiTurn, banking has changed - no question. A bank today can have 100 branches or none (internet only).
Obviously there were many more banks in the '20s ... because there were one branch only banks. Unfortunately we don't have the data for assets and deposits pre-FDIC.
LIz, funny story about the dinosaur. About 20 or so years ago, when I was in my early 20's Mom and I were at the grocery together. A band of kids was going apeshit over a Barney display. They had the aisles blocked and I was not in a happy mood. I snarled at them that "Barney's dead"....before remembering my Mom was right behind me. To my surprise, instead of telling me how awful I was, Mom snarled "Yeah, and I killed him":...And I wonder why I am the way I am...haha...God I miss that woman...
I think the feds know that to destroy wall street is to destroy themselves. Should the world extend a middle finger to our treasury, we are just f'd with a capital F. I don't see how we're not. Talk about being sold up a river.
One could say soft default (inflation) is the lesser of two inevitable evils. Funny thing, though. Inflation on the scale we are talking about is very bad for the banks. Sticky situation, indeed.
Damned if we do, damned if we don't. Our best hope is for the world to say: we love the USA and just let it ride. Not gonna happen. Hehehe...
Barney can still be found on reruns but my understanding is that there are no new shows.
That show threw off all kinds of cash. Middle kid has done some professional theatre and actually was in a show with the guy who played Professor Tinkerputt on Barney. That guy did a beautiful Fagin...
He owns a paid for house in central CA that he referred to as "The House that Barney Built".
Personally didn't care for Barney but it was nice to snuggle up to a kid for the half-hour and enjoy their world.
Has anyone compared failures between now, S+L, and Depression as what percentage of banks in existence at the time failed? This could be very different than just a body count.
EHP, after about a year here on CR and a couple years of researching this crash and probably about ten years of dabbling in trading on and off; I can honestly say that economics is BS. The bottom line is, you can't accurately predict what people might do. They can come up with mathematical models, waves, tech analysis blah blah but there is no way to know which the herd might stamped on a moments notice for whatever reason...People are....well...animals. They are no less unpredictable than a wild animal when faced with certain circumstances.
Rocky, I've been thinking about this for quite awhile. Who really thought when the debt crossed ten trillion and would take us several hundred years to pay off, that we would be paying it off? Worst case scenario in my mind is sovereign default and a return to making things ourselves eventually...Personally, I can live with that...We are one of the few countries that has the resources to feed their own, push come to shove.
I still have a few Barney targets I picked up at a gun show many years ago.I endured "Teletubbies" and my daughter was given a taking "La-La" doll when very young....when she FINALLY lost interest I took it to bring your own gun day at a firearms class and LA-LA faced an 8 person firing squad.We used or rifles first,then switched to pistols...the smallest rifle mag was 20 rounds and by the time the pistols were empty the largest piece could hide behind a quarter.Closure can be sweet.
"Economics as a field has a lot it can learn from other fields that handle the same challenges so much better."
That's the truth. My college is mostly quantitative (10 years in various majors, CE, EE, CS, MIS). I'm still amazed that so many economists couldn't anticipate a feedback effect on housing prices. Mentally, I use current and voltage analogies.
", you can't accurately predict what people might do."
Not exactly true. You can work out likely paths and probabilities. For instance, I know that long-term, production has to equal consumption. I know that if we're truly experiencing productivity, total work hours have to fall somehow. The distribution of how they fall is in question.
Likewise, it's fairly easy to see that the Fed deliberately pursues a path which attempts to offset inflation with an equal amount of deflation, to maintain equilibrium. Knowing that, you can make fairly good guesstimates of their actions at certain times.
I would say, yup, but I have three children who'll have to make their way in this world. In some ways, it's saddening and yet perhaps they won't have some of the BS that has rather twisted our society in the past several decades.
Teletubbies was one of the damnedest, dumbest kid shows that I ever saw. I refused to let the youngest one watch it and would make sure that he was occupied when it was on.
Homedad, to a certain extent, yes. I think too many economists discount human psychology though. They get so caught up in numbers they forget the human aspect.
Broward, sure they can, and I'm sure with some accuracy during "normal" times. That is not to say that when a monkey wrench gets thrown in that all bets are off...That is my opinion of where we are today...Nobody really knows how people might react. The paradigm is changing..
" Who really thought when the debt crossed ten trillion and would take us several hundred years to pay off, that we would be paying it off? "
The US has never paid off the debt. If you look at the historical debt since 1790, there's a strong correlation between high deficits and wars. Typically, the U.S. engaged in a war, ran up enormous debts, then froze spending after a war ended. Over a period of decades, the relative size of the debt to economy shrank, then another war happens.
The post-Cold War period is unusual in that the gov't maintained deficit spending.
And actually, you can - with some thought - predict what some people will do. A good negotiator can figure out what the other person wants and plot a course that ends with some satisfaction for both sides.
homedad, understandable. I don't have kids which gives me a different outlook. On a silver lining tip, perhaps we will return to "simpler" times where learning and knowledge are prized, intelligence and true innovation rewarded? I know the way we've been living for the past couple decades is not condusive to the advancement of the human race. The I've got mine, screw you and yours attitude has gone too far. The "incuriosity" and disparagement of "education" or learning, the unwillingness to bother knowing your neighbors name etc, has not served us well. We function best as a herd animal...not lone wolves.
You might be able to predict human behavior, but you can not predict a certain turn of events, and that's why I agree with Kristina - you can't predict markets or graph patterns if you can't control the external variables.
If it were all mathematics, everyone would be making a killing in the options market. Instead, most people lose their shirts.
"..Nobody really knows how people might react. The paradigm is changing.."
I'd say that's not true. Bernanke knows what he's trying to do and I think I understand it. Ultimately, the total amount of money paid out as interest can't be larger than economic growth in the same period, or you lose equilibrium. So Bernanke's goal is a combination of outright debt default + reduction in total interet payments through lower interest rates.
Homedad,I had my girl at least 20 out of 24 hours the first two years and never finished a cup of coffee while it was hot. Teletubbies is endurable if you are exhausted.La-La was hit with 160 rounds in less than 30 seconds,instant confetti...I used my Calico with the 100 round magazine and switched to my .45.The biggest piece really was smaller than a quarter...
broward, that is kinda my point. The idea that we could pay back the almost eleven trillion we already owed was ridiculous. Anyone that thinks we had any intention of paying it back is most likely delusional and listens to Lee Greenwood on the regular...
Dunno that I agree with the theory about engineers being more/less exciting than economists.
It also depends on you. And the personality of the other person. If the other person truly loves what they're doing, then that in/of itself becomes infectious and makes it more interesting. I'm horrendous with computers and programming but had a phenomenal conversation with a software engineer on a flight about two years ago.
He was jazzed about what he did. It was a really fun conversation.
Mystery Science Theater 3000. Plot-line involved a guy stuck in Outer Space with robot friends and forced to watch old campy 1950's and 1960's movies. They would just comment through the whole movies making fun of them. I believe they may have put out MP3s of the same schtick on new movies.
Some reason my favorite episode I saw was a Christmas one where they showed Santa movies. Only saw it once as my family was going to midknight mass and I happened to be watching on a Christmas eve...
TJ, I'm just a bartender with too much time on her hands. From everything I've read and studied and my own personal observations I see deflation/stagflation as Nouriel suggest. Yeah, they might overshoot and create inflation, but I see that as less of a risk than deflation at this point. They raise prices and the already gun shy, half jobless consumer goes into their turtle shells even further. This doesn't serve the PTB so I can't see it happening, at least not near term. To answer your question though, no. I really think the elite, top five percent have screwed the pooch irreversibly this time. We had the largest boom ever and the only true winners the top. While profits were breaking records in just about category, workers saw no change. In fact, they saw benefits being slashed and wages stagnating while productivity soared and corporations saw huge profits. I view the American consumer much like I view whores, eventually even they grow weary of being used for a pittance...and so, there we stand. Who blinks first and who does our POTUS stand with?
re: Economics can't predict everything
I think those who say such a statement, end up telling a lot about themselves and little about economics. Free will, fate, philosophy, inconsequential to matters at hand
Here's how: You attacked using an extreme case, so the easiest rebuttal is to do the same.
This credit bubble and its consequences were foreseeable and preventable. It doesn't matter that the economy is "so complex" it doesn't matter that individuals are full of spunk, free will, and unpredictability.
Obviously there is a precision limit, but you can still be accurate. So you narrow it down bit by bit. Start with what is possible. Then narrow it down into decision trees and what's probable. The beauty is that probability of choice matters very little, it's about what actions are sustainable. You may choose to eat a $100,000 dinner which I consider improbable as a singular decision, it is possible. However, the chance you choose to eat a $100,000 dinner every day is insignificant. The more you know about what won't happen, the more you know what will happen.
On a side note, we learn much more from system failures than from stable steady state functioning. This credit bubble spanned decades, and the burden of proof on a heretic was very high. The less probable this bubble was to ran so deep and and for so long, means the higher probability we can prevent the next bubble with justified conviction.
broward, no offense, it's just the one's I've known have been kinda "special"....I even dated one back in the nineties, he worked for McDonnell Douglas...super strange guy but he drove a bangin' new vette. He was very nice, he just really had a hard time interfacing with other humans...I've found the same to be true for the ones I've known since then.
It would require some radical revisions in thinking such as property rights and ownership. Can an older person with no more money be allowed to live in an empty home free of charge? What about squatter's rights?
Rethinking of the social contract between generations.
Rethinking of the military needs versus wants with corresponding changes.
Honestly, I'm not a fan of O but what the hell, his attitude appears to be that if he's gonna have to buy an auto company, he should be able to make the call on what type of vehicle makes the most sense in terms of national interest going forward.
Am I gonna like the new 2011 Obamobile? Probably not, but things have to change.
FWIW, I see a system over-leveraged beyond all salvage, and one which is now feeding upon itself to its ultimate demise. As you've noted, the debt's well past payable and still headed north at breathtaking speed. Too many current & soon-to-be TBTF zombies feeding at the public trough. As with the housing bubble, when something is blatantly unsustainable it will fail -- it's only a matter of time.
EHP,
Good post. May I ask you if you think what is happening economically and fiscally is contained only to the study of economics? I see convergence on many different levels, I don't see the economy as the only tree in the forest about to implode so to speak...
can you describe a path forward that doesn't involve some kind of inflationary/deflationary collapse and/or sovereign default?
Anything that knocked about 5-10 years off the life expectancy. The Anglo-Continental concept of retirement was initially made possible by post-wwii reconstruction. once that was tapped out, the "growth" came from future consumption via debt. the demographic change would the greatest inter-generational transfer we've seen and go a long way to fill in the debt "hole."
but of course, all the various forms of deleveraging (e.g. cramdown, default, inflation, etc) are actually achieving the same result, albeit more stealthily, since the largest block of lenders by far are the private/public retirement accounts.
This credit bubble and its consequences were foreseeable and preventable. It doesn't matter that the economy is "so complex" it doesn't matter that individuals are full of spunk, free will, and unpredictability.
EHP:
"Spunk"?
Dude, that's a word I wouldn't expect to read in one of your sentences.
You sound like Captain Kirk in a monologue to some arrogant aliens.
No offense. You're usually very precise and clear in your writing. Just made me actually do a physical double-take when I read that.
Actually, I used to do some rudimentary decision tree analysis when evaluating a claim evaluation/negotiation. But there are still a few folks who'd rather piss in their own coffee than make the most rational decision.
Thoughts from a few threads back:
I took the time to read Bernanke's speech. It seems to epitomize everything I despise about some of our leaders. They lead the perfect lives. I can't believe he gave a speech on unpredictability; and the only thing personal he had to say was that his live was unpredictable in some way, yet if you think about it he has lived such a dull, boring, and predictable life. Does the man ever go outside? His most memorable experience at college was arriving there and wondering "what have I done?" Was he expecting everyone there to be so engrossed in reading and studying?
No doubt he has worked hard and must have decent mind... but has the guy ever been put in an uncomfortable situation? College is supposed to challenge every notion you have about yourself, and your dreams.... my dreams completly changed from freshman year to senior year; and my dreams and hope for my life change.
To me college seems like a good memory; and I would advise every graduate to reflect and think about all the joy they had and tlel them "welcome to life"... college is a phase of continous progress. Yet when I read his speech I see a guy stuck the same place he was 20 years ago as far as his dreams, etc. I can't believe he challenged these graduates to be in uncomfortable situtations! His uncomfortable situtation is running the Fed?
Makes me think the "elites" really do live in a bubble, where their life arc is set and they happily follow it without challenging why they ar egoing to Harvard/Yale and why they wnat to have the perfect life. It's almost like they have the goal of being a stepford family... 2 white picket fences, etc. Seriously... you will experience situations in life that are adventures... you will meet people who will make your life more adventurous (for better or for worse...)
Disappointing, since he gave no insight into "who Ben Bernanke is..." rather than "I'm a boring bookworm who has very little life experience and take very little risks...". Now I know not everyone is good with sharing personally; but just seems like something a good commencement speech wuold be full of... although no one will remember it 6 months from now.
Sad to hear he has never had any type of adventure in his life... or perhaps the biggest adventure he had was the time he cheated on his wife and he wasn't supposed to tell anyone about it or something... I dunno... is he a real person? He really weilds power in our government?
Well, if you're going to open that can of worms, a real pandemic or short nuke exchange would probably do wonders, too. Not exactly what you'd call cheery alternatives.
It's no secret I've been a big believer in high inflation for some time here. You could go back to posts of last winter and see that smart people here were just roasting me for believing in commodities, oil, gold and silver. But in December, we got confirmation that inflation is alive and well. Then, it went into hibernation for 2-3 months and these areas didn't do all that well.
Just in the last 2-3 weeks, it's come roaring back. Remember...the markets should be a leading indicator. They should tell you about big inflation well before it actually gets here.
So, what has happened in 2-3 weeks?
Spot oil has increased by 15-20%.
The Canadian currency has rallied by 10-15%. That's a big move for a sleepy currency. It should wake you up.
Spot silver and gold have rallied by 10-15%. Miners have really been jumping this past week.
Copper, aluminum and other industrial metals have rallied by 10-15%.
Food has been perking up lately, especially this week. Watch DBA for food trends.
Nobody believes this is just a global inflation story. Smart people think it's also a dollar devaluation story. The problem is that most other major currencies (except the loony) aren't much stronger than the dollar. All currencies are sinking at the same time, relative to real assets.
It makes sense that we need devaluation and high inflation to lift real estate prices and get residential and CRE markets moving again.
Most stocks will not do well in a high inflation environment, especially tech. If you want to make guaranteed profit, short tech (PSQ) and buy oil, metals and food (DBA, DBB, XLE, OIH).
Thanks to CR for his journalism, talent, dedication and stamina. I just could not do without Calculated Risk. The last two weeks have reminded me how profitable the insights of this site can be.
People can mask financial difficulties usually many months before finally SHTF and this depression is only about six months old. Bank failures might start accelerating rapidly very soon. Obama administration wasted the ammunition to save the Wall Street greedy speculators and their too big to fail-banks.
So many governments worldwide are seeking money from the bond markets that it will lead to oversupply and that means yields going sky high.
I ran this by some friends last year, before things started getting bad. Was told to go climb back under my rock, that I had no concept how the real world worked, and oh by the way, the banks and GM were fine.....whatever...my point that I can't get people to understand is that collectively the US is having an identity crisis brought about by the endless summer of the 90s and the cold winter of 9/11. The gods of consumerism didn't save us. We woke up to the fact that the world might actually hate us. Then Katrina came, and it seemed we were being punished for our pride. Selfish the herd may be, but it is aware enough to know that the grassy meadow has turned to thorns. People are searching for answers, all ages. That is partly why Obama got elected. The crisis of confidence extends to the core of the liberty apple. Replacing faith in banks, won't cure what is wrong with the people.
The only problem with that statement is that the administration really hasn't saved anyone. Everyone they've given money too is still either failing or at risk of failure.
Why do east-asians think that they are smart and analytical when they have been circle jerking and pauperizing each other for the last 2,000 odd years? Why so much certainty about abilities that have kept you static for 2,000 years?
Morgan Stanley to Boost Executive Salaries as Bonuses Decline - Bloomberg.com
By Elizabeth Hester
May 23 (Bloomberg) -- Morgan Stanley, the sixth-biggest U.S. bank by assets, will increase some executive salaries and double Chief Financial Officer Colm Kelleher’s pay as bonuses come under scrutiny from the Obama administration and lawmakers.
The majority of executives will get raises, according to a person briefed on the decision. Chief Executive Officer John Mack’s base salary is unchanged this year, according to a regulatory filing yesterday.
One way or another, there's going to be a reckoning for the financial cock-up. It's going to be painful and while I don't like the idea of saving every lousy financial institution and guaranteeing everyone's verklempt decisions, the O admin will have much more good faith on it's side afterwards.
Think of what folks thought of Hoover adn the republicans in 1932. Much of politics is perception.
Lucifer,
I am in the fortunate position of not having to deal with east-asians as a singular entity, as such I am unprepared to answer your question. I don't have the breadth of knowledge to understand all the 'tribes', nor does with depth going back 2000 years.
The [$27.2 B] Illinois Teachers’ Retirement System, Springfield, will double its hedge fund allocation to 5% of total assets and will increase its private equity target to 10% from 8%....
Private equity commitments made by trustees at their meeting today were $100 million to distressed debt fund Blackstone/GSO Capital Solutions Fund LP and $50 million to existing manager Energy Capital Partners’ second buyout fund focused on the power generation and energy sectors. Energy Capital Partners managed $7 million for TRS as of March 31. Funding for both commitments will come from cash and rebalancing.
How nice of Steve Schwartzman to help out the little old teachers from Illinois. Lots of public pension money moving from equities and US bonds into PE and hedgies, as part of the new FY rebalancing. Hopefully, these funds are under the Obama-Fed umbrella.
Canada Pension Posts Record Loss on Market Slump (Update3) - Bloomberg.com
By Doug Alexander
May 21 (Bloomberg) -- The Canada Pension Plan Investment Board, the country’s second-biggest public pension manager, reported a record loss because of slumping stock markets.
The investment decline for the fiscal year ended March 31 totaled C$23.6 billion ($20.6 billion), or 19 percent, Toronto- based Canada Pension said today in a statement. Its reserve fund was valued at C$105.5 billion, a decrease from C$122.7 billion a year earlier.
....Canada Pension had C$60 billion invested in equities, or about 57 percent of its assets, a higher percentage than Ontario Teachers’ Pension Plan and Caisse de Depot et Placement du Quebec...
...Over the next five to 10 years, the fund expects stocks to outperform bonds, Denison said in an interview. “We see a reasonable amount of risk in bonds over the next three to five years,” he said....
...Canada Pension is “no longer involved” in a joint bid with Ontario Teachers for BAA Ltd.’s Gatwick airport in London, Denison said. Canada Pension is interested in buying established shopping centers and major office towers in world cities, Denison said...
Sorry for breaking the concentration of this thread... everyday something I read here makes me think more and more about the way people are living and society.
Talking about "interesting". South Korea former president has killed himself over scandal and money laundering... from news reports my wife is watching it looks like $60M that was given to his whole family in illicit payments.
I hate to say this but the corrupt south korean system seems to work better than our system.. how many bankers or politicians have committed suicide.. yet?
The administration is already on the verge of losing complete control; there's no way they make it through one term without events totally overwhelming them. FWIW, it would've happened regardless of who was in charge -- it's that deep a hole.
"Talking about "interesting". South Korea former president has killed himself over scandal and money laundering... from news reports my wife is watching it looks like $60M that was given to his whole family in illicit payments."
It should be interesting how the British MPs handle their scandal...
LOL Vonbeck...I live in a very red area of a previously red state (panhandle Florida). Two years ago when I was warning of imminent doom I was told I was a nut, everything was fine, the stock market was doing great and Bush was a God. Every third car had a "W The President" bumper sticker on it. It's amazing that I was still being told this up until November last year....All of a sudden the debt was of interest, the Dems were to blame because they "controlled" Congress and those "libs' caused the bubble via F and F....The disconnect is astounding. People will believe whatever they wish to believe....The idea that both parties are simply opportunistic theives if foreign to them..
I thought so. Thanks for telling me. I share a 1/2 with you. You could say I am bi-polar, but not the standard definition. I am split so evenly between the hemispheres of my brain I don't even have a dominant eye. I cycle through intensely creative periods to intensely analytical periods. Except for my wife and kids, I could disappear completely.
homedad43,
I have only seen a few episodes of Star Trek, mostly TNG and Voyager in the last few years. I did see the modern movies all at once a year ago, great stuff. Don't know Kirk, but I'm aware of the peculiar ways I write and I'm not offended.
Decision tree, negotiation. Go ahead and call it Game Theory.
Similarly OT, but I found yesterday that some budding first grade Tony Soprano paid a fourth-grader to do a number on my youngest.
The fourth grader - Guido - walked up to my kid and asked if he'd fake a fist fight so that he could collect the money from Tony Soprano. Guido told the principal that he's staged three previous fights to collect money from Tony. Tony wasn't angry with my son, but doesn't like one of my son's friends so he wanted to take him out to send a message.
Stunning on multiple levels.
That a first grader is paying someone to do his dirty work AND only paying upon witnessed completion of the deed.
That Guido is running a scam on Tony, faking fights to collect.
That Tony is willing to cause collateral damage in his effort to deal with his enemy.
Wow. Just wow. It's being dealt with.
Yep, economics is mostly human nature and not math.
Here's an item that seems worth noting, from the Washington Post:
"Swat, known as the Switzerland of Asia, was once one of Pakistan's leading tourist destinations. With its braided mountain streams, golden fields of wheat and soaring, tree-studded peaks, the valley was considered a national treasure, and the local population was renowned for its moderation.
But inept governance and the growth of radical Islamist groups in the nearby Afghan border region combined to make Swat a haven for militancy in recent years.
In late 2007, it became the first major area in Pakistan outside semiautonomous tribal regions to fall under Taliban control."
Reads like the opening lines from one of nova's stories.
There was a Twilight Zone episode I saw when I was young...the guy with glasses who lives after the world ends, is ecstatic he can finally read in peace, then steps on his glasses...I loved that idea. I was ready, had multiple backup pairs. Seemed like paradise.
Extreme INTP = Many characteristics are much stronger than expected.
I did say something about an inability to accept BS. Let's just say it is much stronger than you think. Another one- I could make my teachers look stupid when I was 9 years old.
I was given much leeway in school until high school (10-12th), and then I became imprisoned. Hated everyday. But early on, after first grade (I was put in slow readers and because I was a lefty/ambidextrous, considered a dunce until testing showed I was reading at a sixth grade level in first grade) I was just sent to the library. Got to run the spotlight for highschool drama club in sixth grade because I had tested out of everything. Played spades and poker through high school when I could. Other wise it was pure torture.
Once called my boss "a dumb son-of-a-bitch" some even fouler phrases when he publicly hung me out to dry; he pulled rank on me after we argued on a course of action and when his method screwed up the operations, he did me good.
Thought I'd lose my job, but at some level, it pays to be competent. He apologized.
Something happened to me in high school. I got claustrophobic. They blocked all the windows in the classrooms, and I felt like a trapped animal. Teachers hated me. I wasn't a prick, I showed respect, it is just that I didn't agree with the pictures they were painting. Everyone kept telling me to wait until college and then life would get better...huge disappointment. If I had it all over to do again, would have dropped out and started writing when I was 15.
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) - The U.S. economy will begin to grow again in the next few months, most economists agree, but it may not feel like much of an improvement to the millions who've lost their jobs, businesses or homes.
By almost all accounts, the recovery from the worst recession in several generations will be sluggish for the next year or two or three, with the economy firing on just one cylinder - the Bernanke-Obama stimulus.
Even the most optimistic analysts believe it will be a tough slog for the economy.
The usual sources of growth seem missing: Consumers are paying down debts, businesses aren't investing, and foreign markets are deep in recession. Any growth this year is likely to come from the government's stimulus spending and from the turn of the inventory cycle, but those are temporary factors that will fade.
The site provides both raw data as well as widgets for getting updated information on various topics such as H1N1 flu or the FBI. But if you're really interested in having a data set of the locations and characteristics of the world's copper smelters or past East Pacific storm tracks, this is your new one stop shop. They're even taking requests if the data you're looking for isn't here.
This probably isn't useful to too many people, but if it's useful to you, you know how cool it is.
Absolutely. Homemaker/writer/short-order cook/computer tech/etc....why I use the title of philosopher. I have never been able to settle for any one subject. Jack of all trades, master of none. plus huge empathy. I have been told I would make a formidable psychologist, but I am just a good listener. Everyone has stories to tell if they can find someone to listen. I am currently writing 7 novels. It will be a miracle if I finish one. But I like to try. Poetry however is nice and simple. Lots of that, but nothing of interest to the outside world, and I don't like to share. Writing is very personal. Facts are easy to throw out, but writing reveals how you think. I never like to be labeled.
Buyers looking to purchase foreclosures should still have plenty of opportunities. Only 30% of bank-owned properties are listed on the multiple listing services, says Rick Sharga, senior vice president at foreclosure listing firm RealtyTrac. He figures banks still own as many as 500,000 properties that they want to sell but haven’t put on the market.
A home many not be listed because the bank is wrestling with title, repair or owner right of redemption issues. (Several states such as Michigan and Wisconsin give the previous owners the chance to buy back a home that’s been foreclosed on). Banks may also be holding houses off the market because selling them now would lower prices even further. Foreclosures typically sell at a 31% discount to similar homes whose owners aren’t in distress. Listing all those homes now, Sharga says, “would have a devastating impact on inventory and pricing.”
According to the latest data, the unemployment rate in the US was equal to that in the EU-15 in March, and is now likely to be higher. Writing in the NY Times, Floyd Norris refers to the conventional wisdom that flexibility inherent in the American system — it is easier to both hire and fire workers than in many European countries implies that unemployment should be lower (at any given point in the business cycle) in the US than in Europe.
Although this is the conventional wisdom, the research on which it was based (by Lazear and others) has long since been qualified or refuted. I looked at this in the context of the debate about unfair dismissal laws a few years back. Although the early research supported the simple view that more flexibility = more jobs, later research yielded the conclusion that employment protection laws lower the variance of employment and unemployment but have no clear effect on the average levels.
we are all messed up in some way -- damaged and/or conditioned as children long before we achieve the "age of reason" or any reasonable measure of self-control. in fact, the frontal lobe development of the human being is not completed until well into our twenties, so we have faculties allowing self-control, long term planning and execution long after the comparatively short-term focused and evolutionarily-older portions of the brain, much less the comparatively-ancient, and very short-term, emotionally-driven limbic portions of the brain, which develop well in excess of both the cerebrum and frontal lobes. the recapitulation of evolutionary history is far from over at birth... it has in fact barely begun!
luckily the amalgam of complexes, defense mechanisms resulting from pre-rational traumas, hormonally-driven adolescence, hardwiring of the brain to seek out emotional peaks and valleys through risk-taking behavior, etc. is navigated, somehow, by enough of us that we can more or less function in society with our fellow damaged human beings.
Lucifer,
I just prefer humiliating and destroying those who stand in my way.
The empathy gets in my way. I have that rare gift of being able to see through the masks people wear and to pick out individual threads that hold identities together. I misused this power once and it had devastating consequences that have stayed with me my entire life. I choose exile in the grey wastes. I don't want to serve in heaven, or rule in hell. They are the same to me now. Let me roam the wasteland of dying stars, a black wolf in the mists of time.
It's very repetitive and it's organized with bookmarks in PDF so you can hop to what you want. Data only covers 89-92-95-98-01-04-07. Quicker than charting the data yourself
To you it is a cliche, to me it is...fond and not so fond memories. It is how I think...I assign mental pictures to phrases. Once you accept there are limitations to language, ideas, the very pairing of words or even notes on the piano.....originality becomes meaningless...who is to say that my use of certain words is not more profound then someone a year ago, twenty before that, and 3 centuries before that. Nothing new under the sun. Let's use an old standby of mine...you see the color you call red, I see the color I call red. Do we see the same color?
Just wanted to give a quick sampling for the overnight thread. I included autos because there's obviously been a demand bubble when we've only scrapped 12mn autos annually at peak but new sales were 15-17mn for the better part of a decade, and it'll be a chip on my shoulder until CR gets the gospel and in turn converts Krugman
Data in the isolated charts is nebulous. Bottom 40% of income households didn't participate in much of anything, probably because of regional income disparities and relative lack of debt marketing towards them, well non-farm or household debt at least. Will check that as they do provide regional breakdown.s There is going to be a lot fewer people retiring than anyone expected, just like Japan. Old people also are much less likely to own a car, let alone use them, just like Japan. Education debt seemed surprisingly low for the mean/median, could be a barbell effect or some funky distribution, definitely a disproportionate burden on lower income households
EvilHenryPaulson (profile) wrote on Sat, 5/23/2009 - 1:22 am
There is going to be a lot fewer people retiring than anyone expected, just like Japan. Old people also are much less likely to own a car, let alone use them, just like Japan.
Education debt seemed surprisingly low for the mean/median, could be a barbell effect or some funky distribution.
Exactly how does one "retire" on an account of $100k much less $40k with any kind of expectation for a decent quality of life? We are in dreamland here, if these figures are anywhere near accurate. Speculative housing equity gain "wealth" makes up the missing hundreds of thousands, I suppose? Ah, to be a homedebtor...
Education debt seems extremely low, period. All under $20k?? You couldn't attend the cheapest state university you could with resident tuition for four years... Something has to be amiss here... Of course, credit-card-financed college debt isn't an "educational loan"... hmm....
Bond Girl (homepage, profile) wrote on Sat, 5/23/2009 - 1:23 am
Yeah, education loans - pretty crazy.
There's not a whole lot of difference between how universities have acted in this bubble and credit card companies.
college tuition costs have outpaced in growth all the major stock market indices in the time period 2000-2009. another government-backed loan program that seems to have only inflated the nominal asset value in accordance with availability of credit. and of course, we can't forget the interplay between educational institutions and credit card companies that was allowed, targeting many of the most-vulnerable and least experienced with credit, of little means, and only earning expectations to mitigate the risks... another ingredient baked into this nasty pie.
Keep in mind that is for households, and does not limit the type of education the loan financed too well. $100 per credit community college vs post graduate university. I'm sure you could pull it out from one of their data tables, I was just pulling the sample charts out
It is technically the Education Instalment Loan category fwiw
"The Federal Reserve Board on Friday announced the adoption of a final rule that will allow bank holding companies to include in their Tier 1 capital without restriction senior perpetual preferred stock issued to the U.S. Treasury Department under the Troubled Asset Relief Program (TARP)."
It's impossible to understand this sentence without proper punctuation. I think it's the best that bankers can come up with without consulting a lawyer. Since I did take English 1A
"On Friday, the Federal Reserve Board announced the adoption of a final rule that will allow bank holding companies to include in their Tier 1 capital, without restriction, senior perpetual preferred stock, issued to the U.S. Treasury Department under the Troubled Asset Relief Program (TARP)."
So, as I understand it, any company with control over a bank - Citibank, Bank of America, GE - can include in their CORE CAPITAL (their liquid assets, so to speak) stock that has been bought by the US Taxpayers via the TARP.
Breaking it down further, this means that any bank with TARP cash can claim that cash as 100% insoluble cash - essentially, the taxpayers have given these banks free cash in exchange for "senior perpetual preferred stock".
So how much of this "senior perpetual preferred stock" is there? Did this dilute "senior perpetual preferred stock"? What makes it perpetual?
EvilHenryPaulson (profile) wrote on Sat, 5/23/2009 - 1:42 am
Keep in mind that is for households, and does not limit the type of education the loan financed too well. $100 per credit community college vs post graduate university. I'm sure you could pull it out from one of their data tables, I was just pulling the sample charts out
It is technically the Education Instalment Loan category fwiw
I have looked at the underlying data for the 2007, 2004 installments of the survey (I dumped it into a database to play around for several hours - a few weeks ago)... I'm not extremely familiar with the data set but the category sounds correct. I'm wondering if/how these median values are distorted by inclusion of all folks regardless of college education. In other words, within the data set, it gives education (years of school) and also Ed. Level is categorized (1-5 I think). Naturally, if levels below "some college" (3 IIRC) are lumped in with college graduate or grad school this will greatly skew things. I don't have the datasets handy or I would try a few queries... ok, perhaps not at this time of night
Even if they do break it up, it is done by head of household.
I don't think we should necessarily fight the data — the prodding so far has been fine — but maybe a second factor like HELOCs fills in the blank for education funding. I know there are scholarships, financial aid, savings, income to help pay. I guess the important thing is probably these numbers are for the entire population. Higher education costs were dramatically lower even 10, let alone 20, years ago. As such, not only did that cohort have a lower debt burden, but they likely even paid most of it off. I wonder how interest rates have factored into it. Could have been cheaper to pay the interest on the student loan, than to borrow more with a mortgage. Probably the better way to look at higher education debt is by the Federal Reserve flow of funds report if they break out education loans
darnit, they don't show education loans separately.
but I did come across Pension fund reserves totalling $13427.1bn at recent peak a few months back, and $10280.0bn in March
best way to look at educational loans would probably just be through the size of its debt market.
Bond Girl, GM G.M. originally said that it would need an additional $2.6 billion from the government to operate through June 1, but added $1.4 billion to that amount.
...
G.M. gave the Treasury a note for $266.8 million as security against the additional money that it borrowed on Friday. The financing does not appear to be the last that G.M. will draw, according to the filing with the Securities and Exchange Commission.
Ditch the pre-tense, give up the ghost, just back up your trucks and take as much cash as you need, it'll be the honor system but we can reuse the Master Liquidity Enhancement Conduit trademark Paulson took out but never got to use
darnit, they don't show education loans separately.
but I did come across Pension fund reserves totalling $13427.1bn at recent peak a few months back, and $10280.0bn in March
best way to look at educational loans would probably just be through the size of its debt market.
it's just way too easy to play games with educational loan figures, and that isn't including fraud or misusing statistics. I am sure more than a few HELOCs went to graduate education, which is really probably one of the more sensible applications and might at least have some long-term value and even real ROI. I think you're correct that the nearest we can get to an objective view is via the volume of the private and federal student loan debt market.
Does anyone want to have a serious discussion about whether government stimulus is actually of any benefit whatsoever to an economy?
In my mind it simply "kicks the can down the road," as so many CR posters like to say. Worse, it prevents the economy from self-correcting like a healthy immune system. Real problems aren't weeded out to make room for real, sustainable growth.
Danny,
If you catch me online at a better hour I might try better to explain the layers of logic. It's wheels spinning within wheels inside of Matryoshka dolls
I hear more and more people talking about how inflation is going to halt the fall in housing prices. Or how buying real estate now is a good hedge against the inevitable hyperinflation to come.
But that is all FALSE.
We're not going to see simple inflation. We're going to see stagflation. Which means along with rising prices for durable goods will come rising unemployment (i.e., falling incomes). And since house prices are more directly tied to incomes than anything else, prices will continue to fall.
Does anyone want to have a serious discussion about whether government stimulus is actually of any benefit whatsoever to an economy?
In my mind it simply "kicks the can down the road," as so many CR posters like to say. Worse, it prevents the economy from self-correcting like a healthy immune system. Real problems aren't weeded out to make room for real, sustainable growth.
stimulus is a form of wealth transfer IMHO, from taxpayer earnings or a claim on future earnings to the politically-well-connected. a real stimulus action would put the money directly into the hands of hoi polloi. top-down could only exceed the benefit of direct stimulus if it resulted in investment gains, technological innovation, or the creation of sustainable jobs, the sum total gains of which would have to exceed the gains of same if they were put into taxpayers' hands. giving every taxpaying adult $10,000, for example, would result in a lot of different economic behavior, from savings to investment to entrepreneurship to paying down debts to risky speculation. can the Central Planners and their selected cronies outthink the aggregate of individual economic decisions made by the rest of us?
Dr. Rogoff and others believe policymakers are these days “ameliorating” the deleveraging process. My analytical framework takes a contrasting view. The critical “deleveraging” process at this point would amount to weaning the U.S. Bubble Economy off of its currently required $2.0 Trillion or so of annual Credit growth. The issue is at its heart embedded deep within the economic structure and will not be cured through additional credit inflation. Current policymaking is shifting the debt burden from the private sector to the federal government sector - and, in the process, increasing the total system (non-productive) debt burden by another $2.0 Trillion or so annually. Moreover, I would argue that this momentous government (Fed and Treasury) intervention in the pricing of finance further corrodes our system’s process of allocating financial and real resources. The “debt bomb” is not being diffused. Rather, the fuse is being somewhat lengthened as the bomb enlarges.
I think MINOR stimulus can work only insofar as the problems an economy is facing are simply crises of confidence. In that sense the stimulus is simply a temporary bridge over the troubled water of irrational consumer fear. For instance, if our economy in late 2001 was robust and healthy (this is hypothetical of course - it wasn't), then a little bit of stimulus would have been a wise move to get people over their post-9/11 anxieties.
But if there are REAL, non-psychological, non-illusory problems in an economy (trade deficits, shrinking manufacturing base, gross overleveraging, etc.), then stimulus doesn't do jack shit. It fixes nothing.
I think MINOR stimulus can work only insofar as the problems an economy is facing are simply crises of confidence. In that sense the stimulus is simply a temporary bridge over the troubled water of irrational consumer fear.
But if there are REAL, non-psychological, non-illusory problems in an economy (trade deficits, shrinking manufacturing base, gross overleveraging, etc.), then stimulus doesn't do jack shit. It fixes nothing.
Again, what you are actually doing is borrowing from the future earning potential to satisfy present consumption. If you can create sufficient growth/return in the present to overcome the cost of that borrowed future capital + interest, you can keep up the game. That would require some amazing "investing", and I would gamble on the collective effort of millions any day over the profit-maximizing behavior of a well-connected elite and their army of Master Planners to achieve it. This doesn't mean you are solving underlying structural issues, of course, but it both buys time and creates real economic growth in the meantime. Of course, we don't see that with present efforts, and it would be a tremendous gamble.
This gets back to the disagreement I've had with the "inflationists" for years now: In the name of Keynesian economics, inflation proponents have repeatedly called for massive stimulus in response to the bursting of THE Bubble, while in reality this activist policymaking was instrumental in only extending and worsening a systemic Credit Bubble. This was especially the case after the bursting of the technology Bubble and is again true today following the bursting of the Wall Street finance/mortgage finance Bubble. Now, more than ever before, "Keynesian" inflationism is THE Bubble. When it eventually bursts Washington policymakers will have little left to offer.
Resistance - if you don't fix the underlying structural problems, you haven't fixed anything. AND you've borrowed against future earning potential, as you say. So what has Keynesian stimulus done other than move us closer to stagflation?
I believe we all agree that Keynesian stimulus may be effective when psychology is the only issue.
One could argue that the only way to effectively counter a psychological problem is to put money into people's pockets. The housing bubble did that indirectly, unfortunately at the cost of unsustainable debt. It's rather amazing that Obama, who ran somewhat as a populist, is pursuing policies that benefit Wall Street at the expense of Main Street. It's counterproductive both economically and psychologically to J6P.
Danny (profile) wrote on Sat, 5/23/2009 - 2:53 am
Resistance - if you don't fix the underlying structural problems, you haven't fixed anything. AND you've borrowed against future earning potential, as you say. So what has Keynesian stimulus done other than move us closer to stagflation?
it's possible that all you can do is continue the game/scam or risk systematic collapse, the outcome of which would be far less preferred than either stagflation or a deflationary depression to all but a tiny minority. but "buying time" literally means buying time in which to assess and attempt to address the underlying weaknesses. if that isn't done, there is only the choice of continued perpetual growth until the thing collapses. that's basically where we are right now, IMHO, with hugely deflationary forces acting from within that bubble of malinvestment, and vested interest (not just of the elite but of a vast majority of us who wish to sustain our illusions of progress, wealth and prosperity instead of admit we have been hoodwinked for decades by moneychangers who stole most of our real wealth) in keeping up appearances / asset values. again the "massive stimulus to taxpayers" is just a giant gamble, really, but it is one I would take in lieu of handing huge sums to the very people who created the problems in the first place, as this is the only stimulus I personally believe might have any probable effect other than simple wealth transfer, or jonesing the taxpayer with another one-time hit from the monetary crackpipe.
"South Korea’s Ex-President Roh Moo Hyun (2003-2008) Jumps to Death Amid Bribery Investigation"
This seems to be the avenue of "closure" many men from the "Far East" have taken when addressing their past moments of weakness. Many of our executives could take a few lessons from this. It would seem to beat the alternative of a humiliating court trial (for the family), and subsequent long-term incarceration for many.
An earlier question regarding banks in the 1930s; were more of them single "stand-alone" banks with no branches? If so, that might indicate some noise in stats when including multi-branched institutions as ONE bank failure.
BTW, nice work. Kudos for the dedication required to put out this top-flight blog. Thank you for the concise information and knowledge you've imparted through your many long hours.
Alas, in South Florida, refinancing at 3% isn't working. When you are down half, owe 300 on a 150 place, they
could charge 2% and it wouldn't change anything. Maybe 1/2%!!! Those 3% deals only last 5 years by the way,
and if anyone thinks the property will be anywhere close to 300k, well I have a bridge I could sell them.
I am selling one of my rentals and the young girl with kids is getting the down payment from the county. My guess is she will walk in with little or zero down. A couple of years after identifying part of the problem is DAP's they are still at it. Disgusting! Interest rates in over blown markets won't cure a thing but maybe slow foreclosure at our expense.
re: Lucifer - he suffers from what I can only describe as an aggravated narcissistic personality disorder, and I hope he gets professional help before he harms some unfortunate woman someday.
It only strokes his massive ego to engage with him on the subject of his twisted sex life on this forum, as well as diminish the quality and credibility of the forum, itself. Please do not engage this attention-seeking behavior. It is ruining the CR experience, IMO.
A related question; How many banks were in operation in the 20's or 80's compared to today after the deregulation fed wave of bank mergers? A graph comparing failures to operating banks would help.
Citi and the other 18 are conspicuous by their absence.
How are those WaMu net operating loss carryforwards working out for JPM?
Lucifer, not included in the assets - "Too big to fail"
The real support isn't showing up in these graphs.
best wishes
Beaten by the dark lord again Nemo?
They have assets? I thought their "assets" were make believe studio sets.
//Lucifer, not included in the assets - "Too big to fail"//
A new thread. And not a moment too soon.
Whatcha mean beaten? You were first.
CR, what defines a bank failure. In the '30s many of the banks had a single branch. Failure was counted as one. How about banks with multiple branches? Still counted as 'one?'
Thanks,
MiTurn
CR,
How about forbidding any financial institutions from using Mac in its name?
CR - (we have lots of questions tonight) - heard anymore about Sovereign? And what happens if a foreign-owned bank goes under - not that Sovereign will of course - but is it just like any other US bank?
Or, Security, or First, or Financial, or Trust, or One, or. . .well, you get the idea.
Or Sovereign. . . .
Bond Girl
There are different kinds of tests based on different theories of intelligence.
I think the idea of testing intelligence is BS, personally.
I in general agree with you, but if you take a whole battery of tests with personality profiling thrown in, it can be revelatory. I learned a lot about myself. In no way should you let the tests define you though. I have a high IQ, but am a stay-at-home dad. I think the rat race is for suckers, but my choice isn't seen as 'smart' and I don't think most men are capable of doing what I do. Nor do I want them too. I am an aberration to the norm. The old adage of Thinker/Doer/Watcher is pretty apt. People have bits of all, but most fall into one category. I am equally divided into the Thinker/Watcher role. Nothing would get done, if my personality were more common.
Gee, CR. These charts make this look like almost a non-event compared to the S+L crisis. What are so doom-and-gloom about?
Oh yeah, that whole 11T fed, 1T TARP, 1T stimulus thing. Was there any equivalent to this in the great Texas BK of the 80s, 90s.
rockyr,
you can find current PE, using real BOTTOM LINE earnings here:
Barron's Market Lab Table - Barrons.com
PE=123.02
any other measure like PE based on operating earnings is a fantasy number that is subject to every book keeping trick in the book.
the only meaningful number is 12 month trailing PE derived from aggregate bottom lines AKA net income.
Vonbek777,
I said that because I think intelligence tests reify a metaphor.
Hey Rocky - a little late replying on the last thread - in case you were wondering:
Yah, Mook. I think you're right. But, I think the inflation trade is coming in vogue now. Who wants to play chicken with the USG?
Oh, Wall Street does. You can be sure of that. These are, after all, the same people who live and work in America and yet are cheerfully buying up CDS's on the US government. We're talking a level of amorality that would render Richard Nixon speechless with awe.
The problem I see with that trade is that, if it comes down to brass tacks, the Fed and Treasury will throw every last one of those banks overboard to save their own skins. If it's between putting all of Wall Street out of business and being unable to finance the national debt, I have to believe that even a group as beholden to those idiots as our government seems to be will find the stones to opt for the former and hope for the best.
And that level of credit destruction would mean instant deflationary depression. Which is why I'm not sold on the inflation trade, at least in the near term. But at the same time, I can't have all that much confidence that (a) Ben, Timmy, and Obama will swallow that pill if it comes to that and (b) it would ultimately work. It didn't for Great Britain in '92. So maybe the inflationistas are on the right track.
Bottom line ... if I were trading for a living in this market, I'd probably make Jeff Macke look like the Dalai Lama.
MiTurn, my bank here has a cease and desist as of two months ago, is no longer microfishing their checks as they can't afford the 600 bucks to get it fixed and they just shut down four branches...of course it is not technically a "bank failure"...
Otis otis.
We agree.
You are never gonna get the MSM to agree until long after the fact.
Thank you dot, dot, dash guy. When the wine wears off, I shall investigate.
Vonbeck, that is kinda the beauty of life, it takes all kinds of people. Think of how boring it would be if everyone though the same?
Comrade, that is scary. . . or pathetic. No, both.
That's Code Otis. 3 dashes are an O, 1 is a T. . .
K, I guess your bank is too medium!!
And if you last on CR, I'm guessing you've passed the most significant test!!
"Oh, Wall Street does. You can be sure of that. These are, after all, the same people who live and work in America and yet are cheerfully buying up CDS's on the US government. We're talking a level of amorality that would render Richard Nixon speechless with awe."
I'm assuming you are talking about Government Sachs?
"they can't afford the 600 bucks to get it fixed "
Why do you still have an account there?
Oh damn Mook, the Macke reference has me choking now....
Compared to these jokers, Nixon was a quaint naif.
Hell, Cheney is a quaint naif compared to them.
Well broward it is just a checking account and it doesn't have much in it. I've already cashed my CDs with them. It's too bad, because they were a good bank for the most part, community oriented and local...CRE has killed them/
CR,
You should add another bar with a different color on the deposits/assets graph that includes the stuff RockyR mentioned (11T fed, 1T TARP, 1T stimulus thing), plus add in the PPIP, loan guarantees, and AIG pass-throughs to get a true measure of the cost to the taxpayers. Just counting FDIC DIF losses does not begin to measure the extent of the damage in the last year.
Agreed Coinz, but they have murked it up so much, I am not sure we can tell losses from
non losses. After all there is a little value there.
I guess that was the point.
the folly of using other measures for PE is illustrated in this e-mail sent to me by the WSJ defending their use of operating earnings PE as massaged by Birinyi associates. note where they say "S&P classifies some one time changes as operating expenses and Birinyi does not."
"from d.bernard@wsj.com d.bernard@wsj.com
date Thu, May 21, 2009 at 12:53 PM
subject RE: SP 500 PE is 62, not 15 (KMM19898265I72L0KM)
mailed-by wsj.com
hide details May 21 (1 day ago)
Reply
Follow up message
Dear (otis),
Thak you for contacting Daniel Bernard of The Wall Street Journal
Online. Mr. Bernard has requested that the WSJ.com Customer Service
dept. acknowledge receipt of your email.
We forwarded your comments to our Markets Data Group, which replied with
the following explanation:
"Our source, Birinyi, has verified their figure to be correct based on
their methodology. Birinyi’s explanation as to why their number differs
from S&P is how S&P classifies some one time changes as operating
expenses and Birinyi does not. This will lead to different values.
Neither method is “wrong”, it is just different methodologies. In the
end it is really at the analyst’s discretion as how to categorize
one-time charges. Birinyi & S&P differ on how this is done.
We use Birinyi as our source for P/E data for the S&P 500, Russell 2000,
and NASDAQ so we have a consistent methodology from one source used
across all three indexes so an apples-to-apples comparison can be made."
Thank you.
Best Regards,
Wall Street Journal Online Customer Support
Please email your comments or questions to:
email address: onlinejournal@wsj.com"
who is birinyi?
"Birinyi Says S&P 500 May Surge 88% in Three Years (Update1) - Bloomberg.com"
Birinyi Says S&P 500 May Surge 88% in Three Years (Update1) - Bloomberg.com
"I've already cashed my CDs with them"
Maybe you killed them.
They needed those CDs so they could make more CRE loans!
Really. Tough. Week. for. Bonds.
Bernanke can't be too confident here. Green shoots could easily be overwhelmed.
LMAO @Jas.
Geez, I'm glad that I missed teh last thread. I caught the first third and left it go.
Life's getting pretty cool when the two oldest can sit downstairs and appreciate a DVD of an old MST3K show. The little one, years away yet.
Hmmm.
Tom Servo and Crooooow or Lucifer's attitude towards women?
Lucifer's gotta be Aussie. They have a great style of foreplay: "Psssst. You awake?"
The history of my bank is a local "boy" made good. I've heard the good, the bad and the ugly across the bar about him. The bottom line is, they got sucked into the dream that property on the beach that was worth 20K an acre before the boom suddenly became worth several hundred thousand an acre during the boom. The St. Joe Corporation perpetuated that dream by selling a whole lot of swamp acreage for the new and improved airport to nowhere...Interestingly enough the lead contractor is...budddumpdabum...KBR..
If I say ridiculous stuff, can I be a member of the MSM?
LOL broward, I doubt my piddly little CDs hurt them, they shouldn't have offered that "one time cash out no fee option"...I took full advantage when I saw where this crap was heading.
homeday, nah, you could have added insight I'm sure
HD - what is MST3K?
Liz, we could start our own news station....Complete with cussing and cliff diving charts...
Kids get to be really interesting. . . and then they leave.
As is appropriate.
Thanks, CR!
I guess this hints that after each crest some of the problem gets diverted to a different form.
Life's getting pretty cool when the two oldest can sit downstairs and appreciate a DVD of an old MST3K show.
You mean there's more to family television than Bob the Builder, Dora, and Thomas the Tank Engine?
Not that I want the little ones to grow up too fast, but I'll admit, I'm envious.
Nope, we aren't dumb enough, and aren't willing to cheerfully dumb ourselves down.
Drowned houses on the other Fla coast approaching 1000.
MST3K == Mystery Science Theater 3000
MST3K = Mystery Science Theatre 3000.
Early Comedy Central Show consisting of some characters sitting down and make smartass remarks about really bad movies. Now in DVD compilations.
Kinda like college, but funnier. Much, much funnier.
"LMAO @Jas"
I can't say I'm laughing.
I understand why Jas is so angry about this thing and people's attitudes.
That paper has more risk than it appears.
He's got to be sweating.
I know people who love that but I'm not one of 'em.
Has that stupid purple dinosaur finally bitten the dust?
My kids luckily grew up in the heyday of Sesame Street.
One two three four five six seven eight nine ten. . .one two
Wow. I never heard of MST3K. Must be above my comprehension level.
And here I thought my 2 teens were all grown up staying up for SNL....
We did Dora, Bob and Barney and each was cool in it's own way. But now the older ones can start to appreciate some of the finer things...
But enjoy the other while you can since you can't go back.
Actually, you can but you feel like a damned fool.
For a reference point on Real Estate here, my parents paid 76K for this house in '98. Granted the house in piss poor condition, had been taken in a divorce by a redneck exwife and her two spawn. She moved out and left her spawn. They proceeded to destroy everything they could including wood ceilings. My parents put at least 100K in before all was said and done but they did a great job. When I had it appraised two years ago to refinance Mom's mortgage into my name when she died they appraised for 210K. Granted that was bubble price, but Zillow is still giving me 173K and feasibly I could sell for 150K. I'm above water by 20-30K with no other debt. I love the house, the location and the amenities here. I have almost a full acre, inground pool, sunken living room with monstrous stone fireplace, three bedrooms, two baths, inlaw apartment that is all but finished and storage building. All on a dead end street with two retired neighbors.
Nitey nite.
Avl Dao,
It might help you understand what I say if you know I have degrees first in electrical engineering, and then in economics. I am not an apologist, and I try not to be a reactionary who dismisses everything based on association.
Economics is not a science, let alone a dismal science. It should be the meeting of math and psychology, but it is mostly a platform for ideologues who search for support in their positions with econometrics without even bothering to question if the system is in steady state. Economics as a field has a lot it can learn from other fields that handle the same challenges so much better.
However, when you find yourself unfamiliar with the terms — a language or system of units in its own right — it is your fault and not the system's for the misunderstanding.
As for the distribution of debt, I did find what I was thinking of. It shows the debt by quintile but the catch is the survey is triennial which is why I probably mentioned the subject of credit is too often neglected. Link here
If you want to find some data, I don't think there is a country in the world that provides as much or as good data in a freely accessible manner as the United States. If you hang around this blog, you can't help but picking up great data sources.
As for my comment about how the distribution of debt "does not matter at this point". I would break the scenarios down into 3 regions.
- Debt is very low, distribution does not matter because at its most concentrated the impact on the economy is inconsequential
- Big middle area where debt is moderate and distribution of it matters to understanding the economy
- Debt is very high, distribution does not matter. The thing about debt growth, is that it also provides income growth to someone, somewhere in the economy. Even if you yourself were the model credit-prude and had zero debt with high savings, your income is jeopardized because it depended on someone, somewhere who wasn't prudent. We've crossed a critical point/a pole/there is sustained positive feedback. The losses are just much bigger than you comprehend at this point apparently.
There are endless analogies for this. Consider one car hitting another stationary car.
- at low speed, vector doesn't matter, no injuries
- at moderate speeds, vector does matter, side-impact could cause a lot more damage than head on
- at high speeds, vector doesn't matter, everyone dies
MiTurn, banking has changed - no question. A bank today can have 100 branches or none (internet only).
Obviously there were many more banks in the '20s ... because there were one branch only banks. Unfortunately we don't have the data for assets and deposits pre-FDIC.
What is a MST3K?
LIz, funny story about the dinosaur. About 20 or so years ago, when I was in my early 20's Mom and I were at the grocery together. A band of kids was going apeshit over a Barney display. They had the aisles blocked and I was not in a happy mood. I snarled at them that "Barney's dead"....before remembering my Mom was right behind me. To my surprise, instead of telling me how awful I was, Mom snarled "Yeah, and I killed him":...And I wonder why I am the way I am...haha...God I miss that woman...
Mook,
I think the feds know that to destroy wall street is to destroy themselves. Should the world extend a middle finger to our treasury, we are just f'd with a capital F. I don't see how we're not. Talk about being sold up a river.
One could say soft default (inflation) is the lesser of two inevitable evils. Funny thing, though. Inflation on the scale we are talking about is very bad for the banks. Sticky situation, indeed.
Damned if we do, damned if we don't. Our best hope is for the world to say: we love the USA and just let it ride. Not gonna happen. Hehehe...
I think the inflation trade is in.
Liz:
Barney can still be found on reruns but my understanding is that there are no new shows.
That show threw off all kinds of cash. Middle kid has done some professional theatre and actually was in a show with the guy who played Professor Tinkerputt on Barney. That guy did a beautiful Fagin...
He owns a paid for house in central CA that he referred to as "The House that Barney Built".
Personally didn't care for Barney but it was nice to snuggle up to a kid for the half-hour and enjoy their world.
Has anyone compared failures between now, S+L, and Depression as what percentage of banks in existence at the time failed? This could be very different than just a body count.
EHP, after about a year here on CR and a couple years of researching this crash and probably about ten years of dabbling in trading on and off; I can honestly say that economics is BS. The bottom line is, you can't accurately predict what people might do. They can come up with mathematical models, waves, tech analysis blah blah but there is no way to know which the herd might stamped on a moments notice for whatever reason...People are....well...animals. They are no less unpredictable than a wild animal when faced with certain circumstances.
Follow up on the NY Times economics reporter Edmund Andrews' tale of his own home mortgage default - wife had 2 bankruptcies in 10 years..
The Road to Bankruptcy - The Atlantic Business Channel
Rocky, I've been thinking about this for quite awhile. Who really thought when the debt crossed ten trillion and would take us several hundred years to pay off, that we would be paying it off? Worst case scenario in my mind is sovereign default and a return to making things ourselves eventually...Personally, I can live with that...We are one of the few countries that has the resources to feed their own, push come to shove.
Yeah, you can figure out what people will do. Economics is predominantly group psychology with a math twist, but it's still human nature.
Just drop a twenty on the ground and watch the reaction of the various people who come across it.
sepoy,
I think it is intellectually dishonest for him not to mention that, if he didn't in the book. Although I kind of assumed she was like that.
I still have a few Barney targets I picked up at a gun show many years ago.I endured "Teletubbies" and my daughter was given a taking "La-La" doll when very young....when she FINALLY lost interest I took it to bring your own gun day at a firearms class and LA-LA faced an 8 person firing squad.We used or rifles first,then switched to pistols...the smallest rifle mag was 20 rounds and by the time the pistols were empty the largest piece could hide behind a quarter.Closure can be sweet.
"Economics as a field has a lot it can learn from other fields that handle the same challenges so much better."
That's the truth. My college is mostly quantitative (10 years in various majors, CE, EE, CS, MIS). I'm still amazed that so many economists couldn't anticipate a feedback effect on housing prices. Mentally, I use current and voltage analogies.
", you can't accurately predict what people might do."
Not exactly true. You can work out likely paths and probabilities. For instance, I know that long-term, production has to equal consumption. I know that if we're truly experiencing productivity, total work hours have to fall somehow. The distribution of how they fall is in question.
Likewise, it's fairly easy to see that the Fed deliberately pursues a path which attempts to offset inflation with an equal amount of deflation, to maintain equilibrium. Knowing that, you can make fairly good guesstimates of their actions at certain times.
CK:
I would say, yup, but I have three children who'll have to make their way in this world. In some ways, it's saddening and yet perhaps they won't have some of the BS that has rather twisted our society in the past several decades.
liz, it's my dead horse and i can beat it if i want. besides, rockr asked.
it pisses me off to no end, the bold face lies. why be stoic about it? why give in and accept it? why be complicit?
Tom Stone:
Very sweet.
Teletubbies was one of the damnedest, dumbest kid shows that I ever saw. I refused to let the youngest one watch it and would make sure that he was occupied when it was on.
I hope Lala died slow.
Homedad, to a certain extent, yes. I think too many economists discount human psychology though. They get so caught up in numbers they forget the human aspect.
Broward, sure they can, and I'm sure with some accuracy during "normal" times. That is not to say that when a monkey wrench gets thrown in that all bets are off...That is my opinion of where we are today...Nobody really knows how people might react. The paradigm is changing..
" Who really thought when the debt crossed ten trillion and would take us several hundred years to pay off, that we would be paying it off? "
The US has never paid off the debt. If you look at the historical debt since 1790, there's a strong correlation between high deficits and wars. Typically, the U.S. engaged in a war, ran up enormous debts, then froze spending after a war ended. Over a period of decades, the relative size of the debt to economy shrank, then another war happens.
The post-Cold War period is unusual in that the gov't maintained deficit spending.
And actually, you can - with some thought - predict what some people will do. A good negotiator can figure out what the other person wants and plot a course that ends with some satisfaction for both sides.
My experience with econ profs in college was that they were much more comfortable with numbers - less messy and unpleasant.
People get very unpleasant about money.
homedad, understandable. I don't have kids which gives me a different outlook. On a silver lining tip, perhaps we will return to "simpler" times where learning and knowledge are prized, intelligence and true innovation rewarded? I know the way we've been living for the past couple decades is not condusive to the advancement of the human race. The I've got mine, screw you and yours attitude has gone too far. The "incuriosity" and disparagement of "education" or learning, the unwillingness to bother knowing your neighbors name etc, has not served us well. We function best as a herd animal...not lone wolves.
Bernamke stacked all the chips on 17 Black.
Good luck with that.
You might be able to predict human behavior, but you can not predict a certain turn of events, and that's why I agree with Kristina - you can't predict markets or graph patterns if you can't control the external variables.
If it were all mathematics, everyone would be making a killing in the options market. Instead, most people lose their shirts.
Coming in late tonight... sorry if I missed this in earlier threads, but... anyone else read this? R.I.P Bank United | footnoted.org
Over half of their loans were, umm, not documented!
CK I am currently entering CSC airspace... wish you were here! Umm, as it were, that is!
Woof!
"..Nobody really knows how people might react. The paradigm is changing.."
I'd say that's not true. Bernanke knows what he's trying to do and I think I understand it. Ultimately, the total amount of money paid out as interest can't be larger than economic growth in the same period, or you lose equilibrium. So Bernanke's goal is a combination of outright debt default + reduction in total interet payments through lower interest rates.
Dang Lothar, let him know I miss him if you see him out there! I'm jelly...
homedad, I have a theory, the only people that are less interesting than economists are engineers....
Homedad,I had my girl at least 20 out of 24 hours the first two years and never finished a cup of coffee while it was hot. Teletubbies is endurable if you are exhausted.La-La was hit with 160 rounds in less than 30 seconds,instant confetti...I used my Calico with the 100 round magazine and switched to my .45.The biggest piece really was smaller than a quarter...
broward, that is kinda my point. The idea that we could pay back the almost eleven trillion we already owed was ridiculous. Anyone that thinks we had any intention of paying it back is most likely delusional and listens to Lee Greenwood on the regular...
CK.... sorry but that was a figurative statement, not a literal one...
Thread music given the earlier conversation about kid shows.
YouTube - Parachute Girl by Roger Day
The singer was a friend of mine in college, when we both had more hair.
Kristina,
All things considered, can you describe a path forward that doesn't involve some kind of inflationary/deflationary collapse and/or sovereign default?
"everyone would be making a killing in the options market"
From a macro-standpoint, equations balance over time.
Changes for specific time periods still have to sum up to a balanced equation.
The housing crash was not hard to predict.
The timing was.
Bank failures are like kidney failures, the filter gets clogged and then kills the host.
So why won't this host die?????
Oh yeah, Bernake dialysis with an Obama/Geithner shunt installed. Novel.
But the patient usually still dies in the end.
"can you describe a path forward that doesn't involve some kind of inflationary/deflationary collapse and/or sovereign default?"
Sure!
All mortgages refinanced at 3% interest and a 32-hour workweek with appropriately reduced paycheck.
The housing crash was not hard to predict.
The timing was.
But in the market, timing is everything.
Broward, that still wouldn't do it.
"the only people that are less interesting than economists are engineers...."
How quickly we forget leather pants and S&M sex clubs.
Time for dinner after an inslut like that.
Dunno that I agree with the theory about engineers being more/less exciting than economists.
It also depends on you. And the personality of the other person. If the other person truly loves what they're doing, then that in/of itself becomes infectious and makes it more interesting. I'm horrendous with computers and programming but had a phenomenal conversation with a software engineer on a flight about two years ago.
He was jazzed about what he did. It was a really fun conversation.
Dear goodness:
Comrade Kristina said:
What is MST3K?
Mystery Science Theater 3000. Plot-line involved a guy stuck in Outer Space with robot friends and forced to watch old campy 1950's and 1960's movies. They would just comment through the whole movies making fun of them. I believe they may have put out MP3s of the same schtick on new movies.
Some reason my favorite episode I saw was a Christmas one where they showed Santa movies. Only saw it once as my family was going to midknight mass and I happened to be watching on a Christmas eve...
22 page hits Groth rates of iguanas on realmeme.
TJ, I'm just a bartender with too much time on her hands. From everything I've read and studied and my own personal observations I see deflation/stagflation as Nouriel suggest. Yeah, they might overshoot and create inflation, but I see that as less of a risk than deflation at this point. They raise prices and the already gun shy, half jobless consumer goes into their turtle shells even further. This doesn't serve the PTB so I can't see it happening, at least not near term. To answer your question though, no. I really think the elite, top five percent have screwed the pooch irreversibly this time. We had the largest boom ever and the only true winners the top. While profits were breaking records in just about category, workers saw no change. In fact, they saw benefits being slashed and wages stagnating while productivity soared and corporations saw huge profits. I view the American consumer much like I view whores, eventually even they grow weary of being used for a pittance...and so, there we stand. Who blinks first and who does our POTUS stand with?
BTW, in case you missed it, the San Fran Fed is starting to get a clue:
San Francisco Fed Concerned About Consumer Deleveraging
Zero Hedge: San Francisco Fed Concerned About Consumer Deleveraging
re: Economics can't predict everything
I think those who say such a statement, end up telling a lot about themselves and little about economics. Free will, fate, philosophy, inconsequential to matters at hand
Here's how: You attacked using an extreme case, so the easiest rebuttal is to do the same.
This credit bubble and its consequences were foreseeable and preventable. It doesn't matter that the economy is "so complex" it doesn't matter that individuals are full of spunk, free will, and unpredictability.
Obviously there is a precision limit, but you can still be accurate. So you narrow it down bit by bit. Start with what is possible. Then narrow it down into decision trees and what's probable. The beauty is that probability of choice matters very little, it's about what actions are sustainable. You may choose to eat a $100,000 dinner which I consider improbable as a singular decision, it is possible. However, the chance you choose to eat a $100,000 dinner every day is insignificant. The more you know about what won't happen, the more you know what will happen.
On a side note, we learn much more from system failures than from stable steady state functioning. This credit bubble spanned decades, and the burden of proof on a heretic was very high. The less probable this bubble was to ran so deep and and for so long, means the higher probability we can prevent the next bubble with justified conviction.
broward, no offense, it's just the one's I've known have been kinda "special"....I even dated one back in the nineties, he worked for McDonnell Douglas...super strange guy but he drove a bangin' new vette. He was very nice, he just really had a hard time interfacing with other humans...I've found the same to be true for the ones I've known since then.
Path forward without default or inflation?
Somebody earlier used the word, "austerity".
It would require some radical revisions in thinking such as property rights and ownership. Can an older person with no more money be allowed to live in an empty home free of charge? What about squatter's rights?
Rethinking of the social contract between generations.
Rethinking of the military needs versus wants with corresponding changes.
Honestly, I'm not a fan of O but what the hell, his attitude appears to be that if he's gonna have to buy an auto company, he should be able to make the call on what type of vehicle makes the most sense in terms of national interest going forward.
Am I gonna like the new 2011 Obamobile? Probably not, but things have to change.
Kristina,
FWIW, I see a system over-leveraged beyond all salvage, and one which is now feeding upon itself to its ultimate demise. As you've noted, the debt's well past payable and still headed north at breathtaking speed. Too many current & soon-to-be TBTF zombies feeding at the public trough. As with the housing bubble, when something is blatantly unsustainable it will fail -- it's only a matter of time.
Somebody earlier used the word, "austerity".
Unfortunately that word is not in the politician's dictionary.
EHP,
Good post. May I ask you if you think what is happening economically and fiscally is contained only to the study of economics? I see convergence on many different levels, I don't see the economy as the only tree in the forest about to implode so to speak...
can you describe a path forward that doesn't involve some kind of inflationary/deflationary collapse and/or sovereign default?
Anything that knocked about 5-10 years off the life expectancy. The Anglo-Continental concept of retirement was initially made possible by post-wwii reconstruction. once that was tapped out, the "growth" came from future consumption via debt. the demographic change would the greatest inter-generational transfer we've seen and go a long way to fill in the debt "hole."
but of course, all the various forms of deleveraging (e.g. cramdown, default, inflation, etc) are actually achieving the same result, albeit more stealthily, since the largest block of lenders by far are the private/public retirement accounts.
This credit bubble and its consequences were foreseeable and preventable. It doesn't matter that the economy is "so complex" it doesn't matter that individuals are full of spunk, free will, and unpredictability.
EHP:
"Spunk"?
Dude, that's a word I wouldn't expect to read in one of your sentences.
You sound like Captain Kirk in a monologue to some arrogant aliens.
No offense. You're usually very precise and clear in your writing. Just made me actually do a physical double-take when I read that.
Actually, I used to do some rudimentary decision tree analysis when evaluating a claim evaluation/negotiation. But there are still a few folks who'd rather piss in their own coffee than make the most rational decision.
Thoughts from a few threads back:
I took the time to read Bernanke's speech. It seems to epitomize everything I despise about some of our leaders. They lead the perfect lives. I can't believe he gave a speech on unpredictability; and the only thing personal he had to say was that his live was unpredictable in some way, yet if you think about it he has lived such a dull, boring, and predictable life. Does the man ever go outside? His most memorable experience at college was arriving there and wondering "what have I done?" Was he expecting everyone there to be so engrossed in reading and studying?
No doubt he has worked hard and must have decent mind... but has the guy ever been put in an uncomfortable situation? College is supposed to challenge every notion you have about yourself, and your dreams.... my dreams completly changed from freshman year to senior year; and my dreams and hope for my life change.
To me college seems like a good memory; and I would advise every graduate to reflect and think about all the joy they had and tlel them "welcome to life"... college is a phase of continous progress. Yet when I read his speech I see a guy stuck the same place he was 20 years ago as far as his dreams, etc. I can't believe he challenged these graduates to be in uncomfortable situtations! His uncomfortable situtation is running the Fed?
Makes me think the "elites" really do live in a bubble, where their life arc is set and they happily follow it without challenging why they ar egoing to Harvard/Yale and why they wnat to have the perfect life. It's almost like they have the goal of being a stepford family... 2 white picket fences, etc. Seriously... you will experience situations in life that are adventures... you will meet people who will make your life more adventurous (for better or for worse...)
Disappointing, since he gave no insight into "who Ben Bernanke is..." rather than "I'm a boring bookworm who has very little life experience and take very little risks...". Now I know not everyone is good with sharing personally; but just seems like something a good commencement speech wuold be full of... although no one will remember it 6 months from now.
Sad to hear he has never had any type of adventure in his life... or perhaps the biggest adventure he had was the time he cheated on his wife and he wasn't supposed to tell anyone about it or something... I dunno... is he a real person? He really weilds power in our government?
Basel Too,
Well, if you're going to open that can of worms, a real pandemic or short nuke exchange would probably do wonders, too. Not exactly what you'd call cheery alternatives.
It's no secret I've been a big believer in high inflation for some time here. You could go back to posts of last winter and see that smart people here were just roasting me for believing in commodities, oil, gold and silver. But in December, we got confirmation that inflation is alive and well. Then, it went into hibernation for 2-3 months and these areas didn't do all that well.
Just in the last 2-3 weeks, it's come roaring back. Remember...the markets should be a leading indicator. They should tell you about big inflation well before it actually gets here.
So, what has happened in 2-3 weeks?
Spot oil has increased by 15-20%.
The Canadian currency has rallied by 10-15%. That's a big move for a sleepy currency. It should wake you up.
Spot silver and gold have rallied by 10-15%. Miners have really been jumping this past week.
Copper, aluminum and other industrial metals have rallied by 10-15%.
Food has been perking up lately, especially this week. Watch DBA for food trends.
Nobody believes this is just a global inflation story. Smart people think it's also a dollar devaluation story. The problem is that most other major currencies (except the loony) aren't much stronger than the dollar. All currencies are sinking at the same time, relative to real assets.
It makes sense that we need devaluation and high inflation to lift real estate prices and get residential and CRE markets moving again.
Most stocks will not do well in a high inflation environment, especially tech. If you want to make guaranteed profit, short tech (PSQ) and buy oil, metals and food (DBA, DBB, XLE, OIH).
Thanks to CR for his journalism, talent, dedication and stamina. I just could not do without Calculated Risk. The last two weeks have reminded me how profitable the insights of this site can be.
Vonbek:
There are multiple corollaries that feed into the economic situation.
Consumerism.
Individual rights versus collective rights/necessity.
Mutual obligation.
The concept of "value".
Yep, it's gonna take down a few nearby trees as well.
So Rich:
Waddaya think of AMZN?
Is it a buy?
rich,
Thank you for your insights as well.
People can mask financial difficulties usually many months before finally SHTF and this depression is only about six months old. Bank failures might start accelerating rapidly very soon. Obama administration wasted the ammunition to save the Wall Street greedy speculators and their too big to fail-banks.
So many governments worldwide are seeking money from the bond markets that it will lead to oversupply and that means yields going sky high.
I ran this by some friends last year, before things started getting bad. Was told to go climb back under my rock, that I had no concept how the real world worked, and oh by the way, the banks and GM were fine.....whatever...my point that I can't get people to understand is that collectively the US is having an identity crisis brought about by the endless summer of the 90s and the cold winter of 9/11. The gods of consumerism didn't save us. We woke up to the fact that the world might actually hate us. Then Katrina came, and it seemed we were being punished for our pride. Selfish the herd may be, but it is aware enough to know that the grassy meadow has turned to thorns. People are searching for answers, all ages. That is partly why Obama got elected. The crisis of confidence extends to the core of the liberty apple. Replacing faith in banks, won't cure what is wrong with the people.
timmyone,
The only problem with that statement is that the administration really hasn't saved anyone. Everyone they've given money too is still either failing or at risk of failure.
Identity crisis.
Yeah, I hadn't thought of it in those terms.
EvilHenryPaulson,
Why do east-asians think that they are smart and analytical when they have been circle jerking and pauperizing each other for the last 2,000 odd years? Why so much certainty about abilities that have kept you static for 2,000 years?
I wouldn't limit it to economics. The bubble had dramatic impacts on society and culture, all the way from the individual level up to the macro.
Morgan Stanley to Boost Executive Salaries as Bonuses Decline
- Bloomberg.com
By Elizabeth Hester
May 23 (Bloomberg) -- Morgan Stanley, the sixth-biggest U.S. bank by assets, will increase some executive salaries and double Chief Financial Officer Colm Kelleher’s pay as bonuses come under scrutiny from the Obama administration and lawmakers.
The majority of executives will get raises, according to a person briefed on the decision. Chief Executive Officer John Mack’s base salary is unchanged this year, according to a regulatory filing yesterday.
TJ:
Perhaps here's a different way of looking at it.
One way or another, there's going to be a reckoning for the financial cock-up. It's going to be painful and while I don't like the idea of saving every lousy financial institution and guaranteeing everyone's verklempt decisions, the O admin will have much more good faith on it's side afterwards.
Think of what folks thought of Hoover adn the republicans in 1932. Much of politics is perception.
Lucifer,
I am in the fortunate position of not having to deal with east-asians as a singular entity, as such I am unprepared to answer your question. I don't have the breadth of knowledge to understand all the 'tribes', nor does with depth going back 2000 years.
Thank you, Lucifer.
Reminds me of why I had the other white meat for dinner (Bankers, the other white meat). Now I have to eat more.
The [$27.2 B] Illinois Teachers’ Retirement System, Springfield, will double its hedge fund allocation to 5% of total assets and will increase its private equity target to 10% from 8%....
Private equity commitments made by trustees at their meeting today were $100 million to distressed debt fund Blackstone/GSO Capital Solutions Fund LP and $50 million to existing manager Energy Capital Partners’ second buyout fund focused on the power generation and energy sectors. Energy Capital Partners managed $7 million for TRS as of March 31. Funding for both commitments will come from cash and rebalancing.
How nice of Steve Schwartzman to help out the little old teachers from Illinois. Lots of public pension money moving from equities and US bonds into PE and hedgies, as part of the new FY rebalancing. Hopefully, these funds are under the Obama-Fed umbrella.
Canada Pension Posts Record Loss on Market Slump (Update3)
- Bloomberg.com
By Doug Alexander
May 21 (Bloomberg) -- The Canada Pension Plan Investment Board, the country’s second-biggest public pension manager, reported a record loss because of slumping stock markets.
The investment decline for the fiscal year ended March 31 totaled C$23.6 billion ($20.6 billion), or 19 percent, Toronto- based Canada Pension said today in a statement. Its reserve fund was valued at C$105.5 billion, a decrease from C$122.7 billion a year earlier.
....Canada Pension had C$60 billion invested in equities, or about 57 percent of its assets, a higher percentage than Ontario Teachers’ Pension Plan and Caisse de Depot et Placement du Quebec...
...Over the next five to 10 years, the fund expects stocks to outperform bonds, Denison said in an interview. “We see a reasonable amount of risk in bonds over the next three to five years,” he said....
...Canada Pension is “no longer involved” in a joint bid with Ontario Teachers for BAA Ltd.’s Gatwick airport in London, Denison said. Canada Pension is interested in buying established shopping centers and major office towers in world cities, Denison said...
east-asians = han chinese. The other east-asians are not as hubris ridden as that group.
Sorry for breaking the concentration of this thread... everyday something I read here makes me think more and more about the way people are living and society.
Talking about "interesting". South Korea former president has killed himself over scandal and money laundering... from news reports my wife is watching it looks like $60M that was given to his whole family in illicit payments.
What wonderful analytical method/ theory did you use to get that insight?
//The bubble had dramatic impacts on society and culture, all the way from the individual level up to the macro.//
YLSP:
Don't apologize. It isn't occurring in a vacuum. Never thought that an econ blog would make me reconsider political and social beliefs.
Except in regards to those damned Han Chinese.
Lucifer,
Where do you fit on the introvert/extrovert scale, if you don't mind my asking? The curiosity is killing me.
YLSP,
I hate to say this but the corrupt south korean system seems to work better than our system.. how many bankers or politicians have committed suicide.. yet?
Vonbeck777,
Extreme INTP
homedad43,
The administration is already on the verge of losing complete control; there's no way they make it through one term without events totally overwhelming them. FWIW, it would've happened regardless of who was in charge -- it's that deep a hole.
"Talking about "interesting". South Korea former president has killed himself over scandal and money laundering... from news reports my wife is watching it looks like $60M that was given to his whole family in illicit payments."
It should be interesting how the British MPs handle their scandal...
"it's that deep a hole"
Agreed. But the absurdity of thinking that one could whitewash over it? That is O's burden alone.
Blackhalo,
British MPs usually kill themselves though auto-erotic asphyxiation.
I wonder if I should be concerned that I have the same personality type as Lucifer?
Lucifer,
I know. Even Madoff is still smirking... I suppose asians still have some honor.
Korean's aren't friends of the Han either... (or so supposedly "historical" tv-series in Korea make me think) .
LOL Vonbeck...I live in a very red area of a previously red state (panhandle Florida). Two years ago when I was warning of imminent doom I was told I was a nut, everything was fine, the stock market was doing great and Bush was a God. Every third car had a "W The President" bumper sticker on it. It's amazing that I was still being told this up until November last year....All of a sudden the debt was of interest, the Dems were to blame because they "controlled" Congress and those "libs' caused the bubble via F and F....The disconnect is astounding. People will believe whatever they wish to believe....The idea that both parties are simply opportunistic theives if foreign to them..
double post
I thought so. Thanks for telling me. I share a 1/2 with you. You could say I am bi-polar, but not the standard definition. I am split so evenly between the hemispheres of my brain I don't even have a dominant eye. I cycle through intensely creative periods to intensely analytical periods. Except for my wife and kids, I could disappear completely.
homedad43,
I have only seen a few episodes of Star Trek, mostly TNG and Voyager in the last few years. I did see the modern movies all at once a year ago, great stuff. Don't know Kirk, but I'm aware of the peculiar ways I write and I'm not offended.
Decision tree, negotiation. Go ahead and call it Game Theory.
Similarly OT, but I found yesterday that some budding first grade Tony Soprano paid a fourth-grader to do a number on my youngest.
The fourth grader - Guido - walked up to my kid and asked if he'd fake a fist fight so that he could collect the money from Tony Soprano. Guido told the principal that he's staged three previous fights to collect money from Tony. Tony wasn't angry with my son, but doesn't like one of my son's friends so he wanted to take him out to send a message.
Stunning on multiple levels.
Wow. Just wow. It's being dealt with.
Yep, economics is mostly human nature and not math.
Bond Girl,
I said extreme INTP... not garden variety INTP.
Probably already linked, but Doug Noland really hits the nail on the head in today's"Credit Bubble Bulletin":
"Inflationism's Seductive Battle Cry"
PrudentBear
This next bubble could easily end in bankruptcy of the nation. I hope "the authorities" come to their senses.
Nobody likes them.. who cares about mercantile, legalistic, covetous delusional assholes?
//Korean's aren't friends of the Han either//
God help me, I'm INTP as well.
Lucifer, my brother.
You wanna help me whack a first grader?
You mean we not bankrupt yet?
//This next bubble could easily end in bankruptcy of the nation.//
Extreme INTP.
Is that on Spike?
And for the authorities monitoring this site, the first grader comment was a joke.
I'm a paranoid INTP.
homedad43,
what is in it for me..
//You wanna help me whack a first grader?//
"That is partly why Obama got elected."
I'm going to go with astounding incompetence of the opposition for the win Alec.
Anyone else notice how shrill and fevered the oppositon has been getting lately at the prospect of irrelevance?
Liberty University Bans Democrat Club
The page cannot be found
Steale, Jindal and Cheany are not helping much. 2010 is not looking so good. Which is sad as a anti-banker party would win big.
Lucifer, the bankruptcy only becomes official when people stop lending you money to pay off your existing debts!
Here's an item that seems worth noting, from the Washington Post:
"Swat, known as the Switzerland of Asia, was once one of Pakistan's leading tourist destinations. With its braided mountain streams, golden fields of wheat and soaring, tree-studded peaks, the valley was considered a national treasure, and the local population was renowned for its moderation.
But inept governance and the growth of radical Islamist groups in the nearby Afghan border region combined to make Swat a haven for militancy in recent years.
In late 2007, it became the first major area in Pakistan outside semiautonomous tribal regions to fall under Taliban control."
Reads like the opening lines from one of nova's stories.
Nothing now, but in about three years, a whole wheelbarrow full of freshly printed cash for a loaf of bread...
There was a Twilight Zone episode I saw when I was young...the guy with glasses who lives after the world ends, is ecstatic he can finally read in peace, then steps on his glasses...I loved that idea. I was ready, had multiple backup pairs. Seemed like paradise.
Extreme INTP = Many characteristics are much stronger than expected.
I did say something about an inability to accept BS. Let's just say it is much stronger than you think. Another one- I could make my teachers look stupid when I was 9 years old.
"I have only seen a few episodes of Star Trek, mostly TNG and Voyager in the last few years."
Ooof that is some of the worst stuff. DS9 and original series is where Trek shines. Although to be fair the last few seasons of TNG did not suck.
I was given much leeway in school until high school (10-12th), and then I became imprisoned. Hated everyday. But early on, after first grade (I was put in slow readers and because I was a lefty/ambidextrous, considered a dunce until testing showed I was reading at a sixth grade level in first grade) I was just sent to the library. Got to run the spotlight for highschool drama club in sixth grade because I had tested out of everything. Played spades and poker through high school when I could. Other wise it was pure torture.
Lucifer, I understand.
Once called my boss "a dumb son-of-a-bitch" some even fouler phrases when he publicly hung me out to dry; he pulled rank on me after we argued on a course of action and when his method screwed up the operations, he did me good.
Thought I'd lose my job, but at some level, it pays to be competent. He apologized.
Poker through HS.
It could be worse.
Something happened to me in high school. I got claustrophobic. They blocked all the windows in the classrooms, and I felt like a trapped animal. Teachers hated me. I wasn't a prick, I showed respect, it is just that I didn't agree with the pictures they were painting. Everyone kept telling me to wait until college and then life would get better...huge disappointment. If I had it all over to do again, would have dropped out and started writing when I was 15.
Where will the growth come from?
Economy may move forward, but only on one cylinder
Where will the growth come from? - MarketWatch
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) - The U.S. economy will begin to grow again in the next few months, most economists agree, but it may not feel like much of an improvement to the millions who've lost their jobs, businesses or homes.
By almost all accounts, the recovery from the worst recession in several generations will be sluggish for the next year or two or three, with the economy firing on just one cylinder - the Bernanke-Obama stimulus.
Even the most optimistic analysts believe it will be a tough slog for the economy.
The usual sources of growth seem missing: Consumers are paying down debts, businesses aren't investing, and foreign markets are deep in recession. Any growth this year is likely to come from the government's stimulus spending and from the turn of the inventory cycle, but those are temporary factors that will fade.
Where will the growth come from then?
Do you write now?
Vonbek777,
I just prefer humiliating and destroying those who stand in my way.
Lucifer,
Just saw on Drudge/Yahoo that the dollar is hitting new lows versus other currencies and Moody's is concerned about US losing it's AAA status.
Damn, didn't see that one coming.
I just prefer humiliating and destroying those who stand in my way.
But that is an emotional, and not logical, orientation.
Wonder what CR might do with this?
The newest website from the Obama administration is Data.gov: a public resource for "high value, machine readable datasets generated by the Executive Branch of the Federal Government."
Data.gov Provides Government Data Sets For Your Nerdy Curiosities - data.gov - Gizmodo
The site provides both raw data as well as widgets for getting updated information on various topics such as H1N1 flu or the FBI. But if you're really interested in having a data set of the locations and characteristics of the world's copper smelters or past East Pacific storm tracks, this is your new one stop shop. They're even taking requests if the data you're looking for isn't here.
This probably isn't useful to too many people, but if it's useful to you, you know how cool it is.
homedad43,
It is just that every other first world country is more fucked than the US.
Bond Girl (homepage, profile) wrote on Sat, 5/23/2009 - 12:46 am
I just prefer humiliating and destroying those who stand in my way.
But that is an emotional, and not logical, orientation.
LOL. that's a win.
+1
I have to entertain myself...
//But that is an emotional, and not logical, orientation.//
Analyze this. No fair picking on Broward, either.
YouTube - Barry Manilow - I write the songs
Absolutely. Homemaker/writer/short-order cook/computer tech/etc....why I use the title of philosopher. I have never been able to settle for any one subject. Jack of all trades, master of none. plus huge empathy. I have been told I would make a formidable psychologist, but I am just a good listener. Everyone has stories to tell if they can find someone to listen. I am currently writing 7 novels. It will be a miracle if I finish one. But I like to try. Poetry however is nice and simple. Lots of that, but nothing of interest to the outside world, and I don't like to share. Writing is very personal. Facts are easy to throw out, but writing reveals how you think. I never like to be labeled.
Are Banks Keeping Foreclosed Homes Off the Market?
Are Banks Keeping Foreclosed Homes Off the Market? - BusinessWeek
Posted by: Chris Palmeri on May 21
Buyers looking to purchase foreclosures should still have plenty of opportunities. Only 30% of bank-owned properties are listed on the multiple listing services, says Rick Sharga, senior vice president at foreclosure listing firm RealtyTrac. He figures banks still own as many as 500,000 properties that they want to sell but haven’t put on the market.
A home many not be listed because the bank is wrestling with title, repair or owner right of redemption issues. (Several states such as Michigan and Wisconsin give the previous owners the chance to buy back a home that’s been foreclosed on). Banks may also be holding houses off the market because selling them now would lower prices even further. Foreclosures typically sell at a 31% discount to similar homes whose owners aren’t in distress. Listing all those homes now, Sharga says, “would have a devastating impact on inventory and pricing.”
REFUTED ECONOMIC DOCTRINES #8: US LABOR MARKET SUPERIORITY
John Quiggin » Refuted economic doctrines #8: US labor market superiority
By jquiggin | May 23, 2009
According to the latest data, the unemployment rate in the US was equal to that in the EU-15 in March, and is now likely to be higher. Writing in the NY Times, Floyd Norris refers to the conventional wisdom that flexibility inherent in the American system — it is easier to both hire and fire workers than in many European countries implies that unemployment should be lower (at any given point in the business cycle) in the US than in Europe.
Although this is the conventional wisdom, the research on which it was based (by Lazear and others) has long since been qualified or refuted. I looked at this in the context of the debate about unfair dismissal laws a few years back. Although the early research supported the simple view that more flexibility = more jobs, later research yielded the conclusion that employment protection laws lower the variance of employment and unemployment but have no clear effect on the average levels.
we are all messed up in some way -- damaged and/or conditioned as children long before we achieve the "age of reason" or any reasonable measure of self-control. in fact, the frontal lobe development of the human being is not completed until well into our twenties, so we have faculties allowing self-control, long term planning and execution long after the comparatively short-term focused and evolutionarily-older portions of the brain, much less the comparatively-ancient, and very short-term, emotionally-driven limbic portions of the brain, which develop well in excess of both the cerebrum and frontal lobes. the recapitulation of evolutionary history is far from over at birth... it has in fact barely begun!
luckily the amalgam of complexes, defense mechanisms resulting from pre-rational traumas, hormonally-driven adolescence, hardwiring of the brain to seek out emotional peaks and valleys through risk-taking behavior, etc. is navigated, somehow, by enough of us that we can more or less function in society with our fellow damaged human beings.
Can anyone offer a counter argument for this: Financial de-globalisation, savings drain, and the US dollar | vox - Research-based policy analysis and commentary from leading economists
Jas? Anyone?
Lucifer,
I just prefer humiliating and destroying those who stand in my way.
The empathy gets in my way. I have that rare gift of being able to see through the masks people wear and to pick out individual threads that hold identities together. I misused this power once and it had devastating consequences that have stayed with me my entire life. I choose exile in the grey wastes. I don't want to serve in heaven, or rule in hell. They are the same to me now. Let me roam the wasteland of dying stars, a black wolf in the mists of time.
I was poking about the Survey of Consumer Finances Chartbook (1200+ pages)
Debt value
Retirement account value
Education loans
Here's some random excerpted charts, median/mean value/ownership status by age/income/etc
http://img40.imageshack.us/img40/6703/picture8yoy.png Median Income
http://img39.imageshack.us/img39/5152/picture9h.png Mean Income
http://img269.imageshack.us/img269/3076/picture10n.png
.
http://img193.imageshack.us/img193/8458/picture6c.png Vehicle value
http://img188.imageshack.us/img188/8156/picture7b.png Vehicle value sum
http://img199.imageshack.us/img199/2287/picture3xsk.png Vehicle ownership
.
http://img200.imageshack.us/img200/7940/picture11h.png Mortgages and HELOCs value
http://img199.imageshack.us/img199/9026/picture12npw.png Percentage with Mortgages and HELOCs
http://img200.imageshack.us/img200/3047/picture2fsi.png Primary residence value
.
http://img269.imageshack.us/img269/467/picture1cdf.png
http://img196.imageshack.us/img196/593/picture4cdr.png
http://img195.imageshack.us/img195/1456/picture5xuc.png Credit Card balances
EHP: 1200 pages. Wow. And you are still awake?
I am thoroughly convinced that EHP is some kind of robot.
Vonbeck 777: You've never met a cliche you haven't abused, huh?
It's very repetitive and it's organized with bookmarks in PDF so you can hop to what you want. Data only covers 89-92-95-98-01-04-07. Quicker than charting the data yourself
From Doug Noland (linked above):
The notion that there is a system price level easily manipulated by our monetary authorities to produce a desired response is an urban myth.
Love that guy!
To you it is a cliche, to me it is...fond and not so fond memories. It is how I think...I assign mental pictures to phrases. Once you accept there are limitations to language, ideas, the very pairing of words or even notes on the piano.....originality becomes meaningless...who is to say that my use of certain words is not more profound then someone a year ago, twenty before that, and 3 centuries before that. Nothing new under the sun. Let's use an old standby of mine...you see the color you call red, I see the color I call red. Do we see the same color?
Sorry, had to step away.
Good night folks.
EvilHenryPaulson (profile) wrote on Sat, 5/23/2009 - 1:07 am
http://img269.imageshack.us/img269/467/picture1cdf.png
Retirement account value
http://img196.imageshack.us/img196/593/picture4cdr.png Education loans
I don't know whether to be more shocked or saddened by these two. Retirement account value in particular... disheartening isn't the word for it.
Just wanted to give a quick sampling for the overnight thread. I included autos because there's obviously been a demand bubble when we've only scrapped 12mn autos annually at peak but new sales were 15-17mn for the better part of a decade, and it'll be a chip on my shoulder until CR gets the gospel and in turn converts Krugman
Data in the isolated charts is nebulous. Bottom 40% of income households didn't participate in much of anything, probably because of regional income disparities and relative lack of debt marketing towards them, well non-farm or household debt at least. Will check that as they do provide regional breakdown.s There is going to be a lot fewer people retiring than anyone expected, just like Japan. Old people also are much less likely to own a car, let alone use them, just like Japan. Education debt seemed surprisingly low for the mean/median, could be a barbell effect or some funky distribution, definitely a disproportionate burden on lower income households
Yeah, education loans - pretty crazy.
There's not a whole lot of difference between how universities have acted in this bubble and credit card companies.
Let's use an old standby of mine...you see the color you call red, I see the color I call red. Do we see the same color?
A favorite of mine, too.
NJ is shelving its $5k 0% down-payment-assistance loan, but not from any sudden fiscal sanity, rather from bureaucratic confusion:
N.J. puts home buyer tax credit loan on hold for FHA borrowers | NJ.com: Business - Real Estate - - Real Estate - NJ.com
EvilHenryPaulson (profile) wrote on Sat, 5/23/2009 - 1:22 am
There is going to be a lot fewer people retiring than anyone expected, just like Japan. Old people also are much less likely to own a car, let alone use them, just like Japan.
Education debt seemed surprisingly low for the mean/median, could be a barbell effect or some funky distribution.
Exactly how does one "retire" on an account of $100k much less $40k with any kind of expectation for a decent quality of life? We are in dreamland here, if these figures are anywhere near accurate. Speculative housing equity gain "wealth" makes up the missing hundreds of thousands, I suppose? Ah, to be a homedebtor...
Education debt seems extremely low, period. All under $20k?? You couldn't attend the cheapest state university you could with resident tuition for four years... Something has to be amiss here... Of course, credit-card-financed college debt isn't an "educational loan"... hmm....
Do state regulators require people to remove lead paint from their homes so the state regulators can snack on lead-paint chips all day?
Some housing focus
.
non-primary residence real estate
http://img40.imageshack.us/img40/3691/picture1hsm.png by percent of families with
http://img39.imageshack.us/img39/4979/picture2xrr.png by region
http://img37.imageshack.us/img37/3269/picture3sfl.png by net worth
http://img36.imageshack.us/img36/9135/picture4x.png by work status
http://img269.imageshack.us/img269/766/picture9c.png by family structure
.
primary residence RE
http://img34.imageshack.us/img34/248/picture5j.png by region
http://img33.imageshack.us/img33/2295/picture6p.png by net worth
http://img20.imageshack.us/img20/8297/picture8x.png by family structure
.
and for Bond Girl,
http://img132.imageshack.us/img132/2996/picture7iiv.png
despair not, Bonds will kick the butts of Equities in the coming post-crash decade(s )
Bond Girl (homepage, profile) wrote on Sat, 5/23/2009 - 1:23 am
Yeah, education loans - pretty crazy.
There's not a whole lot of difference between how universities have acted in this bubble and credit card companies.
college tuition costs have outpaced in growth all the major stock market indices in the time period 2000-2009. another government-backed loan program that seems to have only inflated the nominal asset value in accordance with availability of credit. and of course, we can't forget the interplay between educational institutions and credit card companies that was allowed, targeting many of the most-vulnerable and least experienced with credit, of little means, and only earning expectations to mitigate the risks... another ingredient baked into this nasty pie.
Re: Education loans
Probably does not count any way of paying for university that is not specifically a student loan. Not as straightforward as say, a mortgage.
EHP,
you are amazing. thanks for sharing. Must go sleep soon....good night everyone.
Keep in mind that is for households, and does not limit the type of education the loan financed too well. $100 per credit community college vs post graduate university. I'm sure you could pull it out from one of their data tables, I was just pulling the sample charts out
It is technically the Education Instalment Loan category fwiw
"The Federal Reserve Board on Friday announced the adoption of a final rule that will allow bank holding companies to include in their Tier 1 capital without restriction senior perpetual preferred stock issued to the U.S. Treasury Department under the Troubled Asset Relief Program (TARP)."
It's impossible to understand this sentence without proper punctuation. I think it's the best that bankers can come up with without consulting a lawyer. Since I did take English 1A
"On Friday, the Federal Reserve Board announced the adoption of a final rule that will allow bank holding companies to include in their Tier 1 capital, without restriction, senior perpetual preferred stock, issued to the U.S. Treasury Department under the Troubled Asset Relief Program (TARP)."
So, as I understand it, any company with control over a bank - Citibank, Bank of America, GE - can include in their CORE CAPITAL (their liquid assets, so to speak) stock that has been bought by the US Taxpayers via the TARP.
Breaking it down further, this means that any bank with TARP cash can claim that cash as 100% insoluble cash - essentially, the taxpayers have given these banks free cash in exchange for "senior perpetual preferred stock".
So how much of this "senior perpetual preferred stock" is there? Did this dilute "senior perpetual preferred stock"? What makes it perpetual?
All education installment (sic) loans this time
http://img190.imageshack.us/img190/1149/picture1kti.png median, housing
http://img188.imageshack.us/img188/9194/picture2trt.png percent, housing
http://img42.imageshack.us/img42/4466/picture3y.png mean, region
http://img41.imageshack.us/img41/2296/picture4g.png mean, occupation
http://img40.imageshack.us/img40/7851/picture5wjp.png median, income
http://img39.imageshack.us/img39/9703/picture6j.png mean, income
EvilHenryPaulson (profile) wrote on Sat, 5/23/2009 - 1:42 am
Keep in mind that is for households, and does not limit the type of education the loan financed too well. $100 per credit community college vs post graduate university. I'm sure you could pull it out from one of their data tables, I was just pulling the sample charts out
It is technically the Education Instalment Loan category fwiw
I have looked at the underlying data for the 2007, 2004 installments of the survey (I dumped it into a database to play around for several hours - a few weeks ago)... I'm not extremely familiar with the data set but the category sounds correct. I'm wondering if/how these median values are distorted by inclusion of all folks regardless of college education. In other words, within the data set, it gives education (years of school) and also Ed. Level is categorized (1-5 I think). Naturally, if levels below "some college" (3 IIRC) are lumped in with college graduate or grad school this will greatly skew things. I don't have the datasets handy or I would try a few queries... ok, perhaps not at this time of night
So does INTP stand for Intelligent Prick, as the context comments suggest?
Here is a quick primer on SCF methodology:
Home Finance Freedom: Americans’ Net Worth in the Federal Reserve’s Survey of Consumer Finances (SCF)
INTP
Portrait of an INTP
INTP personalities are not generally caustic, so much as detached.
Even if they do break it up, it is done by head of household.
I don't think we should necessarily fight the data — the prodding so far has been fine — but maybe a second factor like HELOCs fills in the blank for education funding. I know there are scholarships, financial aid, savings, income to help pay. I guess the important thing is probably these numbers are for the entire population. Higher education costs were dramatically lower even 10, let alone 20, years ago. As such, not only did that cohort have a lower debt burden, but they likely even paid most of it off. I wonder how interest rates have factored into it. Could have been cheaper to pay the interest on the student loan, than to borrow more with a mortgage. Probably the better way to look at higher education debt is by the Federal Reserve flow of funds report if they break out education loans
double post redaction
So does INTP stand for Intelligent Prick, as the context comments suggest?
Sorry for the snark. As INTJ I couldn't help myself.
EHP - I bet HELOCs have been a huge part.
unrelated - GM
G.M. Draws Another $4 Billion From Treasury, for a Total of $19.4 Billion - NY Times
unirealist,
Now that is funny.
darnit, they don't show education loans separately.
but I did come across Pension fund reserves totalling $13427.1bn at recent peak a few months back, and $10280.0bn in March
best way to look at educational loans would probably just be through the size of its debt market.
Bond Girl, GM
G.M. originally said that it would need an additional $2.6 billion from the government to operate through June 1, but added $1.4 billion to that amount.
...
G.M. gave the Treasury a note for $266.8 million as security against the additional money that it borrowed on Friday. The financing does not appear to be the last that G.M. will draw, according to the filing with the Securities and Exchange Commission.
Ditch the pre-tense, give up the ghost, just back up your trucks and take as much cash as you need, it'll be the honor system but we can reuse the Master Liquidity Enhancement Conduit trademark Paulson took out but never got to use
darnit, they don't show education loans separately.
but I did come across Pension fund reserves totalling $13427.1bn at recent peak a few months back, and $10280.0bn in March
best way to look at educational loans would probably just be through the size of its debt market.
it's just way too easy to play games with educational loan figures, and that isn't including fraud or misusing statistics. I am sure more than a few HELOCs went to graduate education, which is really probably one of the more sensible applications and might at least have some long-term value and even real ROI. I think you're correct that the nearest we can get to an objective view is via the volume of the private and federal student loan debt market.
What gets me is that the administration already leaked a couple days ago that they were looking at forgiving the GM debt. You are quite right.
3:18 am... I think this is my bedtime
Does anyone want to have a serious discussion about whether government stimulus is actually of any benefit whatsoever to an economy?
In my mind it simply "kicks the can down the road," as so many CR posters like to say. Worse, it prevents the economy from self-correcting like a healthy immune system. Real problems aren't weeded out to make room for real, sustainable growth.
Most recent GAO report on tuition, HIGHER EDUCATION Tuition Continues to
Rise, but Patterns Vary by Institution Type, Enrollment, and Educational Expenditures
There had been a lot of work on it around 1998, but that ended in a dead-end. I know from personal experience that they also did a great report on textbook pricing about 5 years ago that could have been the basis of an anti-trust lawsuit, but it was once again ignored
"Kinda like college, but funnier. Much, much funnier. "
You went to the wrong school.
Danny,
If you catch me online at a better hour I might try better to explain the layers of logic. It's wheels spinning within wheels inside of Matryoshka dolls
I hear more and more people talking about how inflation is going to halt the fall in housing prices. Or how buying real estate now is a good hedge against the inevitable hyperinflation to come.
But that is all FALSE.
We're not going to see simple inflation. We're going to see stagflation. Which means along with rising prices for durable goods will come rising unemployment (i.e., falling incomes). And since house prices are more directly tied to incomes than anything else, prices will continue to fall.
Danny (profile) wrote on Sat, 5/23/2009 - 2:22 am
Does anyone want to have a serious discussion about whether government stimulus is actually of any benefit whatsoever to an economy?
In my mind it simply "kicks the can down the road," as so many CR posters like to say. Worse, it prevents the economy from self-correcting like a healthy immune system. Real problems aren't weeded out to make room for real, sustainable growth.
stimulus is a form of wealth transfer IMHO, from taxpayer earnings or a claim on future earnings to the politically-well-connected. a real stimulus action would put the money directly into the hands of hoi polloi. top-down could only exceed the benefit of direct stimulus if it resulted in investment gains, technological innovation, or the creation of sustainable jobs, the sum total gains of which would have to exceed the gains of same if they were put into taxpayers' hands. giving every taxpaying adult $10,000, for example, would result in a lot of different economic behavior, from savings to investment to entrepreneurship to paying down debts to risky speculation. can the Central Planners and their selected cronies outthink the aggregate of individual economic decisions made by the rest of us?
Danny,
More Doug Noland:
Dr. Rogoff and others believe policymakers are these days “ameliorating” the deleveraging process. My analytical framework takes a contrasting view. The critical “deleveraging” process at this point would amount to weaning the U.S. Bubble Economy off of its currently required $2.0 Trillion or so of annual Credit growth. The issue is at its heart embedded deep within the economic structure and will not be cured through additional credit inflation. Current policymaking is shifting the debt burden from the private sector to the federal government sector - and, in the process, increasing the total system (non-productive) debt burden by another $2.0 Trillion or so annually. Moreover, I would argue that this momentous government (Fed and Treasury) intervention in the pricing of finance further corrodes our system’s process of allocating financial and real resources. The “debt bomb” is not being diffused. Rather, the fuse is being somewhat lengthened as the bomb enlarges.
I think MINOR stimulus can work only insofar as the problems an economy is facing are simply crises of confidence. In that sense the stimulus is simply a temporary bridge over the troubled water of irrational consumer fear. For instance, if our economy in late 2001 was robust and healthy (this is hypothetical of course - it wasn't), then a little bit of stimulus would have been a wise move to get people over their post-9/11 anxieties.
But if there are REAL, non-psychological, non-illusory problems in an economy (trade deficits, shrinking manufacturing base, gross overleveraging, etc.), then stimulus doesn't do jack shit. It fixes nothing.
Danny (profile) wrote on Sat, 5/23/2009 - 2:39 am
I think MINOR stimulus can work only insofar as the problems an economy is facing are simply crises of confidence. In that sense the stimulus is simply a temporary bridge over the troubled water of irrational consumer fear.
But if there are REAL, non-psychological, non-illusory problems in an economy (trade deficits, shrinking manufacturing base, gross overleveraging, etc.), then stimulus doesn't do jack shit. It fixes nothing.
Again, what you are actually doing is borrowing from the future earning potential to satisfy present consumption. If you can create sufficient growth/return in the present to overcome the cost of that borrowed future capital + interest, you can keep up the game. That would require some amazing "investing", and I would gamble on the collective effort of millions any day over the profit-maximizing behavior of a well-connected elite and their army of Master Planners to achieve it. This doesn't mean you are solving underlying structural issues, of course, but it both buys time and creates real economic growth in the meantime. Of course, we don't see that with present efforts, and it would be a tremendous gamble.
Thank you, TJ. Here's some more from Doug.
This gets back to the disagreement I've had with the "inflationists" for years now: In the name of Keynesian economics, inflation proponents have repeatedly called for massive stimulus in response to the bursting of THE Bubble, while in reality this activist policymaking was instrumental in only extending and worsening a systemic Credit Bubble. This was especially the case after the bursting of the technology Bubble and is again true today following the bursting of the Wall Street finance/mortgage finance Bubble. Now, more than ever before, "Keynesian" inflationism is THE Bubble. When it eventually bursts Washington policymakers will have little left to offer.
Down with Keynes!!!
Resistance - if you don't fix the underlying structural problems, you haven't fixed anything. AND you've borrowed against future earning potential, as you say. So what has Keynesian stimulus done other than move us closer to stagflation?
Danny, RIF,
I believe we all agree that Keynesian stimulus may be effective when psychology is the only issue.
One could argue that the only way to effectively counter a psychological problem is to put money into people's pockets. The housing bubble did that indirectly, unfortunately at the cost of unsustainable debt. It's rather amazing that Obama, who ran somewhat as a populist, is pursuing policies that benefit Wall Street at the expense of Main Street. It's counterproductive both economically and psychologically to J6P.
Danny,
It's worse than even that, because government-directed stimulus spending is almost inherently mis-allocated.
Danny (profile) wrote on Sat, 5/23/2009 - 2:53 am
Resistance - if you don't fix the underlying structural problems, you haven't fixed anything. AND you've borrowed against future earning potential, as you say. So what has Keynesian stimulus done other than move us closer to stagflation?
it's possible that all you can do is continue the game/scam or risk systematic collapse, the outcome of which would be far less preferred than either stagflation or a deflationary depression to all but a tiny minority. but "buying time" literally means buying time in which to assess and attempt to address the underlying weaknesses. if that isn't done, there is only the choice of continued perpetual growth until the thing collapses. that's basically where we are right now, IMHO, with hugely deflationary forces acting from within that bubble of malinvestment, and vested interest (not just of the elite but of a vast majority of us who wish to sustain our illusions of progress, wealth and prosperity instead of admit we have been hoodwinked for decades by moneychangers who stole most of our real wealth) in keeping up appearances / asset values. again the "massive stimulus to taxpayers" is just a giant gamble, really, but it is one I would take in lieu of handing huge sums to the very people who created the problems in the first place, as this is the only stimulus I personally believe might have any probable effect other than simple wealth transfer, or jonesing the taxpayer with another one-time hit from the monetary crackpipe.
didn't realize what time it is, yikes.... I'll check out the dead thread remnants tomorrow - calling it a night...
There is a little bit more to the Edmund Andrews bankruptcy for those who are interested in the story...
Edmund Andrews Explains His Decision to Omit his Wife's Bankruptcies - Megan McArdle
last
"South Korea’s Ex-President Roh Moo Hyun (2003-2008) Jumps to Death Amid Bribery Investigation"
This seems to be the avenue of "closure" many men from the "Far East" have taken when addressing their past moments of weakness. Many of our executives could take a few lessons from this. It would seem to beat the alternative of a humiliating court trial (for the family), and subsequent long-term incarceration for many.
South Korea’s Ex-President Jumps to Death Amid Probe (Update1) - Bloomberg.com
CR......
An earlier question regarding banks in the 1930s; were more of them single "stand-alone" banks with no branches? If so, that might indicate some noise in stats when including multi-branched institutions as ONE bank failure.
BTW, nice work. Kudos for the dedication required to put out this top-flight blog. Thank you for the concise information and knowledge you've imparted through your many long hours.
consider this quote by any ransom shill,
"we are closer to the bottom than we were six months ago"
consider this quote by otis,
"we are closer to tomorrow than we were yesterday."
Nah, the bribers have no class.
Wake up wake up everybody.
Everybody is still in their sleeping bag and there is no WI FI in the camp ground!
Alas, in South Florida, refinancing at 3% isn't working. When you are down half, owe 300 on a 150 place, they
could charge 2% and it wouldn't change anything. Maybe 1/2%!!! Those 3% deals only last 5 years by the way,
and if anyone thinks the property will be anywhere close to 300k, well I have a bridge I could sell them.
I am selling one of my rentals and the young girl with kids is getting the down payment from the county. My guess is she will walk in with little or zero down. A couple of years after identifying part of the problem is DAP's they are still at it. Disgusting! Interest rates in over blown markets won't cure a thing but maybe slow foreclosure at our expense.
The Stimulus is working-the rich are getting richer.
re: Lucifer - he suffers from what I can only describe as an aggravated narcissistic personality disorder, and I hope he gets professional help before he harms some unfortunate woman someday.
It only strokes his massive ego to engage with him on the subject of his twisted sex life on this forum, as well as diminish the quality and credibility of the forum, itself. Please do not engage this attention-seeking behavior. It is ruining the CR experience, IMO.
A related question; How many banks were in operation in the 20's or 80's compared to today after the deregulation fed wave of bank mergers? A graph comparing failures to operating banks would help.