We have a better chance of negative rates than of hiking rates.

"It is interesting that Hoenig believes growth will be sluggish for some time, and he is still advocating raising rates."

It is called stagflation.

"This will not happen any time soon. "

Which will lead to hyperinflation.

Those are our two choices right now.

Speaking of rates. Does anyone else see the ally bank banner ad on the right side of the CR home page. 2.25% APY for a savings account.

Yep. Paid for by the 'merican taxpayer

I got pigged on the Home ATM post

Re: CR's post. The home ATM business isn't completely gone yet. There are still some of the same companies out there hawking debt consolidation and equity loans.

American Home Equity
Homestead Financial

To name a couple whose commercials I see here in the midwest. Where are they getting their money for these loans? I thought the shadow banking system had collapsed. And haven't they learned anything? How can they still be doing this business when house prices are still falling? Who is taking on that risk?

I'm really trying to figure this out. Can anybody shed light on this?

Don't worry the market will eventually do it for them

bearly (profile) wrote on Wed, 6/3/2009 - 3:05 pm reply Ignore user what got into the fargin USD today

Flight to saftey. The only reason the dollar had been going down is because of that trade. People just don't want to accept that because it disturbs their little world of anti-dollar hate.

Instead of taking away the punch bowl as the party gets out of control, Hoenig just wants to cancel the party altogether.
Scene:

"No party for you, Mr. Market!"

Mr. Market looks around the funeral, confused. Everywhere people are weeping, holding each other for comfort.

"You must be in the wrong place, dude." says Mr. Market. "Are you feeling alright?"

"Stop it! Stop it!" yells Hoenig. "No parties! I told you no parties!"

Mr. Market, still confused, pays his respects to the unemployed, and to the idled factories, and the long bond, and the dollar; all laid out in their best suits and with a touch of mortician's putty around their cold and hollow faces.

Then walks off into the night, alone.

Mr. Market, still confused, pays his respects to the unemployed, and to the idled factories, and the long bond, and the dollar; all laid out in their best suits and with a touch of mortician's putty around their cold and hollow faces.

Then walks off into the night, alone.

Nah... I think Mr. Market leaves with all the strippers, and whatever coke is leftover.

I was looking thru this Bank loan performance website and it shows GS had a 7.22 percent delinquency rate on their loans in Q4-2008 and 0 percent in Q1-2009. I also noticed my small bank had significantly lower delinquencies during that same time frame, with no charge off's. How can that be?

Bank Loan Performance

"what got into the fargin USD today ?"

I think flight from European currencies as devaluation of at least one is imminent. Kind of another Iceland due soon...small country with massive debts denominated in Euros rather than domestic currency.

dryfly my response to your comment got pigged.

People on these forums think too much like investors - the Chinese are pols who aren't as concerned about ROI as they are about keeping jobs in China and their prols off the street.

Along those lines, local plastics petro-chem plant worker/neighbor told me last night that they received some good news yesterday from management. They will be shipping their excess plastic feedstock to China for the forseeable future due to increase in demand and also cause the company's China plant has one line with operational issues. No doubt he was happy to hear that as his wife's sales and I'm assuming income is down this year. Her company sells municipal sewage line restoration products and services.

Eric - LOL!

The average American already chose to avoid being forced to choose among your alternatives and instead to let the bankers swim to shore on their own. Fortunately, nobody important really cares what the average American has to say.

Timmy really rolled over when he was in China. "Sure, you can buy Hummer. Yes, we'll release Chinese nationals from Gitmo and relocate them somewhere in the US

Some Chinese Guantanamo Detainees Likely to Be Released in U.S.
Share | Email | Print | A A A

By Justin Blum

June 3 (Bloomberg) -- Some of the 17 Chinese Uighur Muslims being held at Guantanamo Bay, Cuba, will likely be released in the U.S. in an effort to convince other countries to accept prisoners from the detention facility, according to current and former American officials.
Some Chinese Guantanamo Detainees Likely to Be Released in U.S. - Bloomberg.com

"they don't hold loans anymore, they traded them all for treasuries. Hence 0% delinquent"

ROTFLMAO!!!! That sounds about right to me.

Release the Gitmo detainees in Afghanistan...

"Hmm, why is gas suddenly at $3 a gallon?"

Speculation of a fast global recovery. That loses steam, gas prices will fall as holdings are sold.

"The markets won't be fooled... Market participants realize.... ...the first signs of the markets' concerns... ...need to be alert to the markets' message..."

Og see dancing lights! Og know gods upset! Og drag money honey to cave to appease loin gods!

This may have something to do with the USD+

"Latvia has become the first EU country to face a sovereign debt crisis after failing to sell a single bill at a $100m (£61m) treasury auction, prompting fears of a fresh storm in Eastern Europe as capital flight tests currency pegs."

Leftover coke - hah! as real as a unicorn!

Especially when strippers are involved.

Or so I've been told.

I know this is off track but you guys have to read this:

Denninger:

June 3 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank by deposits, hired a newly built supertanker to store heating oil off Malta, shipbrokers reported, in the company’s first such booking in at least five years.

The bank hired the Front Queen for nine months, according to daily reports from Oslo-based SeaLeague A/S and Athens-based Optima Shipbrokers Ltd. David Wells, a spokesman for JPMorgan in London, declined to comment.

So let me see if I get this right.

The Taxpayer hands JP Morgan billions of dollars to bail them out and keep them from potentially being declared insolvent.

In return for this JP Morgan spends that money speculating on the price of oil, and in fact does one better - they take physical delivery and lease a ship to store it in, thereby withholding the oil from the market and propping up the price, hoping to be able to sell that oil at a higher price later.

In the meantime, however, they are partially responsible for the rise in gas prices, meaning that not only did they collect taxpayer money once, but they are effectively partly responsible for you the consumer paying a second tax, this time through higher fuel prices at the gas pump.

Then, when the time is right (for them) they will sell the oil and profit a second time.

You, the taxpayer, will pay for all three of these actions.

And we, the idiots in America, along with a bribed and purchased Congress, will allow them to get away with it.

Not such a crazy idea. One may conclude that households are trying to repair thier balance sheets by saving. Increasing rates leads to increased payments on accrued depository savings. Leading to quicker repair of those balance sheets and a return to indescriminant, ...oops!... normal consumer spending. Increased short term pain for a fundamental repair to our economy. Unfortunately, this administration and FED have zero tolerance for short-term or long-term pain in the hopes of improving fundamentals.

It is interesting that Hoenig believes growth will be sluggish for some time, and he is still advocating raising rates. This will not happen any time soon. - CR

That reminds me:

"In 2000, then-BOJ Governor Masaru Hayami was widely derided for raising rates from zero to 0.25 percent. Pundits called him Japan's answer to Herbert Hoover. Yet Hayami was trying to force Japan Inc. to implement structural reforms. It didn't work and rates returned to zero in March 2001." - William Pesek, 2007

Speed...yup:

FT today:
"A failed Latvian government debt auction on Tuesday sent tremors across financial markets as investors feared that emerging nations round the world would struggle to find buyers for a huge wave of sovereign debt issuance. The auction failure revived concerns about the economies of central and eastern Europe and triggered a sell-off in the shares of Swedish banks, which have invested heavily in the Baltic nation. The currencies of several east European countries fell sharply against the dollar. "

So somebody besides the US needs to issue a lot of notes and bonds...I'm guessing they'll have to offer much higher yields.

heh - best market movie ever

The hyperinflationary argument breaks down when you talk specifics. Look at Mexico, look at Wiemar, look at Zimbabwe - no - look at the US and tell me how much money is flowing from banks into the economy. It isn't. Yes, banks have a lot of taxpayer cash. And that's where it sits - in banks. How will it come out? Loans? To whom? For what? Expansion? Meanwhile, US citizens continue to save and not spend - consumers, remember, make up 2/3 of the US economy. That's all I have to say on the subject of inflation vs deflation.

Right...the demise of the shadow banking system has decreased the money supply enormously.

Kermit, warming up, finishing off that Green Shoot salad....

No:

Mortimer Duke: Randolph look...

Randolph Duke: I'm still not talking to you!!!

Mortimer Duke: But look at this!

Both Dukes: We're BAAACK!!!!

Hmm, why is my neighbor's $600,000 house suddenly $400,000?

Because you moved in next door?

Boy, look at that stick-save attempt into the close.

These guys are brazen.

If I did not pay attention I would swear this Market was rigged.

"That's all I have to say on the subject of inflation vs deflation. "

With all due respect, you should do less saying and more reading.

For example, the rest of Hoenig's speech is interesting:

"...This happens because people often confuse the establishment of low interest rates - and therefore the creation of money - with the creation of wealth. Sadly, through history, it has been shown repeatedly that excessive reliance on monetary policy as a means to avoid fundamental economic policy choices leads to high inflation and an actual worsening of an economy's long-term performance."

Don't confuse the drop in price of your neighbor's house with deflation.

The better question is, what about the debt on your neighbor's house? Is he going to default? If so, who takes the loss? Will the Fed just absorb the loss, or the Treasury absorb the loss, issue more debt, which the Fed monetizes?

In either of those situations, no money is destroyed, so no deflationary pressures.

I went by a Chase bank today and saw picketers outside. I was all excited and ran up two blocks to greet them and see what they were protesting. It was the janitorial staff upset that they weren't getting their fair share. I'd go out with a sign now that I'm young, angry, and unemployed, but I don't want to queer their protest about buckets by talking about bailouts.

Along those lines, local plastics petro-chem plant worker/neighbor told me last night that they received some good news yesterday from management. They will be shipping their excess plastic feedstock to China for the forseeable future due to increase in demand and also cause the company's China plant has one line with operational issues. No doubt he was happy to hear that as his wife's sales and I'm assuming income is down this year. Her company sells municipal sewage line restoration products and services.

I have friends just back from China - said business is up but it is very much 'forced demand'. He doubts it will last through the year if it doesn't get better sans 'stimulus'.

I love this market. You just can't buy this kind of entertainment.

(Well... you can.... log into PokerStars and watch people whine about rigged river cards..... same deal).

Bland and unfunny Moneylenders Cartoon at Slate Magazine:
Doonesbury@Slate - Daily Dose

ADL Abe Foxman's reaction:
"New hate crime laws will prevent this type of anti-semitic satire"...

"I suspect we are experiencing the first signs of the markets' concerns in the rising rates and increased volatility in longer-term Treasury markets. I suggest strongly that we need to be alert to the markets' message and begin in earnest to bring monetary policy into better balance before inflation forces our hand."

Surely, he's referring here to the recent spike in oil prices as a result of the weaker dollar brought on by nothing more than federal deficits and increased money supply from this "quantitative easing." But wasn't that what happened last year when oil went up to $150? Wasn't Bush engaging in deficit spending? And what happened about midway through summer? Does anyone recall? Wasn't it weak demand that brought the price of oil down? What makes us think that weak demand has subsided?

No, inflation is still the least of our concerns.

Stop Paying On Your Loans

Hotels: "By the numbers"

In either of those situations, no money is destroyed, so no deflationary pressures.

He wasn't talking about price drops, he was talking about reductions in bank lending. That's destruction of money.

If your definition of money extends beyond currency, most of it is created and destroyed by entities other than the Fed. The Fed controls the rules governing that creation but doesn't control the creation itself.

I believe you're forgetting the alphabet soup trillions. Also, the NHL doesn't create the players' violence, but setting the rules has a mighty high correlation with the numbers.

How long before your car runs out of gas?

Yalt:
He wasn't talking about price drops, he was talking about reductions in bank lending. That's destruction of money.

Finish the analysis...

Reduction in bank lending is so fickle! It can turn on a whim, on a variety of reasons. From legitimate business loans leading to prosperity; to speculative loans as certain assets get pumped into a bubble (read: PM, Stocks and Oil); to "stabilizing" loans by individuals or business to smooth out short term crunches. Banks can start "runs" to do lending on a drop of a hat.

So, even if bank lending is low today; doesn't mean it stays low forever. A deflationary thesis only holds if the lending can be kept low indefinitely; or that destruction of money can keep pace with the eventual return of new lending.

As Fed withdraws liability and risk from the system through TARP & bailouts; govt inject new economic activity through deficit spending; and Fed doing QE.... Unless something new develops and causes lending to not rebound; the natural momentum now is actually for things to return.

The current govt/fed action guarantees inflation -- it's the degree and schedule of the inflation curve we're unsure about.