"“The Bank finds itself in a position rather like that of a church whose congregation attends weddings and burials but ignores the sermons in between,” he said."
He forgot Coffee Hour. There are Snacks at Coffee Hour.
I wonder what the 'will' for GS and MS would have looked like?
perhaps - 'in the event of our failure due to insolvency, please leave our estate to the citzenry of the USA, after all, we owned them when they were alive, it's only fair that now they own our corpse.'
Ha, Bank of England wants Glass-Steagall and smaller banks. We want the Fed to pretend to watch over of co-mingled titanic banking-investment-insurance-hedge funds.
A point on the glossary: when referring to it in the comments, use the glossary link, rather then edit glossary link, as the latter is unavailable to anonymous users.
"The cuts are terrible," said Ariana Abeltina, spokeswoman for the Latvian Free Confederation of Trade Unions, which is organizing Thursday's gathering. "No one can survive," she said, commenting on the plans for 50% wage cuts for teachers along with an expected 20% reduction to other government workers' salaries and a 10% decrease on pension payments.
Latvia's hanging out there on its on. Worst case in California -- there's a political meltdown and the state gov't begins to shut down. Social order begins to shut down, too. Obama declares martial law and calls out the Guard (I believe he can). Browbeats the top politicians, speaks directly to Californians, works out a political fix and puts it to a special election immediately with his backing. It passes. All is well -- or at least functional. Remember, California's problem is primarily political.
In other words, Obama treats California the same way the U.S. treats one of its Carribean client states that gets out of line. That's worst case. And he could make people like it.
You have said on several occasions that CA has high spending and low taxes. I was under the impressions that CA has some of the highest taxes in the US. Isn't CA's problem out of control entitlement spending?
Hollywood:
A 12 gauge shotgun is a great home defense weapon and does not require much marksmanship skill. Every house should have one.
"Isn't CA's problem out of control entitlement spending?"
more or less. if we spent 100 bil a year (which is more or less 3400 per capita) we'd be fine. it is what we spent before the .com swelled cap gain coffers a dozen years ago.
A written exam administered by the Pentagon labels "protests" as a form of “low-level terrorism” — enraging civil liberties advocates and activist groups who say it shows blatant disregard of the First Amendment.
The written exam, given as part of Department of Defense employees’ routine training, includes a multiple-choice question that asks:
“Which of the following is an example of low-level terrorism?”
— Attacking the Pentagon
— IEDs
— Hate crimes against racial groups
— Protests
The correct answer, according to the exam, is "Protests."
“Its part of a pattern of equating dissent and protest with terrorism," said Ann Brick, an attorney with the American Civil Liberties Union, which obtained a copy of the question after a Defense Department employee who was taking the test printed the screen on his or her computer terminal."
Just thought it interesting, given discussion of protests.
my pleasure, EE, thanks for the stockpile link. if nat gas goes near that 2 btu mark, i'll do that kind of homework. i've been a commodity bull (which was expensive last summer) for 7 or so years now, and have put some energy into it. nat gas really is the fuel (and "money") of the future.
Obama declares martial law and calls out the Guard (I believe he can). Browbeats the top politicians, speaks directly to Californians, works out a political fix and puts it to a special election immediately with his backing.
You must be thinking of some other Obama. The one who got elected last November is much too partial to the status quo to even consider such actions.
"The cuts are terrible," said Ariana Abeltina, spokeswoman for the Latvian Free Confederation of Trade Unions, which is organizing Thursday's gathering. "No one can survive," she said, commenting on the plans for 50% wage cuts for teachers along with an expected 20% reduction to other government workers' salaries and a 10% decrease on pension payments."
If the government can't ensure the survival of the citizenry, it has lost its function. It is no longer a government.
well, liz, i'd discuss my dietary habits, but i value my anonymity. i generally dislike violence, which, not incidentally, is why i dislike fiat currency - it slowly but violently rapes us all.
What is the popular mood in CA? Who do you guys blame for this effort. My impression is that Arnold tried to reform state government a couple years ago and, once rebuffed in the referendum, just went along with the legislature. I guess he is acting tough this time. I am more inclined to blame the legislators, but I could be out to lunch.
Yes, and pricey energy is likely the future...just the timing may be a bit tricky near term. Also, when considering nat gas there may be LNG cargo 'dumping' in our future as project economics for many plants are driven by the liquids stripped and the dry gas is almost a by product...but one or two butt kicking hurricanes can get you right where you want to be as well.
I have had to take these dumb ass anti-terrorism courses. Usually, they give you some dumb scenario and ask you idiotic questions about it. My guess is that they gave the employees a scenario (ie you are in Krapistan when the government collapses and crowds take to the street and burn cars...etc). I don't think there is a nefarious plot to squelch political activity in the Pentagon. Putting chemicals in the contrails, yes. I don't think we are budgeted to target protesters until next fiscal year.
Well, nitey-nite, must go and eat. Will be fun to see how much the glossary has grown by
tomorrow. Palmcaster?? I term I've never seen anywhere. Except in reference to the
"Palmdale Bulge" which has to do with earthquakes, not fat.
total oblivion. many folks out of work are still happily cashing those checks. any fiscal sacto problems are a deep second to people's personal financial problems, almost always involving underwater real estate and underemployment. small businesspersons and retailers are aware that something is funny - the state has been screwing with the sales tax schedule in attempts to trigger fines and get money early in June for the past year - but that's a minority of folks.
but, of course, californians are a special breed. the anti-historical mindset (most SoCalers weren't even aware of the '93/4 housing crash in this last run-up) runs deep, and the bay area elitist attitude is also an effective reality distortion field, while the central valley had double-digit unemployment even at the peak of the .com.
I blame the people of California. Politicians have been telling them they can have something for nothing for decades. Any pol who tries to say otherwise -- and wants to cut spending, say, or to raise taxes -- will be voted out of office in favor of someone who does not present such "difficult" choices.
The problem will not be fixed until the pain is so great that people have no choice but to pay attention. Kind of a microcosm of the whole country, actually.
Passing a budget requires 2/3 vote by the legislature. Democrats are majority but not 2/3. Republican office holders are strictly no new taxes, which also require 2/3. Hence gridlock, been going on for years. Now that the economy goes south, matters get a bit more severe. Income taxes and sales taxes are relatively high, property taxes controlled by Prop 13 and very low for long time holders of property, not so much for somebody with a bubble priced property. If you are a R spending is out of control. If you are a D the tax situation needs to be reformed for more revenue.
"You have said on several occasions that CA has high spending and low taxes. I was under the impressions that CA has some of the highest taxes in the US. Isn't CA's problem out of control entitlement spending?"
What's out of control is our tax system; because of constraints on property tax, and on passing state or local taxes (2/3 vote), California relies heavily on income and sales taxes -- the two taxes that crash most suddenly in hard times. More income from property tax, which is slower to react to economic downturns, would have kept our predicament from becoming this dire.
We also have a gerrymandered legislative map with safe districts for nearly every legislator (their fault). New taxes cannot be passed without a 2/3 vote even in the legislature (a constraint 48 other states don't have), and the Republicans, who vote as a block, have just enough votes to kill any increase in any tax to accompany spending cuts. Which they have done, which has made any lasting compromise in Sacramento on this problem impossible. The only "solution" they were able to come up with was so slipshod and hard to understand that the people shot it down at a special election. Not because (IMO) they don't want new taxes, but because they've lost trust. I will not blame Republicans for everything; Democrats have safe seats, too, and pander to unions unconscionably.
Also: during the dotcom boom and after the legislature played to the crowds (and pet special interests) to fund several large programs that looked doable at the time -- but of course the revenue didn't last. A hefty increase in pension benefits for peace officers, new prisons and higher pay and benefit for the politically powerful prison guards union; other issues. And soon after entering office, Gov' Schwarzenegger made good on a popular campaign promise and cut the auto registration fee in half, cutting six billion in revenue.
None of the above -- none of it -- was scaled back after the spike in revenue from the dotcom boom went away. And nothing was done to cut spending in the wake of the six bill tax cut. And we were already borrowing to make the state budget when that happened.
In the meantime, corporate and political interests continued to present Californians with a bi-yearly selection of multi-billion dollar bond measures that they could vote for through California's direct-democracy proposition process at general elections. The people treated it like free money. I mean, someone will take care of the money, right?
I let no one off here -- nobody, certainly not bureaucrats and advocates of social spending. But to say it's all about entitlements -- well, if that were the case, we'd be hearing the same dire level of end-of-the-world commentary from every high entitlement state. And are we?
I doubt it. By the time the crash comes the military won't have the resources to run anything that is if they are willing to follow this government instead of just taking over
Also most of the wars toys they have are damaged or not that useful for urban warfare
In terms of keeping things from spiraling out of control the US has little manufacturing capacity to keep people busy and less oil. If a crash comes we may not even be able to keep the lights on for long or have boxcars to fill with people for a putative FEMA Konzentrationslager
I am not predicting a crash mind or any worse case scenarios but if we get one we may well end up with several smaller republics and go out Soviet style
"imagine an entire state full of too big to fail types"
well, is our correctional system too big to fail? a quarter million hardened psychos, anyone?
unfortunately, there's no loan scam to subsidize that one in the manner that the UC system has been held in place on the backs of "professional fees" for our grad students.
back in the good old days, in the scotland of adam smith, rival banks would orchestrate runs on each other - such that any leverage was accompanied with real risk. that's the way it should be. we all face the consequences as individuals when we run undue risks in our own personal, social and business lives, no?
"I am not predicting a crash mind or any worse case scenarios but if we get one we may well end up with several smaller republics and go out Soviet style"
I don't think so, barring a supervolcanic erruption, a giant asteroid collision, or the explosion of the sun. IOW, not likely.
"Our enemies - low credit card limit, lack of savings - must not deceive themselves – in the 200 years of US history known to us, our people have never been more united than today. The Lord of the Universe has treated us so well in the past years that we bow in gratitude to a providence which has allowed us to be members of such a great nation. We thank Him that we also can be entered with honour into the everlasting book of US history! SEEK HELP! SEEK HELP! SEEK HELP! (with creditors) BUY BUY BUY!"
Things are pretty dire in NYS budget wise. However, it is much easier to raise taxes here, and the legislature has obliged. The population exodus will get us in the long run; upstate is emptying out. I love upstate NY, but I refuse to pay NYC prices to live outside Albany. Many people here seem to agree and vote with their feet. We are probably 2-3 years behind CA.
Japan has much larger debt:GDP ratio than the US does and Japan lacks reserve-currency status but Japan pays less than half the yield the US does to issue 10-year bonds:
We are too old for those games now. The same demographics that are killing the world economy are also helping stability. Average age over 35 means few riots
Now in about 20 years or less, the US better watch out. The "triple threat" of Very Late Boom, Gen X and Gen Y kids are going to be hitting late teens and early twenties. In raw numbers they are the largest generation yet, largely Hispanic and often (in all ethnic groups) under educated.
The effects could be very interesting and almost all of them are bad . It could be that the generation may prefer cyberspace to real space and be non materialistic (which means a much poorer state by choice of its inhabitants) very political (better hope its not some extremist movement) or it could be a repeat of the juvenile crime boom --
Its also dimly possible they reinvent the American dream and accomplish something amazing
Obviously, the metrics used to judge "soundness"...are unsound.
Here's my suggestion:
Tier One capital ratios based on size of the consolidated firm and/or BHC. So, the larger the firm is, the higher the required near money in reserve.
It's got the benefit of simplicity and helps incentivize a more decentralized banking system.
"Things are pretty dire in NYS budget wise. However, it is much easier to raise taxes here, and the legislature has obliged. The population exodus will get us in the long run; upstate is emptying out. I love upstate NY, but I refuse to pay NYC prices to live outside Albany. Many people here seem to agree and vote with their feet. We are probably 2-3 years behind CA."
Like they say.... California leads the nation .
Well... maybe if we go through the pain and see what's on the other side... all the rest of you will know better what you want to do from our (good or bad) example. That's happened before.
Those who think the military is a monolithic group of right-wing kill bots are mistaken. We are a cross section of American society. Our views reflect the views of society at large, as do our problems. True, the military tends to be somewhat more conservative than the population at large, but not by as much as you would think. In fact, wrt to economic issues, the military, in aggregate, probably sympathizes more with the New Republic than with the Wall Street Journal. Also, there is not a tradition of political activism in the ranks, so any attempt to turn the armed forces against a large popular protest movement would probably fail ultimately. Yes, I know about the pension riots put down by Patton. But that was a long time ago under very different conditions.
"back in the good old days, in the scotland of adam smith, rival banks would orchestrate runs on each other - such that any leverage was accompanied with real risk. that's the way it should be. we all face the consequences as individuals when we run undue risks in our own personal, social and business lives, no?"
~~~~
Great if you want an unstable financial system ...
Stability based on trust is what makes the system work ...
take a look at the Commercial Paper Market ... fine one week ... a shambles the next ...
"Great if you want an unstable financial system ... "
attempts to ameliorate "instability" in the short term just forestall it for a later date.
it is a shame that this perspective is tarred with the stigma of social darwinism, objectivism, etc - it isn't an ideological perspective any more than gravity is.
I believe most Japanese pension plans invest almost exclusively in government debt, providing a large, politically controlled captive market to soak up all those bonds. Sucks for the pensioners, though.
"We have countries making runs on each other's leveraged position instead of banks. "
actually, the opposite is true - the chinese political elite is scared to death of what might happen if the us consumer market totally withers and dies. they need to create jobs, not for 'reelection', but for the integrity of the party (and nation itself) to survive. if anything, major nations are bending over backwards to help each other keep their respective status quos alive. putin is something of an exception, but the aforementioned nat gas trade is putting that midget in his place quite nicely. markets are good for some things, after all.
Both China (late 1940's) & Russia (early 1990's) have episodes of hyperinflation in living memory, and the lessons learned are seared into the psyche of both peoples...
I know lots of veterans of both wars. All are well adjusted and productive citizens. I think the image of crazy, mal-adjusted vets is mostly the product of credulous journalists and stupid movies. A good book on the subject is Stolen Valor, written by a Vietnam vet to examined VA/criminal justice records to determine if vets had a significantly higher instance of mental illness compared to the general population. He found that, by and large, they didn't. But that doesn't sell papers or movies of the week.
not a bad idea, but of course, they'll need to shelve the Advanced IRB approach which allows the moneycenters to understate their risk, so that the net capitalization might remain the same.
Homelessness on the other hand is higher in vets.. speaks volumes about how much the government really cares for them.
// A good book on the subject is Stolen Valor, written by a Vietnam vet to examined VA/criminal justice records to determine if vets had a significantly higher instance of mental illness compared to the general population. //
Do you have a reference? I am not sure that is true. I cannot speak of previous generations, but VA benefits right now are very generous. I think you also need to normalize for whether or not the homeless vets in question actually completed an enlistment or were booted out for drugs, violence, criminal behavior, etc. I think if you did an apples to apples comparison (vets who completed an enlistment with an honorable discharge versus population at large), you would find little to any statistical difference. I have personally helped kick out shitbags (liars, thiefs, etc) who probably ended up destitute after the Navy kicked them out. They could easily skew the numbers.
We moved from San Diego to Chapel Hill in 2000. I was actually surprised that the cost of living wasn't a whole lot less in the Triangle than it had been in SoCal when you factored in higher property taxes, higher utilities (low heating/cooling in San Diego) and higher food costs. OTOH, gas prices are much lower in NC.
We're still very glad we moved, it's just a better quality of life for our family. But not much less expensive on net for us, if at all.
you're indulging in semantics, basel - 1-30 leverage is dangerous for the same reason that 'fractional reserve banking' is dangerous, and all of those tickers were most assuredly levered up the wazoo
The NC Budget battle looks to be heating up. At first the House wanted only cuts with no new taxes to close a $4B hole. Now the governor is predicting dire impacts on education from such a plan and privately urging at least $1.5B in new taxes. Will be an interesting few weeks.
This was an interesting note in a local paper:
"More than 100 people crowded into the old House Chambers to cheer Perdue, mainly members of the N.C. Association of Educators, the influential teachers lobby. "
True. I stuck with the "Tiered" definition and whatever follow on complex taxonomies are being considered in favor of simplicity. Anytime we draw a line, it will be gamed, tested, pushed, etc. Kinda like dumping everything in Level 3. "Oh, you don't like our values? Well, we'll just dump everything in Level 3 and buy assets that will suit your Tier 1 requirements with the TARP money! There, all fixed!"
In a perfect world, if we could stip that reserves could only be CB/FHLB repos and cash on hand, we'd be on much safer footing even under current reserve regimes. But, I'm realistic.
Progressive caps (well done!) eat up a lot of "slop" in the balance sheets I would hope without being too, uh, "reactionary".
I think we are getting into doublespeak. Any time a bank requires emergency assistance from the government that bank has failed. You will never read in an annual report the line "We succeeded beyond all measure this quarter but we lost most of the shareholders money along the way."
In my book:
Royal Bank of Scotland: FAILED
HBOS/Lloyds: FAILED
UBS: FAILED
HypoReal : FAILED
CitiBank: FAILED
Merril Lynch: FAILED
Bear Stearns: FAILED
Lehman Brothers: FAILED
Fannie Mae: FAILED
Freddie Mac: FAILED
AIG: FAILED
Now will someone explain to me what too big to fail means, because it is not all clear from the examples above?
"The problem [in California] will not be fixed until the pain is so great that people have no choice but to pay attention"
as it continues to worsen, they will vote with their feet, since Sacramento pols are so entrenched. I suspect that will leave you with a lot of full prisons, unemployed people, and empty houses.
"Now will someone explain to me what too big to fail means"
too big to fail means that there's no way to clean it up, such that there is no choice but to keep it alive. this is a political question - an AIG blowup would be a serious blow to america's identity overseas, while a collapse of C would just be too much consumer wreckage for the FDIC and FNM/FRE are still the majority of the RRE mortgage business.
I'd also put limits on the pooled loan market at the community and regional level, as well. And, the only reason I'd do this is because I don't feel local lenders are savvy enough to understand the risks. But also, b/c there isn't a secondary market for these deals. So, if one guy gets stuck, they all scramble. Perhaps Silverstone's failure will curtail the number of these deals.
"too big to fail means that there's no way to clean it up"
First comes the failure, then the rscue. If your head isn't on straight, or you're trying to twist someone else's head the wrong way, you say: 'Too big to fail.'
The lifeguard rescued the swimmer who was too big to drown?
i'm firmly in the mellon camp, personally. (no, not an attempt at a horrible pun).
but we really might want to ponder what would happen if FNM/FRE (which really dwarf much of the other entities involved in importance) really went down. personally, i'd find it funny if PTRAX closed at 2 bucks. but there would be effects.
"as it continues to worsen, they will vote with their feet, since Sacramento pols are so entrenched. I suspect that will leave you with a lot of full prisons, unemployed people, and empty houses."
In this case, mass exodus would be more a function of duration; if the budget/governance crisis continues for six months, not so much. People have a certain inertia, as do all things.
Much more than that, though, and I would expect more of an exodus. Nothing dramatic -- but steady.
CA has steadily been undergoing internal (national) emigration and global immigration for a while. Water finds sea level, and people will be buying in malibu when pacific views go under a million.
"Now will someone explain to me what too big to fail means"
TBTF is the antonym for "take your medicine." Usually because of the "systemic risk" of it becoming abundantly clear to the public, that legislators have been the willing and well compensated partners of the TBTF banks in this financial crisis, by ignoring regulatory responsibility, looking the other way, or outright supporting banks getting to be, too big.
When language loses touch with reality, it's because the people who speak it have lost touch. When language degenerates people find it difficult to reason and almost impossible to extricate themselves from predicaments.
"I would not, a large chunk of my 401K is in PTTRX. "
exactly, many people, especially oldsters (and probably congresscritters themselves) are on the bill gross train. they vote. especially the oldsters. hence, TBTF.
California is a democratic state too important to elect college. That repaid tarp will find an insurance scheme for munis monster leverage just how tg likes to roll
exactly, many people, especially oldsters (and probably congresscritters themselves) are on the bill gross train. they vote. especially the oldsters. hence, TBTF.
I have around 30% cash 40% on the Bill Gross train, and a small percentage in other holdings. I just do not have many good options, if TSHTF I still don't know how much of a downside there may be.
Anyone have a reading list for explorers gone mad? I remember something -- PBS? -- about some S. American explorers gone mad but don't remember the details. That is the one I am looking for.
No, not since they accepted or were forced to accept the assistance of the government. They seem to be intact, but they are changed.
Complete horse hockey, as far as the 19 TARP recipients goes.
Mostly horse hockey, in the context of the companies actually listed and what I actually wrote, to wit: Management, boards of directors, and creditors are largely intact. With the exception of Lehman, the latter were made fully whole even for the so-called "failed" institutions.
The point is simple. Same players + same game = same result, sooner or later. And that game has everything to do with the implicit guarantee of all large bank liabilities by the U.S. taxpayer.
Same players + same game = same result, sooner or later.
You don't sound convinced by his O'linesses new department of regulatory supervision and finance and stuff.
A new govt. dept and the Fed on steroids will cure all banking ills... well for the bankers anyway.
I agree w/ Nemo regarding the bankerdome; that is a good bit of site lore that should be preserved. I must have been away when he stopped posting so I don't remember what had happened.
"The point is simple. Same players + same game = same result, sooner or later. And that game has everything to do with the implicit guarantee of all large bank liabilities by the U.S. taxpayer."
When I said 'changed', I didn't mean 'reformed, meaning 'improved by alteration', or that 'abuses have been abolished.' I think it likely that the whole of our system, and perhaps our society, is undergoing a mutation. The banks are part of it. Whatever mistakes are made in the future, whatever distortions are to be suffered, they won't be the same ones as in the recent past. I don't think so.
The "bankerdome" thing predates even me. I am not sure whether Banker himself made up the term or someone else did.
The idea, I think, was that he had a secret retreat with enough food etc. to last through the Apocalypse. This was back when joking about the Apocalypse was actually funny, not "nervous laugh" funny.
I think AllenM or ac would be better qualified to flesh out the definition.
I find it very interesting that the banks are to big to fail where allowed to combine into even bigger banks? Only in America can we see the failure and then amplify it.
Banker thought the Bear Stearns thing would blow over. I maintained, along with a few others, that the reputational damage caused by the failure of Bear's two hedge funds would take down Bear itself.
I think it would be an error to take the crisis of the banks and other financial institutions in isolation, as a random complex of accidents or misfortunes, or malfeasances. It has been a result of who we are, and what we are becoming.
so the next big macro issue (for at least 6 months) is going to be health care... is that outside of CR's ken? Such an interesting economic topic, but at times gets too political.
Bankerdome is presumably where Banker now resides
... or did when the Bear carcass was falling from the sky
... and will again when the a-pork-alypse finally rides us down the path to monetary destruction.
BTW did anyone else read John Hempton's take on rational inflation expectations and monetarism (eg fallacy of the Policy Irrelevance Proposition)?
A nice explanation of why a horizontal natural interest rate curve (except near 0 interest rates) means that the effects of monetary policy can be modeled with long and short term interest rate expectations, except near the zero bound... just read the wonkiness >:) Bronte Capital: Mr Krugman and Mr Ferguson: a suggested interpretation (very long and ultra wonkish)
The model SEEMS simple, but love to hear what others think.
Having read everything Mr.Ferguson's published, and painfully managed to get to the end of it (!)... I find him to be one of those individuals who believe history should be simply shaped to conform to his worldview, not the other way around. A excessively wordy idealogue who I was not impressed by. Plus I personally feel he takes events and does a 1 + 1 = 417.2 which left me with an overall feeling of "just how the hell did you reach THAT conclusion ?". My $0.02 worth which he'd probably disagree with in 50 to 60 pages.
Can we make him our Treasury Secretary?
(Does he pay his taxes?)
at least we're all too small to succeed
Doesn't Blackrock manage more assets than the Fed Now ?
Make their move to slip in ahead of the new regs ... ?
"“The Bank finds itself in a position rather like that of a church whose congregation attends weddings and burials but ignores the sermons in between,” he said."
He forgot Coffee Hour. There are Snacks at Coffee Hour.
I wonder what the 'will' for GS and MS would have looked like?
perhaps - 'in the event of our failure due to insolvency, please leave our estate to the citzenry of the USA, after all, we owned them when they were alive, it's only fair that now they own our corpse.'
Pigged comment.
Some one should define bank who has a vast amount of snark at their disposal.
Ha, Bank of England wants Glass-Steagall and smaller banks. We want the Fed to pretend to watch over of co-mingled titanic banking-investment-insurance-hedge funds.
montas ankle --
in the event of our failure due to insolvency
If there is one thing this crisis has taught us, it is that banks no longer fail due to insolvency.
A point on the glossary: when referring to it in the comments, use the glossary link, rather then edit glossary link, as the latter is unavailable to anonymous users.
Nemo - sorry, my mistake
should have read 'in the event of our failure, due to the government's unwillingness to prop up its greatest benefactors...'
some IMF conditions on Latvia:
"The cuts are terrible," said Ariana Abeltina, spokeswoman for the Latvian Free Confederation of Trade Unions, which is organizing Thursday's gathering. "No one can survive," she said, commenting on the plans for 50% wage cuts for teachers along with an expected 20% reduction to other government workers' salaries and a 10% decrease on pension payments.
No way the UST gets that draconian with Cali.
All the Fedguv needs to do is nothing.
"Ha, Bank of England wants Glass-Steagall and smaller banks. "
~~~
The EU is closing in on England's financial sector ...
More regs smaller banks ...
PM Brown is not a happy camper ...
Yes, NOTHING would be a refreshing change
Guillotines can solve that problem.
//Even then it is just a matter of time - and lobbying. The banks are notorious for having no institutional memory.//
All the Fedguv needs to do is nothing.
Yeah, keep it within their skill set.
That is because they were never solvent in the first place.
//If there is one thing this crisis has taught us, it is that banks no longer fail due to insolvency.//
And the privately owned and operated Federal Reserve Bank
and the missing trillions ?
Call Congress, tell your Senators ...
Yes on S. 604 ... Audit the Fed !
Zip code lookup ...
C-SPAN | Capitol Hill, The White House and National Politics
Lucifer
Guillotines can solve that problem.
~~~~
Still on the revolution kick eh?
Sorry, come the crash it'll be Mussolini style fascism ...
"No way the UST gets that draconian with Cali. "
Latvia's hanging out there on its on. Worst case in California -- there's a political meltdown and the state gov't begins to shut down. Social order begins to shut down, too. Obama declares martial law and calls out the Guard (I believe he can). Browbeats the top politicians, speaks directly to Californians, works out a political fix and puts it to a special election immediately with his backing. It passes. All is well -- or at least functional. Remember, California's problem is primarily political.
In other words, Obama treats California the same way the U.S. treats one of its Carribean client states that gets out of line. That's worst case. And he could make people like it.
"No way the UST gets that draconian with Cali."
if they did, you would be seeing class sizes approaching 100 in the LAUSD... emma lazarus would be a bit disappointed...
I really hope not. I don't like guns.
I like guns, I am a pretty good shot, but I prefer to shoot at inanimate targets.
Very few shots fired during LA riots...but I suspect this would be worse.
Bob Dobbs:
You have said on several occasions that CA has high spending and low taxes. I was under the impressions that CA has some of the highest taxes in the US. Isn't CA's problem out of control entitlement spending?
Hollywood:
A 12 gauge shotgun is a great home defense weapon and does not require much marksmanship skill. Every house should have one.
Cali said it would lay off 60,000 state workers ...
Another what, 120,000 - 140,000 county, muni and school workers ...
Cali unemployment would hit 25% ...
The five highest unemployment areas in the US are in the SanJoaquin Valley ...
I was with a buddy in New England once. He shot a chickadee after some cans. Not nice, i've had an aversion ever since.
I guess the farmers would have their harvesting dilemma solved.
HH,
Thanks for your reply on the previous thread - yes, how short term investors become long term investors, lol!
"Isn't CA's problem out of control entitlement spending?"
more or less. if we spent 100 bil a year (which is more or less 3400 per capita) we'd be fine. it is what we spent before the .com swelled cap gain coffers a dozen years ago.
puts it to a special election immediately with his backing.
So I guess it's Feinstein or Maxine Waters as governor?
I sort of agree with HH, but you know, if you eat meat, you should be aware of how it gets
to the table. I guess nobody eats chickadees.
"Wednesday, June 17, 2009
By James Osborne
A written exam administered by the Pentagon labels "protests" as a form of “low-level terrorism” — enraging civil liberties advocates and activist groups who say it shows blatant disregard of the First Amendment.
The written exam, given as part of Department of Defense employees’ routine training, includes a multiple-choice question that asks:
“Which of the following is an example of low-level terrorism?”
— Attacking the Pentagon
— IEDs
— Hate crimes against racial groups
— Protests
The correct answer, according to the exam, is "Protests."
“Its part of a pattern of equating dissent and protest with terrorism," said Ann Brick, an attorney with the American Civil Liberties Union, which obtained a copy of the question after a Defense Department employee who was taking the test printed the screen on his or her computer terminal."
Just thought it interesting, given discussion of protests.
Or a plot to get Pelosi out of Washington
my pleasure, EE, thanks for the stockpile link. if nat gas goes near that 2 btu mark, i'll do that kind of homework. i've been a commodity bull (which was expensive last summer) for 7 or so years now, and have put some energy into it. nat gas really is the fuel (and "money") of the future.
A 12 gauge shotgun is a great home defense weapon
An even better defense is to not be in CA.
Obama declares martial law and calls out the Guard (I believe he can). Browbeats the top politicians, speaks directly to Californians, works out a political fix and puts it to a special election immediately with his backing.
You must be thinking of some other Obama. The one who got elected last November is much too partial to the status quo to even consider such actions.
"The cuts are terrible," said Ariana Abeltina, spokeswoman for the Latvian Free Confederation of Trade Unions, which is organizing Thursday's gathering. "No one can survive," she said, commenting on the plans for 50% wage cuts for teachers along with an expected 20% reduction to other government workers' salaries and a 10% decrease on pension payments."
If the government can't ensure the survival of the citizenry, it has lost its function. It is no longer a government.
"I guess the farmers would have their harvesting dilemma solved."
~~~~
Harvest what ?
They don't have the money to plant and fertilize ...
let alone run the irrigation pumps ...
Lot a farmers who got into ethanol are ruined ...
well, liz, i'd discuss my dietary habits, but i value my anonymity. i generally dislike violence, which, not incidentally, is why i dislike fiat currency - it slowly but violently rapes us all.
The last time this country seriously rioted was the 70's, so we're a bit rusty...
What is the popular mood in CA? Who do you guys blame for this effort. My impression is that Arnold tried to reform state government a couple years ago and, once rebuffed in the referendum, just went along with the legislature. I guess he is acting tough this time. I am more inclined to blame the legislators, but I could be out to lunch.
Fascism requires a somewhat primitive maunfacturing economy to work.. consumer based economies don't work under fascism. They collapse completely.
//'Sorry, come the crash it'll be Mussolini style fascism//
Yes, and pricey energy is likely the future...just the timing may be a bit tricky near term. Also, when considering nat gas there may be LNG cargo 'dumping' in our future as project economics for many plants are driven by the liquids stripped and the dry gas is almost a by product...but one or two butt kicking hurricanes can get you right where you want to be as well.
pavel: did you catch the WSJ headline for the story on Latvia? It must be nice to print your way out of debt.
"Latvia's Cuts Impress EU, Fray Riga "
" i dislike fiat currency - it slowly but violently rapes us all."
~~~
The problem isn't "fiat currency" ... it is fractional reserve banking ...
Gold was used all through the 1800's and all there was, was boom and bust ....
Fractional Reserve banking levers the economy up too high
Then it's a mad rush to cut credit on the way down ...
Kung Fu:
I have had to take these dumb ass anti-terrorism courses. Usually, they give you some dumb scenario and ask you idiotic questions about it. My guess is that they gave the employees a scenario (ie you are in Krapistan when the government collapses and crowds take to the street and burn cars...etc). I don't think there is a nefarious plot to squelch political activity in the Pentagon. Putting chemicals in the contrails, yes. I don't think we are budgeted to target protesters until next fiscal year.
Well, nitey-nite, must go and eat. Will be fun to see how much the glossary has grown by
tomorrow. Palmcaster?? I term I've never seen anywhere. Except in reference to the
"Palmdale Bulge" which has to do with earthquakes, not fat.
it slowly but violently rapes us all.
My girlfriend did that once, it's better than you might think.
"What is the popular mood in CA?"
total oblivion. many folks out of work are still happily cashing those checks. any fiscal sacto problems are a deep second to people's personal financial problems, almost always involving underwater real estate and underemployment. small businesspersons and retailers are aware that something is funny - the state has been screwing with the sales tax schedule in attempts to trigger fines and get money early in June for the past year - but that's a minority of folks.
but, of course, californians are a special breed. the anti-historical mindset (most SoCalers weren't even aware of the '93/4 housing crash in this last run-up) runs deep, and the bay area elitist attitude is also an effective reality distortion field, while the central valley had double-digit unemployment even at the peak of the .com.
"Fascism requires a somewhat primitive maunfacturing economy to work.. consumer based economies don't work under fascism. They collapse completely."
~~~
And what do we have now besides collapse ?
TPTB will not give up control ... we will have a police state ...
Maybe after that we have anarchy, but not before ...
Nuke --
Who do you guys blame for this effort.
"Whom." (Sorry, can't help myself)
I blame the people of California. Politicians have been telling them they can have something for nothing for decades. Any pol who tries to say otherwise -- and wants to cut spending, say, or to raise taxes -- will be voted out of office in favor of someone who does not present such "difficult" choices.
The problem will not be fixed until the pain is so great that people have no choice but to pay attention. Kind of a microcosm of the whole country, actually.
"pavel: did you catch the WSJ headline for the story on Latvia? It must be nice to print your way out of debt.
"Latvia's Cuts Impress EU, Fray Riga "
Didn't see that, Basel Two.
Passing a budget requires 2/3 vote by the legislature. Democrats are majority but not 2/3. Republican office holders are strictly no new taxes, which also require 2/3. Hence gridlock, been going on for years. Now that the economy goes south, matters get a bit more severe. Income taxes and sales taxes are relatively high, property taxes controlled by Prop 13 and very low for long time holders of property, not so much for somebody with a bubble priced property. If you are a R spending is out of control. If you are a D the tax situation needs to be reformed for more revenue.
Nuke,
Glad to hear it...the story was wierd, where Fox News is on the same side as the ACLU...
Sorry, Basel Too.
"and all there was, was boom and bust ...."
that's called "nature". attempting to smooth out the process never works. mellon was right.
consumer based economies don't work under fascism. They collapse completely.
Oh, thank god!
Instead of some stupid overwrought bank, imagine an entire state full of too big to fail types, and that describes California.
"You have said on several occasions that CA has high spending and low taxes. I was under the impressions that CA has some of the highest taxes in the US. Isn't CA's problem out of control entitlement spending?"
What's out of control is our tax system; because of constraints on property tax, and on passing state or local taxes (2/3 vote), California relies heavily on income and sales taxes -- the two taxes that crash most suddenly in hard times. More income from property tax, which is slower to react to economic downturns, would have kept our predicament from becoming this dire.
We also have a gerrymandered legislative map with safe districts for nearly every legislator (their fault). New taxes cannot be passed without a 2/3 vote even in the legislature (a constraint 48 other states don't have), and the Republicans, who vote as a block, have just enough votes to kill any increase in any tax to accompany spending cuts. Which they have done, which has made any lasting compromise in Sacramento on this problem impossible. The only "solution" they were able to come up with was so slipshod and hard to understand that the people shot it down at a special election. Not because (IMO) they don't want new taxes, but because they've lost trust. I will not blame Republicans for everything; Democrats have safe seats, too, and pander to unions unconscionably.
Also: during the dotcom boom and after the legislature played to the crowds (and pet special interests) to fund several large programs that looked doable at the time -- but of course the revenue didn't last. A hefty increase in pension benefits for peace officers, new prisons and higher pay and benefit for the politically powerful prison guards union; other issues. And soon after entering office, Gov' Schwarzenegger made good on a popular campaign promise and cut the auto registration fee in half, cutting six billion in revenue.
None of the above -- none of it -- was scaled back after the spike in revenue from the dotcom boom went away. And nothing was done to cut spending in the wake of the six bill tax cut. And we were already borrowing to make the state budget when that happened.
In the meantime, corporate and political interests continued to present Californians with a bi-yearly selection of multi-billion dollar bond measures that they could vote for through California's direct-democracy proposition process at general elections. The people treated it like free money. I mean, someone will take care of the money, right?
I let no one off here -- nobody, certainly not bureaucrats and advocates of social spending. But to say it's all about entitlements -- well, if that were the case, we'd be hearing the same dire level of end-of-the-world commentary from every high entitlement state. And are we?
I have met a lot of rich farmers but never one who made money.
I doubt it. By the time the crash comes the military won't have the resources to run anything that is if they are willing to follow this government instead of just taking over
Also most of the wars toys they have are damaged or not that useful for urban warfare
In terms of keeping things from spiraling out of control the US has little manufacturing capacity to keep people busy and less oil. If a crash comes we may not even be able to keep the lights on for long or have boxcars to fill with people for a putative FEMA Konzentrationslager
I am not predicting a crash mind or any worse case scenarios but if we get one we may well end up with several smaller republics and go out Soviet style
"imagine an entire state full of too big to fail types"
well, is our correctional system too big to fail? a quarter million hardened psychos, anyone?
unfortunately, there's no loan scam to subsidize that one in the manner that the UC system has been held in place on the backs of "professional fees" for our grad students.
I have met a lot of rich farmers but never one who made money.
I knew one here in Idaho but he got arrested for counterfeiting.
HollywoodHack
"and all there was, was boom and bust ...."
that's called "nature". attempting to smooth out the process never works. mellon was right.
~~~~
Fractional Reserve Banking exaggerates the cycle, that's what leverage does ...
Your argument applies to fractional reserve banking even more so ...
The Storm Is Coming:
pavel.libsyn.com
That's the way it came to me.
Fractional Reserve Banking exaggerates the cycle,
Paper exaggerates the cycle more than gold does.
We'll be hard-pressed just to return our g.i.'s from their far-flung forts all over the world...
It took a lot of doing to return Soviet soldiers back to Russia, and most of em' were on the same continent, after the fall of communism.
back in the good old days, in the scotland of adam smith, rival banks would orchestrate runs on each other - such that any leverage was accompanied with real risk. that's the way it should be. we all face the consequences as individuals when we run undue risks in our own personal, social and business lives, no?
"I am not predicting a crash mind or any worse case scenarios but if we get one we may well end up with several smaller republics and go out Soviet style"
I don't think so, barring a supervolcanic erruption, a giant asteroid collision, or the explosion of the sun. IOW, not likely.
@Lucifer
"consumer based economies don't work under fascism"
From hitler's speech: The Declaration of War on the US by Adolf Hitler
"Our enemies - low credit card limit, lack of savings - must not deceive themselves – in the 200 years of US history known to us, our people have never been more united than today. The Lord of the Universe has treated us so well in the past years that we bow in gratitude to a providence which has allowed us to be members of such a great nation. We thank Him that we also can be entered with honour into the everlasting book of US history! SEEK HELP! SEEK HELP! SEEK HELP! (with creditors) BUY BUY BUY!"
"Also most of the wars toys they have are damaged or not that useful for urban warfare"
~~~~
50 cal on a armored Humvee will take care of almost any domestic unrest ...
Don't need tanks ... jets ... cruise missiles ...
OR
they will just hire Black Water like they did in NOLA ...
that's the way it should be.
that's the way it is now but improved!
We have countries making runs on each other's leveraged position instead of banks.
Bob Dobbs:
Things are pretty dire in NYS budget wise. However, it is much easier to raise taxes here, and the legislature has obliged. The population exodus will get us in the long run; upstate is emptying out. I love upstate NY, but I refuse to pay NYC prices to live outside Albany. Many people here seem to agree and vote with their feet. We are probably 2-3 years behind CA.
"We'll be hard-pressed just to return our g.i.'s from their far-flung forts all over the world..."
HORSEMAN, HORSEMAN…
Horseman, horseman, where are you riding?
Off to the war to bring ill-tiding,
Dread and sickness walk through our
Country, cities sickness scours
What will you say when you arrive?
Few are those who stayed alive,
And I am come to bring them home,
Those who in the wild world roam
Where have you ridden to come here?
I have seen the roads of fear
Where those who live begrudge the dead
Their bitter sup, their crust of bread
Now they must return with me
To ride the air above the sea,
And if they live they will rebuild,
Let them give thanks they are not ill
But what will they rebuild again?
I do not see the building, friend,
But only what they have to use:
The desperation of ill news
Pavel
May 22, 2009
Japan has much larger debt:GDP ratio than the US does and Japan lacks reserve-currency status but Japan pays less than half the yield the US does to issue 10-year bonds:
Japan’s 20-Year Bonds Rise as Demand Increases at Debt Auction - Bloomberg.com
broward
Fractional Reserve Banking exaggerates the cycle,
Paper exaggerates the cycle more than gold does.
~~~~
Fractional Reserve Banking was used for Gold too ...
The Panic of 1871 was every bit as bad as the Great Depression ...
Leveraged money of any kind assures wider swings in the economy ...
And that's what fractional reserve banking does, lever money : 10 to 1
50 cal on a armored Humvee will take care of almost any domestic unrest ...
It won't stop somebody from slitting your throat after you go home and fall asleep.
We are too old for those games now. The same demographics that are killing the world economy are also helping stability. Average age over 35 means few riots
Now in about 20 years or less, the US better watch out. The "triple threat" of Very Late Boom, Gen X and Gen Y kids are going to be hitting late teens and early twenties. In raw numbers they are the largest generation yet, largely Hispanic and often (in all ethnic groups) under educated.
The effects could be very interesting and almost all of them are bad . It could be that the generation may prefer cyberspace to real space and be non materialistic (which means a much poorer state by choice of its inhabitants) very political (better hope its not some extremist movement) or it could be a repeat of the juvenile crime boom --
Its also dimly possible they reinvent the American dream and accomplish something amazing
Obviously, the metrics used to judge "soundness"...are unsound.
Here's my suggestion:
Tier One capital ratios based on size of the consolidated firm and/or BHC. So, the larger the firm is, the higher the required near money in reserve.
It's got the benefit of simplicity and helps incentivize a more decentralized banking system.
Fractional Reserve Banking was used for Gold too ...
The Panic of 1871 was every bit as bad as the Great Depression ...
But both are probably going to be pikers compared to this one.
"Things are pretty dire in NYS budget wise. However, it is much easier to raise taxes here, and the legislature has obliged. The population exodus will get us in the long run; upstate is emptying out. I love upstate NY, but I refuse to pay NYC prices to live outside Albany. Many people here seem to agree and vote with their feet. We are probably 2-3 years behind CA."
Like they say.... California leads the nation
.
Well... maybe if we go through the pain and see what's on the other side... all the rest of you will know better what you want to do from our (good or bad) example. That's happened before.
Those who think the military is a monolithic group of right-wing kill bots are mistaken. We are a cross section of American society. Our views reflect the views of society at large, as do our problems. True, the military tends to be somewhat more conservative than the population at large, but not by as much as you would think. In fact, wrt to economic issues, the military, in aggregate, probably sympathizes more with the New Republic than with the Wall Street Journal. Also, there is not a tradition of political activism in the ranks, so any attempt to turn the armed forces against a large popular protest movement would probably fail ultimately. Yes, I know about the pension riots put down by Patton. But that was a long time ago under very different conditions.
HollywoodHack
"back in the good old days, in the scotland of adam smith, rival banks would orchestrate runs on each other - such that any leverage was accompanied with real risk. that's the way it should be. we all face the consequences as individuals when we run undue risks in our own personal, social and business lives, no?"
~~~~
Great if you want an unstable financial system ...
Stability based on trust is what makes the system work ...
take a look at the Commercial Paper Market ... fine one week ... a shambles the next ...
damn near brought down the whole economy ...
all the rest of you will know better what you want to do
'true.
I want to play pool and watch the Revolution on teevee.
Tier One capital ratios based on size of the consolidated firm and/or BHC. So, the larger the firm is, the higher the required near money in reserve.
If I'm reading this right, you're suggesting a progressive capitalization scheme?
But that supervolcano is mighty overdue (+/- 100,000 years) . Yeah, I've been watching the discovery channel.
"Great if you want an unstable financial system ... "
attempts to ameliorate "instability" in the short term just forestall it for a later date.
it is a shame that this perspective is tarred with the stigma of social darwinism, objectivism, etc - it isn't an ideological perspective any more than gravity is.
Not One Cent
Japan has much larger debt:GDP ratio than the US does and Japan lacks reserve-currency status but Japan pays less than half the yield the US does to issue 10-year bonds:
Japan’s 20-Year Bonds Rise as Demand Increases at Debt Auction - Bloomberg.com
~~~~
Japan has a trade surplus and deflation ... has had for 20 years ...
B2-
Yep. Exactly. What do you think?
"'true.
I want to play pool and watch the Revolution on teevee. "
And you will get your chance. But I warn you -- there's a very good chance it'll be about as exciting as a PGA gold tournament. Or bowling.
"It won't stop somebody from slitting your throat after you go home and fall asleep."
~~~~
the dog and the shot gun take care of that ...
I believe most Japanese pension plans invest almost exclusively in government debt, providing a large, politically controlled captive market to soak up all those bonds. Sucks for the pensioners, though.
The g.i.'s we ignored upon their return to the world after their tours in Vietnam, were mostly draftees
The g.i.'s we ignore upon their return to the world after their tours in Iraq & Afghanistan are mostly volunteers
Big Difference
"We have countries making runs on each other's leveraged position instead of banks. "
actually, the opposite is true - the chinese political elite is scared to death of what might happen if the us consumer market totally withers and dies. they need to create jobs, not for 'reelection', but for the integrity of the party (and nation itself) to survive. if anything, major nations are bending over backwards to help each other keep their respective status quos alive. putin is something of an exception, but the aforementioned nat gas trade is putting that midget in his place quite nicely. markets are good for some things, after all.
"So I guess it's Feinstein or Maxine Waters as governor? "
....and you think the State has troubles NOW?
"the dog and the shot gun take care of that ...
.....and not necessarily in THAT order.
Both China (late 1940's) & Russia (early 1990's) have episodes of hyperinflation in living memory, and the lessons learned are seared into the psyche of both peoples...
We have no experience whatsoever, in comparison~
"The g.i.'s we ignore upon their return to the world....."
No, WE don't!
""Great if you want an unstable financial system ... "
"attempts to ameliorate "instability" in the short term just forestall it for a later date."
~~~~
Fractional Reserve Banking aka leveraged banking makes economic cycles worse ...
get it ?
if not, you don't understand what fractional reserve banking is ...
Juvenal:
I know lots of veterans of both wars. All are well adjusted and productive citizens. I think the image of crazy, mal-adjusted vets is mostly the product of credulous journalists and stupid movies. A good book on the subject is Stolen Valor, written by a Vietnam vet to examined VA/criminal justice records to determine if vets had a significantly higher instance of mental illness compared to the general population. He found that, by and large, they didn't. But that doesn't sell papers or movies of the week.
hong konger:
not a bad idea, but of course, they'll need to shelve the Advanced IRB approach which allows the moneycenters to understate their risk, so that the net capitalization might remain the same.
"get it ? "
no need to intellectually "get it" - lived through a few bubbles just in the past decade
Homelessness on the other hand is higher in vets.. speaks volumes about how much the government really cares for them.
// A good book on the subject is Stolen Valor, written by a Vietnam vet to examined VA/criminal justice records to determine if vets had a significantly higher instance of mental illness compared to the general population. //
Nemo- Kind of a microcosm of the whole country, actually.
How bout everything under the sun?
mmckinl: you do realize that neither AIG, BSC, FRN/FNM, LEH, MER, etc were involved in fractional reserve banking, right?
I lived in SoCal for 7 years, till a few years ago.
The economic cost of living there FAR outweighs the benefits.
Cost / Benefit = 4 or so
As for North Carolina...
Cost / Benefit = 0.5
The banks have learned a strategic and important lesson through all of this:
"the dog and the shot gun take care of that ..."
After you fall asleep? Do you really want to train your rottweiler to fire a shotgun?
Lucifer:
Do you have a reference? I am not sure that is true. I cannot speak of previous generations, but VA benefits right now are very generous. I think you also need to normalize for whether or not the homeless vets in question actually completed an enlistment or were booted out for drugs, violence, criminal behavior, etc. I think if you did an apples to apples comparison (vets who completed an enlistment with an honorable discharge versus population at large), you would find little to any statistical difference. I have personally helped kick out shitbags (liars, thiefs, etc) who probably ended up destitute after the Navy kicked them out. They could easily skew the numbers.
DOW6000
We moved from San Diego to Chapel Hill in 2000. I was actually surprised that the cost of living wasn't a whole lot less in the Triangle than it had been in SoCal when you factored in higher property taxes, higher utilities (low heating/cooling in San Diego) and higher food costs. OTOH, gas prices are much lower in NC.
We're still very glad we moved, it's just a better quality of life for our family. But not much less expensive on net for us, if at all.
no response? too soon for hitler jokes?
I want to play pool and watch the Revolution on teevee.
Ughh.. to much effort can you Tweet it to my iPhone ?
you're indulging in semantics, basel - 1-30 leverage is dangerous for the same reason that 'fractional reserve banking' is dangerous, and all of those tickers were most assuredly levered up the wazoo
i'm sure you could find a decent SFR in escondido for significantly under 300K. as for the job part...
The NC Budget battle looks to be heating up. At first the House wanted only cuts with no new taxes to close a $4B hole. Now the governor is predicting dire impacts on education from such a plan and privately urging at least $1.5B in new taxes. Will be an interesting few weeks.
This was an interesting note in a local paper:
"More than 100 people crowded into the old House Chambers to cheer Perdue, mainly members of the N.C. Association of Educators, the influential teachers lobby. "
Perdue is the governor.
HH you should add wazoo to the glossary...
Basel Too
"mmckinl: you do realize that neither AIG, BSC, FRN/FNM, LEH, MER, etc were involved in fractional reserve banking, right?"
~~~~
Of course they were, on the other side of the trade, using loans to leverage ...
LTC didn't have fractional reserve banking , but they were levered over 100 to 1 ...
Without fractional reserve banking and the UST regulating the creation of credit these situations will be
much smaller and much fewer . Interest rates will have to go higher without fractional reserve banking ...
There won't be any cheap money anymore and savers will reap the benefits ...
B2-
True. I stuck with the "Tiered" definition and whatever follow on complex taxonomies are being considered in favor of simplicity. Anytime we draw a line, it will be gamed, tested, pushed, etc. Kinda like dumping everything in Level 3. "Oh, you don't like our values? Well, we'll just dump everything in Level 3 and buy assets that will suit your Tier 1 requirements with the TARP money! There, all fixed!"
In a perfect world, if we could stip that reserves could only be CB/FHLB repos and cash on hand, we'd be on much safer footing even under current reserve regimes. But, I'm realistic.
Progressive caps (well done!) eat up a lot of "slop" in the balance sheets I would hope without being too, uh, "reactionary".
"HH you should add wazoo to the glossary..."
Isn't that what they called a Caananite vizier, The Grand Wazoo?
I think we are getting into doublespeak. Any time a bank requires emergency assistance from the government that bank has failed. You will never read in an annual report the line "We succeeded beyond all measure this quarter but we lost most of the shareholders money along the way."
In my book:
Royal Bank of Scotland: FAILED
HBOS/Lloyds: FAILED
UBS: FAILED
HypoReal : FAILED
CitiBank: FAILED
Merril Lynch: FAILED
Bear Stearns: FAILED
Lehman Brothers: FAILED
Fannie Mae: FAILED
Freddie Mac: FAILED
AIG: FAILED
Now will someone explain to me what too big to fail means, because it is not all clear from the examples above?
two entries is enough for one day... can't give ALL of my labor to the public domain...
"The problem [in California] will not be fixed until the pain is so great that people have no choice but to pay attention"
as it continues to worsen, they will vote with their feet, since Sacramento pols are so entrenched. I suspect that will leave you with a lot of full prisons, unemployed people, and empty houses.
"I think we are getting into doublespeak. Any time a bank requires emergency assistance from the government that bank has failed. "
How did reality get in here?
"Now will someone explain to me what too big to fail means"
too big to fail means that there's no way to clean it up, such that there is no choice but to keep it alive. this is a political question - an AIG blowup would be a serious blow to america's identity overseas, while a collapse of C would just be too much consumer wreckage for the FDIC and FNM/FRE are still the majority of the RRE mortgage business.
too big to fail = we won't allow creditors to take a haircut because of the fear of cascading defaults.
I'd also put limits on the pooled loan market at the community and regional level, as well. And, the only reason I'd do this is because I don't feel local lenders are savvy enough to understand the risks. But also, b/c there isn't a secondary market for these deals. So, if one guy gets stuck, they all scramble. Perhaps Silverstone's failure will curtail the number of these deals.
Basel Too
too big to fail = we won't allow creditors to take a haircut.
~~~~~
A++++++
"too big to fail means that there's no way to clean it up"
First comes the failure, then the rscue. If your head isn't on straight, or you're trying to twist someone else's head the wrong way, you say: 'Too big to fail.'
The lifeguard rescued the swimmer who was too big to drown?
Now will someone explain to me what too big to fail means, because it is not all clear from the examples above?
Sure, if you redefine "failed" as "was bailed out", then you are right, lots of big banks have "failed".
Shareholders are irrelevant. The behemoth institutions themselves are fully intact, as are most of their boards, management, and creditors.
Nothing has changed, and no lessons have been learned.
(Apologies for feeding the troll)
Now will someone explain to me what too big to fail means?
Don't mean to toot my own horn, but I provided a handy definition a couple of hours ago.
i'm firmly in the mellon camp, personally. (no, not an attempt at a horrible pun).
but we really might want to ponder what would happen if FNM/FRE (which really dwarf much of the other entities involved in importance) really went down. personally, i'd find it funny if PTRAX closed at 2 bucks. but there would be effects.
OT
If you for a second buy some of the bullshit that flies across this site about Argentina you are really gullible.
Unadulterated.
Sure, if you redefine "failed" as "was bailed out"
That's precisely what he didn't do.
"as it continues to worsen, they will vote with their feet, since Sacramento pols are so entrenched. I suspect that will leave you with a lot of full prisons, unemployed people, and empty houses."
In this case, mass exodus would be more a function of duration; if the budget/governance crisis continues for six months, not so much. People have a certain inertia, as do all things.
Much more than that, though, and I would expect more of an exodus. Nothing dramatic -- but steady.
2B2F: An entity that has grown so inefficient and corrupt that the rules cannot and no longer apply.
"If you for a second buy some of the bullshit that flies across this site about Argentina you are really gullible."
I wrote some of that bullshit
I don't suppose you can help me understand where I'm going wrong; after all, this is what this board is for, no?
"The behemoth institutions themselves are fully intact..."
No, not since they accepted or were forced to accept the assistance of the government. They seem to be intact, but they are changed.
"Nothing dramatic -- but steady. "
CA has steadily been undergoing internal (national) emigration and global immigration for a while. Water finds sea level, and people will be buying in malibu when pacific views go under a million.
Too big to fail= I cannot handle this!
"Now will someone explain to me what too big to fail means"
TBTF is the antonym for "take your medicine." Usually because of the "systemic risk" of it becoming abundantly clear to the public, that legislators have been the willing and well compensated partners of the TBTF banks in this financial crisis, by ignoring regulatory responsibility, looking the other way, or outright supporting banks getting to be, too big.
Nixon once said, "get smaller."
Concentration is bad, but so operating on razor thin capital. Capital that is already mostly the result of accounting voodoo.
Don't lose the forest for the trees.
But he is right about one thing. Banks need to be separated AGAIN from the investment banks.
HollywoodHack -
I'd find it funny if PTRAX closed at 2 bucks. but there would be effects.
I would not, a large chunk of my 401K is in PTTRX.
When language loses touch with reality, it's because the people who speak it have lost touch. When language degenerates people find it difficult to reason and almost impossible to extricate themselves from predicaments.
"I would not, a large chunk of my 401K is in PTTRX. "
exactly, many people, especially oldsters (and probably congresscritters themselves) are on the bill gross train. they vote. especially the oldsters. hence, TBTF.
California is a democratic state too important to elect college. That repaid tarp will find an insurance scheme for munis monster leverage just how tg likes to roll
Pavel,
I enjoyed Horseman - reminded me a bit of Poe's El Dorado.
I think we are getting into doublespeak.
"getting?"
We've been in doublespeak for quite some time.
We are now entering Ludicrous Speed
s, somewhat incomprehensible but true. moneycenter banks are to late 2008 what municipalities are to late 2009.
HollywoodHack -
exactly, many people, especially oldsters (and probably congresscritters themselves) are on the bill gross train. they vote. especially the oldsters. hence, TBTF.
I have around 30% cash 40% on the Bill Gross train, and a small percentage in other holdings. I just do not have many good options, if TSHTF I still don't know how much of a downside there may be.
Anyone have a reading list for explorers gone mad? I remember something -- PBS? -- about some S. American explorers gone mad but don't remember the details. That is the one I am looking for.
"Pavel,
I enjoyed Horseman - reminded me a bit of Poe's El Dorado."
Thanks, blueridge.
On Topic:
Isn't Corus supposed to raise new capital by tomorrow?
No, not since they accepted or were forced to accept the assistance of the government. They seem to be intact, but they are changed.
Complete horse hockey, as far as the 19 TARP recipients goes.
Mostly horse hockey, in the context of the companies actually listed and what I actually wrote, to wit: Management, boards of directors, and creditors are largely intact. With the exception of Lehman, the latter were made fully whole even for the so-called "failed" institutions.
The point is simple. Same players + same game = same result, sooner or later. And that game has everything to do with the implicit guarantee of all large bank liabilities by the U.S. taxpayer.
Too big to fail is too big to exist, etc.
Same players + same game = same result, sooner or later.
You don't sound convinced by his O'linesses new department of regulatory supervision and finance and stuff.
A new govt. dept and the Fed on steroids will cure all banking ills... well for the bankers anyway.
Added bankerdome to glossary.
hmm... may need to add "carousel" too
Added bankerdome to glossary.
Tina Turner: SEND THEM TO THE BANKERDOME !
Crowd: Two bankers enter... no bankers leave..
And renew.
So, who's brave enough to create the glossary definition for "Jas"?
Ah no - in bankerdome 2 debt slaves enter and only one leaves...
You don't sound convinced by his O'linesses new department of regulatory supervision
It could be a Good Thing but probably won't be.
The fate of most Post-Crash things.
Added bankerdome to glossary.
I take it you don't know the history of the term "bankerdome" around here?
Once upon a time, there was a CR commenter named "Banker". And he was an honest-to-g*d Banker...
Far more interesting than most of the current crop of participants, actually. No offense intended.
I agree w/ Nemo regarding the bankerdome; that is a good bit of site lore that should be preserved. I must have been away when he stopped posting so I don't remember what had happened.
@Nemo,
No offense taken, and no I haven't been around long enough to give it the right description, so please update.
"The point is simple. Same players + same game = same result, sooner or later. And that game has everything to do with the implicit guarantee of all large bank liabilities by the U.S. taxpayer."
When I said 'changed', I didn't mean 'reformed, meaning 'improved by alteration', or that 'abuses have been abolished.' I think it likely that the whole of our system, and perhaps our society, is undergoing a mutation. The banks are part of it. Whatever mistakes are made in the future, whatever distortions are to be suffered, they won't be the same ones as in the recent past. I don't think so.
Far more interesting than most of the current crop of participants, actually. No offense intended.
Well, the world was a little more interesting at that time. Now, we've got arguments over the types of "plants" in our collective yard.
The "bankerdome" thing predates even me. I am not sure whether Banker himself made up the term or someone else did.
The idea, I think, was that he had a secret retreat with enough food etc. to last through the Apocalypse. This was back when joking about the Apocalypse was actually funny, not "nervous laugh" funny.
I think AllenM or ac would be better qualified to flesh out the definition.
i was aroudn for bankderdome days, under a different name...but i think bankerdome was actually made up by banker himself.
I find it very interesting that the banks are to big to fail where allowed to combine into even bigger banks? Only in America can we see the failure and then amplify it.
"i was aroudn for bankderdome days, under a different name...but i think bankerdome was actually made up by banker himself"
You are correct.
(now if I can just learn to type)
the computer formerly known as Geoff
Hey there, mp. I wrote the entry for "Conjure"; hope it meets with your approval.
Banker thought the Bear Stearns thing would blow over. I maintained, along with a few others, that the reputational damage caused by the failure of Bear's two hedge funds would take down Bear itself.
Banker disappeared shortly after Bear blew up.
Entry for Conjure? What are you talking about?
I think it would be an error to take the crisis of the banks and other financial institutions in isolation, as a random complex of accidents or misfortunes, or malfeasances. It has been a result of who we are, and what we are becoming.
mp --
Search previous thread for "glossary". And/or click Glossary and Edit Glossary links on sidebar.
And mouse over the word "Conjure" for a second or two.
Ah, I see it now. Nemo, I think you did a fine job, but Conjure would take issue with "imaginary."
But, a question mark is appropriate as Conjure savors them.
so the next big macro issue (for at least 6 months) is going to be health care... is that outside of CR's ken? Such an interesting economic topic, but at times gets too political.
Tanta, may she rest in peace, described Conjure as a pensieve that had acquired its own consciousness.
I like that. Good description.
Bankerdome is presumably where Banker now resides
... or did when the Bear carcass was falling from the sky
... and will again when the a-pork-alypse finally rides us down the path to monetary destruction.
BTW did anyone else read John Hempton's take on rational inflation expectations and monetarism (eg fallacy of the Policy Irrelevance Proposition)?
A nice explanation of why a horizontal natural interest rate curve (except near 0 interest rates) means that the effects of monetary policy can be modeled with long and short term interest rate expectations, except near the zero bound... just read the wonkiness >:)
Bronte Capital: Mr Krugman and Mr Ferguson: a suggested interpretation (very long and ultra wonkish)
The model SEEMS simple, but love to hear what others think.
The glossary is a really cool feature. Thanks Ken.
pensieve
Is that a misspelling?!
Is that a misspelling?!
No.
broward (homepage, profile) wrote on Wed, 6/17/2009 - 8:57 pm replyIgnore userpensieve
Is that a misspelling?!
Come on man - Harry Potter even knows that.
I have met a lot of rich farmers but never one who made money.
Farmers live poor and die rich was how it used to go.
I want to play pool and watch the Revolution on teevee. "
And you will get your chance. But I warn you -- there's a very good chance it'll be about as exciting as a PGA gold tournament. Or bowling.
If there's anything more boring than bowling on TV, it would have to be bowling on the radio....
He that has the glod makes the rules. He that has the glod makes the glossary. Hmm. No worky. Knurd!
Having read everything Mr.Ferguson's published, and painfully managed to get to the end of it (!)... I find him to be one of those individuals who believe history should be simply shaped to conform to his worldview, not the other way around. A excessively wordy idealogue who I was not impressed by. Plus I personally feel he takes events and does a 1 + 1 = 417.2 which left me with an overall feeling of "just how the hell did you reach THAT conclusion ?". My $0.02 worth which he'd probably disagree with in 50 to 60 pages.
Here's a sign of how Bank of America's level of hiring has returned to pre-meltdown levels. Evidence that, operationally, it appears to be business as usual for this particular bank
Return to Normalcy: Bank of America (BAC) Hiring Demand Rebounds Sharply – WANTED Hiring Demand Indicators