Kasriel: "The Rhyming of History – Bloomberg and the RFC?"
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CalculatedRisk on Thu, 08/27/2009 - 2:20pm (371 comments)
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What do you mean? Citi is obviously fine; just look at the stock.
One more step and we'll CRASH THE ECONOMY.... ermm.. AGAIN !
The Purple Party is still running on the platform of FEAR I see...
Exhibit A against fractional reserving. When a system can only exist due to the illusion of strength...
YOU EITHER HAVE TRANSPARENCY OR SECRECY, NOT BOTH.
Fuck Henry Ford, too.
Well here's another concern for ALL Americans
Why the federal deficit will raise taxes - Aug. 27, 2009
A $9 trillion federal deficit over 10 years because The U.S. government is spending huge sums and borrowing more and more and more.
The solution is straightforward if unpleasant: Shy of finding a fairy willing to leave trillions under Uncle Sam's pillow, lawmakers will have to raise taxes and cut spending.
"Taxes are going up and they're going up for a lot more people than those making more than $250,000. Why? Math. The numbers don't come close to working," said David Walker, former U.S. comptroller general.
Welcome to sobering reality!
Sounds like we need a diversion.
Healthcare took up allot of time. How about those Canadians, what ARE they up to?
That we even have two sides on a transparency question shows just how far we have sunk.
But doesn't Efficient Markets Theory hold that decisions are taken by rational actors in the presence of perfect information? How could disclosure then not be beneficial to the efficient functioning of capitalism?
C
don't ask silly questions like that.
the market KNOWS...
Let's not let facts get in the way of where at least $12 trillion of taxpayer money went.
"It's a Wonderful Life"
From ZH
Janet Tavakoli retorts to the posting by Merrill's RateLab with an earlier letter she wrote.
Calm No More: Beyond Dead Calm
By Janet Tavakoli, president of Tavakoli Structured Finance, Inc. – September 20, 2008
I received a self-serving piece of “research” from Merrill Lynch US Rates Strategy. It seems Merrill Lynch would like to give us all a lecture in “value concepts,” and they do a nice job of pointing the finger at everyone else as they use the Capra Defense to explain why an even bigger bailout is necessary (see attached “RateLab Die Once” – September 18, 2008). Merrill Lynch has a lot of bloody nerve. It is waving bull at a red flag. On page one we are told in bold we have a trust problem. Yet they omit the reasons that they (and a few other investment banks) have lost our trust, so allow me to refresh their memories (see also attached “Dead Calm: No One Trusts You” – July 30, 2008). “It is one thing to have documents that disclose risks—many of the documents of death spiral collateralized debt obligations disclosed eye-popping risks—it is quite another to bring deals to market that you knew or should have known were overrated and deeply troubled the day the deal closed.”
Nowhere in this “research” does Merrill Lynch call for heavy regulation of investment banks, banks that purchase investment banks, or a potential return to Glass Steagall (not that it is the answer). Nowhere does it call for consequences for past actions.
Fed bailouts deserve scrutiny. If AIG cannot make a margin call, AIG has less of a problem than its counterparties (Goldman, European banks and others) who cannot get cash (and therefore possibly have liquidity problems of their own). Perhaps a proactive solution would have been to get credit derivatives counterparties together to agree on emergency terms, particularly since like the problem the monolines faced, those buying protection were sometimes architects of the underlying deals getting marked down in value. The main beneficiaries of the AIG bailout seem to be its counterparties. While the outcome may have been the same, when the government looks to AIG’s counterparties for advice, it is not arms-length dispassionate advice, and I could have written every page of the script for how this would go down.
One might argue there was no Fed bailout involved with Bank of America’s purchase of Merrill Lynch, but I am not the one to make that argument. Merrill’s purchase by Bank of America at a premium price seems to only make sense with the huge assist of the Fed’s largesse in suddenly agreeing to accept lower quality collateral for its loans.
The main beneficiaries of the Fed bailouts are not the American consumer, albeit the American consumer has been harmed by this mess and it is a good idea to limit that harm (more on that in 10 days or so).
The main beneficiaries are the insiders who have Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke on speed dial. The Fed has undertaken a massive bailout using U.S. taxpayer dollars.
Now let’s have massive consequences for the key architects of this debacle.
JT Note:
What is the Capra Defense?
Frank Capra directed the movie It’s a Wonderful Life, and it is a holiday favorite in the United States. In one scene, there is a run on the savings and loan managed by the hero (played by Jimmy Stewart, who was also a Brigadier General in the U.S. Air Force during WWII). The small bank survives the run because he is much beloved by the community he has served for many years (and there was no fundamental problem) and he is trusted. Later in the film this honest but rather inept money manager (he entrusts funds to his absent minded uncle, and the funds are misplaced) is bailed out by his friends and depositors. The audience goes all warm and fuzzy and life is wonderful—it is Christmas!
This movie seems to be invoked by every troubled bank today, because they wish they could draw some sort of innocuous parallel to the movie, in what I call the Capra Defense. You see, they would have you believe the problem is that skittish consumers are panicked and do not trust fine upstanding fellows—Jimmy Stewart for goodness sake. If the consumers would just stop panicking and cough up some of their hard earned money to bail Jimmy out of this jam, it would be a wonderful life. See, when you bail them out, you are doing yourself a favor.
It would also be wonderful if you ignore the fact that they do not possess Mr. Stewart’s sterling qualities—just look the other way.
god forbid solvent banks gain an edge
The heisenberg opacity principle?
Evidently, if we had just closed our eyes, clicked our heels, and printed more money to hand to the banks in 1932, the Great Depression would never have happened.
I need to puke again.
Solvent banks are made out of people! Tell the world!
...in which it is impossible to know either the position or the velocity of money...
So, the equities markets are at their highs for the year, yet Treasury yields keep dropping. One of these 2 is wrong.
What about the banks that would do well if the truth were known? Doesn't hiding the truth hurt them?
Or is the truth that NONE of the banks are solvent? Is that what they are hiding? The hiding of information seems to invite that conclusion.
This request by the Fed is total bullshit, in attempting to bring up some ghost from 1930 as a precedent -- just smacks of insider collusion and establishing the fact that this is and has always been a good 'ol boys club and yah also might as well be a member of the KKK!
This is an issue of abusive banking practices that obviously need to be disclosed for the good of the system -- and if that makes Goldman, Cit, BoA and all the rest out to be crooks, what a shock that would be -- the F'ing issue is the collateral and the lack of substantive reality attached to the fraudulent accounting practices that should result in prison sentences for these crooks that are trying to impede justice!
I doubt that many banks had their tit in the ringer on account of HELOC loans in 1932...
Oh, hey, fine. Hey, look, uh, is that ANTI-ILLEGAL-IMMIGRANT-FENCE is that done yet? Just sayin', might be WAY more important than the Fed. Ha, I mean, come-on. The banks are the honest hard-working business leaders of Merica, the people that made this country GREAT. Everything's fine, not sure about that ANTI-ILLEGAL-IMMIGRANT-FENCE tho; they could be streaming over the border right now, you know. Great hords of them.
Look, the banks are just fine, look how high the stock-market is.
""This Michigan bank panic served as a catalyst for a nationwide bank panic."" so sayeth CR.
Is it possible that, for example, a particularly nasty Dubai bank run might start a world-wide run?
The Northern Rock bank thingie didn't look too scary to me. It would have been scarier with teargas and tanks.
None of the banks who got bailout money have to worry about a run on their banks from me. I don't bank with any of them.
I suggest none of you bank with them either.
Don't you people get it? The Fed is looking out for us. By trying to look at the books we're just hurting ourselves. Don't take it from me though. CR, Prof Hamilton, take it away.
His actions[Bernanke] over the past two years have been guided by one and only one motive, that being to minimize the harm caused to ordinary people by the financial turmoil. Whether you agree or disagree with all the steps he's taken, let's start with an understanding that that's been his overriding goal.
I agree with Professor Hamilton.
Oh no! A bank run on a bank that is insolvent, broke, kaput. The horror, fear and danger
I am in favor of hastening the demise of the banks having problems. There are very few such banks who will manage to fix the problems themselves. Usually, the bad management which got you into such problems won't get you out. It is more likely that they will simply dig a deeper hole, and receive more compensation for making a worse mess.
Tell you what. Let them announce the names at the close of business on Sep 4th. That gives the FDIC Labor Day weekend to take over more than the usual number of banks.
Actually, as velocity is close to zero, it's easy to find the money's position: quietly sitting on the Fed's balance sheet, earning risk-free interest for the banks.
How about the youtube clip withe the Blazing Saddles sheriff again ?
Oh, and I'm concerned that once the list comes out, we will find a surprising number of nonbanks on the list. At a minimum, corporate entities which contain a bank somewhere may have received tons of money which helped prop up nonbank operations.
Nuke (profile) wrote on Thu, 8/27/2009 - 3:32 pm replyIgnore userSo, the equities markets are at their highs for the year, yet Treasury yields keep dropping. One of these 2 is wrong.
They both are using funds from the Fed. Fed buys Treasurys. Fed feeds money to GS etal to buy stocks. Nothing wrong, looks right to me.
No surprise that AIG borrowed boatloads of $$ from the FRBNY.
As shares of American International Group Inc. continued to ascend Thursday, newly minted CEO Robert Benmosche said he's taking a far more patient approach than his predecessor toward selling assets to repay the government.
He's willing to wait up to three years, he said, to offer stakes in two multi-billion-dollar foreign units that the insurer had been racing to spin off.
"It's not a question of if, but when," Mr. Benmosche said in an interview with The Wall Street Journal at his home here. "Once the market gives us a price that I think is fair, we can go forward ... If we sell too soon, everyone loses."
Benmosche in No Hurry to Sell Off AIG's Assets - WSJ.com
Re: The Fed is looking out for us.
Absolutely. This is just crazy talk by people that hate Merica (and, probably the troops). We can't let a bunch of radical malcontents call into question the motives of the finest institution in MERICA! This is EXACTLY what you'd expect of people that hate Merica as much as they do.
1932 - the government wanted to discourage borrowing.
2008 - the government wanted to encourage borrowing.
What if the Fed's list says they sent $100 million a recipient bank, and the bank raises its hand and says, "actually, we received $95 million"?
1932 - gold was money
2008 - is the ink dry yet?
Well, no, let's have something far more evocative of the black hole:
YouTube - Soundgarden - Black Hole Sun
C
For your own good, pull your head out of your ass
I don't give a shit what job Bernanke has done. His opposition to transparency means he should resign.
I don't give a shit what job Mayor Bloomberg has done. His improper avoidance of the term-limits referendum means he should resign.
[By the way "I can haz" is correctly spelled wif a z]
Jus' thinkin' out loud. I mean if it turned out that GE were big on the list would CNBC break the exclusive story? Oh wait...
If collateral has to be linked to shadow banking activities that include accounting fraud and irregular non-GAAP and non-real-world accounting standards, then why else would they be hiding the truth of this (fraud)?
Re: "The RFC was willing to lend to this bank, but because of a dispute between one of the Michigan senators and Henry Ford, a large depositor in the bank, the RFC loan was not allowed to be made. A bank panic started in Michigan as a result. This Michigan bank panic served as a catalyst for a nationwide bank panic."
Get yer free fuc-ing peanuts......... BANKS: Michigan Moratorium (Cont'd) - TIME
In addition Mr. Ford had loaned Union Guardian (of which Edsel Ford and his brother-in-law Ernest C. Kanzler are directors) another $11,000,000 in an earlier attempt to buttress the crumbling institution. The R. F. C. had put up $15.000.000. When Union Guardian approached the R. F. C. for more, Senator James Couzens, Henry Ford's oldtime partner and a bitter critic of the R. F. C., insisted that adequate security must be furnished. This the bank could not do for a loan large enough to permit it to liquidate its business as planned. Wealthy Senator Couzens is said to have proposed then to Henry Ford that together they endorse a $20,000,000 note to be used as R. F. C. collateral. Mr. Ford, maintaining that the R. F. C. should help out banks, not ask others to do so, refused. "Jim was trying to make a sucker out of me," he said. Furthermore he refused to subordinate his deposit to the R. F. C. President Hoover was reported to have telephoned Mr. Ford but failed to budge him from his position. A moratorium was the only way out.
classic case of regulator capture
We may have to promote this judge to shut him up.
Any more vacancies on the Supreme Court ?
CR et al
for once I'm going to be non snarky here
but from this post, I would gather that you are in tacit agreement that the problem we faced last fall was a liquidity, not a solvency crisis.
is/was this true? if so, why would we fear another 'liquidity crisi' after all, with solvency already established, all parties (inclsuing intrebank lending) should feel just fine providing the necessary liquidity to thos ein need.
My question is serious, I would love serious thoughts
Didn't BlackRock become a bank for this purpose?
Some investor guy, at 6:39 pm, are you an NYPD vet?
lololololol.
CSI Wall*Street
Re: His opposition to transparency means he should resign
And it's unpatriotic talk like this that leds to the Al Kyda getting plans for our secret troops movements. We can't just let ANYBODY have access to EVERYTHING can we? Sure, people like this would have you think transparency is just a WORD, but when the transparant plans are read by Al Kyda and a HUNDRED of our brave troops are killed just becuase people like YOU hate the Ben Berneki AND the troops!!! IS THAT what this GREAT NATION HAS BECOME?
GOOD history!!!
Governor Comstock soon made the holiday optional and many banks outside Detroit reopened with severe restrictions on withdrawals. In Ann Arbor, home of the State University, banks allowed $20 to heads of families. Banks in the northern peninsula across Lake Michigan resumed normal business.
The moratorium was a midriff blow to general business confidence. On the New York Stock Exchange, both shares and bonds were sold down to the lowest prices of the year. A staggering rise of money in circulation to the highest point of the Depression was blamed chiefly on huge cash shipments to the Detroit area. European speculators neatly hitched news of the eight-day moratorium to the attempt on President-elect Roosevelt's life for a quick raid on the dollar. Francs and belgas shot aloft. A brief outflow of U. S. gold followed.
But in the Michigan Plan, calling for segregation of frozen and liquid assets in both State and National banks, bankers believed they had not only a solution for their own troubles but also a modus vivendi for closed banks in other states. Deposits would be divided in approximately the same proportions as assets. The liquid branch would be operated normally, subject to certain restrictions at the start; the frozen branch would await a thaw. With both State and Federal legislation required it seemed certain that the holiday would be extended.
JD, CSI-WS would be a great show. And maybe, just maybe, all those people stuck in front of the tub would then get the CLUE.
Having ones head firmly stuck in the posterior increases opacity and is therefore preferable.
"And it's unpatriotic talk like this that leds to the Al Kyda getting plans for our secret troops movements. "
Easily one of the weakest analogies I have read, ever.
Emergency Fed loans = National Defense? Ridiculous.
John Kanas - 1,000 Banks to Fail In Next Two Years: Bank CEO - CNBC
Re: "Today, we have federal deposit insurance. Therefore, the probabilities and magnitude of depositor runs on banks are much reduced compared with 1933. "
Yes, we have a bankrupt FDIC and then we also have something we didn't have in 1930, which is massive derivative trading, which involves unregulated securities to be linked to banks and their assets! Wake the F up!
Re: Easily one of the weakest analogies I have read, ever.
You need to watch Faux News a bit more.
Emergency Fed loans = National Defense? Ridiculous.
You kidding? That's the hallmark of type 1 reasoning.
I suppose some second tier bank might have a problem if the data is disclosed.
Suntrust?
////was a liquidity, not a solvency crisis.////
I look at things pretty simple.
If I have a million dollars in the bank, but the bank is closed I have liquidity problem.
If my rent is due and I will be thrown out by Sunday - I have a solvency issue.
If it isn't liquid, it isn't solvent at this moment in time.
Same thing if Bob owes me, but I owe Tim.
Relax, all. CR's "argument" was strictly tongue-in-cheek.
OT:
This might be a repost so sorry if it is.
Barf Bags at the ready?
Good.
EXCLUSIVE: AIG CEO defends holiday, slams lynch mob attacks
| Reuters
We still are in a systemic meltdown caused by banking fraud, which is linked to a lack of regulation -- and now the regulator wants to hide the reason as to why the system is still crashing and save the people that brought down every bank around the globe???? The scope of this collusion and the corruption is global and these pirates have no intention of being truthful, so once again, this type of judge will be found in bed with a cub scout pack and dragged through the mud so that Americans can be safe from the evil within....
I stand corrected sir. Good luck to you
Terry - c'mon, Kanas is blatantly talking his book and shilling for PE - the money quote is undue or brudensome capital requirements "chilling" participation in workouts. This is simply a shot across Sheila's bows, probably overdoing it and a tad late because I thought the decision had already been taken to allow PE involvement as long as 10% Tier 1 was attested.
C
"I suppose some second tier bank might have a problem if the data is disclosed.
Suntrust?"
I think the market knows who the weak and the strong players are among the banks, there is plenty of analysis done (like the good work Chris Whalen does).
I think they are trying to hide something else, like non-banks getting hundreds of billions (GE?), or foreign banks getting bailed out because their governments could not afford to do so. I don't think it is "who got how much", it is more of a matter of the Fed stepping outside its legal functioning. As usual.
Re: lynch mob.
Yeah, more of that CLASS WARFARE that the liberal media is always stiring up!!! The same people that want Al Kyda to see our secret big board because of TRANSPARANCY! YOU FIGURE IT OUT!!!
Re: "If the Fed is required to publish the names of financial institutions to which it has extended credit and this publication induces financial institutions to refrain from borrowing from the Fed, one can only speculate if this would be the tinder for another liquidity conflagration in the coming months."
LOL ....... does anyone think Citi is done borrowing money, or that any of these well hedged banks could live a week without Fed aid??? LOL!
WWI was onlycaused by that Duke getting killed.
The Civil War by that reckless John Brown.
Just nobody strike a match for a few years.
Then a few more.
Counterpointer (profile) wrote on Thu, 8/27/2009 - 5:27 pm
But doesn't Efficient Markets Theory hold that decisions are taken by rational actors in the presence of perfect information? How could disclosure then not be beneficial to the efficient functioning of capitalism?
Efficient to whom? Those who run the system, or those upon whom it is inflicted?
the problem we faced last fall was a liquidity, not a solvency crisis.
Fractional reserves, by defintion, are a liquidity issue. Therefore, banks are always near a liquidity crisis. The only thing that stops them from having a crisis is having assets they can liquidate.
What part of "The assets are worth only 5% of what you say they are worth" don't you understand?
Counterpointer - the FDIC slipped one in on the revised final rule - it is not a straight 10% of Tier 1 capital, but "Tier 1 common equity to total assets of at least 10 percent" - no trust preferred is counted
"LOL ....... does anyone think Citi is done borrowing money, or that any of these well hedged banks could live a week without Fed aid??? LOL!"
Exactly my point. I doubt many market participants would be surprised to see Citi or BAC or JPM or WFC needing billions of emergency loans from the Fed.
I think it is more a matter of who the Fed lent to, something tells me they extended money to entities that weren't legally entitled to participate.
"Now it's 10%!??
Why should PE have to put up 8%?
6% reserves aren't fair..."
[old joke]
Terry - good point, I was actually going to add a clause above on Tier 1 "whatever that really consists of under Calvinball rules..."
C
ResistanceIsFeudal - the ol industrial strength snark passed you by, huh?
C
Ok, I had my coffee and here it is, in plain F'ing site, in plain F'ing Englich.....
The Federal Reserve argued yesterday that identifying the financial institutions
That tells me that the Fed bailed out mutual funds and other organizations that would not want to look like they lost your F'ing money, because they didn't know what they were F'ing doing with repos and CDS, and all the shit that was being done with your F'ing money market funds ---- which is another F'ing reason that the FED linked the FDIC to F'ing mutual Funds and that ...... is the end of my F'ing rant!!!!!!!IURTYTYIRUIR^FT
Bottom line - Sheila either does not really want PE firms to bid or we can expect the regulators to be moving to a 10% TCE standard for all banks. add that on top of bringing the securitized assets on the balance sheet, and the banks will be needing more capital
isnt it also an issue not so much of who is on the list NOW, but if you do show the list now, you'll be asked to show it again later...and THEN is when we see the problem, because the sums being shoveled to these zombies will not only be seen as enormous, but growing.
Free Bernie Madoff !
"liquidity conflagration"
Keep it Kasriel, pal. Chief Economaster of the mixed metaphor.
This FOIA has to go through. Anyone with any inside connections needs to support this effort for the good of this country, support this judge, and stop the backroom dealing to squash this information release.
ghostfaceinvestah,
Good point re: Suntrust
Today, we don't have the option of seizing the gold and remarking it with an instant 70% devaluation. Funny how everyone forgets the giant red "reset" button hit at the end of the story.
All we can do is give GS to goose commodities higher in the hopes of having the same outcome. But that didn't work out so well 2 years ago, and $5/gallon gasoline and 20% U6 make for interesting bedfellows.
Classic power struggle between those who control the money and those who make the laws. We are spectators being charged airport prices.
The battle was one sided until money got tight and elected positions of power were threatened by FIRE's reckless greed. Politicians always understood you have to spill enough feed to keep the goose healthy and them reelected. FIRE forgot and is being reminded. Bankers better blink soon.
OT:
Paging Kcoop.
I just got Drupal'd.
FYI.
Re: Free Bernie Madoff !
Are YOU F'ing serious!?!
(j/k)
I assume they slid tens of billions under the table to bill gross. doesn't everyone?
I just got Drupal'd.
So did I but I shook it off like a man so I could keep posting inane crap because thats what a real American DOES!
"Under" the table?
isn't that the subject of the FOI claim?
Who's going to be in the SuperBowl this year, nova?
Re; Bankers better blink soon
It is pretty funny how this is working out. The Democratic party has probably screwed itself for another 20 years with this. Pretty darn amazin' really.
There's a table? There is no table. The table is not.
C
I am serious. Release him and make him Fed Chairman. He'll show these assclowns how to run a for real ponzi scheme.
Before I was cut off by Big Brother, I was just suggesting that money markets were about to break the bank and that was the Paulson moment and right about then, FDIC conected itself to mutual funds and the money markets that were invested in bullshit
If there's any kind of double-standard in the collateral haircuts given to different financial institutions by the Fed, then these disclosures would blown the stinky underwear wide open.
OT:
Harley Davidson to Sell Bikes in India - CBS News
Do they have biker gangs in India?
The Fed protests are pretty close to the apex on the hyperbola of hyperbole.
Yet, I think they can do better and make explicit threats to kith and kin.
HomeGnome,
We all know the answer to that. What takes skill is calling what over the hill boomer or aging slut will be the entertainmet at halftime.
anyone who can read a balance sheet and a 10Q can get a pretty good idea whether or not a bank is in trouble and an even better idea if they focus on the prior year or two of filings to see how quickly loans grew in particular categories. Congress is given the power to regulate and coin money in our Constitution and the willingness of the Federal Reserve System (whether or not the Federal Reserve banks are "privately" owned) to keep secret just how it has extended trillions of dollars of credit on a footing of minimal equity should be alarming to all. I'm not sure I'm in the camp that wants to abolish the Fed, but I sure would like to see some sunshine reach into the nooks and crannies.....
Re: Do they have biker gangs in India
Enlightened ones. The helmets with the opening for the third eye are kinda interesting too.
This FOIA is all about BIG mutual funds that were bailed out and this is why they want to protect that institution and not have people think their money is in a wild ass casino hedge fund -- and that these repos and CDOs and derivatives that connect your money to the lotto -- it's all i safe hands, run by people that are not teenagers that snort coke and have no fucking clue as to what they bet on...
Re: "The helmets with the opening for the third eye are kinda interesting too."
I looked into that once but didn't see anything... insert third eye (here)
I'm not sure I'm in the camp that wants to abolish the Fed, but I sure would like to see some sunshine reach into the nooks and crannies.....
I had an overweight female supervisor tell me "I am overweight I know but that just gives you more nooks and crannies to explore."
"If there's any kind of double-standard in the collateral haircuts given to different financial institutions by the Fed, then these disclosures would blown the stinky underwear wide open. "
Excellent point.
It's a shame, the only exit to this farce is in the peso-ization of the greenback. I may need more GAZ, NAV be damned.
I think I threw up in my mouth a little...
I need feedback, so what if, we find out this was about a shadow-like bailout of failing mutual funds and you find out yur fund almost went under -- would you pull the plug in retrospect, or would you still maintain rock hard solid, firm confidence in your fund?
the totally arbitrary and random way in which the Fed chose who lived and died in '08 (well, not totally random, political favors and personal connections had more than a little to do with it) speaks for itself
"I'm not sure I'm in the camp that wants to abolish the Fed, but I sure would like to see some sunshine reach into the nooks and crannies..... "
Something tells me that if you saw into the nooks and crannies, you would be firmly in the camp that wants to abolish the Fed, and you wouldn't be alone.
And the Fed knows it.
Re rhyming: whose Sparticus?
The herd is beginning to get restless...
Can we get an icon of a falling financial institution? Sort of like the
but a building that has flames on it and a mutual fund flag burning, maybe a few brokers jumping out windows onto a pile of CDOs ..nevermind
"I need feedback, so what if, we find out this was about a shadow-like bailout of failing mutual funds and you find out yur fund almost went under -- would you pull the plug in retrospect, or would you still maintain rock hard solid, firm confidence in your fund?"
I assume you are talking about money market funds, and that fact that many probably broke the buck without Fed support?
Just the fact that they needed the backstop has shied me away from non-treasury money market funds, probably forever. The yield on money funds does not compensate for risk.
NE and NYG
Bankercare 2008
Obamacare 2010
Here's all you have to ask. How would Teddy have been treated? We all know the answer. He would have been one of the 19.
Every request for a new icon had better have at least $5 hitting one of the tip jars, IMO.
"I'm not sure I'm in the camp that wants to abolish the Fed, but I sure would like to see some sunshine reach into the nooks and crannies..... "
Not sure you understand the purpose that a central bank serves a government.
Saints - Dolphins.
Dolphins by 3 in OT.
I think we need to do an intervention on Wall*Street and enroll them in a 12 step program...
Obfuscation Anonymous
It's for their own good.
FRB: Federal Reserve Board: Error Page
Moreover, as the Lehman case clearly demonstrates, focusing on the direct effects of a default on AIG's counterparties understates the risks to the financial system as a whole. Once begun, a financial crisis can spread unpredictably. For example, Lehman's default on its commercial paper caused a prominent money market mutual fund to "break the buck" and suspend withdrawals, which in turn ignited a general run on prime money market mutual funds, with resulting severe stresses in the commercial paper market. As I mentioned, AIG had about $20 billion in commercial paper outstanding, so its failure would have exacerbated the problems of the money market mutual funds
If there were no central bank now, one would be appointed for us. A central bank is THE natural result of THE smartest amoral scum-bags running things.
(Edit: Which IS why we have one NOW).
Re: "Every request for a new icon had better have at least $5 hitting one of the tip jars"
Can I just make my own and send them in?
Counterpointer (profile) wrote (in reply to...) on Thu, 8/27/2009 - 6:01 pm
ResistanceIsFeudal - the ol industrial strength snark passed you by, huh?
I think I'm about snarked out - it has been a long day... starting to become comfortably numb and I don't like it one bit
HomeGnome,
Is your new poll open yet? I've been very anxious to get one up, but as you recall, last week ...
Re: herd is beginning to get restless...
Only the type 3's, but they wouldn't be able to agree on a date to hold the revolution, so I'm not holding my breath.
Doc,
#1 Premium BFF Poll is open at the polls link.
I'm sorry, but the coffee kicked in:
We took as collateral for our loan AIG's pledge of a substantial portion of its assets, including its ownership interests in its domestic and foreign insurance subsidiaries. This decision bought time for subsequent actions by the Congress, the Treasury, the Federal Deposit Insurance Corporation, and the Federal Reserve that have avoided further failures of systemically important institutions and have supported improvements in key credit markets.
NOTaREALmerican (profile) wrote on Thu, 8/27/2009 - 6:25 pm
If there were no central bank now, one would be appointed for us. A central bank is THE natural result of THE smartest amoral scum-bags running things.
(Edit: Which IS why we have one NOW).
In the END... there can be only one. But that gets amusing because a human being is highly less efficient at amorality than a decision matrix.
You are aware that Black Swans have no sphincter muscles; aren't you?
Obama says Bernanke had out-of-the-box solutions. Can't he at least come up with a corporate cliche that isn't more than ten years old? What a tool.
Something will turn up - you can count on it.
The bigger question here why should the tax paying public want to know? And, once taxes are rec'd they are spent as per the public wishes, based on how the elected officials think about the condition.
The Fed is not accountable to the people. Period. Thats the way its been and will so ever more.
{snark off]
Obama says Bernanke had out-of-the-box solution
That sounds like that song Dick in a box
Obama is just discovering the latent synergy opportunities in the go forward space.
I wonder if GE is a benefactor, or more specifically Jeffrey Immelt?
The only thing out-of-the-box about Bernanke, is Pandora.
"Every request for a new icon had better have at least $5 hitting one of the tip jars"
Personally the icons add to the Grade School flavor of the comments. So from my point of view, less is better.
and the taxpayer is very happy to have hank greenberg's beanie baby collection. it is really, er, something.
Barley - the word is "fewer". Back to grade school, I'm afraid.
C
Re: The Fed is not accountable to the people. Period. Thats the way its been and will so ever more.
But, ONLY because there is no political structure possible in the US to force the fed to be accountable. If you believe in Representative Democracy as a viable form of government THEN the Fed would be accountable.
Personallly, I don't. But, others might.
Couonterpointer - both are correct
Do you think banks would have gambled like they did if there were no Fed?
Less flavor, fewer icons.
mmm
both are correct if
less flavor and
fewer icons
thx yogi you pigged me
why try to seperate moral hazard layers #11-13 from moral hazard layers #5-7?
would the housing bubble have happened without the FHA being created in the 30s? would the NFL have prospered without the push Namath gave it into becoming a truly national TV-friendly sport?
Re: Do you think banks would have gambled like they did if there were no Fed?
It's the WRONG question. The Fed was formed BY the smartest amoral scum-bags to ALLOW THEM to benefit from the system.
Do you think if there was no gravity my face would look better?
OK, gotta go off topic for this:
Yahoo! 404 - Page Not Found
"WASHINGTON – Investors are still trading common shares of Fannie Mae, Freddie Mac and American International Group Inc. by the billions, even though analysts say their prices are almost certain to go to zero."
I am afraid there are more than just three stocks. But the point is well taken.
""People have done well by trading them (in the short term), but when it gets to the end of the road, these stocks are going to be worth zero," said Bose George, an analyst with the investment bank Keefe, Bruyette & Woods Inc."
Didn't Joe wear pantyhose in a commercial back in the 70's?
Sigh. I thought we had it. Thanks, HomeGnome.
"But that gets amusing because a human being is highly less efficient at amorality than a decision matrix."
I'm sure that I've read the following aphorism by Pascal, but can't locate it:
Man secretes evil as bees secrete honey."
Did he really write that?
would the housing bubble have happened without the FHA being created in the 30s? No.
would the NFL have prospered without the push Namath gave it into becoming a truly national TV-friendly sport? Yes.
Do you think if there was no gravity my face would look better? That's a trick question, right?
You are welcome, sir.
I'm getting much keener appreciation for past historic epochs in which the protagonists seemed locked into an endgame in which they had no control over, what an interesting time to be alive.
@ NOTaREALmerican (profile) wrote (in reply to...) on Thu, 8/27/2009 - 4:37 pm
Re: Do you think banks would have gambled like they did if there were no Fed?
It's the WRONG question. The Fed was formed BY the smartest amoral scum-bags to ALLOW THEM to benefit from the system.
I agree and this quote is more true today than depression years
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". -- Congressman Louis T. McFadden
joe was and is the greatest athlete pitchman of all time.
joe was literally doing reverse slam-drunks in high school. in the 50s. the ironic and deeply sad thing about him is that he actually became a great broadway-style actor to please his wife. she resented the fact that it was another thing where he had more talent, and left him. i think he's been a quiet drunk since.
Re: would the housing bubble have happened without the FHA being created in the 30s? No.
If the FHA wasn't created in the 30's it would have been created by the Smart amoral scum-bags in the 40's or 50's or 60' or 70's or 80's or 90's BECAUSE it allowed the Smart Amoral Scum-bags who RUN everything to game the system. THAT is WHY they are THE smart-amoral-scumbags THEY think of these things. It's their JOB in life to do so.
The question is WHOSE JOB IS IT TO STOP THEM?
Not too quiet, though.
zhukov made his own endgame! there are a few...
Re: "Sigh. I thought we had it"
CR4RE
I need to work on this...
By popular demand... Click here to leave a tip.
Logic?
Japan Jobless Rises to Record High of 5.7%, Weakening Recovery
Japan’s Jobless Rate Hits Record 5.7% in Blow to Aso (Update1) - Bloomberg.com
Japan, Australia Stock Futures Advance on Higher Oil Prices
Japan, Australia Stock Futures Advance on Higher Oil Prices - Bloomberg.com
The question is WHOSE JOB IS IT TO STOP THEM?
Not me. Dancing with the Stars is on.
I still remember Joe trying to get a kiss one from of the female sportscasters a few years ago...
On the air and he'd obviously had a few...
relative to his celebrity stature, he seems almost entirely off the radar for the past 15 years.
Back on topic - Fed increases MBS purchases (while production slows, by the way) but says they may not need to use up all $1.25T.
Typical Fed doublespeak.
Fed Raises Mortgage-Bond Purchases as Lacker Suggests Slowdown - Bloomberg.com
Re: Not me. Dancing with the Stars is on.
Actually, it's NOT you. Really. In a Representative Democracy it can't be JUST you, it has to be a structure within society that WANTS it done.
Ask what your country can do you, not what you can do for your country.
Re:Ask what your country can do you, not what you can do for your country.
If you meant "for you". I'd say EXACTLY right.
THEY are supposed to work FOR us. And the COUNTRY is NEVER first WE are.
"To be clear, I am not denying that a Treasury default might be accompanied by some inflation. Inflationary expectations, along with the fact that part of the monetary base is now de facto government debt, can link the fates of government debt and government money. This is all the more reason for the United States to try to break the link and maintain the second financial firewall. We still may end up with the worst of both worlds: outright Treasury default coupled with serious inflation. I am simply denying that such inflation will forestall default."
Jeffrey Rogers Hummel, Why Default on U.S. Treasuries is Likely | Library of Economics and Liberty
We took as collateral for our loan AIG's pledge of a substantial portion of its assets, including its ownership interests in its domestic and foreign insurance subsidiaries. This decision bought time for subsequent actions by the Congress, the Treasury, the Federal Deposit Insurance Corporation, and the Federal Reserve that have avoided further failures of systemically important institutions and have supported improvements in key credit markets.
Would these be the same insurance entities that have assets (rumored) to largely consist of holdings in other related AIG insurance subsiduaries?
AIG Is Even Worse Off Than You Think
Oh-oh, if any of this is fraud, then the Fed's collateral maybe take some further haircuts...
:angryvillagers:
pavel.chichikov (homepage, profile) wrote on Thu, 8/27/2009 - 6:39 pm
"But that gets amusing because a human being is highly less efficient at amorality than a decision matrix."
I'm sure that I've read the following aphorism by Pascal, but can't locate it:
Man secretes evil as bees secrete honey."
Did he really write that?
That is not a long way off.
If not, he should have! It will be interesting to see the emotion and conscience-suppressing nobility get outcompeted by the very machines which helped them dominated. That is a long way off. Not to mention when the Furies start going to town on what's left of their souls
Well, off to power-hour and yoga to watch the hotties (through my third eye).
Let's head into the Heart of Darkness...
Cities turn off streetlights to save money - USATODAY.com
HomeGnome (homepage, profile) wrote on Thu, 8/27/2009 - 6:55 pm
Let's head into the Heart of Darkness...
Cities turn off streetlights to save money - USATODAY.com
Bringing darkness to the masses in exchange for money... how fitting.
now that's a little silly. there will be no treasury default, just debasement of the currency itself. they already print with impunity - there is no difference between the treasury, fed, comptroller, etc, just a half-hearted sleight-of-hand.
NOTaREALmerican (profile) wrote on Thu, 8/27/2009 - 6:55 pm
Well, off to power-hour and yoga to watch the hotties (through my third eye).
I'd be more concerned about the third leg!!
Pavel,
I can't be sure, but I suspect it's a gross mistranslation.
"Honi soit qui mal y pense."
Did you read the entire paper?
So, let's say the public awakens from their slumber and figures out who's been misappropriating the moolah, but how do they go about expressing their discontent?
The $64,000.00 Question
"But my guess is that, faced with the alternatives of seeing both the dollar and the debt become worthless or defaulting on the debt while saving the dollar, the U.S. government will choose the latter."
That guess is wrong. TPTB don't care about the greenback. And, for many reasons, they shouldn't.
I found an interesting analysis of the housing bubble and banking problems in Spain here...it's a powerpoint converted to a Facebook slide deck.. I thought a key point from this was the acknowledgement that Spain transitioning to the euro facilitated their banks being able to participate in the increased leverage allowed by the Euro financial authorities.
His actions[Bernanke] over the past two years have been guided by one and only one motive, that being to minimize the harm caused to ordinary people by the financial turmoil. Whether you agree or disagree with all the steps he's taken, let's start with an understanding that that's been his overriding goal.
"Ordinary people?" I think he spelled Goldman Sachs wrong.
All we need are some financial maggots to eat away the flesh of rotten banks...
Story - Health - Vancouver Sun
Ordinary people or did you mean Everyday People
YouTube - Sly & The Family Stone - Everyday People
Different strokes for different folks
OT: Our local electric utility just raised rates by about 20%. Amazing...probably to cover the fixed costs due to decreased energy use by commercial customers.
Bernanke better be working the phones to get this court order quashed. The light of day would slow those printing presses down.
It's cute the way some people still think the US will be allowed to renege on its debts. Even cuter the way others think repaying with devalued paper will be acceptable to our lenders.
"It's not a question of if, but when," Mr. Benmosche said in an interview with The Wall Street Journal at his home here. "Once the market gives us a price that I think is fair, we can go forward ... If we sell too soon, everyone loses."
This exactly is the attitude the underwater American homeowner should take - it will all be ok then.
ghostface - the logic is like that in a parallel universe :
normally, oil prices would respond to rising demand, thus, people see that as a confirmation of the cause and think back to why there would be higher demand, and then realize that more stuff must be produced and they're obviously going to produce more too because demand is up, which means their exports will go up.
that said, demand is clearly, as MP showed quite nicely yesterday, NOT going up. HOwever, liquidity is, and it's flowing into stocks and oil...
So, we get this idiocy, and it charades as some kind of logic.
Can you only imagine what the spinmeisters of Wall*Street have come up with to say, when they have no choice but to divulge the goods next week?
Oh, to be a fly on Wall*Street...
Some people are into peonage.
atrociti what's happened to banking in our country.
Just wait till they figure out we have been Kiting checks disguised as treasuries.
racial (profile) wrote (in reply to...) on Thu, 8/27/2009 - 7:17 pm
Some people are into peonage.
Diff'rent strokes for diff'rent folks...
what u talkin bout willis
Lobbyist Ben Dover (profile) wrote on Thu, 8/27/2009 - 5:19 pm
Just wait till they figure out we have been Kiting checks disguised as treasuries.
Roll Over Debt Owner.
Willis...
YouTube - First Day Blues
Zombie
It's all there, black and white, clear as crystal! You stole fizzy lifting drinks! You bumped into the ceiling which now has to be washed and sterilized, so you get nothing! You lose! Good day, sir!
The refusal of the Fed to publish records is simply another case of protecting cronies under the pretense of protecting the general public.
Insiderism all the way.
So you're saying we're still that fragile, Mr Man Who Saved the World?
Hmm...me thinks there is something wrong with this picture.
"That guess is wrong. TPTB don't care about the greenback. And, for many reasons, they shouldn't."
At a certain point of decline, they will care about the greenback.
Rob Dawg (homepage, profile) wrote on Thu, 8/27/2009 - 8:13 pm reply Ignore user It's cute the way some people still think the US will be allowed to renege on its debts. Even cuter the way others think repaying with devalued paper will be acceptable to our lenders.
It's cuter how some people take one paragragh from a long paper and make an authoritative statement on the "cuteness" of the claim without reading the entire paper. The debts the author speaks to aren't to foreign nations but to US taxpayers.
"allowed"...or "allowed without any negative financial 'collateral damage'"?
I can't see any entity dis-allowing America doing a sovereign default or a defacto one as i described many months ago.
But that also never precluded some financial & political fall-out.
Rob, what/who would dis-allow a sovereign US default and how?
2 Paths
Reneg on debts: nobody wants to play in our sandbox anymore
Devalue $: accept a much lower lifestyle than we were previously accustomed to
The debts the author speaks to aren't to foreign nations but to US taxpayers.
Take a Name, therein lies a rub....I dont see the US going thru the machinations of spinning a defacto sovereign default without also defaulting on internal obligations.....none of this would be in a vacuum anyway....the pressures causing a US default are also acting on the the UK & EuroZone and both create similar pressures on Japan, Korea, etc.
Only China's 'chinese wall' may leave them superficially un-involved...but not in reality.
I'll pick path 2 Juvenal, but I hope there are lots of switchbacks on our rapid descent from the lofty peaks of yesteryear...
HG - the poll is effed - putting down 10+ is just plain weak... as we all know the scale goes to 11
.
ParaPundit: Odds Of Eventual US Sovereign Debt Default?
I see about 4 possible resolutions of the coming financial crisis:
* US government default. This seems like the lowest probability outcome.
* Huge tax revenue increase. Only one way to do that: Stiff European-style Value Added Tax (VAT) that raises prices 10-20-30%. Goods and services become as expense as we see in Europe. We get a permanent large European-style welfare state but with a worse outcome. I see the people who support this as enemies.
* Inflation. This might happen thru the back door as a response to a financial crisis even bigger than what we saw last fall. The Federal Reserve's attempt to stop a panic will lead to an even bigger monetary injection than we've seen in the last year.
* Massive cuts in entitlements programs. California's fiscal crisis provides a demonstration.
If and when the US dollar ceases to be the world's reserve currency a sharp transition caused by large scale flight from the dollar could cause skyrocketing interest rates and a downturn that causes one or more of the above resolutions. We might get some combination of the latter 3 possibilities in a series of crises with different levels of contribution from each item.
The biggest mistake the Democrats are making is to assume economic growth will fund their dreams. I see demographic problems slowing economic growth as a lower skilled work force grows up to replace the smarter Baby Boomers. Also, Peak Oil is coming at most 11 years from now and possibly much sooner. Economist James Hamilton has explained in his paper Causes and Consequences of the Oil Shock of 2007-08 how oil price run-ups cause recessions. Well, our current recession is basically a rehearsal for worse recessions to come in the 2010s as a result of high oil prices. The money isn't going to be there to make the government spending scenarios above remotely possible.
As people get poorer due to Peak Oil and demographic problems they will become more opposed to taxes on what remains of their take-home income. So I'm expecting some really severe cuts in entitlements. Expect to work longer. Expect more entitlements for old folks to become needs tested. Save now because you are going to need the money in years to come.
If US debt is defaulted.
The bottom drops out of everything in 24 hrs. Every person in this coutry wouild walk around in a state of shock for months on end. There would be no business done on almost every level.
We are seen, by ourselves as well as other nations, as the most stable. I'm not saying we should be, or that we are perfect in the least. However, this is how many people view the US.
I can't imagine the day we default on our US debt.
Dryfly,
My humble apologies.
We shall have "11" next week.
Now turn it up!!!
Avl Dao (profile) wrote (in reply to...) on Thu, 8/27/2009 - 8:35 pm reply Ignore user The debts the author speaks to aren't to foreign nations but to US taxpayers.
Take a Name, therein lies a rub....I dont see the US going thru the machinations of spinning a defacto sovereign default.....
The author used the term Treasury default, not sovereign default. Medicare/SSI
"International money speculators thrive on crisis they help create."
"Defend the dollar against the speculators"
"Very technical action, Lay to rest the buggaboo of devaluation."
Tricky Dick
Bretton Woods Burned, Again
Hu does not want to play hardball?
josap, you dont spin it as a default...it will be spun as "mutually-agreed renegotiated long-term obligations and revisiting of long-term trans-Atlantic & Pacific Relations"....and plastered with much bigger & more opaque wordsmithing like "quantitative easing" and "collateral damage" for even better obfuscation.
Take a Name, it's rather clear that some of us on here have moved beyond Ur author to the larger subject of Sovereign Default.
This is not to say ur author is wrong.
Bernanke's re-confirmation is a given, no matter what the FOIA thing reveals. Right?
A "Federal Reserve Note" has no inherent value. They never claimed otherwise. Default on an imaginary value is utterly impossible.
Along those lines, the crux of that paper is just absurd. There's no way congress defaults on programs designed to care for baby boomers when that group is more politically powerful than ever in the coming decade (and they will be, old people vote, and the smaller, younger groups will be very disinclined to vote after getting burned by O).
They will print. Will that cause the dollar to go Weimar? Possibly. That's within the range of possibility, unlike the idea that the Treasury wouldn't meet its obligations.
That's just my opinion. The author thinks that Congress and/or the Fed would rather "save the dollar", I don't, I don't even think there's a real discussion there.
Avl Dao, maybe some people are stupid enough to let them get away with that crap as an explination. But I doubt we would stay that stupid for long. The fallout would be too easy to see day to day.
This is the polite way to respond when you get pigged.
Pigging will happen. It happens in bars, in school, at work and when you talk to your spouse.
There's a high level of pigging in the blogosphere, because there's no eye contact, and you don't exactly know who's an idiot or perv.
But people can be nice when they get pigged, like Barley. End of sermon.
I have lots of friends who worked at Metlife under Benmosche. I've done a lot of work for MetLife over the years myself.
Benmosche is universally known in insurance circles as one of the most bombastic ecocentric tyrants of all time.
In other words, he's perfect for AIG.
Well excuse me. My author spoke to the viability of a sovereign default that ur post wrongly concluded was my authors intent. My author laid out all bad options and concluded that Ur conclusion was unworkable. Urgo, ur conclusions were wrong.
Benmosche is universally known in insurance circles as one of the most bombastic ecocentric tyrants of all time.
In other words, he's perfect for AIG.
ecocentric?
Was that a Freudian slip or intentional - if intentional it was very good.
ahhh josap, I'd agreed with you in October 2008 when the 1st vote on $700 B TARP I failed and there was an uproar.
But nowadays i look at how public opinion can be swayed and uproars subverted.
Look at how far we've come since Oct 2008? Since then every proposed bailout has been easily approved and Ben's been working secretly, all collectively to the tune of about $7,700 to $12,000 Billion.
It makes the yelping over $700B for TARP I seem a bit quaint.
No. Not so fast. Anything can come out in a reconfirmation hearing. Bernanke is open game, very exposed.
He's not a good liar.
That's just my opinion. The author thinks that Congress and/or the Fed would rather "save the dollar", I don't, I don't even think there's a real discussion there.
I concur...
"Along those lines, the crux of that paper is just absurd. There's no way congress defaults on programs designed to care for baby boomers when that group is more politically powerful than ever in the coming decade"
Exactly. By the time the US collapses under it's debt, the babyboomers will be dead or drooling in a corner. It's the next generation that gets screwed.
Hollywood Hack,
You are very perceptive. Everything you say is good.
Exactly. By the time the US collapses under it's debt, the babyboomers will be dead or drooling in a corner. It's the next generation that gets screwed.
Why default then - it will have already been so massively devalued as to be pointless. You default PRIOR to collapse not after [edit - or not at all].
A "Federal Reserve Note" has no inherent value. They never claimed otherwise. Default on an imaginary value is utterly impossible.
They're not just risking default on your pocket money, HH. Nonetheless, I agree with your overall view.
rich (profile) wrote on Thu, 8/27/2009 - 5:52 pm
reply ignore user
It really depends which banking cabal has the upperhand in Congress. Tbtf 19 or everyone else
the muzzling of Dodd makes me think it's still the group of 19 right now.
Yes, Bob Benmosche is ecocentric.
His personal needs, including corporate power, are the whole world.
As I clearly typed "That is not to say your author is wrong".
Can I say it another way?
Who would have thought that after all this time, when we faithfully met the unspecified demands the 19 hijackers pleaded for, they would still have control of the cockpit?
Take a name asswipe (profile) wrote on Thu, 8/27/2009 - 5:32 pm
It's cuter how some people take one paragragh from a long paper and make an authoritative statement on the "cuteness" of the claim without reading the entire paper. The debts the author speaks to aren't to foreign nations but to US taxpayers.
Try to keep up. The two are joined at the hip. There's no way to screw just one class of debt holder any more. Trillions jump across oceans in milliseconds. There's no way to return to isolationism. To try would be economic suicide as there's no way to close the gates fast enough and it isn't like we can return to self sufficiency. We'll pay it back no matter how painful and long.
nice calling the Premium BFF on a 2 o'clock 8/28/09 PST close,
here's sumthin to turn up....
Uncle Tupelo- No Depression
You're right. I just saw the paper has an interesting point of view. The end result discussed by all is the same, the manner of how we get there or who gets burned first are the only points of contention.
bANK,
How many BFF's have you won now?
I'll have to remember you folks on the left coast next week too.
RobD, well-said.....and much shorter than how I put it by describing the debt daisy-chain within domestically as well as overseas.
Does it really matter anyway?
Its not like everybody had a 20% bagger today at the slots-o-fun casino.
Sheila said 300
Bove said 500
Kanas said 1000
We cannot have a Bank Failure Gap!
Best description of this market I've heard
"this is like smoking crack while skydiving"
I'm trying Rob. I disagree that you can't screw one class of debtholder's and not the others. Actually, we agree more than I and maybe you think
Put me down for 1001 of em' on BFF.
airplane cockpit
I need to wiki the origins of that word...I hope it's from Latin and not street slang.
They will print. Will that cause the dollar to go Weimar? Possibly. That's within the range of possibility, unlike the idea that the Treasury wouldn't meet its obligations.
TPTB will do their usual political calculus: Renegotiate debt terms (rating agencies would call it default) vs. Inflation and which constituency would prefer which outcome.
The outcome therefore is in no way assured. For example, in 1998 Russia decided to default on its own rouble-denominated debt, because it was mostly held by the foreigners and who counted for very little for the political calculation of the Russian government at the time. Can we see a special deal between UST and China extending maturity of some of the debt held by the Chinese? Who knows. And what would be the impact on USD? Probably positive.
In the end it may come down to the power struggle between Wall Street and AARP/Organized Labor
This seems like a good summary of the options. However, I think the idea that the post-Boomer workforce is lower skilled is a crock. Post boomer cohorts have had more opportunities for education, not less...and the skyrocketing cost of higher education shows that people have been taking advantage of the opportunities. And I don't want to see any responses moaning about how nobody can program in assembler anymore
All, I'm going to disable the RSS feed module for a day, to eliminate it as a possible culprit. Sorry for any inconvenience.
Does anyone here really not believe that Zero Hedge is not sh*ttalking his own book....
its about the action, baby.....sweet hot, wet, dangerous action. Its when I wake up and I smell, fear, guilt, and shame that are the greatest days of the daze. A crisis is a terrible thing to waste.
-panic buyer and seller
Kung.Fu.Panda, the reference is to experience and judgment, not to packing hexadecimal. If you conned the substance of higher education - or the lower grades, for that matter - in the sixties and seventies, as opposed to recent rubrics, you might suspect even the educational advantages you cite are not particularly defensible.
edit: Incidentally, that's not a critique of the rising generations. They're distributed normally, so far as I can tell. I do think they've been ruinously cheated in their investment of time and money for education, however.
The outcome therefore is in no way assured. . . .
In the end it may come down to the power struggle between Wall Street and AARP/Organized Labor
I followed the first part, but got lost with your ending. Why wouldn't foreign creditors be just as large a functioning interest group as either Wall Street or AARP/Organized Labor?
In general the youngsters don't have the real work ethic necessary. Education is not an entitlement for riches. It is just a tool. They have to combine both for a winning combination. I will still take a smart person uneducated person over an dumb educated person any day.
Understood. It's 91º in the dawg house, any crankiness is due to it being the hottest day of the year.
The real "innovation" of finance is fungibility. It's had tremendous advantages but unfortunately we don't know the limits until we fall off the edge or hit a wall. I've no doubt there will be attempts to get more blood out of taxpayers but I think California is proving that it won't work this time. That damn fungibility cuts two ways.
The image of goose-stepping AARP members pitted against the Business Brobdingnagians are what nightmares are made of.
I followed the first part, but got lost with your ending. Why wouldn't foreign creditors be just as large a functioning interest group as either Wall Street or AARP/Organized Labor?
If we formally default we go 'pay go' overnight - no one domestic or foreign lends to us again. Under the current scheme [lack of fiscal discipline] that's all the threat they need.
The image of goose-stepping AARP members pitted against the Business Brobdingnagians are what nightmares are made of.
Rostenkowski understood.
i will admit to being old.
When I hit 18 I wanted out of my parents house. I wanted to be on my own, responcible for myself, rent, food, work, choices. And that is what I did.
Today there are 40 yr olds whos parents are still paying for vacations, gym memberships, health insurance etc. These are fully employed 40 yr olds.
Today there are 30 yr olds still living with their parents. Most are working and using their earnings to live large and have a good time.
Today there are 20 yr olds laying around the house watching TV all day with no intention of ever getting off the couch.
Kung.Fu.Panda (homepage, profile) wrote (in reply to...) on Thu, 8/27/2009 - 8:08 pm
And I don't want to see any responses moaning about how nobody can program in assembler anymore Smile
6510, Z80, 68k, x86 ... all at some point, though never in a professional capacity. I don't know if I would have much of a chance anymore without some heavy review. c64, calculators, computers, in that order
Why wouldn't foreign creditors be just as large a functioning interest group as either Wall Street or AARP/Organized Labor?
How many voters or registered lobbyists do foreign creditors have behind them?
(Compare to Stalin's question about the Pope - "The Pope? How many divisions does he have?")
it's weird to be following these comments in 1 window while reading in another window Mish's blog and posting on how Ben's excesses are not creating money that's making it into the economy. Mish has a great graphic from the Feds showing how the excess Bernanke-Bucks are simply sitting as excess reserves in insolvant banks.
Mish's Global Economic Trend Analysis: Creative Destruction
If we formally default we go 'pay go' overnight - no one domestic or foreign lends to us again.
Agreed on that, but I wasn't thinking in terms of a formal default, but rather 'the political calculus' to which MrM referred. I think they'll be a whole lot of negotiating with each group, including foreign creditors as a loose group.
I also think foreign creditors are buying private debt secured by private assets in the U.S. as a way of minimizing the risk of a formal default by the government, however slight that might be.
sportsfan, I think they're exiting dollar-denominated assets.
josap (profile) wrote i will admit to being old.
You're not old...you're seasoned...and of good vintage.
If I owe you a dollar which I cannot repay, I have a problem; but if I owe you (Hu) a trillion which I cannot repay, you have a problem. Foreign debtors are likely to end up taking the hit either way, whether it is through inflation or through debt negotiations.
Extend and pretend applies not only to real estate owners.
If we formally default we go 'pay go' overnight - no one domestic or foreign lends to us again.
Russia seems to be able to borrow. And it might be possible to negotiate a partial default that would be less drastic than theirs was.
In fact I can't think of any functioning sovereign that isn't able to borrow, regardless of their past history. It may get more expensive but it's rare if not unheard of to get completely cut off.
Thank you Avl Dao.
Hu will be glad to talk about a trade. Taiwan perhaps?
It's bad enough that we gave up most of our civil liberties in the the name of "national security" during the post 9-11 period. Now we're being asked to give up more for the sake of money.
It's not like anyone is going to die or get physically hurt if the Fed has to cough up the names of various zombie banks. In terms of moral dilemmas, this one is about as easy as it gets.
History will record our obituary thusly: "For the love of money, a once great nation was lost."
josap:
In the 60s and 70s there were plenty of youths who were content to waste their lives smoking dope and badmouthing their country...
I left home when I was 18, never looked back. However, I will agree that, say, 30 years ago a fully grown man living at home was automatically a loser. Today, unfortunately, much of that stigma is gone. I have the priviledge of working with young people (sailors) who have taken the plunge and are willing to let go of the apron strings. Most of them are far more mature than the average college student. On some days, it even renews your hope in humanity, seeing an 18 year old acting like an adult.
How many voters or registered lobbyists do foreign creditors have behind them?
Yes, I did get that point right away. I just don't see a formal repudiation of debt, foreign or domestic (if there's any real difference to that distinction) by the U.S., now or in the future.
I actually think the eventual outcome will be more like HollywoodHack described. In order to get to that point, though, some accommodation has to be made with debt holders to keep them from causing trouble while the negotiations continue with the other interest groups, the ones with voters and lobbyists.
If we formally default we go 'pay go' overnight - no one domestic or foreign lends to us again.
Russia seems to be able to borrow. And it might be possible to negotiate a partial default that would be less drastic than theirs was.
In fact I can't think of any functioning sovereign that isn't able to borrow, regardless of their past history. It may get more expensive but it's rare if not unheard of to get completely cut off.
The problem is not the ability to borrow. It's what that society lives through preceding and after the collapse. Ugly doesn't begin to describe it.
You can say Extend & pretend" or
"mutually-agreed renegotiated long-term obligations and revisiting of long-term trans-Atlantic & Pacific Relations"....and plastered with much bigger & more opaque wordsmithing like "quantitative easing" and "collateral damage" for even better obfuscation.
Not proud of their nationality by country. Definition, graph and map.
It won't be a single path.
Feds will raise taxes and print simultaneous and hope they cancel each other to some extent.
That's what's been happening for many years anyway.
sportsfan, I think they're exiting dollar-denominated assets.
burnside, I see a concerted effort by some Asians to invest in dollar-denominated debt secured by real property in the U.S.
The property values are viewed as a good entry point for the long term (which to some means generations).
I would expect to see them lessening their position in Treasuries, but I don't think that is actually occurring now.
sportsfan, I think they're exiting dollar-denominated assets.
Then they will also have to exit the US consumer export market as well - or face severe currency arbitrage. Unbelievably fierce given our deficits.
Hu will be glad to talk about a trade. Taiwan perhaps?
I read a newspaper article recently--someone who had served in the German foreign ministry was discussing the backroom discussions over the Russian default. The favorable energy pricing they get from the Russians was one of the results.
Maybe I can find a link.
@ broward (homepage, profile) wrote on Thu, 8/27/2009 - 6:29 pm
It won't be a single path.
Feds will raise taxes and print simultaneous and hope they cancel each other to some extent.
That's what's been happening for many years anyway.
Once again boys and girls taxes are going up!
Why the federal deficit will raise taxes - Aug. 27, 2009
A $9 trillion federal deficit over 10 years because The U.S. government is spending huge sums and borrowing more and more and more.
The solution is straightforward if unpleasant: Shy of finding a fairy willing to leave trillions under Uncle Sam's pillow, lawmakers will have to raise taxes and cut spending.
"Taxes are going up and they're going up for a lot more people than those making more than $250,000. Why? Math. The numbers don't come close to working," said David Walker, former U.S. comptroller general
Welcome to sobering reality Americans!
I don't disagree that experience and judgement are very important, but of course by definition that comes over time. And I'm not denying that ageism is a problem. I've personally had the opportunity to work with individuals whose knowledge and skills I would value regardless of their age.
It depends on how schools are run locally of course, but please correct me if calculus is a common subject studied in high schools today where as in 1975, say, that subject was considered college material.
Then they will also have to exit the US consumer export market as well - or face severe currency arbitrage.
Why do you think the US consumer will continue having luxury of paying for imports in its domestic currency?
It may get more expensive but it's rare if not unheard of to get completely cut off.
Price fixes everything - it also forces de facto 'pay go'.
get a grip of some Always Be Kloaking
knurd.
Effigy
Hu are we burning?
think about it.
The problem is not the ability to borrow. It's what that society lives through preceding and after the collapse. Ugly doesn't begin to describe it.
I'm not sure I'm following you here. The 1997-8 debt crisis was a cakewalk for the average Russian compared to the events of a few years before.
It's not like anyone is going to die or get physically hurt if the Fed has to cough up the names of various zombie banks. In terms of moral dilemmas, this one is about as easy as it gets.
I would go so far as to say it's not really dilemma and there is no moral component at all.
It's a simple power play by moneyed interests to flip off the rest of the country. (They do that all the time.)
If any good comes out of it, it might be the Fed losing stature in the halls of Congress and that could lead to all sorts of interesting developments, oh, for instance, an audit.
California raised the core sales tax 14% and got an 18%+ decline in revenue. Best of all they jump started an informal and now socially acceptable underground economy.
Shy of finding a fairy willing to leave trillions under Uncle Sam's pillow
Did they just out Bernanke?
Rob Dawg:
Link, please. If that is true, wonderful. It is nice to occasionally see stupidity punished.
@racial (profile) wrote on Thu, 8/27/2009 - 6:35 pm
Shy of finding a fairy willing to leave trillions under Uncle Sam's pillow
Did they just out Bernanke?
Hilarious but probably true !
The 1997-8 debt crisis was a cakewalk for the average Russian compared to the events of a few years before.
And by 2001 the average Russian was doing much better than at any point between 1988 and 1998
I often read/hear in this forum and elsewhere, we are the richest country on earth. By what measure I humbly ask you lords and ladies?
That would also be the result of a hyperinflationary "default" as most here seem to be calling for.
hyperinflationary default is coming, count on it.
Why do you think the US consumer will continue having luxury of paying for imports in its domestic currency?
I'm not saying we will have that luxury - I'm saying the two are coupled.
If the merchantilists stop buying USD assets - they in effect stop pricing to us in dollars and price in their own then appreciating currency. That raises the price of their goods here and squeezes them out. They can have one or the other [either export surpluses to us & buy our dodgy assets - or don't buy our assets and see their currency appreciate relative to the USD until they are squeezed out]. One or the other.
Here's a quickie on CA revenues: Sales tax revenue plummets, cities suffer
@ SNAFU (profile) wrote on Thu, 8/27/2009 - 6:37 pm
I often read/hear in this forum and elsewhere, we are the richest country on earth. By what measure I humbly ask you lords and ladies?
Goldman Sucks water boy Geithner continues to reassure China that its massive US bond holdings are safe despite concerns.
HA !!!....US economy carries about $20 trillion of excess debt because until that debt is eliminated, the idea of a healthy boom is a mirage.
A Treasury official acknowledged that the budget deficit was "going to increase sharply" as a result of aggressive measures to jolt the economy from recession but added that once recovery was firmly established, "we are going to walk back these measures and the deficit will decrease. "In general, Treasury believes that by maintaining the most liquid debt markets in the world, by maintaining strong economic fundamentals, we will continue to attracts both domestic and international investment."
Liquid debt markets = More Tsing Tao please !
The key dynamic to focus on with Congress is to what extent they correctly perceive the Fed's growing usurpation of power as a direct threat.
Even Nancy Pelosi has started to grumble about all the money the Fed is doling out, without any input from Congress.
This is offset somewhat by the tendency of most in Congress to relinquish power to the Fed in exchange for escaping accountability. That way they can blame the Fed when things go bad. "See, it was that evil Fed that screwed up, we tried to stop them but ..."
However, particularly in the Senate I am beginning to sense that the old bulls are stirring. This fall we may see some change.
Rob points out how govt actions (Cali) can create an unexpected adjustment by society....all manner of adjustments not seen ahead of time if you keep extrapolating today's behaviors & trends linearly.
That also goes for Congress....and TPTB. Neither seem to be behaving today as they did in 1979 or 1969. Why would we expect the Congress of 2019 to act as it did in 2009?
That's why I say a defacto or declared default wont happen in a vacuum....heck, we may be the 2nd to the last relevant economy standing when we default and the matter of "no one wanting to lend to us" could be quite moot.
And life will not end, there will be 310 million (plus more) americans adapting and adjusting (local markets, underground mkts) , not sitting on their arses IF such scenarios come to bear on us.
The problem is not the ability to borrow. It's what that society lives through preceding and after the collapse. Ugly doesn't begin to describe it.
I'm not sure I'm following you here. The 1997-8 debt crisis was a cakewalk for the average Russian compared to the events of a few years before.
I've spoken to people who lived through the debt/crisis in both Russia and Serbia. It sounded horrible. If you didn't have relatives outside the country you were sol.
What is She Bear going to do????
Said she won't tap the treasury for more funds. We know this is BS.
OT Probably mentioned already, but just in case:
Yahoo! 404 - Page Not Found
On some days, it even renews your hope in humanity, seeing an 18 year old acting like an adult.
Nuke, two years of mandatory government service after high school (or age 18) would do wonders for an entire generation, in fact most generations, and just might have a positive impact on this country as a whole.
You just have to eliminate the rich-kids' exemption . . . or it won't work.
The Fed appealing the District Court's order on Bloomberg's FOIA case is exactly what the rich-kids' exemption leads to later in life . . . that overwhelming sense of entitlement.