Cerberus Capital Management, the investment firm run by Stephen A. Feinberg (above), on Tuesday dismissed market speculation that some of its hedge funds, which have suffered losses and heavy investor withdrawals, are in danger of default, Reuters reported.
Traders in London and Frankfurt were buzzing with talk that a major hedge fund was headed for default. Much of the talk was directed at Cerberus, a private equity and hedge fund firm hit hard by losses on investments in Chrysler and GMAC.
Underlying this stimulus intervention is a belief that a small injection of "animal spirits" will turn things around and get momentum going in a positive direction. This has been the fundamental belief of the administration all along: there is nothing fundamentally wrong, we just need some confidence to send housing prices and the economy back to "normal."
If you believe that houses were fundamentally overpriced by the bubble, however, then a small stimulus will not prevent a fall in prices to a more fundamentally sound price/rent and price/income ratios. Time will tell.
My belief is that NAR is underestimating first time buyers, but, they are NAR and them being wrong goes without saying. If only about 20% were allowed or induced to buy because of the tax credit, I would be shocked. My estimate is closer to half and that would bring the cost down significantly. It is still a horrendous policy mistake, but my gut tells me per house it is not as high as believed. No hard facts to back it up. Just based on conversations with people considering buying a house and comments from builders. It was a hugely hot topic for the vast majority of them.
CR- it is impossible to calculate the cost of the C4C based on one months number. You have to consider what happens to car sales in the following months to determine its efficacy. If in fact Edmunds is right and sales fall back into the 9 MM level in September and holds there for 4-5 months the average over 6-7 months will be less than 10 MM SAAR and the cost of the program per incremental sale will be approaching infinity. All that we can tell at this time is that it has cost AT LEAST $7,200 . The same is true for the housing credit.
"The hedge fund talk "is a huge driver" of currency markets, said Dan Cook, senior market analyst at IG Markets Inc in Chicago. "When you have data like we had but the Dow drops, people are running for that safe haven.""
Clearly, Obama never should have sought the ARRA or arranged any event that might have slowed the rate of descent . . . and he certainly shouldn't have had Geithner do anything with the second half of TARP that would benefit anyone at all.
That way everything could have crashed, we'd be living in Mad Max world right now and everyone here would be happy.
CR nails it again. Marginal (incremental) costs are what matter when deciding efficacy.
Who are selling houses? Boomers. Who are the FTHB? Not boomers. When this continuation of intergenerational wealth transfer is tallied there will be anger.
Interest rates are low, there are tax benefits and yet homeownership still doesn't make sense at these price levels. Until prices are addressed the rest are but Paul Boomer and Lord Windesmere contesting.
Okay, when do you Obama supporters storm the ramparts?
That sort of economic stupidity -- $40K credit to buy a home -- cannot go on too much longer. I presume the Chinese pick up the phone daily and say, 'Timmy, what in the hell are you doing, schmuck?'
Crazyv -- You are suggesting that cash for clunkers and the first time homebuyer tax credits are simply moving demand forward. But that is the explicit goal of such stimulus activities. Theoretically, you are stealing demand from next year in the hope that there is enough additional demand next year from a recovering economy to overcome that penalty. Again, we will see.
what we are witnessing in the economic sphere is exactly the same game as in the educational sphere. There the dominant theme was "self esteem" -it didn't matter whether you knew how to read or write. Now we have the confidence theme- if consumers are confident they will spend- doesn't matter whether they have the income or not.
BTW I think the reason our political dialogue has become so debased is a direct result of the "self esteem" education system that has convinced people that their opinions are worth something even if they are ignorant and ill informed.
CR, the premise that the program was to stimulate additional demand may be flawed. For certain mindsets all that matters is the total amount of print-and-spend capital delivered to Main Street, and corresponding changes in political positions.
Meanwhile, I think "Cerberus Capital Management" should be renamed "Cerebellum Capital Management", and not "Cerebral Capital Management". At any rate, Cerebellum Capital Management would be a great name for a high-frequency-trading sort of hedge fund. Gotta tap into those animal spirits!
Sportsfan: the argument form most of us isn't that Obama should have done nothing. Rather, it is that the government stimulus activities were not as effective as they could have been.
Oh buy me a home
Where the buffalo don't roam
And the deer or antelope don't play
And seldom is heard
A HOA's discouraging word
And the sky can be cloudy all day.
Let's assume burning less gas does absolutely nothing to reduce pollution and climate change.
You still must ADD the value of gas not consumed because of C4C.
Yes, indeed, my argument is you need to take on oversupply (since oversupply is so out of whack), not falsely inflated present demand at the cost of future demand. To deal with oversupply, we need B4D. Bulldozed for Demolition would employ out of work construction by giving them each a free bulldozer and paying them to demolish foreclosed homes. After the program ends, a new program named C4B4C would them roll out. Cash for Bulldozers for Christmas. Stimulus programs are the gift that never stops giving.
"Gee, you mean pulling demand forward was the point all along? Hoocoodanode? "
The questions are (1) how much demand; (2) how far forward; and (3) at what cost. Stealing demand from September/October 2009 at $7k/car is fairly expensive and not very effective.
You can agree that economic stimulus was wise and prudent and still disagree with how it was implemented.
how long before you run out of tomorrows to steal from?
Every time a consumer borrows to spend you are taking away demand from the future and actually over time ending up with net less aggregate demand. (interest has to be paid). It might make sense borrowing from the future if (a) we were anticipating huge income games e.g. in a developing country which has the ability to move up the scale in terms of productivity and income. (b) next year was going to be an abnormally robust year and so there was evening out going on. This latter event I just don't see happening on an economy wide basis and the former is certainly not happening.
The problem is that our entire economic policy coming into the crisis and now trying to get out of it has been based on borrowing from the future. When the future arrives we require additional amounts of debt just to keep demand stable by borrowing from the future. Hence the incremental debt per incremental dollar of GDP has been rising every year. In any other context this would be described as a Ponzi scheme. All Ponzi schemes inevitably blow up. All that we have done under the fearless leadership of that agent "change we can believe in" is transfer the Ponzi scheme from the consumer to the government. However when the government can borrow no more what happens then. As somebody who has spent a life in risk management I would say - "when the markets are even asking the questioning of whether the US government could default you are getting close to the edge of the cliff"
You still must ADD the value of gas not consumed because of C4C.
Well, I don't know if the math works quite that way. Somehow, you'd want to calculate the increased efficiency (value of the additional miles driven with the same amount of gas as it would have taken in the 'clunker'.)
Anyway, therein lies the taxpayer's gain, not in the pulling forward of future sales.
This last sentence is perhaps the most significant.
Asking the question accepts that possible outcome, which nullifies unreasonable hope, hope which has no use for history, circumstances, or facts: we are in fact going to risk defaulting.
My criticism of Obama is not for much of the specifics of the stimulus plan but rather what it was predicated on. There should have been acknowledgment that for years we (government and private individuals) have been living beyond our means based on a borrow and spend mentality. What we need to do is get ourselves of that addiction which will require an economy that is smaller than we currently have. The stimulus should have been used bring us down gently to that new lower sustainable level. Instead the entire thrust of administration policy has been to try and re-create the economy prior to the bust up.
Name me one thing that has been proposed that changes the economic trajectory.
"That way everything could have crashed, we'd be living in Mad Max world right now and everyone here would be happy. "
I would argue that the banks crashing would not necessarily lead to Mad Max. But that waiting until housing and the equity markets had found found a natural bottom, before turning on the money taps, would have been a far better use of ammo, and more likely to lead to a "V" recovery, as the worst actors would have been wiped out and the available funds would have gone to the strongest survivors. Instead the money went to the worst of them, and has had the least benefit possible.
"That way everything could have crashed, we'd be living in Mad Max world right now and everyone here would be happy. "
There are no degrees of freedom in history, AFAIK.
No one has ever successfully walked me in a straight line from allowing overleveraged IBs to go away to something which would affect my personal well-being.
Rob, the libs are getting restless. I am not sure what will bring out their long knives, but I see such coming if Obama keeps going down the 'Bush-on-meth' path.
It would have been catastrophic had we simply allowed things to fail, but we could have rebuilt for far less than we are going to end up spending when all is said and done. The reason we chose not to allow things to fail has less to do (with) us little people than the re-election of politicians; they simply can't accept that doing nothing is occasionally the correct course of action.
that is a complex question it is not as simple we were getting 15mpg and are now going to get 24mpg.
a. how much more are people going to drive in a new car compared to what they were prepared to do in the clunker.
b. How many of those clunkers would have been replaced anyway- i.e. there would have been gas savings with or without the C4C.
c. What is the gas saving between a clunker replaced today and one replaced 3 years from now when the higher CAFE standards kick in.
d. What is the energy usage in producing and delivering a brand new vehicle as substitute for an existing and usable vehicle.
At the end of the day your question highlights the bait and switch nature of this program. If the stimulus effectiveness sucks lets talk about the environmental side. If the environmental side sucks lets talk about the stimulus.
As a moral matter what are the consequences of higher used car prices on the most vulnerable in our society who have no other choices but a used car for their transportation requirements?
“There is absolutely no truth to the speculation,” Tim Price, a Cerberus managing director and spokesman for the firm, told Reuters.
"We will continue to categorically deny the speculation as long it it remains speculation, and not something more substantial," said Price, who is looking for a job.
From previous thread: Blackhalo (homepage, profile) wrote (in reply to...) on Tue, 9/1/2009 - 1:54 pm
For MSM to get news, they might have to do some actual investigative reporting, and know what they are talking about well enough to inform the public.
Then there's the matter of having to give up access in order to report the news instead of the Administration's talking points.
I think you are spot on. There is one lesson from successful intervention in foreign exchange markets- timing matters. Intervene too early BOE in 1992 and all you end up doing is bankrupting yourself but not changing anything. Reserve Bank of Australia devalued (I forget the year) and the market traded up immediately after the devaluation.
Another useful analogy is repairing a levee breach. If you try and do it too early the pressure of the water is too great and anything you do is going to run over. I fear that is exactly what will happen with regard to the economic measures. If the credit of the US is shot after the first go around then there is nothing available .
rich, it appears that you are right, that this is a bit of flight to safety.
I thought it was the $6B POMO, as gold and silver moved up sharply as the stock market bottomed (investment banks 're-risking' as they saved the stock market).
But, oil has gone nowhere, so liquidity is not flooding everywhere.
What do you think, will gold and silver move down with the market these next six weeks, or not?
Doc Holiday (homepage, profile) wrote on Tue, 9/1/2009 - 2:18 pm
"The hedge fund talk "is a huge driver" of currency markets, said Dan Cook, senior market analyst at IG Markets Inc in Chicago. "When you have data like we had but the Dow drops, people are running for that safe haven.""
Interesting, and as of this moment, the USD is up against the Euro and GBP.
iceman (profile) wrote on Tue, 9/1/2009 - 2:30 pm
The saddest part ... C4C and the homebuyer tax credit continue to push "consumption" over "savings." AKA Short run benefit vs long run benefit.
If hyper-inflation is in our future, then that would be a good thing; spend it now while it's still worth something. However, I don't think that's the way it will play out.
Nemo (homepage, profile) wrote on Tue, 9/1/2009 - 2:33 pm
So when do we get the "Cash for people who work an honest job, live within their means, and already drive a fuel-efficient car" program?
Agreed, it is indeed complex to calculate the precise environmental benefit, which CR calls the "secondary" effect.
I have always considered that the PRIMARY, indeed the ONE AND ONLY defensible justification for using tax dollars for the C4C program. If there was a sales spike (almost entirely future demand brought forward), well - good for the auto dealers, the manufacturers (mostly foreign), ad-copy writers, giant-inflatable-gorilla salesmen and that dude from "Dirty Jobs". But for the vast majority of taxpayers, C4C gets them nothing.
"Apparently the subject of the rumor is the Corus Bank in Chicago.I had never heard of the entity but apparently they are quite troubled institution.
The firm’s chief accounting officer quit today. There is also a story that the firm missed a regulatory filing several weeks ago and is in danger of stock market delisting."
.......Another well-thought-out government program. We (taxpayers) contribute $7200 per car sold and $43,000 per house sold to "newbie" buyers. WHAT A CROCK! Thank goodness I have NO DOG IN THIS FIGHT anymore. You won't find ME paying it. The War On Poverty has been won - I surrendered.
There's a rumor that today's downturn was caused by some anonymous blogger quoting Ben Bernanke as saying "They're all toast" when asked about the banking sector-
Won't they figure it out slower if you quit? The other way they might get suspicious when you didn't show up for work the next day--this way they might not figure it out until they're unable to serve the subpoena.
"Apparently the subject of the rumor is the Corus Bank in Chicago.I had never heard of the entity but apparently they are quite troubled institution...
We've been on CORS deathwatch since, when? 2005?
I think it has to be something downstream of them or perhaps the simple fact that the FDIC couldn't find a buyer and hasn't got the funds to handle it.
Can someone give us a quick overview of how the FDIC is funded? Would this somehow require an up-or-down vote in Congress?
Interesting analysis. It raises the question of how this subsidy money could have been put to more productive use. Billions of dollars could have paid for a lot of factory retooling, power plant construction, etc. In other words, it could have been invested. Instead, it was used to encourage consumption. Temporarily.
It doesn't do much good to analyze taxes in an environment where inflation, bubbles, and asset mispricing are used to obfuscate the cost/benefits of private and government operations.
EDIT: You can add market manipulation to that list. Even when it's to the downside.
John Stark (profile) wrote on Tue, 9/1/2009 - 3:09 pm
Interesting analysis. It raises the question of how this subsidy money could have been put to more productive use. Billions of dollars could have paid for a lot of factory retooling, power plant construction, etc. In other words, it could have been invested. Instead, it was used to encourage consumption. Temporarily.
What would you suggest investing it in? T-Bills? It's not as though there isn't already an excess of production capacity; not necessarily here, but worldwide.
We have too many units in some locations and not enough in others. Can you imagine the politics of deciding which areas to bulldoze? It would make the headaches you get from slow growth programs look like a nice relaxing chat group.... no thanks.
I would, and perhaps will be someday, an honest to goodness FTHB at 41. I didn't jump in during boom or take the tax break because you had the same sort of financial geniuses hedging the government's 8k on inferior goods. Why pay 8k or more on a crappier house? A friend calls my approach DJ's Economic Akido - instead figthing the momentum, just deflect and go defensive until your opponent uses up all it's energy and gets tired. Then you can swoop in for the kill.
I'm in one of the prime investors turfs. We have people who leveraged for 'great investment buys' in late 2007 already giving them back to the bank. Once they finish with their version of financial darwinism, I'll go see what's worth plopping down cash on.
"One of you libs should tell Obama to shut his pie-hole"
You seem to be mis-informed. O' is not listening to libs. Bankers, Pharmaceutical Companies and Wall St. only. Remember, health care reform is just a decoy to distract you from noticing all the money going out the back door.
C4C was used to get old polluting inefficient cars out of circulation permanently. I think it is a mistake to view it program to boost sales. I know I see differently than CR on this one, but hey we have to disagree on something once in a while.
Let's say you had a vaccine for HPV, but a certain stubborn segment of the population just refuses to take the vaccine cuz they don't understand the benefit, or are too cheap to spend a few bucks on it.
What's a responsible government to do?
Bribe them with a $1 coupon toward a if they go in for a free HPV vaccination.
Yes, Burger King might benefit from the promotion, but don't meaure the success of the program trying to calculate how many incremental Whoppers were sold. They would've purchased their Whoppers regardless, natch. The real value of the outlay is how many more people benefit from avoiding infection in the future.
"It's not as though there isn't already an excess of production capacity; not necessarily here, but worldwide."
Tell that to the billion or so people who don't have consistent access to drinking water.
We don't have an excess of capacity; we just continue to direct production into areas of excess.
That's why some people use the term "misallocation" in addition to overcapacity to describe the current problems.
But the real problems run much deeper than that.
For a long time we've had the ability to feed and house a lot more people than we do. The hard part is coming up with the social structures to accomplish that (assuming you believe that to be the overriding goal of a society, which some people don't).
That's what seems to be what the economists overlook. They get frustrated by the fact that it appears we have the economic means to do certain things, but we don't do them.
Really if you look at Ancient Egypt you'd think we should have been in space a 1000 years before we actually were.
I think there is a real possibility we will destroy the lives we have by framing what are really social and cultural issues as economic problems.
There's a rumor that today's downturn was caused by some anonymous blogger quoting Ben Bernanke as saying "They're all toast" when asked about the banking sector-
I have it on good authority that the quote was accurate.
Apropos of CORUS, the Chief Accounting Officer resigned on August 18, effective 9/3. This is not exactly news. But it does raise the question of whether the Minnaugh is ready to swim with the sharks, after the Manley woman leaves?
Emphasis in bold added by me:
Form 8-K for CORUS BANKSHARES INC
24-Aug-2009
Change in Directors or Principal Officers
ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On August 18, 2009, Paula Manley gave notice of her resignation as First Vice President and Chief Accounting Officer of Corus Bankshares, Inc. (the "Company") and Corus Bank, N.A. (the "Bank" and, together with the Company, "Corus"), effective September 3, 2009. Ms. Manley is resigning to pursue other opportunities and not as a result of any dispute or disagreement with the Company regarding its financial reporting, accounting policies or any other matter. The Company does not currently intend to appoint a new Chief Accounting Officer. However, Michael Minnaugh, the Chief Financial Officer of Corus, will assume the responsibilities of principal accounting officer for Corus following Ms. Manley's departure. Mr. Minnaugh was appointed as the Chief Financial Officer of Corus on June 16, 2009. The Form 8-K filed by the Company with the Securities and Exchange Commission on June 22, 2009 announcing Mr. Minnaugh's appointment as the Chief Financial Officer of Corus and containing the disclosures required by Item 5.02(c) of Form 8-K is incorporated herein by reference. Mr. Minnaugh will not receive any additional compensation in connection with the assumption of these responsibilities.
No, I was responding to your claim that there was excess productive capacity worldwide.
Production capacity. Factories don't necessarily provide people better drinking water. In fact, the opposite is probably true in China today. Just my $0.02-
nova (homepage, profile) wrote on Tue, 9/1/2009 - 3:22 pm
There's a rumor that today's downturn was caused by some anonymous blogger quoting Ben Bernanke as saying "They're all toast" when asked about the banking sector-
I have it on good authority that the quote was accurate.
I was just joking, but if you're serious, do you have a link? I couldn't find one-
Wisdom Speaker (homepage, profile) wrote on Tue, 9/1/2009 - 3:22 pm
Apropos of CORUS, the Chief Accounting Officer resigned on August 18, effective 9/3......Ms. Manley is resigning to pursue other opportunities
At a previous employer, this was code for being fired.
How does anyone know how many units would have been sold without the program? It seems difficult to determine this number, how do you measure intent? What is the baseline and how is it calculated?
Also, I am not sure this metric makes sense, if sales remaind flat when C4C or the home program kicked in, would we consider the program a success or failure? it seems to me the other day people were arguing that the 8K was pulling too many sales forward and causing another housing bubble - now the metric seems to imply we have not pulled enough forward - to that end what would have made the program cost effective(I suppose most people here would say nothing - if that is so what is the point of a metric to tell you something you already know) ? what if home sales declined? would we be claiming success because we spent less money? or what sales increased by 100%? People seem to like to argue from both sides here, either a) the program is too successful, cannabalizing future sales, b) the program did not change anyone's mind and hence is a waste of money - how do you determine that using this metric? Using this metric ANY program which has a large number of people in the original category (1.8M first time home owners a year, it that thre real number? out of 5M sold homes it seems high, where is the graph of new home owners/month?) will always seem very costly - it seems like CR wants a program that only pays money to people who would not have bought a house or car otherwise - how the hell do you do that? should the program(s) have kicked in only when monthly sales for cars and houses was zero?
What was the intent of the housing program - stablize prices? or sell more homes? If it was to stablize prices shouldn't there be a price based metric?
Finally, If anything, the metric seems to imply at least for the C4C program that goverment should have spent more money! as the program was extremely popular, having the program run for a another few weeks would have pulled forward even more sales improving the metric.... I am sure most people here would be against that
I guess my Governor did not get the memo, as he was trying to mandate quite expensive HPV vaccines. Stragely Mereck is a big Perry contributor. The other bing toll road operators...
"The $360 to $450 in vaccine cost alone is much more expensive than any vaccine series now required and does not account for the added expenses of overhead, storage, insurance, occasional lost and expired doses, nonpayment and labor costs being put on the back of primary care physicians throughout the state," said TMA President Ladon W. Homer in a statement.
"The governor has missed the point that just because you don't want to offer up 165,000 11-year-old girls to be Merck's study group doesn't mean you don't care about women's health, it doesn't mean you don't care about young girls and more importantly, doesn't mean that parents shouldn't be making the decisions about their medical choices," Mr. Bonnen said.
"While Mr. Perry conceded this battle, others loom. Sitting in his office is a bill with a two-year hiatus on privately funded toll roads, an overwhelmingly popular legislative proposal that Mr. Perry has blasted. He has until next Wednesday to determine whether he will veto the toll road moratorium and face the prospect of the first veto override since 1979. "
C4C was used to get old polluting inefficient cars out of circulation permanently. I think it is a mistake to view it program to boost sales. I know I see differently than CR on this one, but hey we have to disagree on something once in a while.
I hate to burst your bubble, but C4C was clearly NOT designed to remove polluting and/or inefficient cars from the roads. Taking a look at the requirements of the cars that could be accepted shows this to be the case. Cars over 25 years old, cars that met a certain fuel efficiency when they were NEW, and cars like a 2006 Hummer H2 were all not acceptable for the program. There wasn't even a mention of emissions or MPG testing being required. This was designed to sell new cars to people who were most likely to buy them if the incentive was large enough: the "clunkers" line was just to make it palatable to people like you.
crazyv (profile) wrote (in reply to...) on Tue, 9/1/2009 - 3:30 pm
actually I think conservative republicans have a better chance being heard given that he is so into bipartisanship.
Last time they tried that, he reminded them exactly who won the election. Even conservative Repubs know better than to pee into the wind-
@Schnapps, "C4C was used to get old polluting inefficient cars out of circulation permanently."
You appear to be presuming that we live in a culture of honest, law-abiding, regulation-minded used car dealers, with rigorous government oversight of the handful of outliers.
From what I've seen and heard:
We saw a large number of Katrina-flooded autos put back on the market as "good" used vehicles in 2005-2006.
We hear a lot about the rise of the "cash economy" as cash-strapped working-class folks struggle to make ends meet in a world of fairly high overall taxation, underreported cost-of-living inflation, and stagnant wages.
We see U.S. TREASURY SECRETARIES who haven't properly paid their taxes; ditto for a number of senators considered for Administration posts.
How large was the fraction of prospective Obama appointees who were turned away due to nanny, tax, or other financial fraud or other "avoidance of legal obligations" issues?
Just exactly how honest were the buyers and sellers during the housing boom? And the bust?
Just how much do we trust the Federal Reserves claims about the various programs they're running?
Ditto for Goldman Sachs?
And now you want us to believe that all of the clunkers are going to be trashed, just because some lawmaker wrote it on a piece of paper?
I think what we have here is a legal culture run amok, where the laws have gotten so burdensome and ridiculous in so many cases, that large segments of the population no longer care. When the laws are unenforceable and unenforced, they are mocked, and we end up with a culture where crime pays.
The parallels between this and the Prohibition culture of the 1920s (leading to repeal of Prohibition during the Depression) are quite striking.
I'd prefer to see fewer laws, more cleanly written, more enforceable, and with more people following them.
Yalt (profile) wrote (in reply to...) on Tue, 9/1/2009 - 3:32 pm
It's also been code for "I can't in good conscience continue to work for you but I can't very well say that explicitly in my letter of resignation."
Perhaps, but not at my previous employer-
Gurkhas?!? The State Dept. hired Gurkhas to guard the Afg Embassy! That's embarrassing...anybody with 2 cents worth of knowledge about Asian history knows that the British used these people as armed servants. Somebody at the State Dept needs to be fired....
Yes, no doubt Manley was fired, but was it for being too willing to cook the books, or not willing enough??
I also found it telling that she wasn't going to be replaced. Not a sign of health -- a company that expects to remain in business for a long time will have a transition plan ready.
actually I think conservative republicans have a better chance being heard given that he is so into bipartisanship.
Republicans are only conservative in the social sense and in speeches. Nobody has the guts to be fiscally and economically conservative or smash apart special interest groups and power monopolies.
Cutting wasteful spending and special interest group handouts are the political equivalent of traveling faster than the speed of light.
"Finally, If anything, the metric seems to imply at least for the C4C program that goverment should have spent more money! as the program was extremely popular, having the program run for a another few weeks would have pulled forward even more sales improving the metric.... I am sure most people here would be against that"
If stood on the street corner handing out money I think my effort would be very popular too. Here is the basic problem- you start with a program that you expect to last until November and it is sold out. The rational human being says- "wow maybe I mis-priced this- perhaps I need to increase the price". The government and their supporters say wow look how popular maybe we should do more.
Spending more money actually might have made more sense- at least you would have subsidized all those that were looking to buy in any event and then you would be getting to the true incremental sales. Although my guess that actual incremental cost of spurring new sales would be much higher. CR has way underestimated the cost of the c4c program - it is probably closer to $40,000 per car (Edmonds) then his $7,200. So although you are trying to be facetious you actually are right from an economic perspective.
Blackhalo (homepage, profile) wrote on Tue, 9/1/2009 - 3:40 pm
"Perhaps if the factories were producing drinking-water infrastructure?"
Cost effective desalinization sure would be a nifty, exportable tech...
Yes; it would be nifty, and it would be exportable. The only question is who would pay for it, and unfortunately, the countries most in need of this sort of technology are the ones least able to pay. Hey, since China's no longer interested in us, maybe we can get them to front the money to the undeveloped countries!
Yalt (profile) wrote on Tue, 9/1/2009 - 3:41 pm
Sad that we don't have a strawman icon....
Even sadder that people keep bringing up solutions that have been shown to be ineffective in the past, and try to pass them off as "Change". "Those who forget the lessons of history are doomed to repeat them."
Wizdom Speeker, I don't presume 100% enforcement, and there will always be some graft and dishonesty in any system.
Wheelman, you are right, it is palatable to me. Emissions testing is unrelated, and MPG testing every vehicle would have been too much of an administrative burden.
Not to mention -why would you take $4500 in exchange for a 2006 Hummer H2 even if the program allowed it? That vehicle is worth far more on the open market.
No time to read thread, but I suggest that we take the next 43 billion, or whatever, and
have a lottery. Anybody over 18 who wants to can sign up.
43 billion is 43,000millions, right? The proceeds are prorated amonst the states.
Each lottery prize is 100k. so there will be 430,000 winners. Not too shabby. Anybody
could use the money for anything, except if they are delinquent on a mortgage, the whole amount goes
to come current, and if there is any left over it is split evenly among the morgagees, No
taxes on lottery money.
Result: s.
Some inflation. People who are current on their mortgages get rewarded, as are people who
have no mtges like me.
"......as the program [C4C] was extremely popular, having the program run for a another few weeks...."
......popular my ass - it was run into the ground. Both Sales Mgrs of our TWO new car dealers here said it was finished. There were no more customers that could be financed. NO MAS DINERO! The FICA scores started looking like childrens' bowling scores....
Yes, it's the requirement that investments be profitable that leads to misallocation.
and then:
No! It's not a requirement, and for a plethora of examples, go research the old Soviet Union and its command economy.
The following thought requires a certain revision of the concept of profitability, but consider:
In the normal sense of profitability, Investments that are not profitable lead to bankruptcy, and are thus not sustainable. So yes, there is a requirement that investments be profitable.
Here, we need to remember that in the original sense, "capital" was a surplus of production (of physical, tangible goods) over consumption. A profit is an increase in total capital following an "investment". In other words, a profit implies that one ends up with "more" than one started with.
It should be self-evident that "investments" which don't produce "profit" in the above sense, result in having LESS than one started with, and thus are NOT sustainable. In other words, you drain your physical capital and end up going bankrupt in the sense of having nothing left.
The modern, "sophisticated" capitalism has so much Orwellian language abuse involved, that these original truisms get lost. Especially where a bank (or banking system) claims "profits" even as the host country is drained of capital to keep the bank (system) alive...
Jeebus, we are so doomed. If I was ever to be "saved" I would never tell anyone. The stigma of the label is too damning.
By James Sterngold
Sept. 1 (Bloomberg) -- Henry Jones delivered the good news in a conference call with Tri Energy Inc.’s investors: The gold deal the company had been working on for years was about to pay off.
Jones, 55, a record producer in Marina del Rey, California, and his two partners had raised more than $50 million from 735 investors, which they said they were using to broker the sale to Arab buyers of 20,000 tons of gold owned by a group of Israelis. They promised to triple investors’ money -- if only Tri Energy could overcome some last-minute glitches.
All the company needed to close the deal, Jones said on the Dec. 20, 2004, conference call, taped by one of the participants, was a “safe-passage letter” that would cost $450,000. A few days later, on another call, he said Tri Energy had to come up with $100,000 to open a “commission account.” Then, on Jan. 15, 2005, a new request: The bank handling the deal wanted $125,000 to conduct an audit.
...Tri Energy’s investors had something in common. Many were Mormons and born-again Christians who shared dreams and prayers on nightly conference calls. They vowed to use the profits for charitable works and kept raising funds, at times taking out second mortgages, draining retirement accounts and recruiting relatives.
"I would argue that the banks crashing would not necessarily lead to Mad Max. "
Forget Mad Max. In the real world Mad Max gets his clock cleaned as soon as he lifts his head. In a real world of crashing banks you get demagogues, and some of them may actually get their hands on real power. And this: What may make sense as a hypothetical risk in a projected theoretical economic theory is inapplicable in a real world of political facts and possibilities. No government is going to deliberately permit its banking system to fail. And then what: Sit back with its fingers crossed?
Emissions testing measures pollution, MPG averages measure efficiency, both are things you claim were the reasons for C4C. If they are now unrelated and too onerous, how can you still claim they were the point of the program?
I have visited many US embassies ; the Marines are almost always inside the compound behind tall walls and iron gates. If there was a drive by suicide bombing with few tons worth of explosives, you want personnel outside to have a prayer of stopping the vehicle before it hit the premises. The Gorkha(Nepalese) life would be a far cheaper option! The British to date have a Gorkha regiment(so does India) and recruit from Nepal annually(saw a show on NPR on this). What is more, the Gorkhas are likely better reader of local body languages and expressions than the Marines. The Marines, that I have talked to, were all in their very crisp, smart uniforms in a/c offices, show pieces. Standing outside in hot/cold Afghanistaan with Taliban + AlQaida + others trying to kill you from near and far, is a very dirty and grim job. Gorkhas more cost effective, believe me(they are likely better close quarter fighters as well, IMO).
Wizdom Speeker, I don't presume 100% enforcement, and there will always be some graft and dishonesty in any system.
But one has to quantify that effect in order to reach any sort of objective conclusion about whether the C4C program is in fact meeting its objectives. Ditto for the housing programs.
And I'm saying that in the absence of proof, there's a lot of anecdotal evidence that the "graft and dishonesty" have reached epidemic proportions.
We face a new flu pandemic, but the fraud pandemic has been around longer, seems to be at least as widespread, and probably will do more social and economic damage in the long term.
There is another cost to these programs. They totally undermine the administration's efforts to convince the consumers (er citizens) that we are beginning the next big phase of economic expansion right now.
While Joe and Jane Sixpack rightly get a lot of abuse on this board, they somehow have a sense that things in consumer, debt-driven nirvana are not as they should be when the government is having to pay people to buy houses and cars that they can't afford.
All their sixpack friends have always thought they were fulfilling their purpose in life when they drew down their HELOCs to buy a 60" Plasma Flat Panel with integrated Surround Sound and a smoothie dispenser. And it was always fashionable to trade in your 3 year old 325i for the latest model. And they all just knew that one way to keep the credit flowing was to sell your house to some other sixpacker who wasn't quite as far along, and buy a bigger house so that your equity would grow even faster, thus enabling purchases of more needed goodies; boats, ATVs, wildebeasts,... you name it.
I'm prone to hyperbole, but the point is true. They are undermining consumer confidence with these programs. That's one positive impact in my opinion.
Actually I agree you make a good point - they could have dropped the refund and seen where it went and spent more money - I have no idea where the 8K came from why not 2K, or 6K or 10K. I was just critiquing the metric. However I believe the point of the program was to stimulate the econmony a bit and save some fuel at the same time - people whine about pulling sales forward, but in a depression lots of sales are delayed because people are afraid of spending money - people seem to forget that.... but screw keynes right? the market is always right, we deserve punishment for our sinful unthrifty ways... blah blah blah....
seems to me there has to be room for a third party in the middle- socially and economically liberal but believes in fiscal conservatism and free markets. I don't think those ideas are antithetical - actually I think it was the dominant economic policy in the United States from FDR until Ronald Reagan.
I oppose large corporations not out of knee jerk left wing bias but rather because I think they are antithetical to a free market. They will sooner or later get rules that stifle competition. USDA rules on slaughter houses and non pasteurized milk are case in point- both of which have crushed small family farms. This particularly true when credit and capital are tight. We are on our way to repeat the Japanese mistake - by increasing the economic clout of large corporations. A free market has intangible benefits that far outweigh the modest efficiency achieved by concentration into a few corporations.
Wisdom Speaker (homepage, profile) wrote on Tue, 9/1/2009 - 3:51 pm
Yes,
The modern, "sophisticated" capitalism has so much Orwellian language abuse involved, that these original truisms get lost. Especially where a bank (or banking system) claims "profits" even as the host country is drained of capital to keep the bank (system) alive...
Love the analysis, but it certainly doesn't prove Yalt's assertion that " it's the requirement that investments be profitable that leads to misallocation" is true. His remark was totally off-base, and my example of the old Soviet Union showed multiple instances where mis-allocation occurred, and there was no profit or loss associated with the allocation.
"All their sixpack friends have always thought they were fulfilling their purpose in life when they drew down their HELOCs to buy a 60" Plasma Flat Panel with integrated Surround Sound and a smoothie dispenser."
So instead of going to the Games they anchor themselves in front of the 60". Rome was an Iron Age civilization with an Iron Age economy. We're an advanced, post-industrial civilization.
While some Tri Energy claims were implausible -- the 20,000 tons of gold was more than twice the total U.S. bullion reserve, the largest in the world -- investors rarely wavered in their loyalty.
"sales are depressed" - the operative question is from what level? Clearly they are lower than what they were but does that necessarily mean that they are depressed. This is precisely my problem with current conventional economic theory. Where we or were we not living beyond our means. In my book if you are constantly having to go into deeper debt that suggest that you are living beyond your means. If that in fact is the case lower sales now are not "depressed" but rather where they should be if we were operating on a sustainable basis.
I liken our current policy to whipping a horse who is slowing down because he is tired in the hope that doing so and making the horse go faster with make the horse less tired.
Avoids the difficulties in recruiting that at least the army was having (at least until the recession started)--I don't think the neocons ever felt reinstating the draft was politically feasible. Mercenaries make much more but as far as I know, the gov't incurs no long term responsibilities for mercenaries, i.e,. no liability for service-connected disability, GI bill related expenditures, no need to provide medical care.
And while it seems as though the issue is still being litigated, it seems as though the neocons might've seen it as a way to avoid dealing with the Military Justice rules (or whatever it's called) and other "unreasonable" (to the neocons) restrictions on the military behavior.
And it I think it was partly ideological--I think that branch of the GOP was very pro--privatization. If you remember, one of the Bush-Cheney selling points was that since they'd been successful businesspeople (allegedly) they run gov't like a business (didn't say running an Enron type of business though). And isn't outsourcing and offshoring some of the corporate things to do?
seems to me there has to be room for a third party in the middle- socially and economically liberal but believes in fiscal conservatism and free markets.
The problem with being "economically liberal" is that basically implies central management, which has for the most part been a dismal failure (measured by relative economic growth). You may be able to get it to work in specific sectors like health care where the complexity of the problem isn't so great as to be unmanageable.
But there's a reason centrally managed countries end up looking like giant military institutions - that conformity and reduction of complexity is necessary to "manage" the economy.
I guess some people are willing to pay that price for stability and predictability, but personally I just don't like the idea of living in a country like that.
Emissions testing measures pollution, MPG averages measure efficiency, both are things you claim were the reasons for C4C. If they are now unrelated and too onerous, how can you still claim they were the point of the program?
Wheelman, I agree both are important, but do you really need to test a vehicle that had an original MPG rating of 18 or lower to know that it is currently a gas-guzzling-pollution-belcher relative to a Honda Civic?
Loving the discussion this thread. Sounds like I misinterpreted either you or Yalt, or both. I thought you were quibbling with the "requirement that investments be profitable" part, rather than the "misallocation" part.
Misallocation is certainly possible in any system, and it's more possible when people forget that investments need to be profitable (on average, over the long term), and that "profitable" has a well-defined meaning, which applies globally to the whole planet and not just to an individual person, corporation or government.
We have burned through a lot of the planetary capital ... I think sustainability and profitability are no longer conflicting concepts.
"No government is going to deliberately permit its banking system to fail."
I say that is the problem that leads to, "In a real world of crashing banks you get demagogues, and some of them may actually get their hands on real power." A managed, intentional failure is far preferable to fighting it and getting the failure anyway. What level of credibility will be given to the next round of "stress tests" and "green shoots."
My opinion is that we had an opportunity for a managed crash, but now the mountainside is looming.
John Stark (profile) wrote (in reply to...) on Tue, 9/1/2009 - 3:58 pm
Actually there are a lot of water and power system improvements that could be made HERE. Also telecommunications.
You said "Tell that to the billion or so people who don't have consistent access to drinking water", and that's one of the things to which I was responding. There are certainly are some inadequacies here in this country, but IIRC, solutions are not "shovel ready", and I presume the Administration wanted something to happen now.
No, but you should find out if a car that got 25 MPG in 1990 is still getting more than 18 MPG, rather than just rule it out. The same with emissions testing. Again, if efficiency and pollution are the reasons for spending tax dollars to subsidize a purchase, then (c4c) was a failure in both design and execution because it targeted neither gas guzzler nor smog pumper.
I may have misinterpreted myself, WS. I certainly didn't mean to imply that the profit-requirement was the only possible source for misallocation, ever, anywhere--just that in the particular example under discussion (and many others) it was the requirement for a particular profit margin that was preventing what to me would seem a clearly socially beneficial investment. That, to me, is misallocation.
Late comment, but..
We won't really know how many new sales were generated until well after the programs end and the future sales changes (presumedly, decreases from expected) are incorporated into the analysis.
nova,
According to the LA office of the FBI's press release, these guys were arrested just about two years ago. And right in their story, Bloomberg prints the dates of the events in question: 2004 and 2005. Why is this front page news today?
I'm not arguing the content of the story; just the timing.
wheelman, let me guess - you own a vehicle that just missed the cut?
I think it's hard to evaluate C4C as a failure or success, altough few would dispute that the same people are driving the same distances while consuming fewer gallons of gasoline than they would have in the absence of this program. Sure, they might have bought cars anyway, but perhaps not the fuel-efficient models.
My point was that it is wrong to judge the impact of C4C by looking at sales figures.
How can all the banks be insolvent when some paid record bonuses?
Why would bonuses be related to solvency?
Cerberus Capital Management, the investment firm run by Stephen A. Feinberg (above), on Tuesday dismissed market speculation that some of its hedge funds, which have suffered losses and heavy investor withdrawals, are in danger of default, Reuters reported.
Traders in London and Frankfurt were buzzing with talk that a major hedge fund was headed for default. Much of the talk was directed at Cerberus, a private equity and hedge fund firm hit hard by losses on investments in Chrysler and GMAC.
Cerberus Dismisses Talk of Fund Defaults - DealBook Blog - NYTimes.com
Sweet deal! Who pays for this....
But you can't put a price on peace of mind.
You ever taken a look at Cerberus' holdings?
Sweet jeebus, somebody teach Nemo's monkey to throw darts. Go long that and short Cerberus' picks.
I've got it. Cerberus needs to buy Corus, then get a loss-share arrangement with the FDIC for their existing assets.
Everybody wins.
is there any way I can profit off of taxpayers getting stuck holding the bag? cause that'd be the best investment EVAR
Cerberus has been playing hot "potatoe".
GM light-vehicle sales down 20%
Well, what Cerberus will do is pull the pensioner card.
When you give stuff away and call it 'sales' and even that doesn't pump up the charts very much... you are in trouble.
Hugely expensive with minimal impact.
Underlying this stimulus intervention is a belief that a small injection of "animal spirits" will turn things around and get momentum going in a positive direction. This has been the fundamental belief of the administration all along: there is nothing fundamentally wrong, we just need some confidence to send housing prices and the economy back to "normal."
If you believe that houses were fundamentally overpriced by the bubble, however, then a small stimulus will not prevent a fall in prices to a more fundamentally sound price/rent and price/income ratios. Time will tell.
That was the purpose of the tax credit!
I disagree, at least w/r/t C4C. I thought the purpose of the tax credit was to get high-polluting fuel-inefficient vehicles off the road.
My belief is that NAR is underestimating first time buyers, but, they are NAR and them being wrong goes without saying. If only about 20% were allowed or induced to buy because of the tax credit, I would be shocked. My estimate is closer to half and that would bring the cost down significantly. It is still a horrendous policy mistake, but my gut tells me per house it is not as high as believed. No hard facts to back it up. Just based on conversations with people considering buying a house and comments from builders. It was a hugely hot topic for the vast majority of them.
we just need some confidence to send housing prices and the economy back to "normal."
That's because in these people, optimism is a character defect.
CR- it is impossible to calculate the cost of the C4C based on one months number. You have to consider what happens to car sales in the following months to determine its efficacy. If in fact Edmunds is right and sales fall back into the 9 MM level in September and holds there for 4-5 months the average over 6-7 months will be less than 10 MM SAAR and the cost of the program per incremental sale will be approaching infinity. All that we can tell at this time is that it has cost AT LEAST $7,200 . The same is true for the housing credit.
"The hedge fund talk "is a huge driver" of currency markets, said Dan Cook, senior market analyst at IG Markets Inc in Chicago. "When you have data like we had but the Dow drops, people are running for that safe haven.""
Clearly, Obama never should have sought the ARRA or arranged any event that might have slowed the rate of descent . . . and he certainly shouldn't have had Geithner do anything with the second half of TARP that would benefit anyone at all.
That way everything could have crashed, we'd be living in Mad Max world right now and everyone here would be happy.
CR nails it again. Marginal (incremental) costs are what matter when deciding efficacy.
Who are selling houses? Boomers. Who are the FTHB? Not boomers. When this continuation of intergenerational wealth transfer is tallied there will be anger.
Interest rates are low, there are tax benefits and yet homeownership still doesn't make sense at these price levels. Until prices are addressed the rest are but Paul Boomer and Lord Windesmere contesting.
Okay, when do you Obama supporters storm the ramparts?
That sort of economic stupidity -- $40K credit to buy a home -- cannot go on too much longer. I presume the Chinese pick up the phone daily and say, 'Timmy, what in the hell are you doing, schmuck?'
Crazyv -- You are suggesting that cash for clunkers and the first time homebuyer tax credits are simply moving demand forward. But that is the explicit goal of such stimulus activities. Theoretically, you are stealing demand from next year in the hope that there is enough additional demand next year from a recovering economy to overcome that penalty. Again, we will see.
what we are witnessing in the economic sphere is exactly the same game as in the educational sphere. There the dominant theme was "self esteem" -it didn't matter whether you knew how to read or write. Now we have the confidence theme- if consumers are confident they will spend- doesn't matter whether they have the income or not.
BTW I think the reason our political dialogue has become so debased is a direct result of the "self esteem" education system that has convinced people that their opinions are worth something even if they are ignorant and ill informed.
CR, the premise that the program was to stimulate additional demand may be flawed. For certain mindsets all that matters is the total amount of print-and-spend capital delivered to Main Street, and corresponding changes in political positions.
Meanwhile, I think "Cerberus Capital Management" should be renamed "Cerebellum Capital Management", and not "Cerebral Capital Management". At any rate, Cerebellum Capital Management would be a great name for a high-frequency-trading sort of hedge fund. Gotta tap into those animal spirits!
Sportsfan: the argument form most of us isn't that Obama should have done nothing. Rather, it is that the government stimulus activities were not as effective as they could have been.
Comrade-Dope jg (profile) wrote on Tue, 9/1/2009 - 11:20 am
Okay, when do you Obama supporters storm the ramparts?
People willing to man the barricades are almost surely not the people who voted for Obama.
"Upon These Stones (At The Barricade)"
CR,
On what basis are you judging that NAR has overestimated the number of additional sales? Care to elaborate?
But that is the explicit goal of such stimulus activities.
Gee, you mean pulling demand forward was the point all along? Hoocoodanode?
...we'd be living in Mad Max world right now and everyone here would be happy.
squirrels are relieved though.
As a college instructor, I'm with you on this analogy Crazyv.
[singing to Timmy]
Oh buy me a home
Where the buffalo don't roam
And the deer or antelope don't play
And seldom is heard
A HOA's discouraging word
And the sky can be cloudy all day.
Yes Shnaps.
Let's assume burning less gas does absolutely nothing to reduce pollution and climate change.
You still must ADD the value of gas not consumed because of C4C.
You heard me: consuming less adds value.
You must be a big fan of "planned economies", eh comrade?
The saddest part ... C4C and the homebuyer tax credit continue to push "consumption" over "savings." AKA Short run benefit vs long run benefit.
The Fortune Teller Baba is writing all the headlines today.
Yes, indeed, my argument is you need to take on oversupply (since oversupply is so out of whack), not falsely inflated present demand at the cost of future demand. To deal with oversupply, we need B4D. Bulldozed for Demolition would employ out of work construction by giving them each a free bulldozer and paying them to demolish foreclosed homes. After the program ends, a new program named C4B4C would them roll out. Cash for Bulldozers for Christmas. Stimulus programs are the gift that never stops giving.
cara, I'm guessing because the NAR tends to cheerlead the living shit out of creatures of their own lobbying efforts.
"Gee, you mean pulling demand forward was the point all along? Hoocoodanode? "
The questions are (1) how much demand; (2) how far forward; and (3) at what cost. Stealing demand from September/October 2009 at $7k/car is fairly expensive and not very effective.
You can agree that economic stimulus was wise and prudent and still disagree with how it was implemented.
how long before you run out of tomorrows to steal from?
Every time a consumer borrows to spend you are taking away demand from the future and actually over time ending up with net less aggregate demand. (interest has to be paid). It might make sense borrowing from the future if (a) we were anticipating huge income games e.g. in a developing country which has the ability to move up the scale in terms of productivity and income. (b) next year was going to be an abnormally robust year and so there was evening out going on. This latter event I just don't see happening on an economy wide basis and the former is certainly not happening.
The problem is that our entire economic policy coming into the crisis and now trying to get out of it has been based on borrowing from the future. When the future arrives we require additional amounts of debt just to keep demand stable by borrowing from the future. Hence the incremental debt per incremental dollar of GDP has been rising every year. In any other context this would be described as a Ponzi scheme. All Ponzi schemes inevitably blow up. All that we have done under the fearless leadership of that agent "change we can believe in" is transfer the Ponzi scheme from the consumer to the government. However when the government can borrow no more what happens then. As somebody who has spent a life in risk management I would say - "when the markets are even asking the questioning of whether the US government could default you are getting close to the edge of the cliff"
HG, any basis for that loaded question, comrade?
Shnaps,
That's a good point.
So when do we get the "Cash for people who work an honest job, live within their means, and already drive a fuel-efficient car" program?
I'd be long on tomorrows. There will be a supply shortage.
Yeah, I'm sick of American Corporate Fascism and its supporters.
They call it "paying taxes", Nemo.
You still must ADD the value of gas not consumed because of C4C.
Well, I don't know if the math works quite that way. Somehow, you'd want to calculate the increased efficiency (value of the additional miles driven with the same amount of gas as it would have taken in the 'clunker'.)
Anyway, therein lies the taxpayer's gain, not in the pulling forward of future sales.
My take on NARs estimates is it is low and they are lobbying to get a higher credit that would have a "bigger effect."
crazyv,
This last sentence is perhaps the most significant.
Asking the question accepts that possible outcome, which nullifies unreasonable hope, hope which has no use for history, circumstances, or facts: we are in fact going to risk defaulting.
So when do we get the "Cash for people who work an honest job, live within their means, and already drive a fuel-efficient car" program?
Just as soon as we get a "cash for people who pay their mortgages on time."
Never.
My criticism of Obama is not for much of the specifics of the stimulus plan but rather what it was predicated on. There should have been acknowledgment that for years we (government and private individuals) have been living beyond our means based on a borrow and spend mentality. What we need to do is get ourselves of that addiction which will require an economy that is smaller than we currently have. The stimulus should have been used bring us down gently to that new lower sustainable level. Instead the entire thrust of administration policy has been to try and re-create the economy prior to the bust up.
Name me one thing that has been proposed that changes the economic trajectory.
"That way everything could have crashed, we'd be living in Mad Max world right now and everyone here would be happy. "
I would argue that the banks crashing would not necessarily lead to Mad Max. But that waiting until housing and the equity markets had found found a natural bottom, before turning on the money taps, would have been a far better use of ammo, and more likely to lead to a "V" recovery, as the worst actors would have been wiped out and the available funds would have gone to the strongest survivors. Instead the money went to the worst of them, and has had the least benefit possible.
blackhat, are you quoting something? Your grammar is hard to follow.
"That way everything could have crashed, we'd be living in Mad Max world right now and everyone here would be happy. "
There are no degrees of freedom in history, AFAIK.
No one has ever successfully walked me in a straight line from allowing overleveraged IBs to go away to something which would affect my personal well-being.
Wasn't future demand for housing crushed when anybody could get a mortgage loan for 4 years or so?
So when do we get the "Cash for people who work an honest job, live within their means, and already drive a fuel-efficient car" program?
never, as far as i can tell.
which is why, after walking the straight and narrow for the last 30 years, i am strongly considering doing everything in my power to game the system
moving to an all cash business, with reportable income of about $12k/yr
going on food stamps
finding a good dr so i can go on permanent disability
unintended consequences indeed
I'm with you, HG.
Rob, the libs are getting restless. I am not sure what will bring out their long knives, but I see such coming if Obama keeps going down the 'Bush-on-meth' path.
toyota sales up 32%.. c4c was a boon for american companies...snark off
Blackhalo,
It would have been catastrophic had we simply allowed things to fail, but we could have rebuilt for far less than we are going to end up spending when all is said and done. The reason we chose not to allow things to fail has less to do (with) us little people than the re-election of politicians; they simply can't accept that doing nothing is occasionally the correct course of action.
that is a complex question it is not as simple we were getting 15mpg and are now going to get 24mpg.
a. how much more are people going to drive in a new car compared to what they were prepared to do in the clunker.
b. How many of those clunkers would have been replaced anyway- i.e. there would have been gas savings with or without the C4C.
c. What is the gas saving between a clunker replaced today and one replaced 3 years from now when the higher CAFE standards kick in.
d. What is the energy usage in producing and delivering a brand new vehicle as substitute for an existing and usable vehicle.
At the end of the day your question highlights the bait and switch nature of this program. If the stimulus effectiveness sucks lets talk about the environmental side. If the environmental side sucks lets talk about the stimulus.
As a moral matter what are the consequences of higher used car prices on the most vulnerable in our society who have no other choices but a used car for their transportation requirements?
Most of the benefit inures to the new car seller and buyer, not the taxpayer, but less oil used is a good thing.
"they simply can't accept that doing nothing is occasionally the correct course of action."
Sounds like my plan for a beach vacation. It is a good plan.
Shnaps, yes - that was a secondary benefit.
best wishes
later
Oooh: big volume on the futures.
A save today by Timmy and Bennie is going to be expensive.
Die, Federal Reserve, die!
"We will continue to categorically deny the speculation as long it it remains speculation, and not something more substantial," said Price, who is looking for a job.
is the market opening at 3:00 pm est? it's been a while
The three-head dog appears to merely be just a dog that is being driven to the vet to be put down.
Elvis: Wasn't future demand for housing crushed when anybody could get a mortgage loan for 4 years or so?
No, Elvis. We all deserved, as did our children, and our grandchildren, ever increasing numbers of homes and condos on all four corners of the earth.
Exponential growth in demand, sir.
That's what the Baby Boomers and their progeny deserved, sir.
But today, the safe haven people are running for is gold more than Treasuries.
I thought this might happen. Go TBT!
The oil/energy savings calculation is not as straightforward as (fuel for clunker) - (fuel for shiny new efficient vehicle).
There is a substantial amount of energy consumed in manufacturing the new car.
From previous thread:
Blackhalo (homepage, profile) wrote (in reply to...) on Tue, 9/1/2009 - 1:54 pm
For MSM to get news, they might have to do some actual investigative reporting, and know what they are talking about well enough to inform the public.
Then there's the matter of having to give up access in order to report the news instead of the Administration's talking points.
Comment by Cinco-X from thread 'Autos: Ford U.S. August sales rise 17%'
I think you are spot on. There is one lesson from successful intervention in foreign exchange markets- timing matters. Intervene too early BOE in 1992 and all you end up doing is bankrupting yourself but not changing anything. Reserve Bank of Australia devalued (I forget the year) and the market traded up immediately after the devaluation.
Another useful analogy is repairing a levee breach. If you try and do it too early the pressure of the water is too great and anything you do is going to run over. I fear that is exactly what will happen with regard to the economic measures. If the credit of the US is shot after the first go around then there is nothing available .
The total pie of 'money' (wages/credit) available to the consumer is shrinking as deleveraging continues.
These stimulus props only succeed in determining how big the slice is for specific sectors (at the expense of others).
Anyone else notice retail sales?
rich, it appears that you are right, that this is a bit of flight to safety.
I thought it was the $6B POMO, as gold and silver moved up sharply as the stock market bottomed (investment banks 're-risking' as they saved the stock market).
But, oil has gone nowhere, so liquidity is not flooding everywhere.
What do you think, will gold and silver move down with the market these next six weeks, or not?
Doc Holiday (homepage, profile) wrote on Tue, 9/1/2009 - 2:18 pm
"The hedge fund talk "is a huge driver" of currency markets, said Dan Cook, senior market analyst at IG Markets Inc in Chicago. "When you have data like we had but the Dow drops, people are running for that safe haven.""
Interesting, and as of this moment, the USD is up against the Euro and GBP.
iceman (profile) wrote on Tue, 9/1/2009 - 2:30 pm
The saddest part ... C4C and the homebuyer tax credit continue to push "consumption" over "savings." AKA Short run benefit vs long run benefit.
If hyper-inflation is in our future, then that would be a good thing; spend it now while it's still worth something. However, I don't think that's the way it will play out.
Toyota sales #, well that was confusing..now its only up 6%
Toyota August U.S. sales rise 6.4% - MarketWatch
Nemo (homepage, profile) wrote on Tue, 9/1/2009 - 2:33 pm
So when do we get the "Cash for people who work an honest job, live within their means, and already drive a fuel-efficient car" program?
Now THAT would be a Black Swan event-
passengers sales up a lot, but light trucks and everything else were negative
Toyota sales #, well that was confusing..now its only up 6%
May be their Aug 2008 # was not as bad as Detroit three.
cravyv -
Agreed, it is indeed complex to calculate the precise environmental benefit, which CR calls the "secondary" effect.
I have always considered that the PRIMARY, indeed the ONE AND ONLY defensible justification for using tax dollars for the C4C program. If there was a sales spike (almost entirely future demand brought forward), well - good for the auto dealers, the manufacturers (mostly foreign), ad-copy writers, giant-inflatable-gorilla salesmen and that dude from "Dirty Jobs". But for the vast majority of taxpayers, C4C gets them nothing.
Other than the environmental benefits.
Jansen says:
"Apparently the subject of the rumor is the Corus Bank in Chicago.I had never heard of the entity but apparently they are quite troubled institution.
The firm’s chief accounting officer quit today. There is also a story that the firm missed a regulatory filing several weeks ago and is in danger of stock market delisting."
D'oh!!
OT, but if you want to give yourself a little scare about the potential for taxpayers being on the hook for unfunded issues and losses.
http://www.house.gov/budget_republicans/press/2007/pr20090804contliab.pdf
and this $1 tril potential doesnt even include FHA or Ginnie.
Egads.
Makes the C4C and housing subsidies look like eentsy weentsy tiny potatoes.
Thanks, rosethorn.
C'mon, let's do it: Bank Failure Tuesday!
"The firm’s chief accounting officer quit today."
I smell blood...
Blackhalo (homepage, profile) wrote on Tue, 9/1/2009 - 3:04 pm
"The firm’s chief accounting officer quit today."
I smell blood...
Any chance he's leaving the country ahead of an indictment?
C'mon PPT.....
You don't quit if you are fleeing the country. You just flee and let them figure out you quit.
.......Another well-thought-out government program. We (taxpayers) contribute $7200 per car sold and $43,000 per house sold to "newbie" buyers. WHAT A CROCK! Thank goodness I have NO DOG IN THIS FIGHT anymore. You won't find ME paying it. The War On Poverty has been won - I surrendered.
GM sales are down 20%
Detnews.com | This article is no longer available online | detnews.com | The Detroit News
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
Jansen says:
"Apparently the subject of the rumor is the Corus Bank in Chicago.I had never heard of the entity....
Somebody should send the gentleman a subscription to CR.
There's a rumor that today's downturn was caused by some anonymous blogger quoting Ben Bernanke as saying "They're all toast" when asked about the banking sector-
Won't they figure it out slower if you quit? The other way they might get suspicious when you didn't show up for work the next day--this way they might not figure it out until they're unable to serve the subpoena.
"Apparently the subject of the rumor is the Corus Bank in Chicago.I had never heard of the entity but apparently they are quite troubled institution...
We've been on CORS deathwatch since, when? 2005?
I think it has to be something downstream of them or perhaps the simple fact that the FDIC couldn't find a buyer and hasn't got the funds to handle it.
Can someone give us a quick overview of how the FDIC is funded? Would this somehow require an up-or-down vote in Congress?
Yes, Yalt. I found that odd as well. Shows the level of knowledge out there.
"The three-head dog appears to merely be just a dog that is being driven to the vet to be put down."
Now that is just sad, and seems a bit too sympathetic. I prefer the image of sending Cerberus back to hell where it belongs.
Interesting analysis. It raises the question of how this subsidy money could have been put to more productive use. Billions of dollars could have paid for a lot of factory retooling, power plant construction, etc. In other words, it could have been invested. Instead, it was used to encourage consumption. Temporarily.
It doesn't do much good to analyze taxes in an environment where inflation, bubbles, and asset mispricing are used to obfuscate the cost/benefits of private and government operations.
EDIT: You can add market manipulation to that list. Even when it's to the downside.
John Stark (profile) wrote on Tue, 9/1/2009 - 3:09 pm
Interesting analysis. It raises the question of how this subsidy money could have been put to more productive use. Billions of dollars could have paid for a lot of factory retooling, power plant construction, etc. In other words, it could have been invested. Instead, it was used to encourage consumption. Temporarily.
What would you suggest investing it in? T-Bills? It's not as though there isn't already an excess of production capacity; not necessarily here, but worldwide.
Cash4Clowns.
650,000 more people with car payments. Christmas sales are going to be FUGLY.
One of you libs should tell Obama to shut his pie-hole:
"Obama: Manufacturing growth a good sign"
"Obama says Americans should get swine flu vaccine"
This guy is like Bush and Tom Ridge, rolled into one.
It's not as though there isn't already an excess of production capacity; not necessarily here, but worldwide.
Tell that to the billion or so people who don't have consistent access to drinking water.
We don't have an excess of capacity; we just continue to direct production into areas of excess.
"This guy is like Bush and Tom Ridge, rolled into one. "
He did quite a sell job on america.
Most liberals are disgusted with Obama by now.
I'm waiting for the wine flu vaccine. I get the wine flu everytime I drink a couple jugs of red wine. Can't work for at least a day after.
Elephants and Asses
Trampling the Masses
toyota sales up 6.4%
WEAK
We have too many units in some locations and not enough in others. Can you imagine the politics of deciding which areas to bulldoze? It would make the headaches you get from slow growth programs look like a nice relaxing chat group.... no thanks.
I would, and perhaps will be someday, an honest to goodness FTHB at 41. I didn't jump in during boom or take the tax break because you had the same sort of financial geniuses hedging the government's 8k on inferior goods. Why pay 8k or more on a crappier house? A friend calls my approach DJ's Economic Akido - instead figthing the momentum, just deflect and go defensive until your opponent uses up all it's energy and gets tired. Then you can swoop in for the kill.
I'm in one of the prime investors turfs. We have people who leveraged for 'great investment buys' in late 2007 already giving them back to the bank. Once they finish with their version of financial darwinism, I'll go see what's worth plopping down cash on.
Yalt (profile) wrote (in reply to...) on Tue, 9/1/2009 - 3:15 pm
It's not as though there isn't already an excess of production capacity; not necessarily here, but worldwide.
Tell that to the billion or so people who don't have consistent access to drinking water.
So, instead of spending the money here, you'd suggest we spend it overseas? Ohhhhhhhhhhkaaaaaaaaaaaaaaaayyyyyyyyyy-
"Most liberals are disgusted with Obama by now."
.....only the intelligent ones............and I'll continue to be nice.
Elvis (profile) wrote on Tue, 9/1/2009 - 3:15 pm
I'm waiting for the wine flu vaccine. I get the wine flu everytime I drink a couple jugs of red wine. Can't work for at least a day after.
Wine contains histamines. Try actifed AFTER you've sobered up, and lots of water.
"One of you libs should tell Obama to shut his pie-hole"
You seem to be mis-informed. O' is not listening to libs. Bankers, Pharmaceutical Companies and Wall St. only. Remember, health care reform is just a decoy to distract you from noticing all the money going out the back door.
Instead, it was used to encourage consumption.
C4C was used to get old polluting inefficient cars out of circulation permanently. I think it is a mistake to view it program to boost sales. I know I see differently than CR on this one, but hey we have to disagree on something once in a while.
Let's say you had a vaccine for HPV, but a certain stubborn segment of the population just refuses to take the vaccine cuz they don't understand the benefit, or are too cheap to spend a few bucks on it.
What's a responsible government to do?
Bribe them with a $1 coupon toward a
if they go in for a free HPV vaccination.
Yes, Burger King might benefit from the promotion, but don't meaure the success of the program trying to calculate how many incremental Whoppers were sold. They would've purchased their Whoppers regardless, natch. The real value of the outlay is how many more people benefit from avoiding infection in the future.
No, I was responding to your claim that there was excess productive capacity worldwide.
Don't forget utilites need to be retooled as I think that infrastructure is looking old as well... winter is coming after all >; )
"It's not as though there isn't already an excess of production capacity; not necessarily here, but worldwide."
Tell that to the billion or so people who don't have consistent access to drinking water.
We don't have an excess of capacity; we just continue to direct production into areas of excess.
That's why some people use the term "misallocation" in addition to overcapacity to describe the current problems.
But the real problems run much deeper than that.
For a long time we've had the ability to feed and house a lot more people than we do. The hard part is coming up with the social structures to accomplish that (assuming you believe that to be the overriding goal of a society, which some people don't).
That's what seems to be what the economists overlook. They get frustrated by the fact that it appears we have the economic means to do certain things, but we don't do them.
Really if you look at Ancient Egypt you'd think we should have been in space a 1000 years before we actually were.
I think there is a real possibility we will destroy the lives we have by framing what are really social and cultural issues as economic problems.
Blackhalo, if he keeps going down this path, he will be viewed as worse than Hoover (who at least moderated his numerous unsuccessful interventions).
C4C was used to get old polluting inefficient cars out of circulation permanently.
I'll have what he's having....
C 4 C was not passed for environmental reasons.
There's a rumor that today's downturn was caused by some anonymous blogger quoting Ben Bernanke as saying "They're all toast" when asked about the banking sector-
I have it on good authority that the quote was accurate.
Breaking News:
Obama Administration giving 1 Billion Stimulus for Buggy Whip Manufacturers.
Apropos of CORUS, the Chief Accounting Officer resigned on August 18, effective 9/3. This is not exactly news. But it does raise the question of whether the Minnaugh is ready to swim with the sharks, after the Manley woman leaves?
Emphasis in bold added by me:
Form 8-K for CORUS BANKSHARES INC
24-Aug-2009
Change in Directors or Principal Officers
ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On August 18, 2009, Paula Manley gave notice of her resignation as First Vice President and Chief Accounting Officer of Corus Bankshares, Inc. (the "Company") and Corus Bank, N.A. (the "Bank" and, together with the Company, "Corus"), effective September 3, 2009. Ms. Manley is resigning to pursue other opportunities and not as a result of any dispute or disagreement with the Company regarding its financial reporting, accounting policies or any other matter. The Company does not currently intend to appoint a new Chief Accounting Officer. However, Michael Minnaugh, the Chief Financial Officer of Corus, will assume the responsibilities of principal accounting officer for Corus following Ms. Manley's departure. Mr. Minnaugh was appointed as the Chief Financial Officer of Corus on June 16, 2009. The Form 8-K filed by the Company with the Securities and Exchange Commission on June 22, 2009 announcing Mr. Minnaugh's appointment as the Chief Financial Officer of Corus and containing the disclosures required by Item 5.02(c) of Form 8-K is incorporated herein by reference. Mr. Minnaugh will not receive any additional compensation in connection with the assumption of these responsibilities.
Yalt (profile) wrote on Tue, 9/1/2009 - 3:20 pm
No, I was responding to your claim that there was excess productive capacity worldwide.
Production capacity. Factories don't necessarily provide people better drinking water. In fact, the opposite is probably true in China today. Just my $0.02-
PPT is going to make this exciting for us.
Can they save it in the face of reasonable volume?
I say 'yes,' but hope 'no.'
.....you've been out jogging a bit this AM, nova??
nova (homepage, profile) wrote on Tue, 9/1/2009 - 3:22 pm
There's a rumor that today's downturn was caused by some anonymous blogger quoting Ben Bernanke as saying "They're all toast" when asked about the banking sector-
I have it on good authority that the quote was accurate.
I was just joking, but if you're serious, do you have a link? I couldn't find one-
The Best Mercenaries Money Can Buy
Group: US Embassy Security in Kabul Risky - CBS News
Why is it again that the US Military cannot provide its own security force?
War Profiteering?
@ac: Really if you look at Ancient Egypt you'd think we should have been in space a 1000 years before we actually were.
And we could have, except that we had a whole lot of Byzantine Ruins to work our way through, first.
No, I talked to the person who typed it and he said he was serious.
stopped out ....rats
I'll go with "Goon"
Now where did I put those steel toed boots?
AIG CEO regrets sharp criticism of Cuomo
| Reuters
BSR,
No, but I did listen to a homeless lady telling everyone about her travels with Obama.
Perhaps if the factories were producing drinking-water infrastructure?
It's hard to know if we really have overcapacity when basic human needs aren't even being met.
Wisdom Speaker (homepage, profile) wrote on Tue, 9/1/2009 - 3:22 pm
Apropos of CORUS, the Chief Accounting Officer resigned on August 18, effective 9/3......Ms. Manley is resigning to pursue other opportunities
At a previous employer, this was code for being fired.
Server must be spiking like a Lee
Official white house report:
Fed Chairman Ben Bernanke was misquoted today by evil blogger misinterpreting "thier all toast" statement with clearly "that he liked>
http://latimes.image2.trb.com/lanews/media/photo/2008-02/35543075.jpg
A couple of comments
nova (homepage, profile) wrote on Tue, 9/1/2009 - 3:27 pm
No, I talked to the person who typed it and he said he was serious.
Well in that case, okay-
actually I think conservative republicans have a better chance being heard given that he is so into bipartisanship.
Ha, ha, credit-.
Figures it would be French toast.
It's also been code for "I can't in good conscience continue to work for you but I can't very well say that explicitly in my letter of resignation."
Yalt (profile) wrote on Tue, 9/1/2009 - 3:29 pm
Perhaps if the factories were producing drinking-water infrastructure?
It's hard to know if we really have overcapacity when basic human needs aren't even being met.
If it were profitable, they would have been.
That's FREEDOM TOAST, surrender
!
"a free HPV vaccination."
I guess my Governor did not get the memo, as he was trying to mandate quite expensive HPV vaccines. Stragely Mereck is a big Perry contributor. The other bing toll road operators...
"The $360 to $450 in vaccine cost alone is much more expensive than any vaccine series now required and does not account for the added expenses of overhead, storage, insurance, occasional lost and expired doses, nonpayment and labor costs being put on the back of primary care physicians throughout the state," said TMA President Ladon W. Homer in a statement.
"The governor has missed the point that just because you don't want to offer up 165,000 11-year-old girls to be Merck's study group doesn't mean you don't care about women's health, it doesn't mean you don't care about young girls and more importantly, doesn't mean that parents shouldn't be making the decisions about their medical choices," Mr. Bonnen said.
"While Mr. Perry conceded this battle, others loom. Sitting in his office is a bill with a two-year hiatus on privately funded toll roads, an overwhelmingly popular legislative proposal that Mr. Perry has blasted. He has until next Wednesday to determine whether he will veto the toll road moratorium and face the prospect of the first veto override since 1979. "
C4C was used to get old polluting inefficient cars out of circulation permanently. I think it is a mistake to view it program to boost sales. I know I see differently than CR on this one, but hey we have to disagree on something once in a while.
I hate to burst your bubble, but C4C was clearly NOT designed to remove polluting and/or inefficient cars from the roads. Taking a look at the requirements of the cars that could be accepted shows this to be the case. Cars over 25 years old, cars that met a certain fuel efficiency when they were NEW, and cars like a 2006 Hummer H2 were all not acceptable for the program. There wasn't even a mention of emissions or MPG testing being required. This was designed to sell new cars to people who were most likely to buy them if the incentive was large enough: the "clunkers" line was just to make it palatable to people like you.
crazyv (profile) wrote (in reply to...) on Tue, 9/1/2009 - 3:30 pm
actually I think conservative republicans have a better chance being heard given that he is so into bipartisanship.
Last time they tried that, he reminded them exactly who won the election. Even conservative Repubs know better than to pee into the wind-
Yes, it's the requirement that investments be profitable that leads to misallocation.
@Schnapps, "C4C was used to get old polluting inefficient cars out of circulation permanently."
You appear to be presuming that we live in a culture of honest, law-abiding, regulation-minded used car dealers, with rigorous government oversight of the handful of outliers.
From what I've seen and heard:
And now you want us to believe that all of the clunkers are going to be trashed, just because some lawmaker wrote it on a piece of paper?
I think what we have here is a legal culture run amok, where the laws have gotten so burdensome and ridiculous in so many cases, that large segments of the population no longer care. When the laws are unenforceable and unenforced, they are mocked, and we end up with a culture where crime pays.
The parallels between this and the Prohibition culture of the 1920s (leading to repeal of Prohibition during the Depression) are quite striking.
I'd prefer to see fewer laws, more cleanly written, more enforceable, and with more people following them.
Yalt (profile) wrote (in reply to...) on Tue, 9/1/2009 - 3:32 pm
It's also been code for "I can't in good conscience continue to work for you but I can't very well say that explicitly in my letter of resignation."
Perhaps, but not at my previous employer-
Gurkhas?!? The State Dept. hired Gurkhas to guard the Afg Embassy! That's embarrassing...anybody with 2 cents worth of knowledge about Asian history knows that the British used these people as armed servants. Somebody at the State Dept needs to be fired....
@Cinco -
Yes, no doubt Manley was fired, but was it for being too willing to cook the books, or not willing enough??
I also found it telling that she wasn't going to be replaced. Not a sign of health -- a company that expects to remain in business for a long time will have a transition plan ready.
actually I think conservative republicans have a better chance being heard given that he is so into bipartisanship.
Republicans are only conservative in the social sense and in speeches. Nobody has the guts to be fiscally and economically conservative or smash apart special interest groups and power monopolies.
Cutting wasteful spending and special interest group handouts are the political equivalent of traveling faster than the speed of light.
War Profiteering; plain and simple.
Yalt (profile) wrote (in reply to...) on Tue, 9/1/2009 - 3:35 pm
Yes, it's the requirement that investments be profitable that leads to misallocation.
No! It's not a requirement, and for a plethora of examples, go research the old Soviet Union and its command economy.
They should let the Marines provide Embassy security. That's something they do, and they do it well.
"Perhaps if the factories were producing drinking-water infrastructure?"
Cost effective desalinization sure would be a nifty, exportable tech... Both from a health and agricultural perspective.
Where is the profit in that, Comrade Terry?
War is good bidness.
Waiting for that 3:57 market stick save.
Sad that we don't have a strawman icon....
"Finally, If anything, the metric seems to imply at least for the C4C program that goverment should have spent more money! as the program was extremely popular, having the program run for a another few weeks would have pulled forward even more sales improving the metric.... I am sure most people here would be against that"
If stood on the street corner handing out money I think my effort would be very popular too. Here is the basic problem- you start with a program that you expect to last until November and it is sold out. The rational human being says- "wow maybe I mis-priced this- perhaps I need to increase the price". The government and their supporters say wow look how popular maybe we should do more.
Spending more money actually might have made more sense- at least you would have subsidized all those that were looking to buy in any event and then you would be getting to the true incremental sales. Although my guess that actual incremental cost of spurring new sales would be much higher. CR has way underestimated the cost of the c4c program - it is probably closer to $40,000 per car (Edmonds) then his $7,200. So although you are trying to be facetious you actually are right from an economic perspective.
It was scheduled for 3:30, but all they could was stop the puck on the line. It's still sitting there waiting for someone to tap it in.
That would be a special treat, S&P closing below 1,000.
Die, Fed, die!
Blackhalo (homepage, profile) wrote on Tue, 9/1/2009 - 3:40 pm
"Perhaps if the factories were producing drinking-water infrastructure?"
Cost effective desalinization sure would be a nifty, exportable tech...
Yes; it would be nifty, and it would be exportable. The only question is who would pay for it, and unfortunately, the countries most in need of this sort of technology are the ones least able to pay. Hey, since China's no longer interested in us, maybe we can get them to front the money to the undeveloped countries!
one minute....wait for it.....
"War is good bidness."
Sorry. I forgot.
I was still thinking it involved proper execution of the mission. Quaint, eh?
is money going to the sidelines today?
15 yard penalty and loss of down if it steps back in.
Did that exit door just get a little smaller?
Hmm, PPT seems to have surrendered 1K S&P. Something big brewing after hours?
Yalt (profile) wrote on Tue, 9/1/2009 - 3:41 pm
Sad that we don't have a strawman icon....
Even sadder that people keep bringing up solutions that have been shown to be ineffective in the past, and try to pass them off as "Change". "Those who forget the lessons of history are doomed to repeat them."
Wizdom Speeker, I don't presume 100% enforcement, and there will always be some graft and dishonesty in any system.
Wheelman, you are right, it is palatable to me. Emissions testing is unrelated, and MPG testing every vehicle would have been too much of an administrative burden.
Not to mention -why would you take $4500 in exchange for a 2006 Hummer H2 even if the program allowed it? That vehicle is worth far more on the open market.
No time to read thread, but I suggest that we take the next 43 billion, or whatever, and
have a lottery. Anybody over 18 who wants to can sign up.
43 billion is 43,000millions, right? The proceeds are prorated amonst the states.
Each lottery prize is 100k. so there will be 430,000 winners. Not too shabby. Anybody
could use the money for anything, except if they are delinquent on a mortgage, the whole amount goes
to come current, and if there is any left over it is split evenly among the morgagees, No
taxes on lottery money.
Result:
s.
Some inflation. People who are current on their mortgages get rewarded, as are people who
have no mtges like me.
Some banks get some money.
How about it Patient Renter?
and try to pass them off as "Change".
Piling one on top of another. I don't have time for this, unfortunately....
"......as the program [C4C] was extremely popular, having the program run for a another few weeks...."
......popular my ass - it was run into the ground. Both Sales Mgrs of our TWO new car dealers here said it was finished. There were no more customers that could be financed. NO MAS DINERO! The FICA scores started looking like childrens' bowling scores....
Volume coming back on the Dow.
C
Yes, it's the requirement that investments be profitable that leads to misallocation.
and then:
No! It's not a requirement, and for a plethora of examples, go research the old Soviet Union and its command economy.
The following thought requires a certain revision of the concept of profitability, but consider:
In the normal sense of profitability, Investments that are not profitable lead to bankruptcy, and are thus not sustainable. So yes, there is a requirement that investments be profitable.
Here, we need to remember that in the original sense, "capital" was a surplus of production (of physical, tangible goods) over consumption. A profit is an increase in total capital following an "investment". In other words, a profit implies that one ends up with "more" than one started with.
It should be self-evident that "investments" which don't produce "profit" in the above sense, result in having LESS than one started with, and thus are NOT sustainable. In other words, you drain your physical capital and end up going bankrupt in the sense of having nothing left.
The modern, "sophisticated" capitalism has so much Orwellian language abuse involved, that these original truisms get lost. Especially where a bank (or banking system) claims "profits" even as the host country is drained of capital to keep the bank (system) alive...
Jeebus, we are so doomed. If I was ever to be "saved" I would never tell anyone. The stigma of the label is too damning.
By James Sterngold
Sept. 1 (Bloomberg) -- Henry Jones delivered the good news in a conference call with Tri Energy Inc.’s investors: The gold deal the company had been working on for years was about to pay off.
Jones, 55, a record producer in Marina del Rey, California, and his two partners had raised more than $50 million from 735 investors, which they said they were using to broker the sale to Arab buyers of 20,000 tons of gold owned by a group of Israelis. They promised to triple investors’ money -- if only Tri Energy could overcome some last-minute glitches.
All the company needed to close the deal, Jones said on the Dec. 20, 2004, conference call, taped by one of the participants, was a “safe-passage letter” that would cost $450,000. A few days later, on another call, he said Tri Energy had to come up with $100,000 to open a “commission account.” Then, on Jan. 15, 2005, a new request: The bank handling the deal wanted $125,000 to conduct an audit.
...Tri Energy’s investors had something in common. Many were Mormons and born-again Christians who shared dreams and prayers on nightly conference calls. They vowed to use the profits for charitable works and kept raising funds, at times taking out second mortgages, draining retirement accounts and recruiting relatives.
I want to see a -200+ for the DOW.....lets see the nag break stride at the stretch
"I would argue that the banks crashing would not necessarily lead to Mad Max. "
Forget Mad Max. In the real world Mad Max gets his clock cleaned as soon as he lifts his head. In a real world of crashing banks you get demagogues, and some of them may actually get their hands on real power. And this: What may make sense as a hypothetical risk in a projected theoretical economic theory is inapplicable in a real world of political facts and possibilities. No government is going to deliberately permit its banking system to fail. And then what: Sit back with its fingers crossed?
Emissions testing measures pollution, MPG averages measure efficiency, both are things you claim were the reasons for C4C. If they are now unrelated and too onerous, how can you still claim they were the point of the program?
I have visited many US embassies ; the Marines are almost always inside the compound behind tall walls and iron gates. If there was a drive by suicide bombing with few tons worth of explosives, you want personnel outside to have a prayer of stopping the vehicle before it hit the premises. The Gorkha(Nepalese) life would be a far cheaper option! The British to date have a Gorkha regiment(so does India) and recruit from Nepal annually(saw a show on NPR on this). What is more, the Gorkhas are likely better reader of local body languages and expressions than the Marines. The Marines, that I have talked to, were all in their very crisp, smart uniforms in a/c offices, show pieces. Standing outside in hot/cold Afghanistaan with Taliban + AlQaida + others trying to kill you from near and far, is a very dirty and grim job. Gorkhas more cost effective, believe me(they are likely better close quarter fighters as well, IMO).
Wizdom Speeker, I don't presume 100% enforcement, and there will always be some graft and dishonesty in any system.
But one has to quantify that effect in order to reach any sort of objective conclusion about whether the C4C program is in fact meeting its objectives. Ditto for the housing programs.
And I'm saying that in the absence of proof, there's a lot of anecdotal evidence that the "graft and dishonesty" have reached epidemic proportions.
We face a new flu pandemic, but the fraud pandemic has been around longer, seems to be at least as widespread, and probably will do more social and economic damage in the long term.
Well
we are getting there.
We were talking about this this morning nova.
BLIND FAITH BABY!
Hmm, PPT seems to have surrendered 1K S&P. Something big brewing after hours?
Way to put the whammy on it.
CR,
There is another cost to these programs. They totally undermine the administration's efforts to convince the consumers (er citizens) that we are beginning the next big phase of economic expansion right now.
While Joe and Jane Sixpack rightly get a lot of abuse on this board, they somehow have a sense that things in consumer, debt-driven nirvana are not as they should be when the government is having to pay people to buy houses and cars that they can't afford.
All their sixpack friends have always thought they were fulfilling their purpose in life when they drew down their HELOCs to buy a 60" Plasma Flat Panel with integrated Surround Sound and a smoothie dispenser. And it was always fashionable to trade in your 3 year old 325i for the latest model. And they all just knew that one way to keep the credit flowing was to sell your house to some other sixpacker who wasn't quite as far along, and buy a bigger house so that your equity would grow even faster, thus enabling purchases of more needed goodies; boats, ATVs, wildebeasts,... you name it.
I'm prone to hyperbole, but the point is true. They are undermining consumer confidence with these programs. That's one positive impact in my opinion.
Why does America need to hire mercenaries?
Actually I agree you make a good point - they could have dropped the refund and seen where it went and spent more money - I have no idea where the 8K came from why not 2K, or 6K or 10K. I was just critiquing the metric. However I believe the point of the program was to stimulate the econmony a bit and save some fuel at the same time - people whine about pulling sales forward, but in a depression lots of sales are delayed because people are afraid of spending money - people seem to forget that.... but screw keynes right? the market is always right, we deserve punishment for our sinful unthrifty ways... blah blah blah....
seems to me there has to be room for a third party in the middle- socially and economically liberal but believes in fiscal conservatism and free markets. I don't think those ideas are antithetical - actually I think it was the dominant economic policy in the United States from FDR until Ronald Reagan.
I oppose large corporations not out of knee jerk left wing bias but rather because I think they are antithetical to a free market. They will sooner or later get rules that stifle competition. USDA rules on slaughter houses and non pasteurized milk are case in point- both of which have crushed small family farms. This particularly true when credit and capital are tight. We are on our way to repeat the Japanese mistake - by increasing the economic clout of large corporations. A free market has intangible benefits that far outweigh the modest efficiency achieved by concentration into a few corporations.
This sucker is going down.
this is your chance to buy SPY
new highs in sept!
damn. that was one helluva a move there at the end. up 20 pts instantaneously.
VIX still pushing up sharply, 11% to 29. Could be interesting.
C
Got Corporate Fascism?
i would have felt a lot better about C4C if my car qualified
nova,
Read the same article. Self-selection. Poof.
Actually there are a lot of water and power system improvements that could be made HERE. Also telecommunications.
Wisdom Speaker (homepage, profile) wrote on Tue, 9/1/2009 - 3:51 pm
Yes,
The modern, "sophisticated" capitalism has so much Orwellian language abuse involved, that these original truisms get lost. Especially where a bank (or banking system) claims "profits" even as the host country is drained of capital to keep the bank (system) alive...
Love the analysis, but it certainly doesn't prove Yalt's assertion that " it's the requirement that investments be profitable that leads to misallocation" is true. His remark was totally off-base, and my example of the old Soviet Union showed multiple instances where mis-allocation occurred, and there was no profit or loss associated with the allocation.
"All their sixpack friends have always thought they were fulfilling their purpose in life when they drew down their HELOCs to buy a 60" Plasma Flat Panel with integrated Surround Sound and a smoothie dispenser."
So instead of going to the Games they anchor themselves in front of the 60". Rome was an Iron Age civilization with an Iron Age economy. We're an advanced, post-industrial civilization.
Ok, HAL, bring the Dow back in on 9,330 on the Dow, easy now...
C
Hal: "I'm sorry Dave, I can't do that."
BH and HG,
Well, maybe they can make back their lost money selling Amway...
Glad we got the September drop out of the way.....
Now it's TO THE MOON!!!!! for the rest of the month.
i weep for anyone who bought AIG in the high 50's...
Eric, thank you for anti-jinxing us.
Ha, ha; the schmucks could not save 1000.
Post-close adjustment, maybe?
Why won't I see this analysis in the MSM?
Shouldn't the NY Times or WSJ or WaPo be publishing this?
Shouldn't someone in government be reading this?
HELLO
Nova,
/snip
While some Tri Energy claims were implausible -- the 20,000 tons of gold was more than twice the total U.S. bullion reserve, the largest in the world -- investors rarely wavered in their loyalty.
BLIND FAITH!
Pavel,
The economies may be different, but the flawed human beings are the same.
"sales are depressed" - the operative question is from what level? Clearly they are lower than what they were but does that necessarily mean that they are depressed. This is precisely my problem with current conventional economic theory. Where we or were we not living beyond our means. In my book if you are constantly having to go into deeper debt that suggest that you are living beyond your means. If that in fact is the case lower sales now are not "depressed" but rather where they should be if we were operating on a sustainable basis.
I liken our current policy to whipping a horse who is slowing down because he is tired in the hope that doing so and making the horse go faster with make the horse less tired.
WFC releases presser in time for market close (article carried at 3:55 EST), asserting many good things. Guess it was them? Y'know rumors an all.
Wells Fargo to Repay TARP Without Raising New Equity (Update2) - Bloomberg.com
C
i agree with eric 100%
jo6p knows all about the september curse - i have been asked about it 4 times today
no way we tank for reals
Eric, thank you for anti-jinxing us.
Yeah, you could make some serious dough fading my call from this morning.
Glad to be wrong, but wish my GDX would kick in.
"Pavel,
The economies may be different, but the flawed human beings are the same."
Chainsaw, I couldn't agree more.
Ciao; off to lay out a prototype Doomstead garden.
Avoids the difficulties in recruiting that at least the army was having (at least until the recession started)--I don't think the neocons ever felt reinstating the draft was politically feasible. Mercenaries make much more but as far as I know, the gov't incurs no long term responsibilities for mercenaries, i.e,. no liability for service-connected disability, GI bill related expenditures, no need to provide medical care.
And while it seems as though the issue is still being litigated, it seems as though the neocons might've seen it as a way to avoid dealing with the Military Justice rules (or whatever it's called) and other "unreasonable" (to the neocons) restrictions on the military behavior.
And it I think it was partly ideological--I think that branch of the GOP was very pro--privatization. If you remember, one of the Bush-Cheney selling points was that since they'd been successful businesspeople (allegedly) they run gov't like a business (didn't say running an Enron type of business though). And isn't outsourcing and offshoring some of the corporate things to do?
timmay and kermit: you need to talk, bro's
seems to me there has to be room for a third party in the middle- socially and economically liberal but believes in fiscal conservatism and free markets.
The problem with being "economically liberal" is that basically implies central management, which has for the most part been a dismal failure (measured by relative economic growth). You may be able to get it to work in specific sectors like health care where the complexity of the problem isn't so great as to be unmanageable.
But there's a reason centrally managed countries end up looking like giant military institutions - that conformity and reduction of complexity is necessary to "manage" the economy.
I guess some people are willing to pay that price for stability and predictability, but personally I just don't like the idea of living in a country like that.
Emissions testing measures pollution, MPG averages measure efficiency, both are things you claim were the reasons for C4C. If they are now unrelated and too onerous, how can you still claim they were the point of the program?
Wheelman, I agree both are important, but do you really need to test a vehicle that had an original MPG rating of 18 or lower to know that it is currently a gas-guzzling-pollution-belcher relative to a Honda Civic?
C'mon.
I felt a
comin'
@Cinco -
Loving the discussion this thread. Sounds like I misinterpreted either you or Yalt, or both. I thought you were quibbling with the "requirement that investments be profitable" part, rather than the "misallocation" part.
Misallocation is certainly possible in any system, and it's more possible when people forget that investments need to be profitable (on average, over the long term), and that "profitable" has a well-defined meaning, which applies globally to the whole planet and not just to an individual person, corporation or government.
We have burned through a lot of the planetary capital ... I think sustainability and profitability are no longer conflicting concepts.
"No government is going to deliberately permit its banking system to fail."
I say that is the problem that leads to, "In a real world of crashing banks you get demagogues, and some of them may actually get their hands on real power." A managed, intentional failure is far preferable to fighting it and getting the failure anyway. What level of credibility will be given to the next round of "stress tests" and "green shoots."
My opinion is that we had an opportunity for a managed crash, but now the mountainside is looming.
John Stark (profile) wrote (in reply to...) on Tue, 9/1/2009 - 3:58 pm
Actually there are a lot of water and power system improvements that could be made HERE. Also telecommunications.
You said "Tell that to the billion or so people who don't have consistent access to drinking water", and that's one of the things to which I was responding. There are certainly are some inadequacies here in this country, but IIRC, solutions are not "shovel ready", and I presume the Administration wanted something to happen now.
No, but you should find out if a car that got 25 MPG in 1990 is still getting more than 18 MPG, rather than just rule it out. The same with emissions testing. Again, if efficiency and pollution are the reasons for spending tax dollars to subsidize a purchase, then (c4c) was a failure in both design and execution because it targeted neither gas guzzler nor smog pumper.
Ok, now the real trading action can start. C'mon volume, c'mon back n ow y'hear!
C
M (profile) wrote on Tue, 9/1/2009 - 4:01 pm
Why won't I see this analysis in the MSM?
Shouldn't the NY Times or WSJ or WaPo be publishing this?
They'll be reciting the Administration's talking points as they've been told to do, assuming that they want to keep their access-
I may have misinterpreted myself, WS. I certainly didn't mean to imply that the profit-requirement was the only possible source for misallocation, ever, anywhere--just that in the particular example under discussion (and many others) it was the requirement for a particular profit margin that was preventing what to me would seem a clearly socially beneficial investment. That, to me, is misallocation.
So your theory is the economy just needs a rest? I guess the 10% unemployed are just resting....
Late comment, but..
We won't really know how many new sales were generated until well after the programs end and the future sales changes (presumedly, decreases from expected) are incorporated into the analysis.
nova,
According to the LA office of the FBI's press release, these guys were arrested just about two years ago. And right in their story, Bloomberg prints the dates of the events in question: 2004 and 2005. Why is this front page news today?
I'm not arguing the content of the story; just the timing.
Federal Bureau of Investigation - Los Angeles Field Division - Press Release - Department of Justice
wheelman, let me guess - you own a vehicle that just missed the cut?
I think it's hard to evaluate C4C as a failure or success, altough few would dispute that the same people are driving the same distances while consuming fewer gallons of gasoline than they would have in the absence of this program. Sure, they might have bought cars anyway, but perhaps not the fuel-efficient models.
My point was that it is wrong to judge the impact of C4C by looking at sales figures.