too slow.

darn!

i thought it was his pictures of young gold bars.

scone wrote:

Now you're dreaming. That's a gold bug trait, it seems.

No, I had no expectation or even delusion that it would happen. Not enough on the planet to think I'll ever understand women. Now investing in PMs, that is another matter...

Basel Too wrote:

FDIC Statement of Policy on GOLD

Quote:

Irrespective of the manner in which an insured nonmember bank intends to deal in gold, the Corporation should be notified of such intention.
..snip..
Insured nonmember banks intending to trade in gold should submit written notice of such intent to the appropriate regional office of the Corporation at least 10 business days prior to the initiation of such trading. Such notice should include all information the bank deems relevant to its proposed activity including whether the bank will be trading for its own account or solely on an agency or consignment basis, the projected amount and purpose of any such trading, the experience of those individuals who will be engaged in the trading, insurance arrangements which will be in effect.

Interesting the entire post seems to say "Caveat Emptor", but when it comes to actually doing it, they definitely want to be in on it. Such an odd duality of intentions...

Re: the frowned-upon gold talk.... We did hit an all-time high today, and it is relevant with respect to the US dollar. I wonder if CR has ever done a post on gold? (I don't remember one, ever).

CR, do you feel gold deserves no electronic ink? With al l the varied economic indicators about which you post, I do find that strange....

CRE vacancy rates, on the other hand, are clearly meaningless, as CRE equity valuations climb regardless.

EPH, "Traders never kill their own currency". Perhaps in England of yore that may have been true, but in today's USA it certainly is not.

sportsfan,
reply at the end of last thread

REBear,
I said over the medium-long term, as in will Gold maintain its purchasing power when calm returns at least to major currencies, and global growth returns.

scone wrote:

playing on the primitive instincts of the herd

That's it in a nutshell. There's something very primitive about the appeal of gold... very basic to human nature. Some say it has no intrinsic value, but what is intrinsic value really but the value humans place upon things? In that regard, gold has (and will always have) the highest value. Heck, even at it's turn-of-the-century low it was still $240+ for an ounce, whereas a full barrel of oil was $10? Nothing but pure psychology can account for that.

"Gold is a "don't fight the tape" situation. It's just another bullshit commodity bubble, but you can ride that horse to market just as well as a donkey. And get out when you need to. Getting out before a crash is key, IMO."

timing is key. Took my parents 20 years to break even on their gold purchase last time gold was all the rage.

Danny wrote:

intrinsic value means it has some utility

Link, please.

poic wrote:

Took my parents 20 years to break even on their gold purchase last time gold was all the rage.

This time is not like that time.

EHP, on your reply in the last thread:

I understand we have more oil than normal at current level of 338Mbbls, but I don't see that as 'full' in the sense that we "should have" more than a 23 day supply as a cushion against contingencies, natural or man made. Refined products can be stored in numerous locations, public and private, and don't seem to be spilling over the top, so to speak. I'm still paying over $3/gallon which, while under $1/litre, is not like they giving the stuff away.

Natural gas is a whole other issue and I'll admit I do focus only on U.S. supplies for both hydrocarbons. There again I make the domestic/international distinction even though the U.S. does import some LNG and could take more if it were needed.

If/when the spot prices collapse, producers will stop producing. They do it every time. I'm not expecting prices to collapse. If and when we hit a double dip, there will be some more weakness in energy pricing, but one thing the Fed can't do is print more energy.

sportsfan,
Here are 2 recent articles that mention Verleger
Cold Comfort for Oil Bulls - WSJ.com
Open Interest Surge Signals Peak as Traders See Slump (Update1) - Bloomberg.com
I don't think he has made one mistake on oil in the last decade that I can track.

'Krugman presents a model in which a fixed exchange rate is the inevitable target of a speculative attack. An important assumption in the model is that a speculative attack is inevitable.'
-Chiodo & Owyang, 'A Case Study of a Currency Crisis: The Russian Default of 1998', (research.stlouisfed.org, Nov./Dec. 2002)

"“People love reading Kindle books,” Bezos said. “It’s that simple. There are so many advantages over a paper book.”

I ride the Bart to work in geek heaven bay area and I've seen only 2-3 people so far using a kindle in the last few months.

As to the comment that "my gas is $3, they aren't giving it away", inventories grew at a smaller rate when gas was over $4 per gallon than it has now by a country mile. $4 then was more sustainable than $3 now. There are 3 key prices to oil/gasoline. User's price, producer's price, and market price which must lie between those. $147 oil was selling. Saudi Arabia brought on 2mn more barrels of daily production, but just before they did (timed for the US elections btw, for the 2nd or 3rd time in a row) traders capitulated. No one was willing to absorb 2mn per day given the evident economic risks, and you lose money if you don't collect your winnings first in a bubble unwind. You can hold the price of oil all the way up to the user's price, or all the way down to the producer's price so long as you have enough inventory to maintain a binding or saturated market respectively. Oil could stay at $70 per barrel till the cows come home because people can afford it, it's a good value at that price. Oil won't stay at that price because inventory will unwind. Unlike 0% interest rates, storage costs money. The less excess capacity of an inelastic service like storage, the more the cost of it sharply increases. That last bit is what is coming into play for natural gas. Storage outfits are charging penalty fees for users exceeding their quotas. Which is insult added to injury when Natgas is so cheap

Hiya Doc

I meant, not in terms of they might take a while to make a profit, rather, that past performance is not to be construed, blah blah blah...

Somehow in this economic environment, I suspect Amazon will continue to have trouble selling that device for $250, nevermind the $300 they were asking previously.

Also, I found it interesting that a hardcover book ("Dear Mr Buffet" by Janet Tavakoli) is $16.50 versus $13.25 for the Kindle version. Somehow I thought the discount was going to be more than 20% for the Kindle download versus the real thing...

I may lack vision, but I just don't see this thing being a $Billion line of business in two years...

EHP,

Your thoughts on "Peak Oil"? IMO the pressure's off due to demand destruction, plus I don't expect significant demand growth due to perpetually anemic economies world wide. However, exploration and development is too low these days and existing capacity is declining a few percent annually. Seems to me any true uptick in the world economy and we're back to triple-digit oil, regardless of what happens to the dollar.

re: Producers cutting production
In some instances, it physically doesn't make sense to stop production of an existing well (more a factor for natural gas than oil)
More to the point, if budgets were tight at $70 per barrel at this output, how do you negotiate who cuts their revenue how much? The answer is OPEC, which is equivalent to undefined. Output will drop, but not enough to stop prices from falling as the the flip between inventory build (tailwind) to inventory drawdown (headwind). There is enough inventory that even if the daily imbalance is historically small for an inventory drawdown, that it will push oil prices all the way down to the producer's price.
This will happen even if the Treasury issues a new holographic purple currency to replace the greenback. You don't need an opinion on the USD because this unwind is for reasons endogenous to the physical/real/oil market.

Chiodo & Owyang conclude in their currency crisis study that 'four key ingredients can trigger a crisis: a fixed exchange rate, fiscal deficits and debt, the conduct of monetary policy, and expectations of impending default. Using the example of the Russian default, we show that the prescription of contractionary monetary policy in the face of a currency crisis can, under certain conditions, accelerate devaluation.
(We must be in the beginning of the 'acceleration' phase of the dollar devaluation.)

Gold Near Record, Oil Climbs as Dollar May Drop, Inflation Gain - Bloomberg.com

Fascinating times. My favorite analysts call for an extended period of deleveraging and disinflation. Even Marc Faber is calling for a short-term correction in equities and strengthening of the dollar.

And yet stocks and gold march upward and onward.

What to do?

I think what I'll do is sell a little bit of gold this week...

Night all.

Doc, thanks for the Kindle comments.

Hmmm... I don't "trade" my physical. Transaction costs are too high, and I didn't buy so many years ago to get caught should events overtake us.

Good luck!

At the risk of straying on topic by accident:

CR's post includes a quote stating:

Effective [U.S. office] rents ... fell 8.5 percent, the biggest year-over-year drop since 1995.

I can say with some degree of certainty that office rents in my little part of the U.S. have dropped 20 to 25% to keep existing tenants and to keep occupancy at 90% or so.

Meanwhile, the newer, highly leveraged office buildings that had proformas with numbers that don't exist in today's market are still mostly vacant. Their future is not bright. Wonder what banks are stuck with the paper?

sportsfan said, "Wonder what banks are stuck with the paper? "

Our fearless leaders will make sure we do not know for a very long time, if possible.

I would rather own physical gold, and lease it through a broker at a high real rate of interest. Probably tough for a small fry to get a fair deal doing that, and I weary of going long on anything that has done well over the last 6 months.

ShortCourage, actually I do know already. The problem, though, is that the banks seem to think that somehow they aren't going to lose as much as they would lose if they were to sell the paper today.

Do they really believe in green shoots? Do they think the market will snap back? Do they think Uncle Timmie will bail them out? Do they just want to conceal the hit they would take on their books? I can't answer any of those questions. I only know they are not being realistic today.

FDIC Press Release with Corus Asset Sales Details
Math worked out just like I suspected. I was simply looking at the PPIP to get an idea for what was going on.

The FDIC as Receiver for Corus financed the sale of assets to the LCC using term notes, guaranteed by the FDIC
in its corporate capacity, with leverage of 1-to-1, based on the gross equity value of the LLC. In addition, the
Receiver will provide an Advance Facility of up to $1 billion to the LCC to assist in covering future unfunded
commitments. Equity holders in the LLC will not receive any distributions until all debt of the LLC is paid off, and
FDIC’s equity interest will increase once certain thresholds are met.

I still think it is shady that the debt:equity in this was 1:1. The PPIP calls for 4:1 or 6:1 (the Franklin Bank option ARMs were sold at 6:1)!
The FDIC and Treasury aren't full of stupid people willing to risk their taxpayer money as well!

I suppose it just depends on how "comfortable" you are. I 'd love to have gold; priorities tell me food is more important.

Comrade Kristina,
It's all relative to the context at hand, such as renting the right to buy gold versus owning and then leasing the gold.
If things go apocalyptic, I'm fortunate enough that I believe I could earn enough food for myself and then some

Additional research on financial crisis and financial instability...both Krugman(1999) and N. Roubini(1999) looked into the East Asian Crisis and B. Bernanke & Harold James did a paper on 'The Gold Standard, Deflation, and Financial Crisis in the Great Depression: An International Comparison'(1991).
(This research could very well be relevant to what is happening now...)
http://mit.econ.au.dk/dgpe/diverse/voth-syllabus.pdf

I do think it is a great idea that one could potentially save paper; you just need one book that gets all of your data. I'm weary of rights issues and DRM... as well as the ability of a central server to rescind purchases (didn't that happen to 1984?).

Wow.. it's like Back to the Future !
~splat

I'd like to have a few cases of Jack Daniels just for backup

Heh. Did you just read "The Go-Go Girls of the Apocalypse" on your Kindle, Sportsfan?

More on the Starwood purchase of Corus assets since I find it compelling...

August 2009, Starwood Seeks $500M IPO to Buy Bad Real Estate
From their S-1: We believe that the next five years will be one of the most attractive real estate investment periods in the past 50 years...a void in the debt and equity capital available for investing in real estate has been created as many banks, insurance companies, finance companies and fund managers face insolvency or have determined to reduce or discontinue investment in debt or equity related to real estate. We believe that there will be a significant supply of distressed investment opportunities from sellers and equity sponsors of real estate...We believe that well-funded managers will have the opportunity to acquire real estate debt positions and assets with limited competition and at prices deeply discounted to replacement cost.

Starwood Strikes IPO Gold
What's more, the six members of the executive team have worked together for more than 12 years. Keep in mind that there is extensive experience with distressed investing, especially with the Resolution Trust Corporation (which was the federal agency to clean up the S&L mess).

Go-Go Girls of the Apocalypse

What passes for civilization surprises him: a chain of strip joints called Joey Armageddon’s Sassy-A-Go-Go has set itself as mankind’s savior. But as with any fledgling world-saving operation, there is opposition—to wit, the terrorist-like Red Stripes, whom Mortimer is sent to defeat. His subsequent breakneck journey is full of cannibals, slave runners, bad booze, and other dangers, none more perilous than hope. Although this dark comedy makes one laugh, it isn’t a romp in a postapocalyptic playground. It’s violent and sleazy, laced with moments of quiet gravity, an intelligent satire of how American society works even after it has broken down (the label for postapocalypse Jack Daniel’s in chapter 23 is pure comic gold). Compulsively readable.

I think it was mp on here who has a great love of the Mauser gun

Nope. Not me.

Can you elaborate?
--Blackhalo

Do you have any idea how many people are employed shuffling insurance forms?

90% of them would be out of work if there were a single-payer system. When I was growing up a doctor's office had two workers: the doctor, and his wife, who was a nurse. That's it. Insurance red tape was an insignificant factor.

Today, it seems there are more clerical workers/receptionists in a medical office than there are actual health care professionals.

E.g. according to my chiropractor, if he stopped accepting insurance and only accepted cash payments, he could provide his services at just over half the cost of his current charges.

YLSP wrote:

Why get a kindle when you can get a netbook for comparable price? Or even a pdf capable mobile phone?

Electronic ink is much easier on the eyes. Regardless of all the criticisms, the Kindle is a great advancement if you read extensively. For people that don't read much, maybe it isn't worth the inconveniences. It is nice to be able to buy a couple books before hopping on a long flight. I wouldn't rely on it for important books (for those I keep physical copies) but for random paperbacks it is great and eventually pays for itself if you read frequently. I'd claw my eyes out trying to read a book on an iphone.

.....morning nova....I C glod has risen some more overnight...

Morming - I was chatting with one of my partners yesterday who practices in environmental law, especially the permitting issues for power plants, ethanol plants, etc. He just got back from a conference that was addressing the EPA's proposed CO2 regulations. The speakers were pretty uniform in their belief that these regulations make most new construction or modification of power plants, refineries and large industrial facilities unbankable - the costs of installing the best available CO2 abatement systems is just too great. Of course, many believed that the regulations are subject to attack, on the basis that the Clean Air Act requires abatement if a producer generates more than 2,500 lbs of a "polluntant" a year, not the 25,000 lb level these regs try to enforce (the EPA knows they will get killed in Congress if every business had to install CO2 abatement systems in every facility). Probably not an issue today, given all the excess capacity, but if we have a recovery, it will cause serious problems.

GEEZ BSR,

You're one early riser! I'm only up because I had a support call, and then I'm going back to bed.

EvilHenryPaulson wrote:

I weary of going long on anything that has done well over the last 6 months.

EHP, how about something that has done well over the last 9 years?

NOVA,

Good to see you up... now start writing!

Makes sense -- the rich almost certainly see it as a shrewd business issue and are not concerned about credit ratings.

Oh, and I'd expect those 10 & 15 numbers could even be low.

This is why I prefer the term "ruthless default" to strategic default. It's purely business to these people and screw the greater ramifications. I would love to see the actual regression model on the relationship between % underwater and %walkaway.

....and if I was the owner of the Detroit Tigers I'd like to have a first-baseman that WASN'T a drunk.

,rads:

I wonder if all this vacant Office Space comes with or w/o red Swingline staplers?

Rocky............yep...there are HUNDREDS of younger ballplayers who would love the chance. If Cabrera blew a .26 BA - he's a "Professional Drinker". On a game-day? That's Bullsh** - pure and simple. Seems he couldn't hit himself out of a paperbag Sunday.

$150-million contract, he gets "faced", goes home in the AM and "bitch-slaps" his wife...... AND he has a history of the "drunk in public" thing....what a complete idiot. Enough said.

BSR,

Just enjoy the ride and reminisce about way back when before the 1966 season, when Koufax and Drysdale both held out for 3-year $500k contracts with the Dodgers, and got turned down.

I don't follow baseball much, and i've never heard of this upstanding ballplayer with a $150 million contract and a .26 BA, but they are going to be the cause of most every team going broke*, as professional sports makes it's money off of tv, which makes it's money off of advertisers, and there's a gaping hole in the supply chain, as the advertisers aren't so game anymore, but the ballplayers salaries are guaranteed for years.

*exemption: hyperinflation helps, not hinders professional sports.

Anyone notice the revision in Europes exports number?

,rad BSR,

I inked a 10 year guaranteed deal to play with Lehman for $86 million back in 2006...

,rad BSR,

Daddy-o worked with Peter O'Malley in the 1960's, and we had dugout seats on many an occasion, which means I saw Koufax pitch and Wills steal, well, about as much as a 3 year old can remember, which is ZIP. But I was there, so they tell me. ha

Good morning

Hu ordered Chinese take-out?

didja see Janet Tavakoli's thing about the Ruthless Defaulters of the Far East...

Monsanto doubled analysts estimates. (Two cents versus the expected one cent.) Revenues down almost 10%. No first quarter guidance. Missed top line.

Up 2%. Go figure.

We appear to be past the river, (Rubicon) the traditional ending of the sum of the remains of a dealt deck of debt, and all players wager one last time, before they turn over their hands and show what they've got...

(pushes a shitlode of greenbacks into the middle, and says "ALL-IN", hoping the bluff works)

good morning all.
another day oh well got

Juvenal Delinquent wrote:

(pushes a shitlode of greenbacks into the middle, and says "ALL-IN", hoping the bluff works)

Hu looks at the bet bet and says; "Sooo sowwy, this is a cash only table, no markers. What else you got?" Perhaps the deed to a certain island will cover our account.

energycon,

European Economy Contracts More Than Estimated (Update4) - Bloomberg.com

excerpt

Oct. 7 (Bloomberg) -- Europe’s economy contracted more than estimated in the second quarter as consumer spending, investment and exports were weaker than earlier reported.

Gross domestic product in the 16-nation euro region fell 0.2 percent from the first quarter, when it dropped 2.5 percent, the European Union’s statistics office in Luxembourg said today in publishing final figures on second-quarter GDP. The decline was sharper than the 0.1 percent decrease estimated on Sept. 2.

Rob Dawg wrote:

Basel Too wrote:
krugman doesn't understand why banks aren't lending.
Why did you include the second half of that sentence?

That was for the folks who didn't understand the first half of the sentence-

AND THEY'RE OFF (for some pre-market trading....)

Can a procrastinator decumulate?

Cinco-x

So Jim will die of a heart attack because he is overweight and overworked. His wife will find out upon his death that they are BK. Meanwhile Hoover will go from the gov to a lucrative consulting position. He will marry a woman from the right back ground, bang his aide on week-ends and live to 93?

Juvenal Delinquent wrote:

Can a procrastinator decumulate?

I'll get back to you later on this.

What we have here is a failure to decumulate.

Rob Dawg wrote:

That a Nobel Memorial Prize winning economist is mystified is quite an indictment of the entire profession.

In all fairness to PK, wasn't he criticizing the "shadow banking system", and wondering why we continue to support it through "Bernanke Banking"?

cinco-x

my point was how unfair the world can be

especially the way it is setup now