CBS Exclusive: Sources Say Force Will Grow to 100,000 with Long-Term Stay Planned; White House Denies Report
Excerpts from "in the Graveyard of Empires" by Seth Jones a Rand Political Scientist
"Babrak Kamal's Soviet backed government desperately tried to increase is power and legitimacy.... it declared allegiance to Islam... proposed amnesty fo those misguided citizens it deemed "deceived patriots""
"the Soviets attempted to clear and hold a few strategic areas of the countryside and tried without success to to seal the borders with Iran and Pakistan"
"throughout the war the Afghan army was weak, divided and frequently unreliable"
Sounds familiar? But it is different this time because we are Americans unlike those evil Soviets.
Albert Edwards, an analyst at French bank Societe Generale who correctly predicted the Asian financial crisis, sees global equity markets at a new low and chances of another global recession in 2010.
Edwards, a prominent equities bear and a long-term critic of the policies of Western central banks, is skeptical of popular opinion that extreme policy responses will safeguard the West against a repeat of Japan's 'lost decade' of the 1990's.
"People should question the happy clappy nonsense from sellside analysts," London-based Edwards, a global strategist with SocGen's Corporate & Investment Banking group, told a media briefing. "We are not saying that people should not participate in the rallies -- that will get you fired as a fund manager -- but they should not become too convinced of the recovery," he said.
What is the likelihood that that the assets backing the $3.5 trillion in CRE loans is worth half as much vis a vis the the real estate backing the $11 trillion of home mortgages being worth 80% of the loans. It would appear to me that CRE loans are leverage to the hilt continuously while home mortgages are paid down.
"While the CRE problem is serious for parts of the banking industry, I don't believe it poses a broad risk to the financial system."
That's funny. I could have sworn he, and just about everyone else at the Fed and Treasury, spent the past 12 months solemnly intoning that the banking industry was the American financial system. Or did we throw a trillion dollars at those guys just for the hell of it?
A friend is one of those geniuses that can do anything construction-wise, and he's by far the best i've ever seen at what he does, as a 2 man operation. A Picasso with a backhoe, using the ground as his etch-a-sketch.
He tells me, it's as if the spending switch in people's minds was turned off. Business is slow.
"I don't see it posing a broad risk to the financial system."
I think it is important to note that when he says 'financial system' he very specifically means "big banks". The rest of his comments make that crystal clear.
He is honest about it... but the point is that the Fed does not see the 'financial system' as the economy, businesses, jobs, the value of the dollar, local banks or anything else other than big banks.
It would appear to me that CRE loans are leverage to the hilt continuously while home mortgages are paid down.
Warnings have been sounded about the next wave of recasts and resets coming from other vintages. Still many neg am and interest only coming to a day of reckoning.
It would appear to me that CRE loans are leverage to the hilt continuously while home mortgages are paid down.
It's worse than that. CRE are generally balloon loans with terms 3-5-8 years. Additionally lots of businesses found themselves sitting on "dead equity" and were essentially forced as good business practice to put that asset to work. There's lots of exposure even in established companies. Indeed, I suspect even those who survive the recession will lose out in the recovery as nimble competitors come in with dramatically lower cost bases.
Yeah, they might want to double check exactly what is in those CMBS, CDO and CDS before throwing that one out there again. Of course, maybe they have and are now in the "Lehman Bros is well capitalized mode," now.
Warnings have been sounded about the next wave of recasts and resets coming from other vintages. Still many neg am and interest only coming to a day of reckoning.
Exactly. The wave of subprimes has struck, but there's plenty more to come. There was a very instructive chart the other day showing the future loan reset schedule. I'll see if I can find it...
"Unlike residential real estate, there is not the same direct linkage from CRE to household wealth—"
I must respectfully disagree. The employees will lose jobs, the employers will have no income or unemployment, the city - state - Fed will collect less taxes. All of these things will have a large effect on Main Street over the next year.
The article tells the real story. One of the political parties (in this case Dems) don't want to cut school aid because it hurts their suburban re-election chances. Same old, same old.
Exactly. The wave of subprimes has struck, but there's plenty more to come. There was a very instructive chart the other day showing the future loan reset schedule. I'll see if I can find it...
John Hussman usually throws this chart into his Weekly Market Comment every couple of months. Here's an example (fig 1.7, about 2/3rds of the way down the page):
The bulk of the Alt-A's are just starting to roll over now ... and, oh yeah, we haven't even seen the tip of the iceberg for Option ARM resets/recasts.
Albert Edwards, an analyst at French bank Societe Generale who correctly predicted the Asian financial crisis, sees global equity markets at a new low and chances of another global recession in 2010.
All that means is that he hasn't been right for 10 years.
WASHINGTON (MarketWatch) -- Small-business owners haven't seen much improvement in the U.S. economy and more are expected to cut jobs instead of adding them over the next three months, a monthly survey shows.
Fed officials warn weak recovery won't spur jobs Fed officials warn of long road ahead to turn around jobs market, commercial real estate
By Jeannine Aversa, AP Economics Writer
On 10:05 am EST, Tuesday November 10, 2009
WASHINGTON (AP) -- Unemployment likely will remain high for the next several years because the economic recovery won't be strong enough to spur robust hiring, Federal Reserve officials warned Tuesday. Fed officials warn weak recovery won't spur jobs - Yahoo! Finance
Yep, like the beginning of 2014 or so using EMRATIO as a guide and a couple of rosy assumptions (1: the peak rate of year over year decline in EMRATIO occurred in October and 2: This recession behaves proportionately the same as 2001, where peak YoY decline occurred 36% of the way through the EMRATIO decline) energyecon: EMRATIO - Continued negative acceleration Year Over Year
John Hussman usually throws this chart into his Weekly Market Comment every couple of months. Here's an example (fig 1.7, about 2/3rds of the way down the page):
I think it is important to note that when he says 'financial system' he very specifically means "big banks". ....but the point is that the Fed does not see the 'financial system' as the economy, businesses, jobs, the value of the dollar, local banks or anything else other than big banks.
.....Exactly......therein lies the danger - this very easily could cause more damage in the trenches than supposed "systemic risk".
Financial innovation is Wall Street's new 'soul sickness' Commentary: New mutant American capitalism has no moral compass
ARROYO GRANDE, Calif. (MarketWatch) -- Could our headline just as easily read: "Financial innovation: Wall Street's biggest con game?" How about: Rip-off? Joke? Oxymoron? Maybe "Wall Street's big lie?"Or something darker: "Financial innovation: Wall Street's deadliest sin, greatest evil, even soul-sickness?"
In fact, they all fit. Each reveals Wall Street's dark side: Why are they at war to keep financial innovation secret, hidden, without public transparency? And why is Wall Street spending millions on lobbyists to kill financial-regulation reforms? Why? Because Wall Street rakes in tens of billions of dollars annually from their financial innovations, gambling in the shadowy $670 trillion global derivatives market. And Wall Street does not want government, investors or competitors digging into their "financial weapons of mass destruction," as Buffett calls them.
Remember, financial innovation is just a Wall Street code word. Translated it simply means derivatives and other proprietary secrets like the high-frequency trading algorithms used by their quants. Yes, Wall Street wants you to believe that financial innovations also help Main Street, but that's just Wall Street lobbyist propaganda to mislead the public, regulators and legislators. Remember when Washington proposed standardized mortgages as a way to help consumers? Wall Street attacked, spending millions to kill it.
Wall Street has no interest in helping Main Street. Time magazine's Justin Fox, author of "The Myth of the Rational Market," said it best in his "Curious Capitalist" column. Most so-called financial innovations are "just new ways to fleece customers or hide risk, and all major financial crises have been associated with some financial innovation."Even credit-card innovations are used against customers as marketing tools to increase fees. The truth is: Wall Street's greed-driven financial innovations fuel our bubble/meltdown cycles in many ways. MarketWatch.com
To repeat my current assessment, while the CRE problem is very worrisome for parts of the banking industry, I don't see it posing a broad risk to the financial system.
Lockhart august 26th, 2009:
I'm concerned that commercial real estate weakness poses a serious potential risk to the economic recovery and to the banking system.
His first paragraph of comments beneath the chart is insightful:
It is tempting to think that with Treasury yields fairly low, mortgage resets might be fairly benign in terms of their impact. The problem is that these Option ARM and Alt-A structures were specifically designed as “teasers” – allowing loans to be made without documentation of creditworthiness, in return for post-reset interest terms that were generally higher than a documented lender would have paid.
Like most, Hussman could have benefited from reading Tanta's UberNerd post on resets v. recasts, but his big-picture point is absolutely valid - e.g. low rates alone aren't going to save most of these loans.
In other words, don't go walking outside quite yet ... we've been in the eye of the hurricane, but the rain is starting to pick up again.
Psst, don't tell anyone, not even Dirk, but Bernanke is printing extra money for Christmas. Why do you think they call this economy the green technology revolution? But keep it a secret, not even Santa is suppose to know. Ha, ha, ha, ha
so i guess no one will be getting the regular flu...
Pshaw! Oh ye of little faith in our busybodies in Congress! Why, that's covered too, of course:
Miller, a Democrat who chairs the House Education and Labor Committee, said the emergency law would cover pandemic H1N1 flu or any other infectious disease.
This is not "happy clappy." NJ to NY - No retail or CRE dependent on these jobs probablt.
As he seeks concessions from state workers to balance his first budget, Governor-elect Chris Christie is examining the possibility of declaring a financial emergency in the state, according to an official familiar with his plans.
Such a declaration — invoking the same law as if New Jersey were hit by a natural disaster — could give Christie broad powers, such as suspending rules governing state worker layoffs. With many state workers due to receive two raises in the next fiscal year and a no-layoff pledge in place through December 2010, Christie's transition team expects to tackle the issue before he takes office Jan. 19, two of his advisers said Monday.
The article tells the real story. One of the political parties (in this case Dems) don't want to cut school aid because it hurts their suburban re-election chances. Same old, same old.
Must be nice and/or stressful to constantly jockey for a job that means spending money you don't have or collecting taxes from people who don't have. Then, you have to turn around and ask for loans from people you cannot repay or ask for votes from people you cannot repay.
.
Can we collectively reinstitute a Conjure-esque Clock counting down to the first state failure/bailout? Bonus points for calling it correctly: AZ, NYS, CA?
The bulk of the Alt-A's are just starting to roll over now ... and, oh yeah, we haven't even seen the tip of the iceberg for Option ARM resets/recasts.
I suspect that this is one reason that the Fed has bent over backwards to keep interest rates low. If not, then look out below-
While I agree with a lot of what Schiff says, I highly doubt that most people will support him, because his policies will cause a lot of pain in the short run, which means higher unemployment and more people struggling to feed their families. That's the issue with the champions of the free market economy, unfortunately, and why the situation we're in is so difficult to deal with.
yagij, that sounds like a poll-worthy idea, but you'll need to include a wider variety of states ... some folks think one of the smaller states but with hefty per capita indebtedness may go first, say RI or Conn, but others are definitely eyeballing the big boys.
If you make a poll with say, 7 - 10 states that are good candidates, and include a catch-all "none of the above, no state failures at all" and a "none of the above, another state not listed here" you got yourself a winner of a poll, says I.
jturner (profile) wrote on Tue, 11/10/2009 - 11:50 am
While I agree with a lot of what Schiff says, I highly doubt that most people will support him, because his policies will cause a lot of pain in the short run, which means higher unemployment and more people struggling to feed their families. That's the issue with the champions of the free market economy, unfortunately, and why the situation we're in is so difficult to deal with
Gold short term trading. After entry short at 1103, the dip to 1098 closed the exhaustion gap, and then it rose again. I have exited the trade earlier this morning against a tight stop. I don't lose money. The market declined. It did not follow through; my tight stop took me out. Waiting for another opportunity. None is obvious. Long term positions remain "on". The denoument always occurs. Patience is required to get to the end of the book.
....Exactly......therein lies the danger - this very easily could cause more damage in the trenches than supposed "systemic risk".
Damage "in the trenches" is not a concern to TPTB. Remember, it's the "workers" that bring home 70% of the income that matter, not the folks trying to finance an Elantra! Boy I wish I was snarking-
but his big-picture point is absolutely valid - e.g. low rates alone aren't going to save most of these loans.
This is true, but high rate could kill them all, since not only would the mortgagees be paying a lot more on their loan, but the effect of higher rates would be to force them further underwater.
at least it didn't upend you...that is the best trade....dollar gyrations should be interesting next couple days...how they have kept it together is a testament to the worthless dollar and computers
Must be nice and/or stressful to constantly jockey for a job that means spending money you don't have or collecting taxes from people who don't have. Then, you have to turn around and ask for loans from people you cannot repay or ask for votes from people you cannot repay.
Thank goodness for the invention of the printing press-
The Financial Entertainment Channel had some used stock saleswoman explaining that the S&P was bargain because 2011 earnings expectations and an 18x multiple suggests S&P @1200. I have got to coffee proof my workstations. These Keyboards and monitors are getting expensive.
MS, no malaky, I don't lose money. I'm a cautious, patient player. Until the gifts appear, and it did yesterday, falling from the sky, I won't do anything save stay long the PM's and long very large inventories as inflation will drive them forward. Yes, like everyone I have constant cash on hand, but that's a matter of tag. One needs the fiat power; but holding fiat is the kiss of economic death. Go figure.
If you consider the early 90's as the reset point then every thing is going down for a long time. Nice smoke and mirrors show from the man behind the curtain.
Thank goodness for the invention of the printing press-
NYS, NJ, CA, et al are dependent on the scraps that fall out of the FedGov presses. Right now FedGov has other priorities and won't even pay attention until they get back mid term tracking polls that show reelection danger.
J.P. Morgan Chase to hire 1,200 loan officers
I'll apply...but I've been known to be a tight ass credit underwriter....so most likely I'll get passed over...
Just remember when they ask "What's 2+2?" The correct answer is "How much do you want it to be?" and you'll do fine.
NYS, NJ, CA, et al are dependent on the scraps that fall out of the FedGov presses. Right now FedGov has other priorities and won't even pay attention until they get back mid term tracking polls that show reelection danger.
Didn't CA effectively print when it paid in IOUs. That said, I think the govt' will print and loan before it'll take the worlds 8th (or is it 5th) ;largest economy into receivership.
Preliminary Q3 2009 Bank Stress Test Results; Looking for OTC Derivatives Reform
Figures:
Those listening to the heated political rhetoric coming out of Washington in recent weeks might be forgiven for thinking that major change is coming to the over-the-counter (OTC) derivatives business. After two separate congressional committees passed legislation modeled on the Treasury Department's blueprint for OTC derivatives reform, it seemed as though some light was about to be shone on the opaque world of derivatives. Alas, as is often the case in Washington, things are not entirely as they appear......
Didn't CA effectively print when it paid in IOUs. That said, I think the govt' will print and loan before it'll take the worlds 8th (or is it 5th) ;largest economy into receivership.
It was more of an illegal short term debt issue. These IOUs paid interest just as if they were real debt instruments just without all those messy votes and other legal stuff.
I know it violates Dawg-win but neither party in D.C. gives a flying fornication what happens on the left coast. CA is just a donor state far away from the BosWash power corridor.
I have to say I have posted trading stuff in the past...some has worked...some not. I'm not shitting on ya slum but trying to figure any of this out from a fundamental or technical perspective is just a waste of time IMO. They make the rules and when they decide to do something it is done....any indicators that worked in the past are basically useless. It's the self-perpetuating market...I think therefore it is done....anything relative be damned. The market goes up simply because that allows the current system to remain in place. Gold figured this out last year(possibly at the end of 07)...bond positions are being placated by another back-end stimulus courtesy of the Fed and it's many unreported machinations. I will say that you've got balls to get in and out of gold on a daily basis but why fight the trend?....at some point the big IB's are going to start peeling off the short trade..the pressure at this level for them is major. They've lost control.....but they have "help" so it may be yet another round of "fun" with it. I know what I see and I see nothing but blue sky for it going forward. That doesn't mean it is straight up...nothing goes up, with the exception of the equity markets over the last 7 months, forever. But everyone here understands how that was accomplished.
BTW everyone loses money...the trick is to make the gains outstrip them...but I know you know that.
Warnings have been sounded about the next wave of recasts and resets coming from other vintages. Still many neg am and interest only coming to a day of reckoning.
That is true but what is the aggregate amount we are talking about? My point was that just comparing the size of the markets to determine their impact on the economy - is just piss poor analysis. It is the depreciation of the underlying collateral and the aggregate difference between that and the stated value of the loans.
Does this clown not realize the extent small banks are in debt to big banks?
pigged
Cinco-X wrote:
Excerpts from "in the Graveyard of Empires" by Seth Jones a Rand Political Scientist
"Babrak Kamal's Soviet backed government desperately tried to increase is power and legitimacy.... it declared allegiance to Islam... proposed amnesty fo those misguided citizens it deemed "deceived patriots""
"the Soviets attempted to clear and hold a few strategic areas of the countryside and tried without success to to seal the borders with Iran and Pakistan"
"throughout the war the Afghan army was weak, divided and frequently unreliable"
Sounds familiar? But it is different this time because we are Americans unlike those evil Soviets.
Amity Shlaes
Keynes, Friedman Give Way to the Master of Gloom: Amity Shlaes
small business employment has been especially hard hit during the current employment recession.
The same change in attitudes towards debt in the private world is happening in parts of the biz world now.
Can't we just print all our CRE issues away? "worked" for everything else
Albert Edwards calls this just a mirage and looks for new lows in 2010.
Fund My Mutual Fund: Albert Edwards of Societe Generale Remains Firmly in Bear Camp, Calls for New Lows in 2010
Albert Edwards, an analyst at French bank Societe Generale who correctly predicted the Asian financial crisis, sees global equity markets at a new low and chances of another global recession in 2010.
Edwards, a prominent equities bear and a long-term critic of the policies of Western central banks, is skeptical of popular opinion that extreme policy responses will safeguard the West against a repeat of Japan's 'lost decade' of the 1990's.
"People should question the happy clappy nonsense from sellside analysts," London-based Edwards, a global strategist with SocGen's Corporate & Investment Banking group, told a media briefing. "We are not saying that people should not participate in the rallies -- that will get you fired as a fund manager -- but they should not become too convinced of the recovery," he said.
Business Cycle Expansions and Contractions
Might be a nice resource for some of you.........
And....
"With this experience in mind, my assessment should continue to be refined."
ground to a mighty fine dust
What is the likelihood that that the assets backing the $3.5 trillion in CRE loans is worth half as much vis a vis the the real estate backing the $11 trillion of home mortgages being worth 80% of the loans. It would appear to me that CRE loans are leverage to the hilt continuously while home mortgages are paid down.
It's contained.
Rob Dawg wrote:
Thank god. So we don't have to worry about the Fed lending against crappy CMBS too.
"While the CRE problem is serious for parts of the banking industry, I don't believe it poses a broad risk to the financial system."
That's funny. I could have sworn he, and just about everyone else at the Fed and Treasury, spent the past 12 months solemnly intoning that the banking industry was the American financial system. Or did we throw a trillion dollars at those guys just for the hell of it?
While the CRE problem is serious for parts of the banking industry, I don't believe it poses a broad risk to the financial system.
Isn't that what Bernanke said about sub prime?
A friend is one of those geniuses that can do anything construction-wise, and he's by far the best i've ever seen at what he does, as a 2 man operation. A Picasso with a backhoe, using the ground as his etch-a-sketch.
He tells me, it's as if the spending switch in people's minds was turned off. Business is slow.
Obviously those small banks should merge quickly so they can become a threat to the system and get more help.
"I don't see it posing a broad risk to the financial system."
I think it is important to note that when he says 'financial system' he very specifically means "big banks". The rest of his comments make that crystal clear.
He is honest about it... but the point is that the Fed does not see the 'financial system' as the economy, businesses, jobs, the value of the dollar, local banks or anything else other than big banks.
crazyv wrote:
Warnings have been sounded about the next wave of recasts and resets coming from other vintages. Still many neg am and interest only coming to a day of reckoning.
crazyv wrote:
It's worse than that. CRE are generally balloon loans with terms 3-5-8 years. Additionally lots of businesses found themselves sitting on "dead equity" and were essentially forced as good business practice to put that asset to work. There's lots of exposure even in established companies. Indeed, I suspect even those who survive the recession will lose out in the recovery as nimble competitors come in with dramatically lower cost bases.
Our Markets are Glorious, only in the great US of A does the Markets only rise and not drop.
Our Markets are Glorious.
Sadly, the only profitable enterprise left, seems to be war.
Juvenal Delinquent wrote:
That and TBTF.
Paterson: NYS Will Be Broke Before Christmas
Paterson: NYS Will Be Broke In 4 1/2 Weeks If Cuts Aren't Made Immediately - wcbstv.com
ac wrote:
Yeah, they might want to double check exactly what is in those CMBS, CDO and CDS before throwing that one out there again. Of course, maybe they have and are now in the "Lehman Bros is well capitalized mode," now.
,rad Dawgma,
The goal of war is about getting the other guy's stuff, money, land, women, etc.
Squid & Co. just went about waging a one-sided battle, the plundering herd~
shill wrote:
Just need to incorporate into a bank holding co. to get at the Fed window and TARP...
volker the viking wrote:
Exactly. The wave of subprimes has struck, but there's plenty more to come. There was a very instructive chart the other day showing the future loan reset schedule. I'll see if I can find it...
"Unlike residential real estate, there is not the same direct linkage from CRE to household wealth—"
I must respectfully disagree. The employees will lose jobs, the employers will have no income or unemployment, the city - state - Fed will collect less taxes. All of these things will have a large effect on Main Street over the next year.
shill wrote:
The article tells the real story. One of the political parties (in this case Dems) don't want to cut school aid because it hurts their suburban re-election chances. Same old, same old.
Yellen's comments just out.
Oh the drama of it all.
and fraud!
I guess NYC and the cities and townships shouldn't put out their stocking this year, or maybe just hope Uncle Sam fills their stockings instead.
Skyin' 'em.
Assitant: "Small banks going under because of CRE exposure"
Lockhart: "Let them eat loans."
Yellen sees signs of jobless recovery - market goes up.
Fewer jobs means a better recovery?
/snark/
We'll be broke before Christmas
You can count on me
Please have some cuts and don't go nuts
And we might need your presence, for free
Christmas eve will find you
Where the light no longer gleams
We'll be broke before Christmas
And only the blind man sees
We'll be broke before Christmas
You can count on me
Please have some cuts and don't go nuts
And we might need your presence, for free
Christmas eve will find us
Where the light no longer gleams
We'll be broke before Christmas
And only the blind man sees
And only the blind man sees
John Hussman usually throws this chart into his Weekly Market Comment every couple of months. Here's an example (fig 1.7, about 2/3rds of the way down the page):
Hussman Funds - On the Urgency of Restructuring Bank and Mortgage Debt, and of Abandoning Toxic Asset Purchases - March 30, 2009
The bulk of the Alt-A's are just starting to roll over now ... and, oh yeah, we haven't even seen the tip of the iceberg for Option ARM resets/recasts.
Woo hoo!
all 'round!
All that means is that he hasn't been right for 10 years.
Not the chart I was thinking of, but this one I found via Google pretty much represents the trend I was recalling:
http://mortgagebehindsolutions.com/wp-content/uploads/2009/03/arm-alt-a-prime-agency-mortgage-reset-chart1.gif
yep, small business is getting better
WASHINGTON (MarketWatch) -- Small-business owners haven't seen much improvement in the U.S. economy and more are expected to cut jobs instead of adding them over the next three months, a monthly survey shows.
Small-business owners skeptical of recovery - MarketWatch
Rigor Mortgage = Foreclosure
Fed officials warn weak recovery won't spur jobs
Fed officials warn of long road ahead to turn around jobs market, commercial real estate
By Jeannine Aversa, AP Economics Writer
On 10:05 am EST, Tuesday November 10, 2009
WASHINGTON (AP) -- Unemployment likely will remain high for the next several years because the economic recovery won't be strong enough to spur robust hiring, Federal Reserve officials warned Tuesday.
Fed officials warn weak recovery won't spur jobs - Yahoo! Finance
Yep, like the beginning of 2014 or so using EMRATIO as a guide and a couple of rosy assumptions (1: the peak rate of year over year decline in EMRATIO occurred in October and 2: This recession behaves proportionately the same as 2001, where peak YoY decline occurred 36% of the way through the EMRATIO decline)
energyecon: EMRATIO - Continued negative acceleration Year Over Year
Mook wrote:
That's the one I recall seeing... thank you.
wally wrote:
.....Exactly......therein lies the danger - this very easily could cause more damage in the trenches than supposed "systemic risk".
And.... Its not easy being green
I think the Fed has indicated they will provide support for bubbles, so why not?
Apparently their priority is to give Wall Street the means to continue to rob main street by selling them 50 cent assets for a dollar a piece.
Lloyds to cut 5,000 more UK jobs
Lloyds to cut 5,000 more UK jobs - Times Online
Financial innovation is Wall Street's new 'soul sickness'
Commentary: New mutant American capitalism has no moral compass
ARROYO GRANDE, Calif. (MarketWatch) -- Could our headline just as easily read: "Financial innovation: Wall Street's biggest con game?" How about: Rip-off? Joke? Oxymoron? Maybe "Wall Street's big lie?"Or something darker: "Financial innovation: Wall Street's deadliest sin, greatest evil, even soul-sickness?"
In fact, they all fit. Each reveals Wall Street's dark side: Why are they at war to keep financial innovation secret, hidden, without public transparency? And why is Wall Street spending millions on lobbyists to kill financial-regulation reforms? Why? Because Wall Street rakes in tens of billions of dollars annually from their financial innovations, gambling in the shadowy $670 trillion global derivatives market. And Wall Street does not want government, investors or competitors digging into their "financial weapons of mass destruction," as Buffett calls them.
Remember, financial innovation is just a Wall Street code word. Translated it simply means derivatives and other proprietary secrets like the high-frequency trading algorithms used by their quants. Yes, Wall Street wants you to believe that financial innovations also help Main Street, but that's just Wall Street lobbyist propaganda to mislead the public, regulators and legislators. Remember when Washington proposed standardized mortgages as a way to help consumers? Wall Street attacked, spending millions to kill it.
Wall Street has no interest in helping Main Street. Time magazine's Justin Fox, author of "The Myth of the Rational Market," said it best in his "Curious Capitalist" column. Most so-called financial innovations are "just new ways to fleece customers or hide risk, and all major financial crises have been associated with some financial innovation."Even credit-card innovations are used against customers as marketing tools to increase fees. The truth is: Wall Street's greed-driven financial innovations fuel our bubble/meltdown cycles in many ways.
MarketWatch.com
Which is it?
Lockhart now:
To repeat my current assessment, while the CRE problem is very worrisome for parts of the banking industry, I don't see it posing a broad risk to the financial system.
Lockhart august 26th, 2009:
I'm concerned that commercial real estate weakness poses a serious potential risk to the economic recovery and to the banking system.
Speech - August 26, 2009
I believe the spin on that is "Lloyds emancipates 5000 wage slaves" ... stolen from the onion
~splat
Obviously the economy has so drastically improved since Aug 26th that CRE is no longer a threat.
Senator proposes paid sick leave for swine flu
Senators debate requiring sick leave for flu
| Reuters
Gee I think I feel a sniffle coming on.
That's the one I recall seeing... thank you.
Ironically, had I refreshed my web browser, I'd have seen that Hussman put that same chart into this week's Market Comment as well, and right at the top to boot: Hussman Funds - Weekly Market Comment: The Second Wave Begins - November 9, 2009
His first paragraph of comments beneath the chart is insightful:
Like most, Hussman could have benefited from reading Tanta's UberNerd post on resets v. recasts, but his big-picture point is absolutely valid - e.g. low rates alone aren't going to save most of these loans.
In other words, don't go walking outside quite yet ... we've been in the eye of the hurricane, but the rain is starting to pick up again.
The swine flew a Gulfstream V.
Senator proposes paid sick leave for swine flu
so i guess no one will be getting the regular flu...
That the Federal Reserve could induce lower unemployment simply by lending money to big crony banks at .25% is an absurd, bizarre delusion.
Psst, don't tell anyone, not even Dirk, but Bernanke is printing extra money for Christmas. Why do you think they call this economy the green technology revolution? But keep it a secret, not even Santa is suppose to know. Ha, ha, ha, ha
so i guess no one will be getting the regular flu...
Pshaw! Oh ye of little faith in our busybodies in Congress! Why, that's covered too, of course:
Miller, a Democrat who chairs the House Education and Labor Committee, said the emergency law would cover pandemic H1N1 flu or any other infectious disease.
Vaccine? I don't need no stinkin' vaccine.
,rad yogi wrote:
"Quarter-back-sneak"
i think that the 0.25% rate also requires a 10% cap gains rate to make for effective trickle down...
This is not "happy clappy." NJ to NY - No retail or CRE dependent on these jobs probablt.
As he seeks concessions from state workers to balance his first budget, Governor-elect Chris Christie is examining the possibility of declaring a financial emergency in the state, according to an official familiar with his plans.
Such a declaration — invoking the same law as if New Jersey were hit by a natural disaster — could give Christie broad powers, such as suspending rules governing state worker layoffs. With many state workers due to receive two raises in the next fiscal year and a no-layoff pledge in place through December 2010, Christie's transition team expects to tackle the issue before he takes office Jan. 19, two of his advisers said Monday.
Rob Dawg wrote:
Must be nice and/or stressful to constantly jockey for a job that means spending money you don't have or collecting taxes from people who don't have. Then, you have to turn around and ask for loans from people you cannot repay or ask for votes from people you cannot repay.
.
Can we collectively reinstitute a Conjure-esque Clock counting down to the first state failure/bailout? Bonus points for calling it correctly: AZ, NYS, CA?
Great Schiff interview.
Peter Schiff: The Government Chose Wrong - Features and Interviews - Hard Assets Investor
Maybe if we taxed bonuses and dividends at a higher rate we'd be able to aid schools.
Or does
need more yachts and jets?
Mook wrote:
I suspect that this is one reason that the Fed has bent over backwards to keep interest rates low. If not, then look out below-
Oh, I know, they'll just move to China if we tax them too much. China has many recipes for
While I agree with a lot of what Schiff says, I highly doubt that most people will support him, because his policies will cause a lot of pain in the short run, which means higher unemployment and more people struggling to feed their families. That's the issue with the champions of the free market economy, unfortunately, and why the situation we're in is so difficult to deal with.
yagij, that sounds like a poll-worthy idea, but you'll need to include a wider variety of states ... some folks think one of the smaller states but with hefty per capita indebtedness may go
first, say RI or Conn, but others are definitely eyeballing the big boys.
If you make a poll with say, 7 - 10 states that are good candidates, and include a catch-all "none of the above, no state failures at all" and a "none of the above, another state not listed here" you got yourself a winner of a poll, says I.
,rad yagij,
Ever been to a party and people only really start leaving, after the first couple says their goodnights, and a flood of exits occurs?
That's what I see happening here, and I have to go with the local team, the Clockwork Oranges, leading the way down into the murky debts
1 currency now -yogi
Maybe if we taxed bonuses and dividends at a higher rate we'd be able to aid schools.
Oh, 1-currency, we've scheduled re-education camp time for you.
Taxing bonuses causes talent to flee the country, and taxing dividends causes investors to become shiftless and misdirected.
Everyone knows education quality is inversely proportional to the money spent teaching the student.
/snark
JD, they're awfully noisy. And so is the Gulfstream, though very smart looking.
shill wrote:
Gotta drive an oak stake in the heart of small business once and for all-
Elmo.
What? you means it can get worse.
Elmo.
Why do you hate America so much?
I guess our "go short...no go long...wait go short" gold trader is not very happy today....
How to miss most of a move.....classic. I've done it before but I also retain a dose of humility too.
Ciao
MS
Gold short term trading. After entry short at 1103, the dip to 1098 closed the exhaustion gap, and then it rose again. I have exited the trade earlier this morning against a tight stop. I don't lose money. The market declined. It did not follow through; my tight stop took me out. Waiting for another opportunity. None is obvious. Long term positions remain "on". The denoument always occurs. Patience is required to get to the end of the book.
Sitting in an interview room. Hate this process.
Cre appears contained to small business
RockyR wrote:
Is this your version of Twittering?
I felt like I was traipsing through a mindfield reading his double dribble about turnover and spread middling.
Black Star Ranch wrote:
Damage "in the trenches" is not a concern to TPTB. Remember, it's the "workers" that bring home 70% of the income that matter, not the folks trying to finance an Elantra! Boy I wish I was snarking-
What I really hate is that I don't know how to make the peeking Elmo icon appear. I love that bad news bastard.
I don't trade the markets but this rally based on nothing is finally beginning to truly offend me.
,rad Gary wrote:
Kramer vs. Cramer?
dated Nov. 2:
$500 Billion Of Commercial Real Estate To Mature Soon - The Atlantic Business Channel
Mook wrote:
This is true, but high rate could kill them all, since not only would the mortgagees be paying a lot more on their loan, but the effect of higher rates would be to force them further underwater.
at least it didn't upend you...that is the best trade....dollar gyrations should be interesting next couple days...how they have kept it together is a testament to the worthless dollar and computers
yagij wrote:
Thank goodness for the invention of the printing press-
Have no fear for free enterprise, peeps will make and buy the weirdest, weirdest stuff:
Regretsy - Handmade? It looks like you made it with your feet
and I always make money...seriously give it a rest. Find a better "forum" for that. This ah.....ain't it.
Ciao
MS
I am Nomad, HAL.
Sentences .... so. long, need to break up .... got to get. to utility ... belt.... Keptain.... she canna tekkit anna llama. aaiiiiieee.
The Financial Entertainment Channel had some used stock saleswoman explaining that the S&P was bargain because 2011 earnings expectations and an 18x multiple suggests S&P @1200. I have got to coffee proof my workstations. These Keyboards and monitors are getting expensive.
BREAKING
J.P. Morgan Chase to hire 1,200 loan officers
I'll apply...but I've been known to be a tight ass credit underwriter....so most likely I'll get passed over...
MS, no malaky, I don't lose money. I'm a cautious, patient player. Until the gifts appear, and it did yesterday, falling from the sky, I won't do anything save stay long the PM's and long very large inventories as inflation will drive them forward. Yes, like everyone I have constant cash on hand, but that's a matter of tag. One needs the fiat power; but holding fiat is the kiss of economic death. Go figure.
If you consider the early 90's as the reset point then every thing is going down for a long time. Nice smoke and mirrors show from the man behind the curtain.
MS wrote:
I think that was Jas. All that was missing was the "born and bred dopes" shtick-
Cinco-X wrote:
NYS, NJ, CA, et al are dependent on the scraps that fall out of the FedGov presses. Right now FedGov has other priorities and won't even pay attention until they get back mid term tracking polls that show reelection danger.
scone wrote:
Sarah Palin: Going "Rouge"
Sarah Palin Christmas 2009 glass GOING ROUGE BOOK by GLASSGIFT
LMAO........I've been rouge all of my life, at least around the back of my neck
Frauditions = Wall*Street tryouts
creditcriminalslovetarp wrote:
Just remember when they ask "What's 2+2?" The correct answer is "How much do you want it to be?" and you'll do fine.
@ cinco, yeah, but do you have a vagina bottle warmer. Or boobie slippers?
Boobies and More at Kinky Crochet by KinkyCrochet on Etsy
MS, no malaky, I don't lose money.
If you never lose money, you're either a liar or a thief. (or
).
Rob Dawg wrote:
Didn't CA effectively print when it paid in IOUs. That said, I think the govt' will print and loan before it'll take the worlds 8th (or is it 5th) ;largest economy into receivership.
Credit Won't Lead The Recovery - The Atlantic Business Channel
scone wrote:
Boobies and More at Kinky Crochet by KinkyCrochet on Etsy
Is this safe for work? BTW, I "DO" have a vagina warmer, but I'll stop there.....
Nice pair of boobies: Google Image Result for http://www.msu.edu/course/isb/202/ebertmay/images/boobies.jpg
Is this safe for work? - C
What! You're posting from work?! I'm shocked!
and I must remember that poi is a hawaiian word for smashed karo root not that income thingy...
scone wrote:
LOL; I'd be remiss if I didn't look out for the commentariat at large
Preliminary Q3 2009 Bank Stress Test Results; Looking for OTC Derivatives Reform
The Institutional Risk Analyst: Preliminary Q3 2009 Bank Stress Test Results; Looking for OTC Derivatives Reform
shill wrote:
Figures:
Folks the day just started and look at the layoffs.....remarkable really.
November 10 , 2009
NTELOS Holdings Corp - Layoffs Coming
Richard Petty Motorsports - 47
Stroud Area Regional Police Department - 3 Layoffs Tonight?
Greeley-Evans School District 6 - Layoffs Likely in 2010
7,500 Trucking Jobs Lost in October
Honda Swindon Factory ( International ) - 500
City of Roselle - 2 Officers
Arizona Schools will be Forced into Massive Layoffs Next Year, Unless Budget Crisis is fixed
Tiburon studio in Maitland FL - 51 part of EA Layoffs
Dearborn Schools - 300
Llyods Banking Group ( International ) - 5,000
City of Jonesboro - 7
City of Sheboygan - up to 16 Layoffs Possible
Update: AOL - 100 Layoffs Today
Mythic Entertainment - 80
Alcan Packaging Food - 50
City of Augusta - Job Cuts Coming?
Fed officials warn weak recovery won't spur jobs
Fed officials warn of long road ahead to turn around jobs market, commercial real estate
I guess the key to getting a job at the Fed is being able to state the obvious with a air of condescension and authority
Cinco-X wrote:
It was more of an illegal short term debt issue. These IOUs paid interest just as if they were real debt instruments just without all those messy votes and other legal stuff.
I know it violates Dawg-win but neither party in D.C. gives a flying fornication what happens on the left coast. CA is just a donor state far away from the BosWash power corridor.
I have to say I have posted trading stuff in the past...some has worked...some not. I'm not shitting on ya slum but trying to figure any of this out from a fundamental or technical perspective is just a waste of time IMO. They make the rules and when they decide to do something it is done....any indicators that worked in the past are basically useless. It's the self-perpetuating market...I think therefore it is done....anything relative be damned. The market goes up simply because that allows the current system to remain in place. Gold figured this out last year(possibly at the end of 07)...bond positions are being placated by another back-end stimulus courtesy of the Fed and it's many unreported machinations. I will say that you've got balls to get in and out of gold on a daily basis but why fight the trend?....at some point the big IB's are going to start peeling off the short trade..the pressure at this level for them is major. They've lost control.....but they have "help" so it may be yet another round of "fun" with it. I know what I see and I see nothing but blue sky for it going forward. That doesn't mean it is straight up...nothing goes up, with the exception of the equity markets over the last 7 months, forever. But everyone here understands how that was accomplished.
BTW everyone loses money...the trick is to make the gains outstrip them...but I know you know that.
Ciao
MS
CRE Risk? They are CONTAINED.
volker the viking wrote:
That is true but what is the aggregate amount we are talking about? My point was that just comparing the size of the markets to determine their impact on the economy - is just piss poor analysis. It is the depreciation of the underlying collateral and the aggregate difference between that and the stated value of the loans.