You can't withdraw from a market where you are the market.

"This is significantly higher than my estimate of 35 to 50 bps and suggest mortgage rates might rise sharply next spring (the MBS purchase program is scheduled to conclude by the end of the first quarter of 2010). "

Nerp...sorry. THe Feral Reserve and it's gov't lackey and playing the same Keynsian playbook of the shitty depression. Just find some analysis from back then and substitute "falling house prices" with "falling wages" and the rest is a fait accompli. This sucker's going down hard.....the ginormous global debt implosion is gonna...well...suck.

This is significantly higher than my estimate of 35 to 50 bps and suggest mortgage rates might rise sharply next spring

Yup. And just in time for all those bubble zone recasts.

"Brian Sack, who runs the markets group of the Federal Reserve Bank of New York,
spoke to the Money Marketeers of New York University"

shouldnt that read Money Mouseketeers

Misean,

Got a link for you:

PrudentBear

ok i got this much from wikipedia and

now looking for how much is owned by the fed

There is about $14.6 trillion in total U.S. mortgage debt outstanding.

There are about $8.9 trillion in total U.S. mortgage-related securities. [3]

The volume of pooled mortgages stands at about $7.5 trillion. About $5 trillion of that is securitized or guaranteed by GSEs or government agencies, the remaining $2.5 trillion pooled by private mortgage conduits.[4]

Mortgage backed securities can be considered to have been in the tens of trillions, if Credit Default Swaps are taken into account.

Comrade Misean

and

TJ and The Bear

thanks

Wtf is a "markets group" and why are my taxes paying his salary? If banks are paying his salary then I trust him even less.

Sack sack!

WSJ: Benny's not our man

Sure. The goverment doesn't even know who's invited to a WH dinner party, but can easily push down mortgage rates by 100 bp with a Phantastic Alphabet Soup Program (PASP). Sounds about as realistic as it can get.
MfO

Yeah, the Republicans can just vote against him and then blame him if he wins.

Meanwhile, the idiot Dems (Dodd-Schumer) try to sugarcoat a Republican-nominated failure.

Paul/Grayson in '12
I'll take Sanders/Franken also.

back one thread the commentariat was weighing the probabilities that goldman got it wrong on their 2011 UE peak

and mp indicated that was questionable esp if gdp comes in flat

my 2 cents

there are more big waves to hit the beach

some commenters mentioned a few lower down

and i agree ...private equity firms... CRE.... and state-municipal gov financing

all look like a technicolor re-make of the movie "night of the living dead"

My 2 cents says that national aggregate raw numbers like GDP and Unemployment are meaningless without details.

Reading into them is possibly harmful, in fact

very hard to predict the UE rate, because you also have to forecast the labor force participation rate. It's easier to forecast the employment to population ratio, and well, that looks horrid now, and is going to get much much worse, because the 16+ pop is going to grow about 1% a year, and employment is likely to go something like 0% next year, 0.2% the year after. So if people didnt drop out of the labor force we'd be looking at 12% UE rate by end 2011.

But what will happen is that the Conf Board "jobs hard to get" figure will keep rising, and the JOLTS hiring figures will keep falling, and the monster board index will keep goin nowhere fast (unless down) and the next thing you know, peeps be droppin out like flies. However, this too is dependent upon how sweet the largesse is as states borrow from the Feds to keep payin UE bennies...and then this depends on how long we keep extending the bennies, because these are, ya know, "extraodinary times."

My point is, "it's complicated."

Hmmm. Not good news from Japan.

Capital spending for companies of all categories fell 24.8 percent in July-September from a year earlier, faster than a 21.7 percent annual decline in the April-June quarter despite stimulus measures that backed a recovery in demand. [JPBUSX=ECI] The drop was the second largest on record after the 25.3 pct fall in January-March.
Spending at manufacturers fell a record 40.7 percent in the quarter from the same period last year.

UPDATE 3-Weak Japan capex seen dragging Q3 GDP lower
| Reuters

100bps is about right.

Comrade Misean is Dope wrote:

Oh, to be such an optimist...

Well, to be fair, he refrained from directly mentioning cannibalism and slavery.

I agree totally, but now we're starting to talk about the U6 forecast.

Seems like we need a population-adjusted combination of hours worked and wages earned.

Want to bet it would be a fairly consistent downward slope?

EDIT: Oh, and it should be broken down into quintiles, since we don't want the banker bonus crowd prettying up the numbers.

josap wrote:

What % increase will there be due to the addition of 800,000 in the January EU adjustment?
That might get us to the GS number in Jan, yes?

I'm down for 841,000. We'll have a commentariat poll when we get closer.

"For the increase?"

depends on the "fix" announced for fannie/freddie. could jump 150 - 200bps easily without full faith and credit backing.

"could jump 150 - 200bps easily without full faith and credit backing. "

Yeah, with it it could be 350-400bps.....

With 100 to 200 basis increase, that has to jump mortgage rates enough to stop sales in its' tracks.

"that has to jump mortgage rates enough to stop sales in its' tracks."

It's "tracts", "tracks" are what speeding locomotives go flying off of...

As there are at least 4 different reports, using 4 different methods, are any of them real numbers?
Seems a bit insane to me. Why don't they just use IRS income reported numbers? Then we could see how many people are employed and how much they are being paid. There would need to be quarterly adjustments for self employed I guess. And some kind of bonus income adjustments. Maybe there is no simple way to get to real numbers.

$200,000 @ 5% is the same as $170,000 @ 6.5%. Housing prices have a 15% bump built in courtesy of Fed interest rate manipulation. There's no way they can stop.

Glad to see this post

I've made this argument time and time again

the 35bps number is way too low (in the short term).

the MBS purchases have pushed mortgage rates down by 75bps or so in my view, largely because of the overshoot caused by the massive problems with the MBS market coming out of the real estate crash.

In the long run, yes, I do believe the relationship will hold and the likely effect will have been 35 bps or so compared to the long term historical regression line.

This is why I do not believe the Fed will leave the MBS market (with regard to purchases of MBS) on 4/1/2010. No way, no how. A slower ate of purchases, yes, I could see that (and even that will move mortgage rates up 25 bps or thereabouts.

the strategy is simple. drive down mortgage rates enough that even marginal 'homeowners' can refi into a lower or reasonable fixed rate mortgage - thereby preserving the 'hold to maturity' value of the original mortgage in as many cases as possible.

for those who follow the money their approach has been nothing short of despicable.

for those who do not (almost all of the american population) it has functioned as sleight of hand genius.

EvilHenryPaulson wrote:

the new appetite for MBS is today

With current default rates on new FHA loans, my guess is 0 appetite, Unless the rate is priced for very high risk.

EvilHenryPaulson wrote:

total impact has to be at least 150bps, and reasonably up to 250bps depending on what you think the new appetite for MBS is today

My guess is the 'new appetite' is about what my appetite is after a long night of binge drinking.

"what you think the new appetite for MBS is today "

I rather suspect it's like my appetite for breakfast the morning after chasing down a large portion of rancid meat with a fifth of discount tequilla for dinner.

dryfly,

good thing the comments are text-based instead of verbal
otherwise we would have people arguing that we are already slightly over the $12tn US national debt mark, while the bleeding edge people were talking about the $20tn mark when the government takes Fannie Mae and Freddie Mac onto their balance sheet with full faith and credit

What are the immediate consequences if the Fed just decides to keep propping up the mortgage market? I really can't see why they would stop pretending and extending anytime soon when it's obvious to everyone what's going to happen when they pull out.

Oxtail wrote:

What are the immediate consequences

Gold to $2000?

TJ and The Bear wrote:

Oxtail wrote:

What are the immediate consequences

Gold to $2000?

Depends on how much they monetize. If a lot then 'yes' $2K or higher possible.

However 'pulling out' is some pretty heavy deflationary pressure - could push gold a lot lower, along with everything else. Depends on what happens to the supply & velocity of the money out there...

Time for some :nightmares:...

Blackhalo wrote:

What happens when the start selling the MBS?

oh no, you can't sell MBS. MBS are only for buying. Like the Hotel California

"we'll all be kidnapped to serve as elite economic advisers to the new rebel governments"

I wanna play Han Solo....I always had to play Luke cuz I'm blonde.

"What happens when the start selling the MBS? "

Yeah...well...the thing is, selling implies a buyer....so....since there won't be any, we don't have to worry! Party on Wayne!

Nytol.

Blackhalo wrote:

What happens when the start selling the MBS?

Even more deflationary pressure - they pull money out of circulation and back into the Fed [reduce both supply & velocity] and replace it w/ basically illiquid paper [MBS]... should push prices for stuff lower.

TJ and The Bear wrote:

So far the broad economy has only seen deflation, yet gold soars.

We aren't seeing 'deflation' now - the current policy is strongly inflationary [increase in money & attempts to jack velocity as well]... gold along w/ stocks have been the prime beneficiaries. Homes & MBS - not so much. The inflation has been into liquid assets and NOT into 'real economy' stuff like factories... or even into real estate... not liquid enough.

for real...

TJ and The Bear wrote:

So far the broad economy has only seen deflation, yet gold soars.

Plus gold is trustworthy. Vs. the Dollar/T-Bills which is depreciating it's trust. It may take some time to rebuild that trust, if the Dollar survives.

Comrade Misean is Dope wrote:

Yeah...well...the thing is, selling implies a buyer....so....since there won't be any, we don't have to worry!

Price can fix, any issue!

dryfly,

I disagree. TPTB might be executing extraordinary measures to ignite inflation. But I don't see proof of inflation, other than assets being bid up by speculators and financial firms with first access to the printed money. In the real economy, I see more convincing signs of deflation than inflation.

As for the actual supply of money and credit, I certainly don't have the ability to count it, so I have to trust somebody who reports the numbers. My take from what I see is that the supply of money and credit is shrinking, and it shows in what you see in the real economy.
And that means deflation will rule in all things not being bid up merely by speculators jacking each other off.

ShortCourage
Federal Reserve flow of funds will have more data out soon for Q3, otherwise you can track several series of credit. household credit has been contracting at absolute record rates.

dryfly
aah, but is it really inflation where prices are sustainably higher or just a wild swing with a known downward trajectory locked in. Happy Hour is not deflation, and this commodities rally hasn't been from devaluation

dryfly, we agree. From the numbers I've seen reported, the government money (credit) creation is barely keeping up with credit contraction. Most likely it is not keeping up, becausee much of the destruction of money via bad debt is being hidden.

So from a monetary-only standpoint, we have deflation, don't we?

dryfly wrote:

I think the next leg down occurs when the Fed can't buy the UST & MBS and we have in effect a visibly failed treasury auction

Nah, that's the BIG ONE.

The next leg down is the stock market headed south again, UE exploring new heights, etc. I expect this to hit within the next 90 days, whereas the BIG ONE is somewhere in the next 2 years.

dryfly wrote:

I'd say folks are trying to move out of dollars - its a 'forex' devaluation.

Yes and no. Have you seen Kitco's gold movement breakout? They use a basket of currencies to discriminate between pure dollar related movements and buying/selling pressure (i.e., gold against all currencies). Most of the moves lately have been the latter.

Nikkei up big is an example of money-creation (their just-announced QE) driving up speculator-driven assets despite overrall deflation. That's what I see here too.

In fact, the money-creation is driving up only certain assets and is actually starving the real economy as financial players refuse to invest in the real economy when they can get risk-free returns in Treasurys and stock gains via PE expansion, and via profits from cost cutting. I'm betting the result is a depressionary spiral, rather than a hyper-inflation. Not likely to get hyper-inflation here with the massive overcapacity worldwide and the lack of wage power stateside.

dryfly wrote:

I think a visibly failed auction happens sooner than that

Wow, dry, you're more pessimistic than I am. That's hard to do. Now I gotta wonder...

BTW I'm not saying that either a deflationary spiral or a hyper-inflation are the most likely cases... Just that the former is more likely than the latter.

HollywoodHack wrote:

the commodities bull

IMO you have to distinguish between gold and all other commodities. The latter has been a devaluation story entirely; gold was, but has started to significantly disconnect.

ShortCourage wrote:

In fact, the money-creation is driving up only certain assets and is actually starving the real economy

Absolutely it is - no argument here. Who in their right mind would lock into illiquid assets in this environment? Churn baby churn.

Goodnight all. I've been busy and it's been a pleasure to join the group again.

There is so much short termed paper that it won't require a failed auction, just a failure to roll over. That will leave no one to blame.

Did CS plateau and rise because of devaluation? That's odd, I thought the majority of the upward force was because of restricted supply (only about 1/3rd due to increased demand via low mortgage rates/downpayment, and FTHB)

Not Irving Fisher wrote:

I don't think either will occur... Just had to be said.

If you read the Sprott reports they've pretty much laid that idea to rest, too.

I suspect most of the attorneys are sound asleep with visions of sugar-plums dancing in their heads, but just in case, this will brighten their night.

...and everyone else's as well.

TJ and The Bear wrote:

IMO you have to distinguish between gold and all other commodities.

I don't. In fact I see EHP's case where oil is the most likely exception. Gold is behaving more like the stock market. IMHO.

dryfly wrote:

... failed auction, Volcker like rates, pay go... in that order.

Real Estate tanks and the banks become rezombied with 5% 30y loans in a 12% world.

dryfly wrote:

Gold is behaving more like the stock market. IMHO.

If you chart gold vs. oil vs. stocks vs. the dollar index it paints a different picture, IMO. Always room for interpretation, of course, but that's my take.

race to the bottom?
The USD is above its pre-crisis lows
devaluation does not explain the present
what's happening is a big global momentum trade.
It started with emerging markets in November '08.
Then foreign CBs started replenishing their UST reserves around January right around when the Fed started buying MBS, so mega-swing
Which liquified markets
Both sides piled into commodities not knowing what else to do
and now is the awkward moment when oil falls in order to clear the market, regardless of what the FX market commands
which not only will have many direct impacts, but will indirectly pour cold water on any investor that was sold the BUY EM!!!! story, DECOUPLING, LEAD THE US OUT OF RECESSION!!!!, which causes them to flee like rats from a ship. which causes foreign CBs to liquidate their UST holdings to maintain currency stability. which they may not rebuild next time since trade levels are so low. which would set the stage for a true inflationary/devaluation scenario. also place a lot of USTs in 'weak/hot hands' creating an exciting set of yields

TJ and The Bear wrote:

Given the short maturity of our debt, wouldn't that immediately put the US in default anyway? If we rolled everything into those high of rates the debt service would exceed federal revenues.

They'd 'extend & pretend' and also print like crazy - sell the equivalent of 'perpetuities'. Sort of like 'pick a pay plan' for treasuries... interest only & such. That and just plain print - even if it meant the gov't took over the Fed to make it 'possible'. It would not be pretty and we'd be [and feel] a lot poorer.

We won't default - defacto default sure - not a nominal default. Well not without a revolution first anyway.

TJ and The Bear wrote:

Not to mention every MBS in the world goes straight to zero. Might as well just plant RIP epitaphs in the front lawns of the GSEs, FHA and GNMA, too.

Put the epitaphs in our own front yards - we own them now.

EvilHenryPaulson wrote:

. which causes them to liquidate their UST holdings to maintain currency stability.

A good share of those T's (that the Fed didn't purchase) are bulking up bank reserves right now -- how's that for back-door financing? -- and will definitely be liquidated as CRE crumbles.

Safe as Treasuries? I don't even want to calculate the NPV for recent long bonds when rates jump.

EvilHenryPaulson wrote:

I'm not saying devaluation or inflation won't happen. It's just not yet. Too early.

I'm short oil too, but I'm not as confident as you on the timing. I think you have the fundamentals of the market nailed down. It's just that we don't have rational markets, or even semi-rational markets anymore. It's a liquidity slosh. If things get out of hand, a dollar drop could easily ramp nearly everything at once. That would be the ultimate short killer. I'm not leveraged or greedy so I can wait out the volatility, but this is CR where everyone is above average. The market gets made by the other 99%.

Domestic savings can't make up for a complete cut off of Chinese purchases. However it can pick up the slack created by a moderate reduction.

EEngineer wrote:

It's just that we don't have rational markets, or even semi-rational markets anymore.

I think that's an understatement
~splat

Not Irving Fisher wrote:

Domestic savings can't make up for a complete cut off of Chinese purchases.

If the Chinese end their purchases, who is going to buy the goods from their entirely export driven model ?
~splat

1) Volcker like rates is how Volcker bailed out the major insolvent banks from the 70s after Latin America couldn't keep pace with inflationary US policies that were used to fund the Vietnam war. The goal wasn't to defeat inflation, it was to provide banks with returns when everything else failed
2) back of the envelope calculation from a while ago is that the US could not pay an average 5% yield on its outstanding debt because that would breach the 20% of budget barrier providing tax receipts as a % of GDP and GDP are stable
[ taxes as % of GDP have ranged from 15-18% in the USA. Assume US GDP static at $14.2tn, and 20% of GDP as tax receipts >> $2.84tn federal government revenue >> states fail when 20% budget goes to debt servicing, so no more than $568bn in debt servicing >> at 5% average yield, that supports $11.36tn which has long been surpassed. same numbers for 4% yield are $14.2tn, conceivably next year. 4%! We are talking serious trouble. ]

How much short paper? Energyecon has the answer.

HollywoodHack wrote:

last time I checked, kroner (or whatever they use there) isn't the world's reserve currency, and certainly wasn't such with dominance when the bull started circa '02. how many tiny european countries are sitting on tons of oil, anyhow? or were sitting on it, at least...

name me one currency that oil didn't rise in, or one country where inventories of crude and distillates has not risen (let alone the storage in tankers offshore)
I'm not bullshitting you

EEngineer

not your fault (or credit

just reality of watching the lies about the numbers

4 week average this

SAR that...and even SAAR that

the pumping of black friday on tv radio all that bs

and the prez and congress unable or unwilling to pull out of the orbit of the bankstas

the corruption is rampant...its the corruption

Not Irving Fisher wrote:

That is the point... The Chinese can't/won't end puchases.

Yes they can. There is a cost:benefit to everything, and when exports are in the tank and people are rioting because of inflation -- it makes sense to cut back on the newly more expensive export subsidies and take the edge off the rioting

Excellent discussion tonight, guys. Always fun to play with the varsity.

Last comment before bed...

Why do the American people get robbed blind in broad daylight by TPTB?

Here's what they're paying attention to (headline and most popular stories on CNN):

Life for Pro Athletes Wives no "fairy tale" (re: Tiger Woods)
White House Party Crashers to Testify over Security Breach
Model's Death Highlights Surgery Risk

American media is not subscriber driven
It's advertiser and therefore corporate driven, all they want it eyeballs and to not offend any potential advertisers

EvilHenryPaulson wrote:

Yes they can. There is a cost:benefit to everything, and when exports are in the tank and people are rioting because of inflation -- it makes sense to cut back on the newly more expensive export subsidies and take the edge off the rioting

But that's the thing, they're artificially, which may be too strong a word, keeping their economy going by buying as much worthless paper as possible, knowing that the US & Euros are just going to use that debt to buy large volumes of Chinese goods. Thus keeping their economy going and round it goes for another cycle.

I wouldn't doubt for a minute the skills that the communist party in China can keep the country very much under control, they're extremely effective at quelling unrest. But something really significant would need to happen outside of China for their export base to drop off precipitously.
~splat

EHP
ëxplain Norway" he wrote.
maybe it's because they haven't reached Peak Oil yet..
spoke at length with a petro-geologist who works in Norway...
said there are fields they haven't tapped yet, until 3 years
they didn't have the tech to go that deep...

ShortCourage wrote:

But it seems like a very large component of gold's attraction today is a lack of trust in governments and institutions, not just in the U.S., but worldwide. This is very different than the speculative alure of stocks. Folks have lost trust not only in major currencies due to QE, and unsustainable debt. They've lost trust in corporations, banks, investment advisors, etc.. If gold was easier to obtain, with lower fees, I bet there'd be a massive move into it. People don't trust the government, and they don't trust the financial entitiies any more. How could they?
...
so you are saying the world is turning Chinese?

Duke of Con Dao
They had the strongest currency and economy, yet oil storage increased and so did price
My point was, that cannot be explained by devaluation

ShortCourage wrote:

I mean there are plenty of pissed off citizens who realize that the wealth confiscation game is just beginning, due to all the bailouts and promises made.

It's funny to me that people see this as a "wealth confiscation game" when at it's essence the entire process has been a desperate attempt to preserve accumulated wealth at the expense of current productive power. Where's the gratitude--they're propping up asset values at all costs.

keynes had a good line about that whole temporary thing...

anyhow, any j6p knucklehead with a scottrade account can load up on hundreds of USO calls in seconds, and thousands of knuckleheads in Stamford can do it with tens of thousands.

does the power of that world perhaps trump the mechanics of almighty fossil fuel consumption and storage? maybe.

Yalt wrote:

It's funny to me that people see this as a "wealth confiscation game" when at it's essence the entire process has been a desperate attempt to preserve accumulated wealth at the expense of current productive power. Where's the gratitude--they're propping up asset values at all costs.

I concur

Rob Dawg wrote:

anyone have a pool yet on how many on CNBC
will be canned?

Does it matter? Nobody watches it anyway. http://pragcap.com/wp-content/uploads/2009/07/nielsen.jpg
...
wow, thanks. I had no idea they've experienced such a drop off. I can't watch that show for more than 25 minutes
before nearly barfing. I blame it all on finding CR in July of '08!

The stock bubble isn't deliberate policy, though the pacification effect of the restoration of paper 401(k) values is no doubt welcome.

Policy is quite simply to avoid a deflationary collapse by maintaining a steady and limited growth in broad money supply. That requires massive infusions of liquidity to offset money destruction elsewhere. What happens to prices as a result is not Bernanke's concern--he's quite happy to leave that to the vicissitudes of the marketplace.

I think EHP's saying this more clearly than I can....

TJ and The Bear wrote:

gold was, but has started to significantly disconnect.

Other commodities are consumption based. Unless there is a real economic activity, their value is at risk. Gold demand is just a hedge vs. global QE, so the disconnect seems warranted.

gdp and debt are intertwined at times
right now they are trying to maintain the stock of debt/wealth outstanding, in order to sustain current consumption and GDP
if they don't, then there is a deflationary spiral where lower assets > lower collateral > lower debt > lower consumption > lower assets (because inflation goes negative, so the real interest rate on all debt increases right at a time when demand is in the toilet)
so I assume they are trying to follow the Japan lead in managing a balance sheet recession
however, you may have noticed that the experts in Japan can't manage it so well when the rest of the world doesn't supply domestic imported growth in exchange for exported goods&services -- which was only a supposition from last year that has turned out quite well
so I don't see 2 decades of extend and pretend
and I don't see a reversion to fantasy bubble land, we are too far outside the maintenance range even if we had a bubble bigger than a global housing bubble
even interstellar traders are doubtful to save us from societal balance sheet reconciliation
I'm open to changing my mind, but until something big comes along I strongly believe we are in the end stage of a credit bubble of mammoth proportions

Yalt wrote:

Wasn't that the point behind Mishkin's distinction between "credit boom bubbles" and "pure irrational exuberance"?

I think so, more or less. One is self-contained, with the redistribution known at decision time ($5 for beanie baby). The other is pervasive and results in unexpected redistribution down the road ($5 for beanie baby paid with loan, loan only gets $2 repaid when beanie baby prices crash)

The only quibble I have with your analysis is that in your second paragraph

right now they are trying to maintain the stock of debt/wealth outstanding, in order to sustain current consumption and GDP

I think you maybe have reversed goals and means: they are trying to sustain current consumption and GDP so as to maintain the stock of outstanding wealth.

It's really a question of sociology I suppose. Some people see the Fed and Treasury and whoever else we mean by "they" in sentences like this as caretakers of the national economy; I see them as representatives of the propertied classes tasked with the goal of maintaining class privilege.

the fed can control debt outstanding, not consumption. that's why I said they were maintaining the debt/wealth stock. they are indirectly maintaining gdp/consumption through the circular loop. which is their goal.
nothing really insightful into my sociology about it, just speaking directly

Blackhalo wrote:

If the Dollar falls far enough, and the Chinese try to keep pace... Some Chinese will start to get hungry...

I don't think the dollar will fall fast enough relative to the global aggregate currency for that to happen. Instead I see a lot of hot money, busted out of its first go at EMs and commodities. will go into agriculture, set prices high, not because of any crop story but because they know they can set the price and the pegging countries have surpluses they can pay for it with.
this hasn't happened in the past because there were always more lucrative targets. we're on our way to some nitty gritty stuff. squeezing yields and VIX and any other premium has not been enough, the herd of hot money is like a surplus seeking herd of marauding bandits. or will become more so. it won't have to start out as a conscious effort. an ant-like / crowd sourced decision making based on initially scattered attempts that through many iterations end up homing in on anyone with some cash to spare. the pegs will be broken if not surrendered. should be something to watch over 2010-2011

Well, going by the futes, that'll be roughly 4 seconds after the open tomorrow!

C

EvilHenryPaulson wrote:

they are indirectly maintaining gdp/consumption through the circular loop. which is their goal.

Yup.

Ahoy, CDS widening to port cap'n... Port 'n aft, actually cap'n. Port, aft 'n starb'd cap'n...

Daily Wideners
Name 5Y Today Daily Chg Weekly Chg 28 Day Chg
Rep Venezuela 1352.10 102.06 236.29 236.52
Argentine Rep 1036.51 10.97 111.00 -7.26

via markit.

Mid-range kaboom forecast, occluded, occasional drivel, but with a strong chance of evaporating liquidity.

C

EvilHenryPaulson wrote:

Except oil is not a cooperative financial instrument, it has real costs that drive production and supply together. The price was/is too high in every market, and so inventories will end up dumped on the market because producers certainly haven't preemptively cut output while prices are up. Where the hyperinflation story goes wrong is with every country in the world operating a peg and that ends up absorbing/importing that inflation you expect to show up in America now. This is not just a story I'm inventing now to fit my views, it's exactly what I've been saying on here for over a year now. I didn't think the market bubble(s) would last this long in duration, but everything has played out as expected and in sequence so far. The market is confused temporarily, it will fall in line behind me like it has before

EHP: Really good reading this morning that helps me understand. I have a question and wonder if you can tell me if this possibility is valid or not.

Can you see a scenario where Saudies/OPEC un-pegs oil to the dollar then opening a window for the Chinese to do the same with their currency and the dollar literally then floats? Given that commodities are the last safe haven, oil/gold/dollar relationships, would this then crash gold and the dollar??

This is really complex, I don't think the Chinese are being truthful with their numbers (as usual). They steadfastly have refused to release how much oil storage capacity they have. They have by double in dollars and through infrastructure improvements applied direct stimulus to their economy. But they also have overcapacity in mfg. Baltic Dry Index and airline cargo data reveals consumers worldwide are becoming more prudent, saving money and retiring debt (if they can).

The commodities market is the bubble IMO and then by extension the FX markets. Credit market are still frozen, particularly the further down on the trickle down you are. I also noted that triparty reverse repo the fed announced as a 'trial' announced the 3rd party as money market mutual funds which is over a $1T market. After Lehmans, the money markets broke the buck which caused the credit crisis. Is this not just asking for another similar event?

Its terribly interdependent and complicated. My apologies if these are irrational and stupid questions.

sdtfs wrote:

1,138,070 millionaire households living in homes valued under $300,000.

How many of them are mobile homes?

volker the viking wrote:

wasn't it strange that the Tiger Woods thing came out just in time to distract everybody's attention away from the 30,000 troops to Afghanistan

You think he took one for the team? I doubt it.

But I do find myself fascinated beyond belief by the story. It's almost like I can see the thing unfolding, from the "discussion" to the dismissal, to the swinging golf club and the swerving car.

New market for investors: Get your pirate ETF here! The anarchists see opportunity.

Oh what a world we live in today.

Somali sea gangs lure investors at pirate lair
| Reuters

The gangs have made tens of millions of dollars from ransoms and a deployment by foreign navies in the area has only appeared to drive the attackers to hunt further from shore.

It is a lucrative business that has drawn financiers from the Somali diaspora and other nations -- and now the gangs in Haradheere have set up an exchange to manage their investments.

One wealthy former pirate named Mohammed took Reuters around the small facility and said it had proved to be an important way for the pirates to win support from the local community for their operations, despite the dangers involved.

Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 'maritime companies' and now we are hosting 72. Ten of them have so far been successful at hijacking," Mohammed said.

"The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials ... we've made piracy a community activity.

Pirates and squids and gold.

It doesn't get any better.

The has Bernanke in a "Buy & Hold" position, for now.

When the extent of the fraud on Wall*Street is exposed, does NYC turn into Buffalo, economy-wise?

good morning all

Ford Foundation to Assist Public Benefit Programs - NY Times

Please press #1 for Tiger Doom in Thai, Press # 2 for Climate Doom in Swahili, or #3 for Economic Doom in Esperanto

Time's up on Benjamins 15 minutes.

quickie wiki:

Esperanto - Wikipedia, the free encyclopedia

How low can you go... how low can you go...........!?

JD<
You might want to take a nap...

During the Section 8 Years, it was as if various cabals of thieves were allowed to plunder @ will, can you imagine the wizards of Wall*Street watching all the money being made with Haliburton & Blackwater by the plunderers in charge politically, saying to themselves:

"it's open season on graft, let's get it on... and lead by example"

It may be useful for people to understand that there are 1,138,070 millionaire households living in homes valued under $300,000.

Don't get too worked up. There are no reliable data sets that accurately cross-tab net household assets ("millionaire households") against the value of U.S. homes.

In fact, there are no reliable data sets that accurately estimate the value of U.S. homes against any demographic.

Nobody collects this data. There are small surveys that ask people "How much money do you have?" and "What's your home currently worth?" An honest academic researcher wouldn't rely on them.

,rad Gnome,

I like to ride nightmares in the daytime.

(CBS/ AP) (CBS) A company paid more than $8 billion by the United States military to feed soldiers in Iraq, Kuwait and Jordan has been charged with fraud.

snip/
Agility/PWC has had close ties to the Pentagon over the years. In July 2008, Dan Mongeon a former Army general who ran operations at the Pentagon’s Defense Logistics Agency became the President and CEO of Defense and Government Services for Agility/PWC. The company has billions of dollars in contracts with the Pentagon.

It’s unclear whether or not the fraud charges against Agility/PWC will affect the company’s other government contracts. Earlier this month, Agility/PWC signed a $50 million food contract with US AID.
Company Charged in $8B Troop Food Fraud - CBS News

---War is a racket.

good morning

Looks like Nov. retail numbers are coming in, and they are not pretty.
No holiday cheer at the malls.

Retail Sales - Slow Start to Holidays as Retailers Post Weak Sales - CNBC 

justaskin wrote:

ow else can you explain out Afghanistan policy?

Preparation for an Israeli strike on Iran with a government take over the banking system and massive currency devaluation?

Yalt wrote:

Some people see the Fed and Treasury and whoever else we mean by "they" in sentences like this as caretakers of the national economy; I see them as representatives of the propertied classes tasked with the goal of maintaining class privilege.

Hand discounted loans to bankers to increase employment of workers. Does anyone still believe that nonsense?