Rolling US Economy Into The Shitbin Thread

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http://bigpicture.typepad.com/comments/2007/10/more-inflation.html

El Tomboto, Thursday, 18 October 2007 23:44 (twelve years ago) link

personally I'm applying for a civil servant position ASAP

El Tomboto, Thursday, 18 October 2007 23:45 (twelve years ago) link

Just FYI, during the 1930s depression, many civil servants were paid with vouchers rather than cash, because local governments were unable to collect property taxes and their receipts fell into the shitbin.

Aimless, Friday, 19 October 2007 00:12 (twelve years ago) link

Economy's doing poorly enough as it stands, why do we deliberately want to roll it into the shitbin?

Abbott, Friday, 19 October 2007 00:14 (twelve years ago) link

Because that way Hillary can rescue us all.

Dandy Don Weiner, Friday, 19 October 2007 00:17 (twelve years ago) link

lol property taxes

El Tomboto, Friday, 19 October 2007 00:18 (twelve years ago) link

shitbin's a great word, BTW.

Dandy Don Weiner, Friday, 19 October 2007 00:20 (twelve years ago) link

you been loving my thread titles lately

El Tomboto, Friday, 19 October 2007 00:26 (twelve years ago) link

i came to this country some time ago with little more than a crippling debt burden in GB Pounds and the shirt on my back. i used to have to send back $1,200 each month to pay off my UK debt, and now I'm sending back over $1,400 to cover the same amount of debt repayment. that's two and a half thousand dollars disappearing from my tiny disposable income every year, for no explicable reason. i *heart* the decline of the US economy.

Roberto Spiralli, Friday, 19 October 2007 00:27 (twelve years ago) link

anyway why start this thread now because the bit where ritholtz points out that domino's pizza can't print new menus fast enough to keep up with inflation was pretty fucking amazing

I wish rasheed wallace was still around to show us the latest and greatest exploding bubble blogs

El Tomboto, Friday, 19 October 2007 00:28 (twelve years ago) link

wow Roberto that was some shitty timing, that sucks

El Tomboto, Friday, 19 October 2007 00:29 (twelve years ago) link

This was in the paper today:

Mortgage defaults

Hit an annual rate of 1.5 million in September. That compares with 900,000 last year from fewer than 800,000 in 2005. At the current rate, more than one million Americans will lose their homes to foreclosure, making this the worst housing recession since the Second World War.

Housing starts

Sank to a 14-year low of 1.19 million in September. Starts are a vital economic engine, creating jobs and growth as people stuff their homes with sofas and TVs. Starts peaked at 2.3 million in early 2006, and the decline will be a drag on the rest of the economy until the slide stops.

Mortgages

A quarter of the roughly 50 million U.S. home mortgages are subprime. That's seven times the number of high-risk mortgages there were in 2001. That means that many more marginal homeowners have mortgages, making it far more likely they'll wind up in default.

House prices

Fell 3.2 per cent in the second quarter. Prices are falling faster and more broadly than they have in decades, according to the closely watched Case-Shiller index.

http://www.theglobeandmail.com/servlet/story/LAC.20071018.IBUSECONOMY18/TPStory/Business

everything, Friday, 19 October 2007 00:29 (twelve years ago) link

where the hell is rasheed anyway?

economic blogs I read (they're all fairly liberal):

http://calculatedrisk.blogspot.com/
http://angrybear.blogspot.com/
http://delong.typepad.com/sdj/
http://www.marginalrevolution.com/marginalrevolution/
http://bigpicture.typepad.com/
http://www.janegalt.net/

Dandy Don Weiner, Friday, 19 October 2007 00:37 (twelve years ago) link

In regard to inflation, in the USA during the past three years inflation has been soaring - but almost entirely in the housing sector. The fact that people are encouraged to see their houses as investments rather than as expenses doesn't mean that skyrocketing housing costs weren't inflationary. They were.

As the bubble market bursts, I predict a recession with an extra added bonus of inflation running close to 10% - before the end of 2008. As it has for the past 30 years, the official CPI will understate the real inflation rate. It was rigged under Reagan so that government entitlement programs indexed to the CPI would not increase at the true pace of inflation.

If Bush continues to shovel shit on the dollar right up to the end of his term in January 2009, the inflation rate could hit 15%-20% by 2010.

Aimless, Friday, 19 October 2007 00:55 (twelve years ago) link

There are some good economics articles put up here as well:
http://www.VoxEU.org

stet, Friday, 19 October 2007 01:02 (twelve years ago) link

Which shit on the dollar are you referring to?

Dandy Don Weiner, Friday, 19 October 2007 01:02 (twelve years ago) link

As the bubble market bursts, I predict a recession with an extra added bonus of inflation running close to 10% - before the end of 2008.

lol

aaaaaaaaaaaaaaaaaaaaaaaaaa, Friday, 19 October 2007 06:11 (twelve years ago) link

this is why i live in canada!

J0rdan S., Friday, 19 October 2007 06:13 (twelve years ago) link

oh wait.

J0rdan S., Friday, 19 October 2007 06:13 (twelve years ago) link

Guys, this is a good time stay in academia right?

Catsupppppppppppppp dude 茄蕃, Friday, 19 October 2007 11:51 (twelve years ago) link

It's a good time to learn a European language.

Nubbelverbrennung, Friday, 19 October 2007 13:33 (twelve years ago) link

Prime shit examples:

When Bush was elected in 2000, the federal budget was in surplus and the national debt was being paid down. Had this state of affairs continued, as projected, it would have led both to lower interest rates and a strong dollar, together. Instead, Bush submitted a series of enormous tax cuts to the Republican-controlled Congress and lobbied them through. Immediately, the CBO's projected budget surpluses turned to projected deficits for the next decade.

Bush also initiated a war of choice, not necessity, in Iraq. This war has already cost well over $700 billion. Yet, Bush insisted on making his tax cuts permanent. Overall, the national debt has increased under Bush by about $2 trillion in seven years. This represents a difference of about $3 trillion of debt from what was projected at the start of his first term.

Because, due to Bush's tax cuts and other policies, the Federal government was in a far weaker position to stimulate the economy when the recession started after 9/11, almost the entire stimulus was delivered via lower interest rates. Because these rate cuts were artificial, and not based on a stronger dollar, this stimulus not only inflated the current housing bubble, but it also undercut the dollar even more than the ballooning national debt did.

Now the dollar is at an all-time low against the euro and the canadian dollar. However, the incomes of the top 10% of American households have increased at a good clip, while the lower 50% of households have seen a decrease in income after inflation. This is largely thanks to Bush's shitty policies. I expect more of the same mismanagement until he is gone.

Aimless, Saturday, 20 October 2007 18:36 (twelve years ago) link

I agree with everything you've just said. You're predictions still seem a tad extreme on the downside though, if I may so.

aaaaaaaaaaaaaaaaaaaaaaaaaa, Saturday, 20 October 2007 18:50 (twelve years ago) link

i wonder if income inequality will ever arrive as a political issue in this country. americans tend to not begrudge the rich - so it'll have to be more of a "for everyone's good" type of angle. no?

jhøshea, Saturday, 20 October 2007 18:54 (twelve years ago) link

I remember the 1970s and early 80s quite well. Back then people couldn't belileve it, either. Bush has done a bangup job of recreating many of the same policy errors under Johnson and Nixon that led to raging stagflation back then, except the underlying economy is now weaker than it was in the 1970s and the oil shocks we are likely to get are not political, as when OPEC was formed, but structural.

Oil will exceed $100/barrel some time this winter. The ever-weakening dollar will lead to smaller profit margins and rising retail prices on all imported goods (which means almost everything we buy in the USA). Transport costs will rise with pil prices. Stock prices will erode along with profits. With so many savings tied up in stocks and home equity, consumer spending will be crunched, and personal debt and bancruptcies will rise like a tide. Businesses will retrench and unemployment will rise. No end in sight.

I hope I am wrong.

Aimless, Saturday, 20 October 2007 19:07 (twelve years ago) link

Anyone want to join my modern-day James Gang? We shall ride across the lower Midwest, robbing and pillaging.

milo z, Saturday, 20 October 2007 19:09 (twelve years ago) link

sounds fun

jhøshea, Saturday, 20 October 2007 19:13 (twelve years ago) link

Sorry, I don't want to relocate. But this scheme sounds ripe for franchising.

Aimless, Saturday, 20 October 2007 19:14 (twelve years ago) link

Oil will exceed $100/barrel some time this winter. The ever-weakening dollar will lead to smaller profit margins and rising retail prices on all imported goods (which means almost everything we buy in the USA). Transport costs will rise with pil prices. Stock prices will erode along with profits. With so many savings tied up in stocks and home equity, consumer spending will be crunched, and personal debt and bancruptcies will rise like a tide. Businesses will retrench and unemployment will rise. No end in sight.

I hope I am wrong.

-- Aimless, Saturday, 20 October 2007 19:07 (14 minutes ago) Link

The coming of $100/barrel oil is not Bush's fault. It's yours and mine and everyone else's for using too damned much energy. I agree Bush could and should have done a lot more with policy to encourage energy efficiency, but there's little he could have done to stop oil's eventual rise to that price level.

Hurting 2, Saturday, 20 October 2007 19:26 (twelve years ago) link

Part of the pricing of oil represents the weakness of the dollar. This hurts the USA more than it does other countries. US citizens are paid in dollars and the US government collects revenue in dollars, so they are stuck. EU countries can use euros to buy increasingly cheap dollars, so they don't see the same rise in prices as we do. The weakness of the dollar is mainly Bush's fault.

Aimless, Saturday, 20 October 2007 19:31 (twelve years ago) link

The US also uses way more oil than other countries.

Hurting 2, Saturday, 20 October 2007 19:33 (twelve years ago) link

he could have done to stop oil's eventual rise to that price level.
Not starting a war in Iraq would definitely have helped here.

stet, Saturday, 20 October 2007 19:57 (twelve years ago) link

arrgh, if that won't work then
http://calculatedrisk.blogspot.com/2007/10/imf-mortgage-reset-chart.html

El Tomboto, Monday, 22 October 2007 17:47 (twelve years ago) link

tombot u r freakin me out

gff, Monday, 22 October 2007 17:50 (twelve years ago) link

i hope my small apartment + modest savings plan + job in "information services" is enough to weather the shitstorm, if it comes. i got myself out of credit card debt a few months ago, at least

gff, Monday, 22 October 2007 17:53 (twelve years ago) link

well if you can hold down a job and don't have to worry about an ARM reset you should be okay, it's the homeowner with kids and a subprime loan and two cars who ought to be shitting themselves

El Tomboto, Monday, 22 October 2007 17:58 (twelve years ago) link

apart from some student loans and binging on credit cards over a few years, i'm kind of debt phobic.

which has actually made me lose out over the past several years, i realize, since i pay for EVERYTHING with a debit/check card... i could have just paid that balance on a credit card with some rewards scheme and has some air miles or something

gff, Monday, 22 October 2007 18:00 (twelve years ago) link

rolling gff personal finances into the shitbin thread, ha

gff, Monday, 22 October 2007 18:01 (twelve years ago) link

This will give you a boner Tombot

http://nymag.com/guides/money/2007/39952/

Dandy Don Weiner, Wednesday, 31 October 2007 11:30 (twelve years ago) link

the economy increased by 3.9% this quarter! bull market forever, baby. economy's better than ever. golden age.

yet me and so many people I know are getting laid off next month. granted we're all in the writing/design field, but urhhhhh. gggg.

burt_stanton, Wednesday, 31 October 2007 14:58 (twelve years ago) link

http://nymag.com/guides/money/2007/catastrophist071105_560.jpg
http://nymag.com/guides/money/2007/catastrophist071105_2_560.jpg

^^^ lol

most of that guy's scenario is not really news to regular bigpicture/CR readers I don't think. But #5, the "we don't pay attention" thing, yeah, well, evidently the awareness campaign is underway, but hell if the big players are paying attention.

He also leaves out the approaching demographic catastrophe as millions of inexperienced thirtysomethings and even some late-twenties kids are forced to move into arguably tougher jobs that the boomers have been holding for two decades. Beyond the social security and healthcare costs associated with mass retirement, I don't really know if this generation has the work ethic and definitely not the rolodex to just start filling in and not fuck up royally. too busy updating their linkedin pages.

El Tomboto, Wednesday, 31 October 2007 15:11 (twelve years ago) link

can someone explain what "being upside down on your mortgage" means, in plain English?

Tracer Hand, Wednesday, 31 October 2007 16:14 (twelve years ago) link

essentially, owing more than your home is worth.

Dandy Don Weiner, Wednesday, 31 October 2007 17:10 (twelve years ago) link

also Tombot I'm not going to blame this generation as much as I blame their parents.

Dandy Don Weiner, Wednesday, 31 October 2007 17:11 (twelve years ago) link

isn't that the way people buy homes? by paying for the privilege of a loan?

Tracer Hand, Wednesday, 31 October 2007 17:12 (twelve years ago) link

When you enter into a contract with a bank for a mortgage, both you and the bank assume that the property value will not plummet. The bank doesn't want you to default any more than you want to default. But if for whatever reason you need to sell your home, and you can't get what you owe on it, then you will owe the difference to the bank. And the bank knows that when that happens, you probably will not have enough assets to cover the difference.

Predatory-type loans (which seems like a nebulous description to me) typically compound the problem because they have higher transaction rates (points, etc.)

Dandy Don Weiner, Wednesday, 31 October 2007 17:17 (twelve years ago) link

oh certainly! well played baby boom letting healthcare slide for the 20 years you've owned the electorate

El Tomboto, Wednesday, 31 October 2007 17:18 (twelve years ago) link

yeah Tracer it's also called "negative equity"

El Tomboto, Wednesday, 31 October 2007 17:19 (twelve years ago) link

Not to mention saddling us with ridiculous expectations. Why do I have to be the one to tell my PARENTS "No, I can't make a living doing whatever I want."

Hurting 2, Wednesday, 31 October 2007 17:20 (twelve years ago) link

I know several people who live in homes that cost more than $500K that signed unbelievably stupid loans.

Dandy Don Weiner, Wednesday, 31 October 2007 17:27 (twelve years ago) link

Today the news is telling me the economy is going great - no need to worry. about anything. I'm glad all this mess is finally, somehow, over.

burt_stanton, Wednesday, 31 October 2007 17:28 (twelve years ago) link

I love how the financial press keeps reporting that the subprime crisis is *not turning out to be as bad as we thought* when it hasn't even come near its peak. No one could have predicted the levees wouldn't hold, etc.

Hurting 2, Wednesday, 31 October 2007 17:36 (twelve years ago) link

No one could have predicted that Bin Laden was determined to strike inside the United States!

Tracer Hand, Wednesday, 31 October 2007 18:04 (twelve years ago) link

No one could have predicted that he would use planes as missiles!

Tracer Hand, Wednesday, 31 October 2007 18:04 (twelve years ago) link

Dear US economy,

I love you. Send money. Thanks loads. Ta!

Aimless, Wednesday, 31 October 2007 18:07 (twelve years ago) link

oh certainly! well played baby boom letting healthcare slide for the 20 years you've owned the electorate

Yeah, that's something, among numerous other socio-political phenomena that baffles me. Does that mean that all that "hippies done sold out and became heartless, vacuous yuppies" stuff is true?

dell, Wednesday, 31 October 2007 22:03 (twelve years ago) link

sure, whatever that means.

El Tomboto, Wednesday, 31 October 2007 22:05 (twelve years ago) link

side note: the word "yuppie" did once have a specific meaning. I'm a little tired of it just signifying everyone upper-middle class and below retirement age.

Hurting 2, Wednesday, 31 October 2007 22:06 (twelve years ago) link

how funny will it be when affluent boomers need their money to pay for their own lifestyle instead of being able to just throw it away on their kids' rent and shit?

El Tomboto, Wednesday, 31 October 2007 22:08 (twelve years ago) link

It once meant a specific kind of douchebag, now the term encompasses too many douchebag subcategories.

xp

Abbott, Wednesday, 31 October 2007 22:10 (twelve years ago) link

I agree, Hurting, Abbott...I think that "yuppie" is about as useful a word as "hipster" (or arguably, "hippie"). But, I'm thinking of all the press about baby boomers -> "yuppies" that was the subject of Time and Newsweek, etc., cover stories when I was growing up in the eighties.

dell, Wednesday, 31 October 2007 22:11 (twelve years ago) link

Not all that funny, if it also means my already-rent-paying ass has to start supporting my parents, which is already a situation I have a small reason to worry about (xpost)

Hurting 2, Wednesday, 31 October 2007 22:14 (twelve years ago) link

Yeah but overall pretty funny, right?

El Tomboto, Wednesday, 31 October 2007 22:14 (twelve years ago) link

even that's pretty funny - the last 50 years of not giving a shit about our elders are something of an aberration, no?

milo z, Wednesday, 31 October 2007 22:16 (twelve years ago) link

also funny because my brother is way more successful than me and any duties are going to fall on him. haha

milo z, Wednesday, 31 October 2007 22:16 (twelve years ago) link

gotta get back to my law school applications...

Hurting 2, Wednesday, 31 October 2007 22:17 (twelve years ago) link

This is where repeated viewings of the movie "Disorderlies" becomes inspiration for a lucrative career path, I guess...

So, are there any nurses or people going to nursing school or working towards related professions in this bitch?

dell, Wednesday, 31 October 2007 22:17 (twelve years ago) link

Dollar is now at a 26-year low against the pound after that rate cut. $2.08!

stet, Wednesday, 31 October 2007 22:43 (twelve years ago) link

i'll never save up enough money to move back to the uk at that rate.

Gukbe, Wednesday, 31 October 2007 22:56 (twelve years ago) link

Hurting, when the financial press say that sub-prime is not turning out as bad as expected, what they're really talking saying is: it's not turning out as bad as expected for the big financial institutions. No doubt, a lot more *individuals* are going to start defaulting when they come off teaser rates, but the investment banks have already marked to market the securities backed by them so, in theory, they have no exposure left to them.

aaaaaaaaaaaaaaaaaaaaaaaaaa, Wednesday, 31 October 2007 23:43 (twelve years ago) link

The judge said the church's financial statements, sealed earlier, could be released to the plaintiffs.

Ooooooooh! I want to see these.

Who the hell lawyers for PhelpsCo.?

Abbott, Wednesday, 31 October 2007 23:57 (twelve years ago) link

The weak dollar is also driving up the cost of oil since the leading petroleum nations trade oil in US currency and buy most of their durable goods in Euros.

earlnash, Thursday, 1 November 2007 01:09 (twelve years ago) link

god hates the us economy xp

tremendoid, Thursday, 1 November 2007 01:25 (twelve years ago) link

Dollar is now at a 26-year low against the pound after that rate cut. $2.08!

-- stet, Wednesday, 31 October 2007 22:43 (Yesterday) Link

i have so many unwatched US dvds from the last few months, but they're giving them away.

That one guy that hit it and quit it, Thursday, 1 November 2007 09:34 (twelve years ago) link

when the financial press say that sub-prime is not turning out as bad as expected, what they're really talking saying is: it's not turning out as bad as expected for the big financial institutions. No doubt, a lot more *individuals* are going to start defaulting when they come off teaser rates, but the investment banks have already marked to market the securities backed by them so, in theory, they have no exposure left to them.

I've heard this explanation before, but I'm still not sure it makes sense to me -- how can the holders of those securities know exactly how bad the fallout is going to be when more of the mortgages reset? Like do they know exactly how many people are going to default? What if it's a lot more than expected because other economic conditions are worse than expected?

Hurting 2, Thursday, 1 November 2007 14:34 (twelve years ago) link

The markets sure weren't expecting the UBS writedown this morning. I think it is unravelling worse than expected.

Ed, Thursday, 1 November 2007 14:35 (twelve years ago) link

I added the google DJI chart to the top so we can watch shit meet fan

El Tomboto, Thursday, 1 November 2007 14:41 (twelve years ago) link

today looks like it's going to be pretty exciting

El Tomboto, Thursday, 1 November 2007 14:41 (twelve years ago) link

I'VE BEEN WAITED SO LONG TIME.. THE BEGINNING IS JUST NOW

El Tomboto, Thursday, 1 November 2007 14:46 (twelve years ago) link

This is where repeated viewings of the movie "Disorderlies" becomes inspiration for a lucrative career path, I guess...

Get real fat and become a rapper?

joygoat, Thursday, 1 November 2007 14:47 (twelve years ago) link

A point that I've seen made on some of these goldbug blogs but which still seems pretty OTM is that the stock market actually HAS been falling for the last several years, basically since the summer of 2000, if you measured US stock prices in, say, pounds sterling, or Euros, or gold. The decline of the dollar as meant that even if your stock stays steady, its "actual" (?) value has decreased.

Tracer Hand, Thursday, 1 November 2007 14:48 (twelve years ago) link

It 'as meant, gun'nor, wot wot

Tracer Hand, Thursday, 1 November 2007 14:48 (twelve years ago) link

i.e. http://www.financialsense.com/Market/allison/2007/0430.html

Tracer Hand, Thursday, 1 November 2007 14:50 (twelve years ago) link

So, are there any nurses or people going to nursing school or working towards related professions in this bitch?

i know several people who have switched to nursing/public health/related fields within the past two years or so.

lauren, Thursday, 1 November 2007 14:59 (twelve years ago) link

oil = $96/barrel
dollar = £2.08

has the dollar really fallen eight cents in the past, what, three weeks??

Tracer Hand, Thursday, 1 November 2007 15:51 (twelve years ago) link

No, not quite 3 weeks

http://newsvote.bbc.co.uk/2/shared/fds/hi/business/market_data/currency/img/77+X_SGBPUSD+bbc-big_thick-line+one_month.png

http://newsvote.bbc.co.uk/2/shared/fds/hi/business/market_data/currency/11/12/img/77+X_SGBPUSD+bbc-big_thick-line+three_month.png

Also semantic pedantry, the dolalr can't fall by cents it has to fall by pence. the pounds has gone up by 8 cents.

Ed, Thursday, 1 November 2007 16:06 (twelve years ago) link

Unless a dollar really is worth 92 cents.

Ed, Thursday, 1 November 2007 16:07 (twelve years ago) link

The dollar is even falling against the penny. We're doomed.

Hurting 2, Thursday, 1 November 2007 16:09 (twelve years ago) link

The purchasing power of little kids and grandmas has increased dramatically though.

Hurting 2, Thursday, 1 November 2007 16:10 (twelve years ago) link

Like do they know exactly how many people are going to default?

simply put, it's an educated guess that is mostly based on historical data and complex mathematical formulas.

Dandy Don Weiner, Thursday, 1 November 2007 16:11 (twelve years ago) link

why compare the USD to the pound; as opposed to, say, US's largest trading partner?

The Cursed Return of the Dastardly Thermo Thinwall, Thursday, 1 November 2007 16:35 (twelve years ago) link

because i live in the UK and travel to the US a lot.

Tracer Hand, Thursday, 1 November 2007 16:54 (twelve years ago) link

ah - it was more of a general question actually. i see the two compared alot and wonder why it isn't held up against it's two north american trading partners more often.

The Cursed Return of the Dastardly Thermo Thinwall, Thursday, 1 November 2007 16:58 (twelve years ago) link

even that's pretty funny - the last 50 years of not giving a shit about our elders are something of an aberration, no?

somebody in Suck.com wrote years ago and wondered if the "Greatest Generation" thing was something that boomers came up with so that everybody could now counteract the shit they put their own parents thru for 30+ years, and for the young folks of today not to give them the same decades of shit they themselves gave.

kingfish, Thursday, 1 November 2007 17:25 (twelve years ago) link

The dollar is falling against the penny there is more than 1.2cents worth of copper in a penny.

(In the UK we make our pennies out of steel, but this is also true for pre-1992 UK copper coins)

why compare the USD to the pound; as opposed to, say, US's largest trading partner?

Because the US's largest trading partner (china) pegs its currency to the dollar and it's second largest (japan) does it's darndest to keep itself weak vs the dollar. Euro and Pound free float. Euro is probably the more important measure as the pound is strong as well as the dollar being weak. the Euro is more comperable.

Ed, Thursday, 1 November 2007 17:32 (twelve years ago) link

when the financial press say that sub-prime is not turning out as bad as expected, what they're really talking saying is: it's not turning out as bad as expected for the big financial institutions. No doubt, a lot more *individuals* are going to start defaulting when they come off teaser rates, but the investment banks have already marked to market the securities backed by them so, in theory, they have no exposure left to them.

I've heard this explanation before, but I'm still not sure it makes sense to me -- how can the holders of those securities know exactly how bad the fallout is going to be when more of the mortgages reset? Like do they know exactly how many people are going to default? What if it's a lot more than expected because other economic conditions are worse than expected?

The holders of the securities won't know how bad the fallout is, but the holders will now all be speculative investors, hedge funds, conduits etc. Whatever subprime backed securities were on the bank's balance sheets when the shit hit the fan are being moved off the bank's balance sheets (but obviously, they're having to sell at a loss, which is what all these write downs are). That doesn't mean it can't sneak in the back door, so you might still get the odd unexpected write down, but for the most part the banks will have cut their losses.

aaaaaaaaaaaaaaaaaaaaaaaaaa, Thursday, 1 November 2007 17:52 (twelve years ago) link

so when should i sell all my stocks?

max, Thursday, 1 November 2007 17:54 (twelve years ago) link

Ed, the US hasn't made its pennies out of copper in at least 20 years. I believe they're made of zinc, with a very very thin copper coating.

Tracer Hand, Thursday, 1 November 2007 17:54 (twelve years ago) link

Ed - I'm aware of china pegging it's dollar. but as far as I'm aware, largest trading partner = Canada. Followed by China and then Mexico. Am I wrong?

The Cursed Return of the Dastardly Thermo Thinwall, Thursday, 1 November 2007 18:05 (twelve years ago) link


Canada 47.56 367.87
China 34.34 246.29
Mexico 31.55 227.46
Japan 16.96 137.75
Federal Republic of Germany 12.95 94.78
United Kingdom 8.57 70.94
Korea, South 6.78 55.28
Taiwan 5.85 42.44
France 5.49 45.56
Brazil 4.55 32.36

remy bean, Thursday, 1 November 2007 18:06 (twelve years ago) link

Isn't the US dollar at something like a 20-year low against the Canadian dollar too? What difference are you trying to tease out?

Tracer Hand, Thursday, 1 November 2007 18:06 (twelve years ago) link

Err. headers should be ||Country|| ||billions of dollars traded in August 07|| ||Billions 2007 to date||

remy bean, Thursday, 1 November 2007 18:08 (twelve years ago) link

Try 50 year! And a small distance from a historical record.

xpost

The Cursed Return of the Dastardly Thermo Thinwall, Thursday, 1 November 2007 18:14 (twelve years ago) link

So it's like, the dollar is low by any measure.

Tracer Hand, Thursday, 1 November 2007 18:17 (twelve years ago) link

Well, when your currency reaches parity with your largest trading partner - when it was 1=.65 a matter of years ago - it should really set off a good deal of reevaluation of the overall nature of business between the two. It's sort of causing chaos in Canada - many businesses no longer being able to compete on the merits of a weaker dollar alone, exports way down and all sorts of crazy pricing discrepancies setting off a tidal-wave of cross boarder shopping. it's the largest trade relationship in the world, if I'm not mistaken, and a sudden reversal of currency value I think should merit more evaluation.

The Cursed Return of the Dastardly Thermo Thinwall, Thursday, 1 November 2007 18:19 (twelve years ago) link

Whatever subprime backed securities were on the bank's balance sheets when the shit hit the fan are being moved off the bank's balance sheets (but obviously, they're having to sell at a loss, which is what all these write downs are).

I don't think much has been moved off bank's balance sheets yet. The writedowns are just the banks writing down the market value of things that are still on their balance sheets. These markets have basically stopped trading since the credit crunch hit, so there's been little opportunity for banks to unload this stuff, and if they were forced to unload it, they'd certainly get even less than the marks they're putting on it now. In addition, there is the danger that banks will have to move even more of this stuff onto their balance sheets if some of the SIVs and conduits that they're backing fail to find financing.

This article from the FT says that there are good reasons to fear that worse is still to come for the banks:

Fall in ABX sparks fresh credit fears

o. nate, Thursday, 1 November 2007 18:19 (twelve years ago) link

xpost
well for me it seems that reaction in Canada = OMG OMG OMG
where as in the States = zuh?

another xpost

The Cursed Return of the Dastardly Thermo Thinwall, Thursday, 1 November 2007 18:20 (twelve years ago) link

you know what. i don't know what my point was. i'm going back to the pot thread.

The Cursed Return of the Dastardly Thermo Thinwall, Thursday, 1 November 2007 18:21 (twelve years ago) link

The writedowns are just the banks writing down the market value of things that are still on their balance sheets.

But with subprime, they haven't been able to do that because the market is so illiquid. Goldman explicitly stated in their earnings report that everything they couldn't value from the market, they sold.

aaaaaaaaaaaaaaaaaaaaaaaaaa, Thursday, 1 November 2007 18:24 (twelve years ago) link

Just to add, if some banks are holding them on their books, it's axiomatic to say that they must believe they're worth more than what they can sell them for, and that they've presumably priced in the fact that lots of people are going to start coming teaser rates into that valuation.

aaaaaaaaaaaaaaaaaaaaaaaaaa, Thursday, 1 November 2007 18:34 (twelve years ago) link

^^^Ach, meant to emphasise some, not banks.

aaaaaaaaaaaaaaaaaaaaaaaaaa, Thursday, 1 November 2007 18:34 (twelve years ago) link

testing

o. nate, Thursday, 1 November 2007 18:39 (twelve years ago) link

If there isn't a market price, the banks usually use models to come up with a price. That's what they call "Level 3" assets. Goldman may be one of the least exposed to subprime of the major banks, but they still had level 3 assets representing $72B at the end of their third quarter:

http://www.marketwatch.com/news/story/goldmanaug-level-3-asset-value/story.aspx?guid=%7BA5F0CE1D-4004-448D-967B-895CC8213FD6%7D

xpost- Banks may think they can get a better price if they wait, but that's a dangerous game when prices are falling.

o. nate, Thursday, 1 November 2007 18:39 (twelve years ago) link

(oops, please ignore that "testing" post)

o. nate, Thursday, 1 November 2007 18:40 (twelve years ago) link

you ever read that book about Long Term Capital Management o. nate ("When Genius Failed")?

Dandy Don Weiner, Thursday, 1 November 2007 19:13 (twelve years ago) link

Book rules.

aaaaaaaaaaaaaaaaaaaaaaaaaa, Thursday, 1 November 2007 19:21 (twelve years ago) link

Yes, I've read it. Good book.

o. nate, Thursday, 1 November 2007 19:26 (twelve years ago) link

Too bad more people haven't read it.

Dandy Don Weiner, Thursday, 1 November 2007 19:42 (twelve years ago) link

when you consider the people who were involved with LTCM, it's fucking frightening.

And my point being that illiquidity and exposure are pretty damn complicated issues at banks in a scary house of cards kind of way.

Dandy Don Weiner, Thursday, 1 November 2007 19:44 (twelve years ago) link

Yeah, they had a quant from GS quoted in the FT a while back saying how crazy the credit squeeze was, and how it shouldn't've happened in three universe lifetimes according to his models, and I thought dude, how can earth can you not've read that book (cause he clearly wouldn't've said that if he had)?

aaaaaaaaaaaaaaaaaaaaaaaaaa, Thursday, 1 November 2007 20:09 (twelve years ago) link

There was an entertaining polemic by Nassim Nicholas Taleb (author of Fooled by Randomness and The Black Swan) in the FT the other day about the models that generate these kinds of (unrealistic) predictions.

The pseudo-science hurting markets

I think he overstates his case a bit, but he does it with wit and is thought-provoking in a good way.

o. nate, Thursday, 1 November 2007 20:20 (twelve years ago) link

The dollar can fall against cents, and has been doing so very nicely in the last couple of weeks, the ECB having failed to take my suggestion that a tenth of a Euro be called a Euroling.

Nubbelverbrennung, Thursday, 1 November 2007 20:56 (twelve years ago) link

do you have a point

El Tomboto, Thursday, 1 November 2007 21:47 (twelve years ago) link

Wow! I guess there are a few bright spots (unfortunately not ones in my portfolio).

o. nate, Thursday, 1 November 2007 21:47 (twelve years ago) link

stocks be rocketing like fogdog.com

wanko ergo sum, Thursday, 1 November 2007 21:49 (twelve years ago) link

once did.

wanko ergo sum, Thursday, 1 November 2007 21:51 (twelve years ago) link

A few big tech stocks with compelling growth stories are doing well. I'm a bit pessimistic on where the broader market is heading though.

o. nate, Thursday, 1 November 2007 21:53 (twelve years ago) link

so am I, but I am usually wrong. It is sticking your neck out calling a crash when the DJIA is all of 5% off the alltime high. But it will be fun watching Jim Cramer forcing a smile and making picks on CNBC here in 5 minutes.

wanko ergo sum, Thursday, 1 November 2007 21:55 (twelve years ago) link

Wow- this just keeps getting uglier for Merrill:

Deals With Hedge Funds May Be Helping Merrill Delay Mortgage Losses

o. nate, Friday, 2 November 2007 15:28 (twelve years ago) link

I came across an individual lawsuit plaintiff named Meryl Lynch yesterday.

Hurting 2, Friday, 2 November 2007 15:30 (twelve years ago) link

i wish i knew more about this stuff and bought gold and google a few years ago

artdamages, Friday, 2 November 2007 15:38 (twelve years ago) link

I have never had much capital to invest really but when I put $2000 into a international/developing markets mutual fund it was EXACTLY one month before a huge sell-off in that sector. So I do tend to call things a little early. OTOH, for a individual investor, I think calling a bear and hedging early is a lot wiser than believing a bull and buying late. Google, Rim and Apple all have nice narratives to their success and have been making headlines for years now, so it's no surprise amateurs are getting into it. "Hey, I use Google/an iPod/my BlackBerry every day! I should invest in these guys!"

El Tomboto, Friday, 2 November 2007 18:11 (twelve years ago) link

moral for me as an investor (once I cover my recent debt injection) - if you want to invest in any sector, wait it out for a 12 month low. if it doesn't happen, you missed the boat, try again next year.

El Tomboto, Friday, 2 November 2007 18:13 (twelve years ago) link

I usually make those decisions during the long holidays I take at my country house in the Algarves.

Tracer Hand, Friday, 2 November 2007 18:15 (twelve years ago) link

lolz. even if i ever have money i doubt i'd ever risk speculating on the market.

artdamages, Friday, 2 November 2007 18:18 (twelve years ago) link

Yes. My advice to clients these days is to invest in property -- it's as safe as houses! I specifically recommend Florida condos. There are some crackerjack deals all over the coast.

Or, if you want something even safer, stash those dollars in a trunk and bury the trunk. And don't tell anyone where it is. Now THAT money won't be going ANYWHERE. Unless the dollar falls further of course.

Hmm.

Tracer Hand, Friday, 2 November 2007 18:21 (twelve years ago) link

It's been a while since I thought about finance with any real depth, but that Taleb column seems like such crap. Academic financial models hardly work better than random chance? Is that not entirely the point? If he and his buddies can predict the market so much more effectively than 150,000 business schools teaching the MPT, why the hell is he making his money writing pop-culture social science books and not trading?

webber, Monday, 5 November 2007 02:29 (twelve years ago) link

haha this buddy of mine was telling me this weekend how his neighbor (whom I know) keeps $20K in cash in his basement in a safe. I'm not sure if I should mention this, but Mr. Sock Drawer is a chiropractor.

Dandy Don Weiner, Monday, 5 November 2007 02:59 (twelve years ago) link

dude seriously who tells people that shit? good way to put you and your family in danger.

El Tomboto, Monday, 5 November 2007 03:04 (twelve years ago) link

Academic financial models hardly work better than random chance? Is that not entirely the point? If he and his buddies can predict the market so much more effectively than 150,000 business schools teaching the MPT, why the hell is he making his money writing pop-culture social science books and not trading?

I think his point is not that he can predict the market better than the models, but rather that the models give those who use them a false sense of security.

o. nate, Monday, 5 November 2007 17:31 (twelve years ago) link

http://ichart.finance.yahoo.com/3m?cadusd=x

El Tomboto, Tuesday, 6 November 2007 22:33 (twelve years ago) link

thanks to abanana

El Tomboto, Tuesday, 6 November 2007 22:33 (twelve years ago) link

November 9, 2007, 12:34 pm
Midday Tidbits — 99 Problems for the Dollar
Posted by Tim Annett

How much Rocawear could these euros buy?
# First Gisele, then China, now Jay-Z? Earlier this week, reports (later denied) that supermodel Gisele Bundchen was demanding to be paid in euros rather than dollars led to many jokes that surely this must be a sign of a bottom for the little-loved greenback. Nobody was laughing much when a Chinese political official badmouthed the buck later in the week, leading to the latest of many dollar selloffs. Now, either as another sign of the bottom, or just another kick to the dollar’s ribs on the way down, rapper Jay-Z has joined the dollar-bashing party. In the video for his new single, “Blue Magic,” at about 1:20 in, when Jay says, “I don’t spin on my head, I spin work in the pots so I can spend my bread,” the “bread” he is preparing to spend is a big stack of euros, not dollars. Et tu, Jay-Z? — Mark Gongloff (Hat Tip: Jesse Pesta)

Hurting 2, Friday, 9 November 2007 18:14 (twelve years ago) link

http://online.wsj.com/media/jayz_c_20071109113234.jpg

Hurting 2, Friday, 9 November 2007 18:15 (twelve years ago) link

two weeks pass...

from the Financial Times (http://www.ft.com/cms/s/0/7b6160be-9b80-11dc-8aad-0000779fd2ac.html?nclick_check=1)

In his letter, Mr Lahde said he expected the collapse in value of subprime mortgage-linked securities to be repeated for bonds backed by commercial property loans in a deep recession – which he also predicts.

“Our entire banking system is a complete disaster,” he wrote. “In my opinion, nearly every major bank would be insolvent if they marked their assets to market.” He also said he would be putting some of his own profits into gold and other precious metals.

I re-read the LTCM book ("When Genius Failed") over the holiday, and it's frightening given the pattern of subprime investments.

Dandy Don Weiner, Monday, 26 November 2007 13:50 (twelve years ago) link

yeah platinum looks really good right about now. are there any metals looking particularly under-valued?

El Tomboto, Monday, 26 November 2007 21:36 (twelve years ago) link

so if some random dude off the street (i.e. me) wanted to buy platinum or whatever, is that possible? Is that just a recipe for getting screwed? How would one go about it anyway??

askance johnson, Monday, 26 November 2007 22:30 (twelve years ago) link

call a broker dude and then shop whatever he says.

Dandy Don Weiner, Tuesday, 27 November 2007 00:48 (twelve years ago) link

there are precious metal mutual funds and stuff, through morningstar and other fairly reputable investment groups. I think those would be easier and less costly than trying to stockpile a bunch of platinum in the commodities markets

El Tomboto, Tuesday, 27 November 2007 00:50 (twelve years ago) link

not to mention that those funds tend to diversify sources and ideally mitigate risks better than turning your garage into a foundry and hoping you don't get robbed or burn the house down.

Dandy Don Weiner, Tuesday, 27 November 2007 00:58 (twelve years ago) link

there's also buying gold and silver coins at your local coin shop - unfortunately the dealer knows the value of a buck so you won't be getting any super deals

brownie, Tuesday, 27 November 2007 01:00 (twelve years ago) link

When my mom worked as a bank teller she bought every silver coin that crossed her window for 20 years.

Rock Hardy, Tuesday, 27 November 2007 01:26 (twelve years ago) link

oh, bernankepaws ...

http://ichart.finance.yahoo.com/t?s=%5EDJI

Eisbaer, Tuesday, 11 December 2007 20:29 (twelve years ago) link

long overdue

El Tomboto, Tuesday, 11 December 2007 20:33 (twelve years ago) link

Added wonkiness just now from Stratfor:

---

China and the Arabian Peninsula as Market Stabilizers
By George Friedman

The single most interesting thing about today's global economy is what has not occurred. In 1979, oil prices soared to slightly more than $100 a barrel in current dollars, and they are approaching that historic high again. Meanwhile, the subprime meltdown continues to play out. Many financial institutions have been hurt, many individual lives have been shattered and many Wall Street operators once considered brilliant have been declared dunderheads. Despite all the predictions that the current situation is just the tip of the iceberg, however, the crisis is progressing in a fairly orderly fashion. Distinguish here between financial institutions, financial markets and the economy. People in the financial world tend to confuse the three. Some financial institutions are being hurt badly. Those experiencing the pain mistakenly think their suffering reflects the condition of the financial markets and economy. But the financial markets are managing, as is the economy.

What we are seeing is the convergence of two massive forces. Oil prices, along with primary commodity prices in general, have soared. Also, one of the periodic financial bubbles -- the subprime mortgage market -- has burst. Either of these alone should have created global havoc. Neither has. The stock market has not plummeted. The Standard & Poor's 500 fell from a high of about 1,565 in mid-October to a low of 1,400 on Oct. 19. Since then, it has rebounded as high as 1,550. Given the media rhetoric and the heads rolling in the financial sector, we would expect to see devastating numbers. And yet, we are not.

Nor are the numbers devastating in the bond markets. By definition, a liquidity crisis occurs when the money supply is too tight and demand is too great. In other words, a liquidity crisis would be reflected in high interest rates. That hasn't happened. In fact, both short-term and, particularly, long-term interest rates have trended downward over the past weeks. It might be said that interest rates are low, but that lenders won't lend. If so, that is sectoral and short-term at most. Low interest rates and no liquidity is an oxymoron.

This is not the result of actions at the Federal Reserve. The Fed can influence short-term rates, but the longer the yield curve, the longer the payoff date on a loan or bond and the less impact the Fed has. Long-term rates reflect the current availability of money and expectations on interest rates in the future.

In the U.S. stock market -- and world markets, for that matter -- we have seen nothing like the devastation prophesied. As we have said in the past, the subprime crisis compared with the savings and loan crisis, for example, is by itself small potatoes. Sure, those financial houses that stocked up on the securitized mortgage debt are going to be hurt, but that does not translate into a geopolitical event, or even into a recession. Many people are arguing that we are only seeing the tip of the iceberg, and that defaults in other categories of the mortgage market coupled with declining housing markets will set off a devastating chain reaction.

That may well be the case, though something weird is going on here. Given the broad belief that the subprime crisis is only the beginning of a general financial crisis, and that the economy will go into recession, we would have expected major market declines by now. Markets discount in anticipation of events, not after events have happened. Historically, market declines occur about six months before recessions begin. So far, however, the perceived liquidity crisis has not been reflected in higher long-term interest rates, and the perceived recession has not been reflected in a significant decline in the global equity markets.

When we add in surging oil and commodity prices, we would have expected all hell to break loose in these markets. Certainly, the consequences of high commodity prices during the 1970s helped drive up interest rates as money was transferred to Third World countries that were selling commodities. As a result, the cost of money for modernizing aging industrial plants in the United States surged into double digits, while equity markets were unable to serve capital needs and remained flat.

So what is going on?

Part of the answer might well be this: For the past five years or so, China has been throwing around huge amounts of cash. The Chinese made big, big money selling overseas -- more than even the growing Chinese economy could metabolize. That led to massive dollar reserves in China and the need for the Chinese to invest outside their own financial markets. Given that the United States is China's primary consumer and the only economy large and stable enough to absorb its reserves, the Chinese -- state and nonstate entities alike -- regard the U.S. markets as safe-havens for their investments. That is one of the things that have kept interest rates relatively low and the equity markets moving. This process of Asian money flowing into U.S. markets goes back to the early 1980s.

Another part of the answer might lie in the self-stabilizing feature of oil prices, the rise of which should be devastating to U.S. markets at first glance. The size of the price surge and the stability of demand have created dollar reserves in oil-exporting countries far in excess of anything that can be absorbed locally. The United Arab Emirates, for example, has made so much money, particularly in 2007, that it has to invest in overseas markets.

In some sense, it doesn't matter where the money goes. Money, like oil, is fungible, which means that if all the petrodollars went into Europe then other money would flow into the United States as European interest rates fell and European stocks rose. But there are always short-term factors to consider. The Persian Gulf oil producers and the Chinese have one thing in common -- they are linked to the dollar. As the dollar declines, assets in other countries become more expensive, particularly if you regard the dollar's fall as ultimately reversible. Dollars invested in dollar-denominated vehicles make sense. Therefore, we are seeing two massive inflows of dollars to the United States -- one from China and one from the energy industry. China's dollar reserves are derived from sales to the United States, so it is stuck in the dollar zone. Plus, the Chinese have pegged the yuan to the dollar. The energy industry, also part of the dollar zone, needs to find a home for its money -- and the largest, most liquid dollar-denominated market in the world is the United States.

The United States has created an odd dollar zone drawing in China and the Persian Gulf. (Other energy producers such as Russia, Nigeria and Venezuela have no problem using their dollars internally.) Unhinging China from the dollar is impossible; it sells in dollars to the United States, a linkage that gives it a stable platform, even if it pays relatively more for oil. Additionally, the Arabian Peninsula sells oil in dollars, and trying to convert those contracts to euros would be mind-bogglingly difficult. Existing contracts and new contracts managed in multiple currencies -- both spot and forward managed -- would have to be renegotiated. Any business working in multiple currencies faces a challenge, and the bigger the business, the bigger the challenge. The Arabian Peninsula accordingly will not be able to hedge currencies and manage the contracts just by flipping a switch.

This provides an explanation for the resiliency of U.S. markets. Every time the news on the subprime situation sounds so horrendous that it seems the U.S. markets will crash, the opposite occurs. In fact, markets in the United States rose through the early days, then sold off and now have rallied again. Where is the money coming from?

We would argue that the money is coming from the dollar bloc and its huge free cash flow from China, and at the moment, the Arabian Peninsula in particular. This influx usually happens anonymously through ordinary market actions, though occasionally it becomes apparent through large, single transactions that are quite open. Last week, for example, Dubai invested $7 billion in Citigroup, helping to clean up the company's balance sheet and, not incidentally, letting it be known that dollars being accumulated in the Persian Gulf will be used to stabilize U.S. markets.

This is not an act of charity. Dubai and the rest of the Arabian Peninsula, as well as China, are holding huge dollar reserves, and the last thing they want to do is sell those dollars in sufficient quantity to drive the dollar's price even lower. Nor do they want to see a financial crisis in the U.S. markets. Both the Chinese and the Arabs have far too much to lose to want such an outcome. So, in an infinite number of open market transactions, as well as occasionally public investments, they are moving to support the U.S. markets, albeit for their own reasons.

It is the only explanation for what we are seeing. The markets should be selling off like crazy, given the financial problems. They are not. They keep bouncing back, no matter how hard they are driven down. That money is not coming from the financial institutions and hedge funds that got ripped on mortgages. But it is coming from somewhere. We think that somewhere is the land of $90-per-barrel crude and really cheap toys.

Many people will see this as a tilt in global power. When others must invest in the United States, however, they are not the ones with the power; the United States is. To us, it looks far more like the Chinese and Arabs are trapped in a financial system that leaves them few options but to recycle their dollars into the United States. They wind up holding dollars -- or currencies linked to dollars -- and then can speculate by leaving, or they can play it safe by staying. In our view, these two sources of cash are the reason global markets are stable.

Energy prices might fall (indeed, all commodities are inherently cyclic, and oil is no exception), and the amount of free cash flow in the Arabian Peninsula might drop, but there still will be surplus dollars in China as long as it is an export-based economy. Put another way, the international system is producing aggregate return on capital distributed in peculiar ways. Given the size of the U.S. economy and the dynamics of the dollar, much of that money will flow back into the United States. The United States can have its financial crisis. Global forces appear to be stabilizing it.

The Chinese and the Arabs are not in the U.S. markets because they like the United States. They don't. They are locked in. Regardless of the rumors of major shifts, it is hard to see how shifts could occur. It is the irony of the moment that China and the Arabian Peninsula, neither of them particularly fond of the United States, are trapped into stabilizing the United States. And, so far, they are doing a fine job.

Ned Raggett, Tuesday, 11 December 2007 21:27 (twelve years ago) link

wrong thread!!!

El Tomboto, Tuesday, 11 December 2007 21:53 (twelve years ago) link

see where it says "into the shitbin?!" not "buoyed by foreigners!"

El Tomboto, Tuesday, 11 December 2007 21:54 (twelve years ago) link

Hahaha. BUT IT'S ABOUT ECONOMICS!

kudlow.jpg

Ned Raggett, Tuesday, 11 December 2007 21:54 (twelve years ago) link

Fight to the death.

Ned Raggett, Tuesday, 11 December 2007 21:59 (twelve years ago) link

for a while, i've had a flip line about how the only time to worry about illegal immigrants is when they start leaving. and there they go.

tipsy mothra, Tuesday, 11 December 2007 22:43 (twelve years ago) link

Good column from Martin Wolf in the FT today about why the credit crisis is a paradigm-shifting event:

http://www.ft.com/cms/s/0/90126fca-a810-11dc-9485-0000779fd2ac.html

o. nate, Wednesday, 12 December 2007 16:21 (twelve years ago) link

Alan Greenspan's take on how we got where we are, from the WSJ:

The Roots of the Mortgage Crisis

o. nate, Wednesday, 12 December 2007 17:51 (twelve years ago) link

And after reading that Statfor thing:

http://seattletimes.nwsource.com/html/travel/2004067332_webchinesetourists12.html

Yes, maybe new competing thread is a good idea. Then again, having a In Da Shittybins vs. Boyed By Fauranurz fight here makes the thread more fun (IMHO)

Mackro Mackro, Wednesday, 12 December 2007 18:55 (twelve years ago) link

Hmm.. now if we can just get all those Chinese tourists to buy a couple of houses while they're here.

o. nate, Wednesday, 12 December 2007 19:06 (twelve years ago) link

"LOL HONGKOUVER!"

Mackro Mackro, Wednesday, 12 December 2007 19:09 (twelve years ago) link

http://www.lakelandsd.com/tutorial/sinking.jpg

That one guy that hit it and quit it, Thursday, 13 December 2007 13:09 (twelve years ago) link

Seamus Milne in today's Guardian

The Boyler, Thursday, 13 December 2007 13:32 (twelve years ago) link

It might be entirely true that the channeling of foreign-held dollars back into USA investments is preventing large amounts of shit from reaching the fan, this dynamic will only hold things in place if the Chinese tolerate a drastic fall in the value of their dollar-holdings. That fall is inevitable unless the USA makes a hard turn from its present course.

What I see as most likely is the Fed will hold interest rates steady, even as the recession becomes apparent in February-March of 2008. The recession will put increasing pressure on mortgage holders from the real estate bubble and loan defaults will increase through out the year as unemployment rises. This will cause the banking system to scream in pain, crying for lower interest rates.

At that point, the Fed is screwed. Lowering rates would further crash the dollar. Not lowering rates would crash the banking system. They'll choose the dollar. Then we'll see the real crisis appear. Whether we can wiggle out of it will depend on whether the central bankers of the world can agree on a plan.

The USA has benefitted enormously from becoming the world's reserve currency at a time of ballooning international trade. It's about time for the world to reclaim the keys to the world economy. I would expect some sort of 'currency basket' to be devised to replace dollars as the reserve currency by 2011. Either that, or big dose of chaos.

As usual, I do not claim to hold any special expertise in the Economics of the Future. I just read, watch, think and make my best guess.

Aimless, Thursday, 13 December 2007 18:27 (twelve years ago) link

http://invivoanalytics.com/2007/12/17/the-real-yield-negative-interest-rates/

note use of real CPI including energy, food etc. instead of what keeps getting reported as CPI in the press

El Tomboto, Thursday, 20 December 2007 00:37 (twelve years ago) link

forecast: (hyper)inflation or deflation?

presume will go for former but i still dont really get how this is done when wage inflation would be severely constrained

Alex in Denver, Wednesday, 26 December 2007 16:55 (twelve years ago) link

None dare call it stagflation.

j.lu, Wednesday, 26 December 2007 17:46 (twelve years ago) link

No deflation is in sight in the USA, apart from housing prices unbubbling.

How this is done when wage inflation is severely constrained is simple enough. We'll import our inflation as the dollar buys progressively less in foreign markets, including raw materials (think: oil) and manufactured goods (think: almost everything in WalMart).

The USA has the most globalized economy. The erosion of USA wages will slow the price inflation down, but the loss of purchasing power will be the pertinent gauge to watch, not just wages or prices.

Aimless, Wednesday, 26 December 2007 18:18 (twelve years ago) link

not helping
http://www.economist.com/images/20071208/20071208issuecovUS400.jpg

mookieproof, Wednesday, 26 December 2007 18:20 (twelve years ago) link

Increasing the money supply through....more credit? But won't it need takers? And institutions to happy to lend more?

Alex in Denver, Wednesday, 26 December 2007 18:50 (twelve years ago) link

The world is awash in dollars already. All that is necessary is for a signifigant portion of foreign dollar holdings to be repatriated for the USA money supply to balloon. When a nation refuses to accept its own currency... well, let's just say it isn't done by solvent nations.

As for lending and credit, when the private sector won't borrow, the government can always step in. If the government is a poor credit risk, it will just have to offer more interest, won't it? If the USA government cannot borrow even at high rates of interest... well, let's just say that is rarely the case with solvent nations.

Aimless, Wednesday, 26 December 2007 19:00 (twelve years ago) link

So like, wtf is about to happen in real terms? Are we most likely looking at a depressed economy where it's tough to find a job and we have to cut our expenses a lot or a genuine crisis?

Hurting 2, Wednesday, 26 December 2007 19:04 (twelve years ago) link

the world is awash in dollars..agreed. don't rate cuts mean yet more dollars though? meaning (hyper)inflation (possibly).

i guess foreign dollar holdings dont want to repatriate...but doesn't this make those holdings look less pleasant with each cut?

Alex in Denver, Wednesday, 26 December 2007 19:11 (twelve years ago) link

The Economist has been getting progressively worse under the new editor-in-chief
I would love to hear how "cheap food" is going to end when McDonald's is on the verge of waging its economy of scale on an even wider variety of foods across an even larger geographical range - are they all of a sudden going to have so much competition that they lose their price control?

El Tomboto, Wednesday, 26 December 2007 19:25 (twelve years ago) link

What's to happen, in real terms?

I think it will be a very slow-motion sort of economic deterioration that will basically look like a recession with stagflation for a while, with continued degradation of infrastructure from year to year. Just a steady impoverishment, falling down from our past levels of opulence.

Whether it turns into a really nasty 'hot' crisis will depend a lot on the quality of USA politics - both among the politicians and the general public.

In the past, the USA has shown the ability to toughen up, change direction and do what has to be done to get the nation going the right way again. Whether this can happen again depends largely on how tightly the general public clings to its delusions and its old, comfortable ways of thinking and how much they are encouraged to stay deluded by leaders who shovel out loads of platitudes instead of useful information.

I can't say the signs are very good for our chucking away our delusions and facing up to the problems we've caused ourselves any time soon. We still have several more layers of fat and comfort to strip away before we come into contact with hard, sharp reality. When we reach that point, it could go any direction - but I'd bet on the country getting its act together eventually.

If we could only get rid of those damned Armageddon-believers I'd feel a whole lot more confident about where we'll be in 20 years.

Aimless, Wednesday, 26 December 2007 19:28 (twelve years ago) link

1. in real terms, wages have been going down for like four years, for most americans anyway
2. additionally with the dollar being in flux so much lately a lot of other figures need to be rejiggered to see where we really are and where the trend is headed
3. "hyperinflation" should not happen because despite the decreasing purchasing power of the median household, that median american household still remains the target customer of the majority of business worldwide
4. the ultimate (c. 2012) result is going to largely depend on how overheated China is and whether they experience their own crash sooner or later
5. deflation is totally out of the question

El Tomboto, Wednesday, 26 December 2007 19:31 (twelve years ago) link

Whether this can happen again depends largely on how tightly the general public clings to its delusions and its old, comfortable ways of thinking and how much they are encouraged to stay deluded by leaders who shovel out loads of platitudes instead of useful information.\

Actually I think the general public and the political leadership have fuck all to do with american economic resiliency. It depends more on if my generation is smart enough and tough enough to pursue effective entrepreneurship and on the capital supply for those ventures - both of which look promising at the moment, to be honest.

El Tomboto, Wednesday, 26 December 2007 19:33 (twelve years ago) link

basically what I think is going to really happen (is happening) with the dollar is that we are going to stick median wages almost exactly where they are and then let the purchasing power of the dollar fall until the average plant worker in Kansas makes the same real amount per month as the average plant worker anywhere else in the world - since that's the competition, and since any other method of adjusting things would be too dangerous to business

El Tomboto, Wednesday, 26 December 2007 19:36 (twelve years ago) link

2. other currencies (sterling and euro anyway) are poised to follow the dollar downwards, this might make the falls seem less harsh..in time?

3. which is presumably why foreign holdings won't repatriate dollars, but rate cuts might test that at some point?

3a. isn't rate cutting just allowing more cheap money in the economy? hair of the dog?

4. thought china were running into similar problems right about now also?

5. not much incentive to save then?

Alex in Denver, Wednesday, 26 December 2007 19:41 (twelve years ago) link

Nah, Tom. They used to call it 'political economy' instead of just 'economics'. There was a reason why. That switch of nomenclature was connected to politics, too.

I save. But the incentives are shite right now.

Aimless, Wednesday, 26 December 2007 19:44 (twelve years ago) link

I'm sure you're not saying that our elected leadership runs the economy as opposed to the other way around

El Tomboto, Wednesday, 26 December 2007 21:04 (twelve years ago) link

The power to make law and impose taxes is not a lightweight factor in how economies operate. Who makes policy and the policies they make swings a lot of weight in what outcomes you get, especially when the government is multi-trillion dollar enterprise.

That importance is reflected in the amount of effort and money that is expended by various corporate interests into keeping our representatives captive and our electorate docile. Economic pain tends to make the electorate less ruly and more likely to glom onto a Huey Long or a Townsend Plan, or technocracy... or something much worse.

Aimless, Thursday, 27 December 2007 00:23 (twelve years ago) link

Too late in the game for gold/silver/platinum? Or still early?

Or: Is money supply going to continue to grow and fiat currencies going to continue to fall? Or will the buck stop somewhere soon?

Alex in Denver, Monday, 7 January 2008 11:31 (twelve years ago) link

I'll take this thread as an opportunity to raise awareness for an underappreciated cult classic

http://rh.foto.radikal.ru/0709/57/19975fea5422.jpg

burt_stanton, Monday, 7 January 2008 13:42 (twelve years ago) link

Phew, that was ugly formatting. $110 million in severance, as noted here:

http://latimesblogs.latimes.com/laland/2008/01/mozilo-severanc.html

Ned Raggett, Friday, 11 January 2008 15:56 (twelve years ago) link

should i be buying gold?

sunny successor, Friday, 11 January 2008 16:02 (twelve years ago) link

Sell your child into slavery. It's the only answer.

Ned Raggett, Friday, 11 January 2008 16:04 (twelve years ago) link

this looks like more fun:

http://www.lambdapsiphi.com/daft/daft/images/dtopen5.jpg

sunny successor, Friday, 11 January 2008 16:05 (twelve years ago) link

im kindof like scroge mcduck. every mornign i juimp into a money bin filled with used condoms

burt_stanton, Friday, 11 January 2008 16:44 (twelve years ago) link

wow, maybe angelo mozilo will dodge a bullet after all ... seriously, i had that dude pegged as the subprime crisis's kenneth lay or dennis kozlowski.

i still hold that the subprime crisis will = Lawyers' Full Employment Act of 2008, tho'.

Eisbaer, Friday, 11 January 2008 16:53 (twelve years ago) link

also, subprime crisis = the closest thing yer typical gold bug will ever come to an orgy.

Eisbaer, Friday, 11 January 2008 16:54 (twelve years ago) link

and BoA may be biting off more than it can chew if its acquisition of Countrywide goes through.

Eisbaer, Friday, 11 January 2008 16:58 (twelve years ago) link

This very wtf. Other than a huge portfolio of questionable loans, what kind of assets does BofA hope to acquire? A lot of employees they can let go? I am stumped.

Aimless, Friday, 11 January 2008 18:38 (twelve years ago) link

whatever BoA is getting out of this deal, it may be the start of a trend --> WaMu Has Discussed Merger With JP Morgan Chase.

i dunno what countrywide shareholders or BoA will get out of the acquisition, but mozilo may get over http://www.latimes.com/business/la-fi-mozilo11jan11,0,2459321.story?coll=la-home-center00M outta this. (keep in mind that countrywide is already being sued for his exercise of over $100M in countrywide stock options a year or so ago -- for his grandchildrens' "college education," mozilo said!)

Eisbaer, Friday, 11 January 2008 19:12 (twelve years ago) link

oh, and because i can't resist any opportunity to bash jim cramer -- Countrywide Still Looks Like a Buy, February 6, 2007

Eisbaer, Friday, 11 January 2008 21:35 (twelve years ago) link

The price of gold has risen 239% since 2001, while the price of oil has risen 267%. That means if the dollar had remained as 'good as gold' since 2001, oil today would be selling at about $30 a barrel, not $99.

Alex in Denver, Saturday, 12 January 2008 00:09 (twelve years ago) link

should i be buying gold?

-- sunny successor, Friday, January 11, 2008 4:02 PM (

depends which of the following you think will happen

a) sound fiscal policy
b) bernanke revving his helicopter

Alex in Denver, Saturday, 12 January 2008 00:39 (twelve years ago) link

it'll be one hilarious day when all the goldbugs retire and flood the market with their precious Au, devaluing their fortunes and fucking shit right up all over the place

El Tomboto, Saturday, 12 January 2008 00:52 (twelve years ago) link

ie I think it comes down to whether you think things are going to get deflationary or hyperinflationary. i think they will do anything to try prevent the former which means gold looks good as fiat currencies get devalued everywhere

there are arguments that gold>cash in a deflationary environment too, but i dont quite get why...if anyone wants to explain?

Alex in Denver, Saturday, 12 January 2008 00:52 (twelve years ago) link

when people hoard copper, are they contributing to the dollar's fall or shoring it up?

El Tomboto, Saturday, 12 January 2008 00:52 (twelve years ago) link

Knew those pennies would come in handy.

Ned Raggett, Saturday, 12 January 2008 00:54 (twelve years ago) link

ass pennies?

Jimmy The Mod Awaits The Return Of His Beloved, Saturday, 12 January 2008 00:55 (twelve years ago) link

it'll be one hilarious day when all the goldbugs retire and flood the market with their precious Au

yes! though surely gold should just act as inflation hedge, so the better things are the less you need the gold to be doing its thing. can definitely see this being something of a speculative bubble (esp once it hits $1000 and goes front page of popular press) - but can anyone see proper financial management and order returning any time soon? (when is the bottom of all this mess? 2010? 2012? later?)

Alex in Denver, Saturday, 12 January 2008 00:55 (twelve years ago) link

My dad has a gym sock full of silver dollars from the '70s. He won't let me touch it.

Abbott, Saturday, 12 January 2008 01:02 (twelve years ago) link

Sign of some sort -- both the LA Times and the NY Times have front-page 'um, this looks really really bad' stories today.

Ned Raggett, Sunday, 13 January 2008 16:36 (twelve years ago) link

The bottom of the slump still looks 2-3 years away as far as i can tell..but how much longer after that before it turns around I dont know. 07-12 would normally seem about right, but the huge size of the bubbles this time, and their global nature makes me wonder if it could be a lot longer than 4-5 years (esp when peak oil and the other longer term clouds come into play). Then i guess it depends on the actions of central banks/govts (more intervention would cushion it on the way down but prolong it and makes worse in long run)

A shutdown of credit would suggest a 1929 situation (but that has only really ever happened once, unless you count japan 1990), and it looks like they'll do anything to flood more cash in, so somwhere between stagflation and hyperinflation for a few years looks maybe more likely

As bad as it will be here, it will be worse in Europe

Alex in Denver, Sunday, 13 January 2008 16:50 (twelve years ago) link

lol

That one guy that hit it and quit it, Sunday, 13 January 2008 16:52 (twelve years ago) link

we gonna die

Jimmy The Mod Awaits The Return Of His Beloved, Sunday, 13 January 2008 17:19 (twelve years ago) link

No we just gonna be correcting painfully.

Aimless, Sunday, 13 January 2008 19:03 (twelve years ago) link

A shutdown of credit would suggest a 1929 situation (but that has only really ever happened once, unless you count japan 1990), and it looks like they'll do anything to flood more cash in, so somwhere between stagflation and hyperinflation for a few years looks maybe more likely
Yea, the post-crash mismanagement of the 1930s economy was cookbook recession-to-Depression stuff and the economy surely won't be badly managed this time around, ha.

stet, Sunday, 13 January 2008 19:21 (twelve years ago) link

I just re-read Galbraith's book on the crash, and there's lots of interesting parallels, especially in how little understanding people had of exactly where all the money was, and how chain-reaction it would be when it finally broke.

stet, Sunday, 13 January 2008 19:23 (twelve years ago) link

Yea, the post-crash mismanagement of the 1930s economy was cookbook recession-to-Depression stuff and the economy surely won't be badly managed this time around, ha

not saying they wont mismanage it (they clearly already have been doing). more that it is more likely to be mismanaged via hyperinflation than via depression (retreat of prices). ie germany 1923 seems more likely than usa 1929 (i really dont know which way it will go, but i think they would do ANYTHING to avoid the latter scenario).

also the dollar was on gold standard during the depression which contributed to price falls. as the dollar isnt now there is nothing stopped more and more dollars being pumped out there, and leading to (hyper)inflation. this is surely why gold is rising (or more accurately fiat is falling), they cant magic gold out of thin air in the way they can magic money out of thin air.

if we were on gold standard then the deflation argument makes more sense to me because then you cant magic money out of thin air and therefore prices drop and depression occurs. they'll do the opposite and we'll be swimming in every more worthless dollars and pounds and euros and krones and whatever else before the decade is out

Alex in Denver, Sunday, 13 January 2008 21:22 (twelve years ago) link

my guess all along is that we will get stagflation for the next few years -- we've already got the inflation, and now the rises in the unemployment rate are coming. it will get ugly IMHO -- probably worse than any recession we've had since the early 1980s -- but not 1930s bad. in any event, i don't envy whoever will be in the White House in january 2009.

it's the obvious question, but THE question is: where WILL all of the "cheap credit" go? commodities are already bubbling (will the next cheap-ass cable TV show sensation be "flip those gold bars"?).

Eisbaer, Sunday, 13 January 2008 23:25 (twelve years ago) link

will the next cheap-ass cable TV show sensation be "flip those gold bars"?

I'm still predicting a flood of "Living Simply" shows and pop-psych books.

Elvis Telecom, Monday, 14 January 2008 01:05 (twelve years ago) link

Commodities are an excellent guess as to what sort of sponge might absorb the cheap credit, assuming the Fed cuts interest rates.

A word to the wise: if you try to hoard toilet paper, the acids in the paper will slowly render it into fluff. Save your mail order catalogs instead. If you hoard tobacco, then hoard loose, cut tobacco in hermetically sealed tins; cartons of cigarettes will go stale and dry out. (insert old-fashioned emoticon here)

Aimless, Monday, 14 January 2008 05:30 (twelve years ago) link

http://www.waxidermy.com/bbs/images/smiles/old.gif

electricsound, Monday, 14 January 2008 05:52 (twelve years ago) link

"fiat currency"

i.e. currency

Tracer Hand, Monday, 14 January 2008 10:44 (twelve years ago) link

im scared

sunny successor, Monday, 14 January 2008 19:00 (twelve years ago) link

as barry bigpicture points out, the most bullish thing going on right now is how much of a bear everybody is being! the psychology of the mainstream press espousing the idea of a recession either ongoing right now or about to come down hard is actually GOOD NEWS for the economy overall because it means the big players are more risk aware and will most likely contribute to softening the blow

e.g. the same way big magazine cover stories on booms typically signal approximate peak points, when they're about busts, they can signal troughs

El Tomboto, Monday, 14 January 2008 21:35 (twelve years ago) link

kind of a bit late to be risk-aware though?

i'd also say the trough is when it ceases to be news. still seems to be very early in the curve to me

Alex in Denver, Monday, 14 January 2008 22:13 (twelve years ago) link

I think busts/recessions are stickier and slower than booms, for sure, but all this talk to the negative seems encouraging, especially compared to the rose-colored spin of the past two years or more. Large firms calling a recession and saying we're already in it bodes well for the short term because it means an end to not admitting things are fucked. Bernanke should now stick to his guns and keep a tight grip on the money supply IMO.

I'm leaning towards deflation at this point

El Tomboto, Monday, 14 January 2008 22:32 (twelve years ago) link

it seems inevitable for a number of commodities already (labor, shipping costs, overhead/housing)

El Tomboto, Monday, 14 January 2008 22:33 (twelve years ago) link

Not sure if this is the right place to post this, but this was pretty interesting:

http://nplusonemag.com/hedge-fund-interview.html

o. nate, Monday, 14 January 2008 22:51 (twelve years ago) link

Btw, I'm pretty sure that interview should be dated January 2008, not 2007 as they have there.

o. nate, Monday, 14 January 2008 22:58 (twelve years ago) link

ever notice how the stock market "plunges" on Friday, then "rallies" the next Monday?

sexyDancer, Monday, 14 January 2008 23:33 (twelve years ago) link

The stock market is like one of those delicate upper crust women from the melodramas of the 1890s, always fainting and reviving.

Aimless, Tuesday, 15 January 2008 01:28 (twelve years ago) link

how else will you afford coke

xp

Jimmy The Mod Awaits The Return Of His Beloved, Tuesday, 15 January 2008 01:30 (twelve years ago) link

friday sell-off for brokers weekend yayo fund is #1 theory

El Tomboto, Tuesday, 15 January 2008 01:31 (twelve years ago) link

Citibank goes 'oops'

Ned Raggett, Tuesday, 15 January 2008 15:29 (twelve years ago) link

citygroup's been around (in some form) for 195 years?!?!

Jimmy The Mod Awaits The Return Of His Beloved, Tuesday, 15 January 2008 15:34 (twelve years ago) link

i am so happy citi is putting my credit card finance charges to good use. way to go guys.

tipsy mothra, Tuesday, 15 January 2008 16:04 (twelve years ago) link

us ilxors are all in the wrong lines of work!

Eisbaer, Wednesday, 16 January 2008 16:43 (twelve years ago) link

"i made you a pension but i losed it"

Tracer Hand, Wednesday, 16 January 2008 17:17 (twelve years ago) link

the connection between car part thefts and the commodity bubble

from the linked article:

Handfield says a tightening economy may be spurring the spike in metal thefts. He says Irvine police recently arrested a man stealing metals from construction sites. He was a mortgage banker using his luxury Lexus SUV to haul the loot, Handfield says.

!!!

Eisbaer, Wednesday, 16 January 2008 18:17 (twelve years ago) link

Where does a thief even go to sell their ill-gotten scraps of metal?

Abbott, Wednesday, 16 January 2008 22:55 (twelve years ago) link

Recycling yards. No questions asked, for the most part.

nickn, Wednesday, 16 January 2008 22:56 (twelve years ago) link

we gonna die

Jimmy The Mod Awaits The Return Of His Beloved, Thursday, 17 January 2008 16:44 (twelve years ago) link

we gonna die

-- Jimmy The Mod Awaits The Return Of His Beloved, Sunday, 13 January 2008 17:19 (4 days ago)

At least you are consistent in your approach.

Aimless, Thursday, 17 January 2008 19:15 (twelve years ago) link

http://img2.timeinc.net/ew/dynamic/imgs/040713/165732__robocop_l.jpg

Nicole, Thursday, 17 January 2008 19:20 (twelve years ago) link

BLAMMO

El Tomboto, Friday, 18 January 2008 00:35 (twelve years ago) link

Well, tomorrow I sell my mutual fund. It made me 80% last year and is now tanking like a barrel full of tanked monkeys.

ILX follow my lead!

brownie, Friday, 18 January 2008 02:34 (twelve years ago) link

i'm too wet behind the ear in that dept - i have to ride this bitch out.

The Cursed Return of the Dastardly Thermo Thinwall, Friday, 18 January 2008 15:11 (twelve years ago) link

economy is better than ever

burt_stanton, Friday, 18 January 2008 15:47 (twelve years ago) link

took a $400+ bath on the 401k this quarter... will be moving to under-the-mattress option later today.

Dr Morbius, Friday, 18 January 2008 15:50 (twelve years ago) link

i'm starting to think a savings account is a better investment than either a mutual fund or a house

Tracer Hand, Sunday, 20 January 2008 17:24 (twelve years ago) link

savings in which currency?

Alex in Denver, Sunday, 20 January 2008 17:28 (twelve years ago) link

good point

Tracer Hand, Sunday, 20 January 2008 17:31 (twelve years ago) link

my savings account pays about half of inflation

Hurting 2, Sunday, 20 January 2008 17:47 (twelve years ago) link

In the current climate there is no safe haven for your money.

The safest investments will be those which have immediate practical value to you personally: tools, practical clothes and shoes, acquiring a valuable skill - that sort of thing. The perfecta would be a tool that you would use for yourself, is not common, and could conceivably be turned into a small side business to earn a few bucks.

The riskiest will be those where you have no firsthand knowledge or experience, the "Argentinian Railway Bonds are a sure bet" or "the Thai auto industry is going to be the next big thing" kind of investment.

Aimless, Monday, 21 January 2008 18:33 (twelve years ago) link

The best investment of all is yourself. Skills

Alex in Denver, Monday, 21 January 2008 19:36 (twelve years ago) link

Sometimes a skill is rather forlorn without the tools to make it go.

Aimless, Monday, 21 January 2008 19:38 (twelve years ago) link

an interesting chart from our friends at calculated risk:

http://bp1.blogger.com/_pMscxxELHEg/R5TbFlX1msI/AAAAAAAABfk/WCQnqA1I_5A/s1600/SP500MonthlyCloseChange.jpg

Eisbaer, Monday, 21 January 2008 20:18 (twelve years ago) link

and for the REALLY antsy ILXors, the same chart from the Great Depression through today:

http://bp0.blogger.com/_pMscxxELHEg/R5TrdVX1mtI/AAAAAAAABfs/vqPdabZ5Or4/s1600/DOWCloseMax.jpg

Eisbaer, Monday, 21 January 2008 20:19 (twelve years ago) link

blogspot do not allow hotlinking bro

El Tomboto, Monday, 21 January 2008 20:21 (twelve years ago) link

SQUEEZE THAT MONEY BRO

El Tomboto, Monday, 21 January 2008 20:21 (twelve years ago) link

bernanke needs to start saying bro

El Tomboto, Monday, 21 January 2008 20:22 (twelve years ago) link

blogspot do not allow hotlinking bro

my bad!

Bear Markets and Recessions -- check out the charts.

Eisbaer, Tuesday, 22 January 2008 00:36 (twelve years ago) link

at any rate, tomorrow (1/22/08) may be very interesting indeed.

or, if y'all prefer, a visual representation:

http://img71.photobucket.com/albums/v216/spinnerau1/Snopes/Wet_roller_coaster.jpg

Eisbaer, Tuesday, 22 January 2008 03:33 (twelve years ago) link

b/c this threads needs some MORE indices to watch plummet in real time:

http://chart.finance.yahoo.com/c/0b/_/_n225

http://chart.finance.yahoo.com/c/0b/_/_hsi

http://chart.finance.yahoo.com/c/0b/_/_ftse

Eisbaer, Tuesday, 22 January 2008 04:33 (twelve years ago) link

I love the existence of "stock market futures" -- I think we should start a stock futures futures market so we can get even further ahead of the curve

Hurting 2, Tuesday, 22 January 2008 04:51 (twelve years ago) link

I think we should start a stock futures futures market so we can get even further ahead of the curve

until eventually the market foresees its own death and goes on a long drinking binge.

tipsy mothra, Tuesday, 22 January 2008 07:17 (twelve years ago) link

stock market futures futures is called "the stock market"

El Tomboto, Tuesday, 22 January 2008 07:18 (twelve years ago) link

everyone should strike and invest in paint

Arms, Tuesday, 22 January 2008 07:20 (twelve years ago) link

emergency rate cut?

laxalt, Tuesday, 22 January 2008 09:33 (twelve years ago) link

Invest in pumpkins now and cash up big in...October?

King Boy Pato, Tuesday, 22 January 2008 10:34 (twelve years ago) link

Gosh:

http://www.nytimes.com/aponline/business/AP-Fed-Interest-Rates.html?hp

toby, Tuesday, 22 January 2008 13:30 (twelve years ago) link

ok thats INSANE. everyone to the bunkers

laxalt, Tuesday, 22 January 2008 13:32 (twelve years ago) link

man the lifeboats!

laxalt, Tuesday, 22 January 2008 13:34 (twelve years ago) link

here they come!

http://img62.imageshack.us/img62/853/VRWCBlackHelicopters.jpg

laxalt, Tuesday, 22 January 2008 13:35 (twelve years ago) link

emergency rate cut?

-- laxalt, Tuesday, January 22, 2008 9:33 AM (4 hours ago) Bookmark Link

damn, son.

That one guy that hit it and quit it, Tuesday, 22 January 2008 13:51 (twelve years ago) link

Alright! Here comes the "petroeuro," £1=$3, massive inflation.

Dickerson Pike, Tuesday, 22 January 2008 13:59 (twelve years ago) link

stock market futures futures is called "the stock market"

so it's futures all the way down!

Hurting 2, Tuesday, 22 January 2008 14:02 (twelve years ago) link

no wonder we're fucked!

Hurting 2, Tuesday, 22 January 2008 14:02 (twelve years ago) link

the fed reminds me of bubbles from 'the wire' right now.

That one guy that hit it and quit it, Tuesday, 22 January 2008 14:02 (twelve years ago) link

By June, Bush's $500 tax rebate will only buy a pack of 'ports and 40 oz of St Ides

Dickerson Pike, Tuesday, 22 January 2008 14:03 (twelve years ago) link

http://ichart.finance.yahoo.com/instrument/1.0/%5EDJI/chart;range=1d/image;size=239x110

wanko ergo sum, Tuesday, 22 January 2008 14:36 (twelve years ago) link

you know what fucking kills me is that in every article about a major dip or crash in the stock market, you get reax from various analysts who say things like "well it looks like the fed finally gets it!" or "some feel the fed has been slow to wake up to the deterioration in the stock market" or "brananke has finally decided to stop the bleeding".. as if the panicky traders who have bet long on endless leveraged growth are the smart cookies and the fed is some dopey retarded cousin. you play with matches for a living, you shouldn't insult firefighters.

Tracer Hand, Tuesday, 22 January 2008 14:44 (twelve years ago) link

haha "brananke"

Tracer Hand, Tuesday, 22 January 2008 14:44 (twelve years ago) link

otm tracer

Hurting 2, Tuesday, 22 January 2008 14:53 (twelve years ago) link

not that i think the fed even knows what it's fighting at this point, or whether there's a fire, or whether their extinguisher is filled with gasoline or what

Tracer Hand, Tuesday, 22 January 2008 15:14 (twelve years ago) link

but yeah the fed doesn't remind of me of bubbles so much as all the "analysts" and traders whose eyes are red and raw from lack of the gushing credit flows and leveraged whatnots to which they've become accustomed; just an extra little drop into the syringe and they're like "AAAAHHHHHH.... the fed gets it"

Tracer Hand, Tuesday, 22 January 2008 15:17 (twelve years ago) link

meanwhile the national debt grows and mean incomes continue to stagnate

Tracer Hand, Tuesday, 22 January 2008 15:18 (twelve years ago) link

http://www.philosophising.com/dogpress/images/hair.of.dog.jpg

laxalt, Tuesday, 22 January 2008 15:19 (twelve years ago) link

i mean, these dudes really are the top-hatted robber barons of old, playing with trillions of dollars that no one else ever sees and putting the entire world's economies at risk - and somehow it's the fed's fault when they get a hangover - somehow the taxpayer is supposed to offer them even cheaper terms on their loans than they've been used to

Tracer Hand, Tuesday, 22 January 2008 15:23 (twelve years ago) link

we're in new territory here

http://media.npr.org/programs/atc/features/2007/aug/panic_cover200.jpg

laxalt, Tuesday, 22 January 2008 15:45 (twelve years ago) link

Bonus points to whoever finds the first bad political cartoon about all this that features the Cloverfield monster stomping down Wall Street with the word "RECESSION" on its chest.

Ned Raggett, Tuesday, 22 January 2008 15:46 (twelve years ago) link

found on a goldbug blog:

Problems Bernanke Faces

* Falling real estate prices
* Subprime housing mess
* Alt-A mortgage mess
* Pay Option ARM mess
* Sharply rising unemployment
* Rising credit card defaults
* Commercial Real Estate implosion
* Global wage arbitrage
* Falling US dollar
* Overheating China
* Slowing global economy
* Tapped out consumers
* Implosion of $500 trillion in derivatives
* Solvency issues at banks
* Forced unwind of massive Yen carry trade
* Boomer retirement
* Pension plan assumptions in an economy starving for yield
* Rising corporate defaults

Tracer Hand, Tuesday, 22 January 2008 15:51 (twelve years ago) link

LOOKS LIKE A GOOD TIME TO STAY IN HIGHER ED!

Catsupppppppppppppp dude 茄蕃, Tuesday, 22 January 2008 15:52 (twelve years ago) link

I ain't moving anywhere!

Ned Raggett, Tuesday, 22 January 2008 15:53 (twelve years ago) link

I feel pretty stupid for investing in my 401k (actually a 403). I'd had a lot more fun if I had eaten the taxes and spent the money on booze, records and drugs.

Catsupppppppppppppp dude 茄蕃, Tuesday, 22 January 2008 15:53 (twelve years ago) link

I mean, like I lost a thousand dollars on paper this year I think!

Catsupppppppppppppp dude 茄蕃, Tuesday, 22 January 2008 15:54 (twelve years ago) link

I have just called the local banks to start the process of refinancing my mortgage.

Maria :D, Tuesday, 22 January 2008 16:04 (twelve years ago) link

I really don't like being a recent college graduate and reading this.
Although I doubt there's anyone who does, really.

Maria, Tuesday, 22 January 2008 17:17 (twelve years ago) link

anyone think a stimulus plan is a good idea?

artdamages, Tuesday, 22 January 2008 17:34 (twelve years ago) link

anyone think a stimulus plan is a good idea?

absolutely (that's what keynes was all about, yo) -- the chinese and the bond markets may not like it very much, tho'.

Eisbaer, Tuesday, 22 January 2008 17:44 (twelve years ago) link

I feel pretty stupid for investing in my 401k (actually a 403). I'd had a lot more fun if I had eaten the taxes and spent the money on booze, records and drugs.

you'll be fine, as long as you keep your job and keep making contributions.

Eisbaer, Tuesday, 22 January 2008 17:45 (twelve years ago) link

Don't pay attention to your 401k or 403b value for the next X years, just max out the matching contributions. A dollar for dollar match gives an immediate return of 100%, doesn't it? And that doesn't take into account tax advantages, or reinvested dividends, or compounding.

I'm convinced that the next channel for promoting consumption will be loans against the value of the 401k, which will result in old people eating rats in 20 years.

Dickerson Pike, Tuesday, 22 January 2008 17:50 (twelve years ago) link

At least this tax refund (is that what GWB wants?) is happening when I'm being taxed enough to GET something.

</short-sighted self interest>

Don't pay attention to your 401k or 403b value for the next X years, just max out the matching contributions. A dollar for dollar match gives an immediate return of 100%, doesn't it? And that doesn't take into account tax advantages, or reinvested dividends, or compounding.

Lol we match double at 5% but I'm also contributing another 5% which isn't matched.

Catsupppppppppppppp dude 茄蕃, Tuesday, 22 January 2008 17:52 (twelve years ago) link

pick funds that have really low operating costs, that way the robots and douchebags losing your money aren't charging you to do so.

gff, Tuesday, 22 January 2008 17:56 (twelve years ago) link

im no economist, but it seems to me the economy today is radically different than it was in keynes time

artdamages, Tuesday, 22 January 2008 17:57 (twelve years ago) link

Yes and no, money is still borrowed into existence. everything has changed and yet not that much has changed

laxalt, Tuesday, 22 January 2008 18:14 (twelve years ago) link

thats deep.

artdamages, Tuesday, 22 January 2008 18:25 (twelve years ago) link

good analysis

artdamages, Tuesday, 22 January 2008 18:26 (twelve years ago) link

to answer your question as to whether it is a good idea, i'm pretty much at the stage of thinking there are no good ideas, sometimes its just better to let the drunkard be. As to whether it will work, which is a different question, they are totally shot if it doesn't, where next if this doesn't work? real interest rates are already negative even before this. its also election year

also, as the uk is finding out interest rates cuts aren't necessarily passed on the customers at all

laxalt, Tuesday, 22 January 2008 18:31 (twelve years ago) link

actually, i think its kind of important the point about money being borrowed into existence, because while more money can be dumped onto the economy, it still has to be borrowed by someone, the question is whether sentiment is holding up enough for people to take on yet more debt and spend, or whether they'll just try pay off what they already have, which returns money to source and is deflationary

laxalt, Tuesday, 22 January 2008 18:35 (twelve years ago) link

Aw man...

President Bush and leaders of Congress joined in a rare show of cooperation in promising urgent action to pump up the economy with upwards of $150 billion in tax cuts and government spending.

Eazy, Wednesday, 23 January 2008 00:00 (twelve years ago) link

http://www.cbpp.org/1-18-08tax-stmt.htm

^ comprehensive dismantling of the president's plan

Tracer Hand, Wednesday, 23 January 2008 01:31 (twelve years ago) link

So I'm a youngish dude. I was in middle school during the dot com crash and didn't have a job in high school during the subsequent recession.

You guys that have lived through this stuff before: how freaked out do I need to be by this talk of "a really bad recession?"

(lol i'm graduating in 6 months, shit.)

BIG HOOS aka the steendriver, Wednesday, 23 January 2008 01:43 (twelve years ago) link

graduating into a teaching or a master's program, more like

El Tomboto, Wednesday, 23 January 2008 01:53 (twelve years ago) link

Yeah I'm going straight into a teaching program this summer I think.

Unless I don't.

GF is moving to NY for grad school next January. Any teaching job I take is gonna require a two-year contract. I might chase her for grad school, who knows. I have about a month to decide lol

BIG HOOS aka the steendriver, Wednesday, 23 January 2008 02:01 (twelve years ago) link

Plz read "I might chase her for grad school, who knows" as "damn am I gonna stay with this girl or not?"

It's been a good 4 years and I'd love to continue it, but wtf do I do with a bachelors in English without a teaching cert or any contacts in publishing etc?

BIG HOOS aka the steendriver, Wednesday, 23 January 2008 02:07 (twelve years ago) link

work in a record store, duh

El Tomboto, Wednesday, 23 January 2008 02:08 (twelve years ago) link

learn to pour beer

El Tomboto, Wednesday, 23 January 2008 02:08 (twelve years ago) link

make the noize bored more fun

El Tomboto, Wednesday, 23 January 2008 02:11 (twelve years ago) link

re: fears about 401k's etc - I contribute dutifully to my IRA (our co. doesn't match. dicks.) and will likely continue to do so. The low-fee stock index funds I bought 3 or so yrs prior to the "correction" in 2000 and have occasionally contributed to since have weathered the storms pretty well. The key is making sure you're not socking away money in these things that you will likely need in the short term (& obv w/ IRA & 401k you prob don't want to even think about it until your nearing retirement in order to avoid penalties). I guess it's important to remember that the market has averaged something like right over 9% since 1927 - which has includes the Great Depression as well as several nasty recessions.

of course it's entirely likely that I don't fully understand the intricacies of the current economic climate and that we are, in fact, all DOOMED.

will, Wednesday, 23 January 2008 02:15 (twelve years ago) link

learn to pour beer

-- El Tomboto, Wednesday, January 23, 2008 2:08 AM

yeah there are these obnoxious "Texas School of Bartending" commercials on the radio every day and i occasionally consider actually dialing

one-EIGHT HUNNID- bar- TEND!

BIG HOOS aka the steendriver, Wednesday, 23 January 2008 02:25 (twelve years ago) link

i was in college during the 1991-1992 recession -- i coped by moving back with my parents, getting a full-time job and finishing up undergrad as a part-time student. it was not fun, but i survived. also, i was very lucky in that my employer at the time had a VERY generous tuition reimbursement policy so my undergrad debt was minimal (i understand that that may not be realistic, and i admit that i was very fortunate in that regard). i ended up graduating in 1997, right when the dot.com thing took off and was able to get a good job. also, my BA is in english/poli. sci. (though i started out as an economics/poli. sci. student) & my undergrad job was in accounting and benefits administration (which may have made me somewhat more marketable when i finally got the BA than the typical english BA).

i survived the dot.com crash/post-9/11 NYC-economy-in-the-shitbin by being in law school during the worst of that -- though those days were financed by student loans (for which i am paying dearly now). i survived that, too, but i would hesitate to recommend doing any kind of post-grad (including law school -- ESPECIALLY law school) if you'll end up deep in student loan debt.

Eisbaer, Wednesday, 23 January 2008 02:54 (twelve years ago) link

and re IRA investments -- learn the term "dollar cost averaging" (it means make regular deposits into the IRA account at a set time interval [weekly, biweekly, monthly, whatevah). it won't totally prevent losses if you are investing in equities, but it will mitigate them to some extent. dollar-cost averaging is how you invest in 401(k)'s, anyway, so if you do that then you already know the drill.

i also heart low-fee/no-load funds ... paying a load is throwing your money away.

Eisbaer, Wednesday, 23 January 2008 02:58 (twelve years ago) link

im no economist, but it seems to me the economy today is radically different than it was in keynes time

that is true -- but the basic idea remains the same: put money in the hands of those who are most likely to spend it (pref. lower-to-middle class folks), who then do just that (and thereby put money in the hands of merchants, who then spend THAT money, etc.). if anything, it may be MORE effective now since (as is repeated ad nauseum in the press) our economy is so strongly dependent on consumer spending.

the problem, though, is funding such a stimulus program -- we've got deficits now to worry about (and freaking out the bond traders and the chinese by running the debt even higher) (and thanks to dubya and his stupid tax cuts/even stupider Iraq war). and dubya (and ANY GOPer) WILL veto anything that raises taxes (the ghost of ronnie reagan still roams the land!)

Eisbaer, Wednesday, 23 January 2008 03:08 (twelve years ago) link

"I might chase her for grad school"

NYC has been a not very good place for those who don't already have jobs or high-demand skills and aren't willing to go into (high?) debt.

And soon (now?) it will be a TERRIBLE place for same. There won't be new jobs outside the service economy, and there will be huge financial layoffs, so you better hope the Europeans learn to tip.

Dickerson Pike, Wednesday, 23 January 2008 03:26 (twelve years ago) link

"how freaked out do I need to be by this talk of 'a really bad recession?'"

Incidentally I got my BA in the early 90s recession, and our commencement speaker at my Big State University was the Postmaster General. He told us "there are a lot of good jobs with the post office."

Dickerson Pike, Wednesday, 23 January 2008 03:28 (twelve years ago) link

Now that the NYC economy is basically all financial and service (serving the needs of the financial workers), I'm curious to see what happens now, especially since it looks like Europe and Asia are having problems of their own.

burt_stanton, Wednesday, 23 January 2008 03:44 (twelve years ago) link

will: why would you contribute to a 401K if your company isn't matching?

Jimmy The Mod Awaits The Return Of His Beloved, Wednesday, 23 January 2008 04:06 (twelve years ago) link

http://www.nytimes.com/2008/01/23/opinion/23stiglitz.html

short version: "if we had democratic policies in place we wouldn't be in this mess"

Tracer Hand, Wednesday, 23 January 2008 13:22 (twelve years ago) link

Yes and no, when everything is 'booming' people have a tendency not to want any measures that might stop the good times rolling, even though they are the very measures that would stop it falling off the edge of a cliff down the line

laxalt, Wednesday, 23 January 2008 13:28 (twelve years ago) link

um, kinda off-topic, but who made that dolly parton/robert armani mashup?

Tracer Hand, Wednesday, 23 January 2008 13:42 (twelve years ago) link

will: why would you contribute to a 401K if your company isn't matching?

-- Jimmy The Mod Awaits The Return Of His Beloved, Wednesday, 23 January 2008 04:06 (10 hours ago) Link

yeah poor wording on my part. I meant to say that since my company doesn't match 401k I try to max out my Roth IRA instead.

will, Wednesday, 23 January 2008 14:28 (twelve years ago) link

there are tax benefits even if your company doesn't match. You can sell low performing funds and buy into better performing ones or switch over to bonds etc within your 401(k) and not have to pay capital gains on it. You're only taxed when you actually cash out.

brownie, Wednesday, 23 January 2008 14:44 (twelve years ago) link

Roth IRAs are taxed on the way in but not on the way out, which I think is better. But there's a contribution limit.

Hurting 2, Wednesday, 23 January 2008 14:49 (twelve years ago) link

also, assets in 401(k)s and IRAs are off-limits to creditors in case of bankruptcy (yes, even after bankruptcy "reform"). not that anyone here is planning on going bankrupt, but it's nice to know that if you do then at least your retirement money won't be on the block.

Eisbaer, Wednesday, 23 January 2008 14:51 (twelve years ago) link

we gonna die

xp
ah I see

Jimmy The Mod Awaits The Return Of His Beloved, Wednesday, 23 January 2008 15:00 (twelve years ago) link

yeah ideally you have the disposable income to do both. Contributing to your 401k reduce your taxable income and (have capital gains benefits as brownie points out), plus, if your company matches, hey! free money!

IRA's don't get taxed when you cash out at retirement (...at least not for now, muahahahaha)

will, Wednesday, 23 January 2008 15:01 (twelve years ago) link

reduces

will, Wednesday, 23 January 2008 15:01 (twelve years ago) link

http://www.nytimes.com/2008/01/23/us/politics/23campaign.html?hp

Mr. Romney, in a speech to Jewish leaders in Boca Raton, sought to portray an air of reassuring confidence as he went through an economic plan that included tax cuts to business to encourage investment, as well as to individuals to spur spending.

“Every time I’ve seen things really get scary and the markets really collapse, I put aside my fear and say — aha, this is a buying opportunity,” he said. “My experience is, whatever goes down goes up.”

Former Mayor Rudolph W. Giuliani of New York was more sketchy as he answered questions about how he would handle the financial upheaval. Addressing a reporter he knew from New York, he pointed to his experience as mayor in suggesting that he was prepared to handle the crisis, but offered no details on what he thought should be in a stimulus package, or what taxes should be cut.

“Congress and the president should do a stimulus package and they should do a spending reduction package,” he said. “You’re familiar with that; we used to do that in New York.”

The shift could prove particularly complicated for Mr. McCain, of Arizona, who, in his own view, began gathering strength as a candidate after conditions in Iraq appeared to improve; he was long a proponent of increasing troop strength there, and national security and the war are the two mainstays of his campaign appearance. He brought up the action by the Federal Reserve before a question was asked at a news conference in Pensacola, and in a speech there, pushed elements of his own economic plan.

Those include eliminating the alternative minimum tax, making the Bush tax cuts permanent and cutting the corporate tax rate to 25 percent from 35 percent. “And, my friends, we’ve got to cut spending,” he said. “Otherwise we will continue to borrow money from the Chinese.”

The Washington Post/ABC News poll found no appreciable differences among Republicans in their ratings of whether Mr. Romney, Mr. McCain or Mr. Giuliani would be best at dealing with the economy.

Harding, Coolidge, Hoover, Reagan, Bush, ??????

Who will be the next Republican to fuck our shit up?

Fucking dilettantes.

Fluffy Bear Hearts Rainbows, Wednesday, 23 January 2008 16:14 (twelve years ago) link

The weakened economy and the turmoil in financial markets have helped to cement a gradual shift in emphasis in the presidential campaign to domestic issues from national security, giving the candidates an opportunity on Tuesday to spotlight economic proposals and try to convince voters that they could handle a crisis.

Whoever would have guessed that a stock market crash and almost unprecedented action by the Fed would have put the economy in the spotlight, well done Adam Nagourney for bringing us this brilliant analysis.

Tracer Hand, Wednesday, 23 January 2008 16:22 (twelve years ago) link

I love how Romney and Giuliani place much of the blame on overregulation. Repealing Sarbanes Oxley would not have done a THING to prevent this-- in fact, without SOx some of the losses may have been hidden away, festering to do even more damage.

Dickerson Pike, Wednesday, 23 January 2008 17:08 (twelve years ago) link

sarbanes-oxley did absolutely nothing whatsoever except employ a bunch of self-proclaimed sarbanes-oxley experts to consult for every poor bastard business that didn't know where to even begin trying to comply with sarbanes-oxley

it's one of the more asinine and pointless business regulations I'm unfortunately familiar with

El Tomboto, Wednesday, 23 January 2008 23:36 (twelve years ago) link

just as an aside, the small business i own is completely fuckmared. looks like worst december ever will be followed by worst january ever.

John Justen, Wednesday, 23 January 2008 23:38 (twelve years ago) link

I am very glad I do not own a small bricks and mortar retail operation, that is a fact.

El Tomboto, Wednesday, 23 January 2008 23:41 (twelve years ago) link

or any retail operation, to be honest.

El Tomboto, Wednesday, 23 January 2008 23:41 (twelve years ago) link

http://www.newsworld.cbc.ca/arts/images/pics/wonderful2.jpg

El Tomboto, Wednesday, 23 January 2008 23:43 (twelve years ago) link

well at least the proposed plan to allow rapid depreciation of investments will oh no wait that really only works for the manufacturing sector fucking assholes

John Justen, Wednesday, 23 January 2008 23:46 (twelve years ago) link

steel and auto industry lobbies profoundly more effective than guitar store lobby

El Tomboto, Wednesday, 23 January 2008 23:48 (twelve years ago) link

if guitar stores and sex workers got together they could probably get some juice tho

El Tomboto, Wednesday, 23 January 2008 23:51 (twelve years ago) link

plus the meetings would be awesome, esp if we incorporated liquor stores.

John Justen, Thursday, 24 January 2008 00:46 (twelve years ago) link

that would be great, especially the scene where the liquor store proprietors and the madams got in your face about what the hell guitar stores have in common with two industries whose entire existence is dependent on the whimsy of the state's blue laws and you come up with some goofy wayne's world answer off the cuff and everybody cheers

El Tomboto, Thursday, 24 January 2008 00:59 (twelve years ago) link

Now *that's* a stimulus package!

Fluffy Bear Hearts Rainbows, Thursday, 24 January 2008 01:02 (twelve years ago) link

http://www.ft.com/cms/s/0/24f73610-c91e-11dc-9807-000077b07658.html

Soros says it's the worst market crisis in 60 years.

Hurting 2, Thursday, 24 January 2008 03:18 (twelve years ago) link

what is renminbi?

Maria :D, Thursday, 24 January 2008 05:34 (twelve years ago) link

is that a srsly question?

Jimmy The Mod Awaits The Return Of His Beloved, Thursday, 24 January 2008 07:04 (twelve years ago) link

As expected: http://krugman.blogs.nytimes.com/2008/01/24/stimulus-disappointment/

Fluffy Bear Hearts Rainbows, Thursday, 24 January 2008 15:31 (twelve years ago) link

If federal funds were lowered beyond a certain point, the dollar would come under renewed pressure and long-term bonds would actually go up in yield. Where that point is, is impossible to determine. When it is reached, the ability of the Fed to stimulate the economy comes to an end.

This sounds analogous to what happened in Japan in the 90's. Is that the kind of recession we're headed into?

Fluffy Bear Hearts Rainbows, Thursday, 24 January 2008 15:38 (twelve years ago) link

If it hits that point, yes. When rates are at, or close to 0%, there's nothing left to cut. Under deflation, it gets to a point where businesses can make more money by saving their cash than by growing the business, and then you get a really nasty deflationary cycle going on. That's what happened in Japan.

stet, Thursday, 24 January 2008 16:34 (twelve years ago) link

deflation vs hyperinflation again;)

japan is still a strange situation because yes they had/have deflation, but didnt they kind of play a trick, sacrificing the domestic economy, and basically exporting inflation (yen carry trade and all that?).

this is a learning curve for us all, but i still think it looks more like hyperinflation than deflation. (almost all economic meltdowns have been hyperinflationary, other than great depression and japan?). the decreasing worth of the currency doesn't suggest deflation either, i dont know how it will pan out though!

laxalt, Thursday, 24 January 2008 17:33 (twelve years ago) link

this is a learning curve for us all, but i still think it looks more like hyperinflation than deflation. (almost all economic meltdowns have been hyperinflationary, other than great depression and japan?). the decreasing worth of the currency doesn't suggest deflation either, i dont know how it will pan out though!

well, bernanke has the nickname "helicopter ben" for a reason!

seriously now, i don't see how flooding the market with cheap money CANNOT be inflationary at some point.

Eisbaer, Thursday, 24 January 2008 17:35 (twelve years ago) link

This dude is even more pessimistic than Gareth. In ten years' time we'll be forced to eat our weakest neighbour just to survive.

Legendary Funds Manager Predicts Utter Global Collapse Stemming From Bursting of Property Bubble

Blames Bush-Cheney "regime"

In a recent interview on CNBC with Ron Insana, one of the "old-timer" funds manager, Julian Robertson, predicted "utter global collapse" as a consequence of the bursting of the world-wide property bubble.

Often called "Never Been Wrong Robertson", the former head of Tiger Management (once the largest hedge fund in the world), is extremely worried about the speculative bubble in real estate.

Specifically, he is very worried about a world that is sustained by American consumer spending which is in turn 1/4 sustained by a property bubble. He predicts that 20 million people could lose their homes once the property bubble bursts.

Even more worrisome, he thinks central banks around the globe out of desperation will try to re-inflate the world economy with more liquidity that will create an inflationary spiral unseen in the economic history of mankind.

"Where does it end?", Insana asked Robertson. "Utter global collapse," he answered. But not just economic collapse ... collapse of epic proportions.
Collapse and disintegration of all infrastructure, including government.
Inflation will run into the double and triple digits. "Food production will fall. People will be carrying around U.S. dollars in wheelbarrows like Germany," he said.


There will be "total collapse of public infrastructure. Total collapse of medical care systems. All public pension plans, Social Security will collapse. All corporate pension plans will collapse."

"The American consumer is effectively now supporting the rest of the planet," he continued. "Consumption rates in all other nations are falling, have fallen to the point that the tax revenues to governments, that the business and industries those nation states are providing is now a net negative number relative to total debt service and public cost, that this exists in virtually every nation state on the planet now."

And for much of this "doom", interestingly, he blames the Bush-Cheney "regime".

"They have now consolidated power and money on the planet to the maximum extent possible. The planet's net liquidity, that is its, net free cash flow. Is now a negative number. The planet is not simply sinking into a sea of red ink; it is already sunk. The people just don't realize it yet," he said.

According to Robertson, "the Bush-Cheney regime is preparing the nation for transition from democracy into dictatorship because a dictatorship will be necessary to control, in 5 years time, food and water riots." He said "the federal government, that part of Patriot II Act, the internal exile, that the government is going to have to build now huge detention compounds on federal lands, probably in the West where the land is available, to potentially house 50 million or more citizens that will be in financial ruin."

In 10 years time, whoever is left will be effectively starting again, he said.

"More importantly, and I'm trying to think how we imply this or how we express this to the people, what extraordinary times we are living in and how the destruction of the planet has been engineered by the Bushonian Cabal from 1980 to 1992, and then from 2001 to present, which has effectively destroyed the economic liquidity of the planet," he said.

Robertson ended the interview by saying that he hopes he is not alive to see this.

"The lucky ones are the ones who are my age now," he said.

Matt DC, Thursday, 24 January 2008 17:39 (twelve years ago) link

someone's been reading 'the road'.

That one guy that hit it and quit it, Thursday, 24 January 2008 17:40 (twelve years ago) link

if you believe in deflation put your money in savings, im there

if you believe in hyperinflation put your money in gold, im there too

laxalt, Thursday, 24 January 2008 17:40 (twelve years ago) link

Bushonian Cabal

Er?

Ned Raggett, Thursday, 24 January 2008 17:40 (twelve years ago) link

Actually Robertson must have been catastrophically wrong in the past considering he managed to grow his fund from $8m to $22bn and then promptly wipe most of the value out.

Matt DC, Thursday, 24 January 2008 17:44 (twelve years ago) link

I intend to weather such a crisis by pretending to be the second coming and developing a cadre of loyal followers.

Hurting 2, Thursday, 24 January 2008 17:49 (twelve years ago) link

A little googling suggests that story is dubious. Any source?

Hurting 2, Thursday, 24 January 2008 17:55 (twelve years ago) link

Clearly that was the work of the Bushonian Cabal.

Ned Raggett, Thursday, 24 January 2008 17:57 (twelve years ago) link

Yes, apparently most of the comments in that story were invented by one Al Martin:

http://www.movermike.com/posts/1118125009.shtml

Hurting 2, Thursday, 24 January 2008 18:02 (twelve years ago) link

This is crazy.

Most taxpayers are going to get a refund of $600-$1,200?

Eazy, Thursday, 24 January 2008 18:48 (twelve years ago) link

In Las Vegas, they hand out free chips to the high rollers, don't they? And the low rollers get some free nickels for the slots. Same idea.

Aimless, Thursday, 24 January 2008 18:57 (twelve years ago) link

Jesus Christ a bunch of young people thinking they're the first people in history to experience a recession.

aaaaaaaaaaaaaaaaaaaaaaaaaa, Friday, 25 January 2008 02:01 (twelve years ago) link

So the stock market is basically experiencing brief memory lapses about the long-term problem and moving on short-term good news, right?

Hurting 2, Friday, 25 January 2008 14:44 (twelve years ago) link

have you seen my blue-eyed sally?
she lives way down on shin-bone alley
the number on the gate is the number on the door
and the next house over is a grocery store

stay all night, stay a little longer
dance all night, dance a little longer
pull off your coat, throw it in the corner
i don't see why you don't stay a little longer

Tracer Hand, Friday, 25 January 2008 14:53 (twelve years ago) link

Jesus Christ a bunch of young people thinking they're the first people in history to experience a recession.

-- aaaaaaaaaaaaaaaaaaaaaaaaaa, Friday, January 25, 2008 2:01 AM (12 hours ago) Bookmark Link

soros ain't that young.

That one guy that hit it and quit it, Friday, 25 January 2008 14:57 (twelve years ago) link

Dems' perfidy knows no end, and Krugman says why:

the Democrats appear to have buckled in the face of the Bush administration’s ideological rigidity, dropping demands for provisions that would have helped those most in need. And those happen to be the same provisions that might actually have made the stimulus plan effective.

...the plan gives each worker making less than $75,000 a $300 check, plus additional amounts to people who make enough to pay substantial sums in income tax. This ensures that the bulk of the money would go to people who are doing O.K. financially — which misses the whole point.
...If the money the government lays out doesn’t get spent — if it just gets added to people’s bank accounts or used to pay off debts — the plan will have failed.

...The words of Franklin Delano Roosevelt come to mind: “We have always known that heedless self-interest was bad morals; we know now that it is bad economics.”

And the worst of it is that the Democrats, who should have been in a strong position — does this administration have any credibility left on economic policy? — appear to have caved in almost completely.

Yes, they extracted some concessions, increasing rebates for people with low income while reducing giveaways to the affluent. But basically they allowed themselves to be bullied into doing things the Bush administration’s way.

Dr Morbius, Friday, 25 January 2008 14:59 (twelve years ago) link

i'm 100% in agreement with you on this one, morbius. that the dems signed off on this "stimulus" bill is disgraceful on a number of levels.

Eisbaer, Friday, 25 January 2008 15:14 (twelve years ago) link

http://media.townhall.com/Townhall/Car/b/ca0123cd.jpg

kingfish, Friday, 25 January 2008 15:43 (twelve years ago) link

i imagine the republicans said "fine, if you won't budge we won't pass the bill - how will your constituents like that?" to which the democrats said "yeah well what about YOUR constituents??" to which the republicans said "we've convinced them they can't count on the govt for anything so why should we even care"

Tracer Hand, Friday, 25 January 2008 15:52 (twelve years ago) link

re that cartoon i cannot wait until these bizarre antigovernment zealots are exposed for the toadying, complacent elites that they are

Tracer Hand, Friday, 25 January 2008 15:54 (twelve years ago) link

Chuck Asay makes me want to throw up my hands and say fuck it.

"Hail, holy Ass!" the quiring angels sing;

"Priest of Unreason, and of Discords King!" Great co-Creator, let Thy glory shine: God made all else, the Mule, the Mule is thine!"

--Ambrose Bierce

Fluffy Bear Hearts Rainbows, Friday, 25 January 2008 16:00 (twelve years ago) link

they should issue the rebates as visa gift cards, in which case people would have to spend them.

not actually kidding.

John Justen, Saturday, 26 January 2008 01:41 (twelve years ago) link

Where's the bottom? As in my aunt Fanny?

Aimless, Saturday, 26 January 2008 01:42 (twelve years ago) link

Haha, I can clearly hear the six different variations on meaningless bullshit coming out of that CNBC screen

Hurting 2, Saturday, 26 January 2008 18:30 (twelve years ago) link

today bernanke injected more crack into the system ...

http://mechapixel.com/slags/329/2285EyAN.jpg

Eisbaer, Wednesday, 30 January 2008 19:55 (twelve years ago) link

is that would just happened up there at the 2pm mark? I was getting actual work done

El Tomboto, Wednesday, 30 January 2008 20:02 (twelve years ago) link

ritholtz called it at 10 am

El Tomboto, Wednesday, 30 January 2008 20:04 (twelve years ago) link

don't see why you don't stay a little longer

Tracer Hand, Wednesday, 30 January 2008 20:17 (twelve years ago) link

so we get our stimulus checks by what, August? I NEED NOW

Dr Morbius, Wednesday, 30 January 2008 20:21 (twelve years ago) link

Instead of taking a stand and recognizing the serious errors made in this little economic situation, once again it's ... easy solutions that'll lead to the same problems again.

Who are these people running our country? Man alive.

burt_stanton, Wednesday, 30 January 2008 20:27 (twelve years ago) link

And down it goes....

Eazy, Wednesday, 30 January 2008 20:46 (twelve years ago) link

So money is basically free now.

Hurting 2, Thursday, 31 January 2008 01:00 (twelve years ago) link

This intraday and day-to-day volatility in stocks is just INSANE. Makes 1999 look stable.

wanko ergo sum, Thursday, 31 January 2008 01:26 (twelve years ago) link

My totally inexpert guess is that you're seeing push/pull between fear of recession and people thinking "gee, this is a great buy-in point" (who are presumably also ignoring/downplaying the fear). I'd also bet you'd see a similar pattern right before past recessions.

Hurting 2, Thursday, 31 January 2008 01:47 (twelve years ago) link

Hello everyone when is the next cut?

laxalt, Thursday, 31 January 2008 03:08 (twelve years ago) link

http://www.ft.com/cms/s/0/28b464a2-cf50-11dc-854a-0000779fd2ac.html

The US should face its need for adjustment with courage and reason, not fear. It should stop behaving as the whiner of first resort, ready to waste all its dry powder on a short-sighted attempt to prevent a 2008 recession. Many poorer countries with weaker markets and institutions have survived and benefited from an adjustment that involves a year of negative growth. Faster bank recapitalisation, fiscal investment stimulus and international co-ordination should be first on the ­policy agenda.

webber, Thursday, 31 January 2008 03:53 (twelve years ago) link

OTM--the U.S. seems to've got itself locked into a boom-bust cycle again through short sighted monetary policy.

aaaaaaaaaaaaaaaaaaaaaaaaaa, Thursday, 31 January 2008 07:29 (twelve years ago) link

My totally inexpert guess is that you're seeing push/pull between fear of recession and people thinking "gee, this is a great buy-in point" (who are presumably also ignoring/downplaying the fear). I'd also bet you'd see a similar pattern right before past recessions in the history of capitalism, cause that's what capitalism is.

aaaaaaaaaaaaaaaaaaaaaaaaaa, Thursday, 31 January 2008 07:31 (twelve years ago) link

boom-bust cycles as we know them today are around 300 years old

laxalt, Thursday, 31 January 2008 10:01 (twelve years ago) link

the graph at the top of this thread was a brilliant move

Tracer Hand, Thursday, 31 January 2008 17:38 (twelve years ago) link

I'd also bet you'd see a similar pattern right before past recessions in the history of capitalism, cause that's what capitalism is.

I mean the unusual volatility of the market right now. I mean I'd guess that before recessions you tend to see big ups and downs with an overall downward trend, the greater downward force being fear of recession and the lesser upward force being denial

Hurting 2, Thursday, 31 January 2008 23:22 (twelve years ago) link

http://www.federalreserve.gov/releases/h3/Current/

can anyone explain why the 'reserves of non-borrowed reserves' rapidly went into negative territory in January? Am i misreading this? How can reserves be negative??

laxalt, Thursday, 7 February 2008 10:14 (twelve years ago) link

So I couldn't find any other thread to put this in but surely this is the kind of thing to make Tombot point and laugh. Favorite part:

After a month of heartbreak and frustration, I finally decided to suck it up and ask my contacts for assistance. They tried, but to no avail. I then asked my White House intern friends for help, but since I had changed political sides after my internship, they were not willing to help me.

From a Dartmouth grad, ladies and gentlemen.

Ned Raggett, Saturday, 9 February 2008 18:26 (twelve years ago) link

"Euros Accepted" signs in NYC

http://www.reuters.com/article/newsOne/idUSN0655798320080206

Fluffy Bear Hearts Rainbows, Saturday, 9 February 2008 18:30 (twelve years ago) link

Talking about retail on CNN: "...worst January in forty years."

http://www.reuters.com/article/newsOne/idUSN0655798320080206

Fluffy Bear Hearts Rainbows, Saturday, 9 February 2008 18:37 (twelve years ago) link

I scored a temporary job long enough to pay my phone bill.

articles like that always leave a lot to the imagination.

That one guy that hit it and quit it, Saturday, 9 February 2008 18:38 (twelve years ago) link

It's a little hard for me to believe that int'l relations-related entry level jobs would suffer that significantly from the current economic downturn, at least so soon. More likely it's just a highly competitive field - low demand, lots of highly educated people wanting to do it.

Hurting 2, Saturday, 9 February 2008 19:34 (twelve years ago) link

"If I can't even find a job the economy must be really bad"

Hurting 2, Saturday, 9 February 2008 21:07 (twelve years ago) link

actually I would say underemployment around here is hitting pretty much every stripe and maybe even my crowd (the cleared people) - I'm on a program that's going nowhere but up, but I keep hearing from everybody else that they're worried/looking around

El Tomboto, Saturday, 9 February 2008 21:16 (twelve years ago) link

When you wet, it's slippery (yeah)
When it damp, it crampin
If you slidin', you're tumblin' down
Don't want you on the ground!

I am kind of amazed I still have a job, especially since I work for a real estate company. At least once a day I take a minute to count my blessings. Then I count again to make sure that my blessings will still cover my rent.

kenan, Saturday, 9 February 2008 21:21 (twelve years ago) link

I do my best not to take my job for granted, that's for sure.

Ned Raggett, Saturday, 9 February 2008 21:23 (twelve years ago) link

xxpost - even if that's true, I don't think that article is representative. Although she was a fulbright scholar and all that, underneath it just sounds like the same "I just got out of college and life isn't as easy as I thought," article I've been reading every year for as long as I can remember.

Hurting 2, Sunday, 10 February 2008 04:31 (twelve years ago) link

that said, of course, I'm REALLY lucky to have my job (I'm no Fulbright scholar), and really glad to be going back to school next year.

Hurting 2, Sunday, 10 February 2008 04:32 (twelve years ago) link

laxalt, somebody pointed me toward this link today, about "non-borrowed reserves".. i can't say i understand it though -

http://globaleconomicanalysis.blogspot.com/2008/02/borrowed-reserves-and-tin-foil-hats.html

Tracer Hand, Monday, 11 February 2008 17:51 (twelve years ago) link

Well, I guess we are going to find out sooner or later whether negative non-borrowed reserves are as bad a thing as they would appear to be!

It would be interesting to see what the equivalent figures in the UK and Euro would be (and is that Iceland sailing into the same murky waters?)

laxalt, Monday, 11 February 2008 18:11 (twelve years ago) link

that chick must be doing something wrong--my school has a big I.R. program and isnt anywhere near as good as dartmouth and large portions of its graduates get jobs pretty easily w/ the govt and NGOs

max, Monday, 11 February 2008 18:14 (twelve years ago) link

After a month of heartbreak and frustration, I finally decided to suck it up and ask my contacts for assistance.

ok someone who doesnt use any connections theyre lucky enough to have as an opening strategy is prob just a retard or rich enough that they have the luxury to prove it to themselves and the world that they can make it on their own

jhøshea, Monday, 11 February 2008 18:19 (twelve years ago) link

i mean do they not teach you this shit in college?

jhøshea, Monday, 11 February 2008 18:23 (twelve years ago) link

my friend went to Dartmouth--she just has to breath and she has jobs thrown at her in NYC. I went to a shitty state college ... took about 7 months to find anything, with 90% of the interviews starting with, "so, where did you go to school?... really?" and ending with, "you really don't like Perec?"

aka, people who don't use their school connections are dinguses.

burt_stanton, Monday, 11 February 2008 18:57 (twelve years ago) link

weren't you not going to post here anymore or something?

bell_labs, Monday, 11 February 2008 19:00 (twelve years ago) link

I don't think you "get it"

burt_stanton, Monday, 11 February 2008 19:03 (twelve years ago) link

(tips a wink at burt, who covertly signals thumbs up)

Aimless, Monday, 11 February 2008 19:07 (twelve years ago) link

Aw, you're in love.

Ned Raggett, Monday, 11 February 2008 19:08 (twelve years ago) link

In love with life, Ned. With life!

Aimless, Monday, 11 February 2008 19:11 (twelve years ago) link

Fun fun:

The banking industry, struggling to contain the fallout from the mortgage debacle, is urgently shopping proposals to Congress and the Bush administration that could shift some of the risk for troubled loans to the federal government.

One proposal, advanced by officials at Credit Suisse Group, would expand the scope of loans guaranteed by the Federal Housing Administration. The proposal would let the FHA guarantee mortgage refinancings by some delinquent borrowers.

Credit Suisse officials have met with senior officials from the Department of Housing and Urban Development, which runs the FHA, and other policy makers to discuss the proposal.

Ned Raggett, Thursday, 14 February 2008 20:30 (twelve years ago) link

lol Ned I missed that! especially funny considering how CS had to revise down again this week. shitbirds.

So is Obama being set up as Carter II or what?

El Tomboto, Thursday, 21 February 2008 04:53 (twelve years ago) link

We've got plenty of time to get all the hate out pre-November. And won't Bush's farewell address be inspiring.

Ned Raggett, Thursday, 21 February 2008 04:54 (twelve years ago) link

Another article from Portfolio on the rising pressure for a government bailout of the big financial firms:

The Bankers' Bailout

The rescue operation brings to mind John Kenneth Galbraith's dictum that in the United States, the only respectable form of socialism is socialism for the rich.

o. nate, Thursday, 21 February 2008 18:23 (twelve years ago) link

http://bigpicture.typepad.com/comments/2008/02/quote-of-the--5.html

JKG getting big kudos from the bears post facto!

El Tomboto, Thursday, 21 February 2008 23:36 (twelve years ago) link

http://www.fpif.org/fpiftxt/4996

"Skyrocketing oil prices, a falling dollar, and collapsing financial markets are the key ingredients in an economic brew that could end up in more than just an ordinary recession."

BIG HOOS aka the steendriver, Saturday, 23 February 2008 04:19 (twelve years ago) link

very OTM inetrnetter comment on today's action. (prognosticate all you will about the economy in general, but there is just NO predicting to stock markets.)

by FreddieMac 6 hours ago

So the DJIA spends the greater part of the day (plus last few days) solidly in negative territory, and at 3:35PM Eastern Time the market suddenly explodes into POSITIVE territory (230 points, from peak-to-trough), as incredibly large volumes of funds SUDDENLY flow into the market? That was about as subtle as the Navy's missile hitting the disabled satellite the other day!

This AMBAC story is absolute poppycock: is THIS the best they could come up with, the unlikely explanation to provide cover for the CO-ORDINATED buy? Once again, the infamous Plunge Protection Team was leading the way, providing government liquidity to the big banks to flood the market to rally stocks.

If you ever doubted it, this clearly shows how the market is rigged, and is no more allowed to operate on free-market principles than the Soviet Republic communist system EVER was. Get used to it, as it is what it is.

Oh, well, the government giving money to banks to prop up the stock market (which is reaching some technical levels that are very worriesome) is no doubt better than the idea of giving recession rebate checks to the sheeple..... But this market is about as sustainable on it's own strength as Terry Schiavo was when hooked up to life-support.

wanko ergo sum, Saturday, 23 February 2008 04:26 (twelve years ago) link

Rising Risk of a Systematic Economic Meltdown

remy bean, Saturday, 23 February 2008 04:35 (twelve years ago) link

http://pub32.bravenet.com/photocenter/remote/2724789253/1B96860485.jpg

gershy, Saturday, 23 February 2008 04:48 (twelve years ago) link

More on bailout talk in Washington:

A 'Moral Hazard' for a Housing Bailout: Sorting the Victims From Those Who Volunteered

o. nate, Saturday, 23 February 2008 17:58 (twelve years ago) link

fuck republicans

El Tomboto, Saturday, 23 February 2008 18:42 (twelve years ago) link

you all realize this makes the hillary vs obama race completely moot, right? and the GOP already figured this out and is just letting McCain be their fall guy for this round?

El Tomboto, Saturday, 23 February 2008 18:43 (twelve years ago) link

That's why this year is going to be such a goddamn trudge to November!

Ned Raggett, Saturday, 23 February 2008 18:49 (twelve years ago) link

One thing that really gravels me is that the Federal Reserve Bank has regulatory powers that extend well beyond the ability to set the Fed Funds rate, and include such things as raising the margin requirements for stock purchases, but because the Fed's governors have completely bought into the Reaganite ideology that regulating free markets can only hurt matters, it has systematically eschewed using these powers, which not only could have softened the dot-com bubble and bust but could also place some boundaries on the over-leveraging used by hedge funds.

By now every single lesson from the Great Depression has been forgotten and every safeguard put in place by those who saw it and lived through it has been dismantled (Glass-Spiegle), co-opted (SEC) or heavily abused (FDIC).

Aimless, Saturday, 23 February 2008 19:19 (twelve years ago) link

Regulation is for the way down;)

laxalt, Saturday, 23 February 2008 19:22 (twelve years ago) link

By now every single lesson from the Great Depression has been forgotten

i dunno, is this true? isn't bernanke a great depression expert and thats maybe partly why he was brought in?

more to the point, i think there's one lesson they learned very well. Avoid Deflation At All Costs (which is why Japan 1990 is the only subsequent downturn that followed that path?)

Which is what all this helicopter ben business and $600 presents is all about? what we'll get instead may be just as bad, but any govt will choose rampant inflation over deflation every time now

laxalt, Saturday, 23 February 2008 19:26 (twelve years ago) link

Eh.

Deflation destroys by slow attrition. It tends to slow everything to a crawl and to strangle commerce. Hyperinflation destroys like a prairie fire, or more accurately, like a neutron bomb that leaves infrastructure intact.

Deflation tends to favor the old and the established, but chokes off investment and fossilizes an economy. Hyperinlfation tends to favor the young, who had less invested, fewer savings and who tend to start from scratch anyway and have their working lives ahead of them.

Don't go wishing for either one, but I suspect that the hyper-right wing establishment is finally going to get its inner heart's desire: wipe out all the work of the New Deal and Great Society, wreak revenge on those damn-hippie baby boomers, and reduce the next generation to properly obedient field workers. It will be Reagan's final legacy.

They'll save their own fucking hides through the wonders of our all-benevolent Chapter 11, which has at last become the sword they needed to work all this magic without ruining themselves.

Bah! I feel immensely old and sour when I think about this stuff.

Aimless, Saturday, 23 February 2008 20:31 (twelve years ago) link

Deflation favours the liquid, hyperinflation favours the illiquid

their actions thus far look like they will do anything to avoid the former. the former means a full stop for the economy, vastly reduced economy. the latter means activity continues, allbeit with people poorer (some of them wont realise)

laxalt, Saturday, 23 February 2008 20:36 (twelve years ago) link

vastly reduced ACTIVITY, i meant to say

though you could argue that economy and activity are the same thing, i dunno

laxalt, Saturday, 23 February 2008 20:37 (twelve years ago) link

Deflation favours the liquid solvent, hyperinflation favours the illiquid insolvent. Slightly different emphasis provided. Both are true.

Aimless, Saturday, 23 February 2008 20:44 (twelve years ago) link

not if you are solvent but rely on a wage for income.

laxalt, Saturday, 23 February 2008 20:45 (twelve years ago) link

Wages may lag in a hyperinflation, but they beat the living tar out of a fixed income.

Aimless, Saturday, 23 February 2008 20:48 (twelve years ago) link

even so, the feds actions thus far suggest they learned one lesson from the great depression? doesn't mean they're doing the right thing, but they've reacted very quickly, and seem happy to get more dollars out there? (at what ever cost that ultimately brings)

laxalt, Saturday, 23 February 2008 20:55 (twelve years ago) link

Yes, they do seem very happy to spew maoney across the landscape like t-shirts at a rock concert, although it is a nail-biting, jittery sort of happiness.

Aimless, Saturday, 23 February 2008 21:02 (twelve years ago) link

http://www.harpers.org/archive/2008/02/0081908

El Tomboto, Wednesday, 27 February 2008 03:25 (twelve years ago) link

When is the next cut? march 18?

laxalt, Wednesday, 27 February 2008 15:50 (twelve years ago) link

That Harper's article is excellent.

Aimless, Wednesday, 27 February 2008 18:35 (twelve years ago) link

Cunning Realist has a little project going.

Ned Raggett, Wednesday, 5 March 2008 03:38 (twelve years ago) link

We haven't even got a good name for that pass play in the last Super Bowl yet. Dude needs to chill.

El Tomboto, Wednesday, 5 March 2008 04:37 (twelve years ago) link

Hahah

Ned Raggett, Wednesday, 5 March 2008 04:53 (twelve years ago) link

http://bigpicture.typepad.com/comments/2008/03/foreclosure-pro.html

"the owners, have ceased paying their mortgages in some cases for nearly 2 years and have continued to occupy these homes. Now, these are homes in excess of $2,000,000 in the very best neighborhoods in South Florida"

this true? those jinglemail dudes must be regretting handing the keys back so easy now

laxalt, Wednesday, 5 March 2008 07:36 (twelve years ago) link

yeah i was gonna start a rolling shitty gas prices thread yesterday.

$3.25 down the street, though i'm sure i've got it easy compared to some of you guys.

BIG HOOS aka the steendriver, Wednesday, 5 March 2008 22:17 (twelve years ago) link

gas prices are further evidence that I am way too pessimistic to make money with puts and shorts or whatever, because I was calling for $4/gallon (DC area) back in 2006

El Tomboto, Wednesday, 5 March 2008 22:20 (twelve years ago) link

I think I was just too young and unaware of how much oil companies will manipulate their own pricing at american pumps in order to maximize profit

El Tomboto, Wednesday, 5 March 2008 22:21 (twelve years ago) link

like, maximize maximize warehouse full of actuarial scientists and microeconomics phd's all evaluating demand curves and models of agents with bounded rationality 80 hours a week maximize

El Tomboto, Wednesday, 5 March 2008 22:22 (twelve years ago) link

will fed cut again in response to todays payroll data?

laxalt, Friday, 7 March 2008 11:18 (twelve years ago) link

I'd say yes. One quarter percent cut looks about right to me.

They are in a tough spot. Politically speaking, they need to look busy. However, in real terms a cut now will do at least as much harm as it does good. It's only for show, to keep the panic on a lower simmer instead of coming to a boil.

Aimless, Friday, 7 March 2008 17:00 (twelve years ago) link

it's good to know that we're using our fiscal policy primarily to sooth a bunch of panicky cocaine-addicts.

Hurting 2, Friday, 7 March 2008 19:56 (twelve years ago) link

haha I know

http://bigpicture.typepad.com/comments/2008/03/whose-the-socia.html

Further, the ECB doesn't seem to care where their equity markets are.

http://bigpicture.typepad.com/photos/uncategorized/2008/03/06/2008europeangraphic.jpg

El Tomboto, Friday, 7 March 2008 20:18 (twelve years ago) link

whoa the market was around 11500 in Jan '00. It's now at 11900.

brownie, Friday, 7 March 2008 20:21 (twelve years ago) link

where's my coke

brownie, Friday, 7 March 2008 20:22 (twelve years ago) link

NEW YORK (AP) -- Stocks tumbled for a second consecutive session Friday after the government's much-anticipated February jobs report revealed employers slashed payrolls last month, touching off concern that a cornerstone of the economy's growth in recent years is showing signs of strain. The Dow Jones industrials fell more than 200 points, bringing their two-day slide to more than 400.

The decline came despite the Federal Reserve's announcement that it would take steps to aid the credit markets.

The Labor Department's report that employers cut jobs by 63,000 last month -- the most since March 2003 -- unnerved investors worried about the health of the economy and who had been expecting a 25,000 gain in jobs. While the unemployment rate fell to 4.8 percent, the decline reflects people leaving the labor force.

The payroll numbers arrived minutes after the Federal Reserve announced it would take fresh steps to ease credit troubles, including boosting the amount of money it will auction to banks.

Dr Morbius, Friday, 7 March 2008 20:34 (twelve years ago) link

Whoa Nellie.

wanko ergo sum, Tuesday, 11 March 2008 21:38 (twelve years ago) link

So can someone help me understand what the fed did? They basically offered to trade government securities to financial institutions for risky mortgage-backed securities? Does anyone have any opinion on that?

Hurting 2, Wednesday, 12 March 2008 21:37 (twelve years ago) link

Well, not exactly a trade- a 28-day loan of a Treasury with a AAA-rated mortgage-backed security as collateral.

o. nate, Wednesday, 12 March 2008 21:48 (twelve years ago) link

ah ok. So does that basically add liquidity by temporarily letting banks hold more safer securities? I really don't understand this stuff that well.

Hurting 2, Wednesday, 12 March 2008 21:51 (twelve years ago) link

Yes, it's supposed to be a liquidity injection - since the banks can easily convert the Treasuries to cash. There are some things that are not yet clear, such as will the Feds automatically roll these loans over every 28 days as long as the MBS hasn't been downgraded? What haircut will be applied to the MBS collateral?

o. nate, Wednesday, 12 March 2008 21:55 (twelve years ago) link

So is there any big risk here? Like what if the MBS turn out to be even worse than we thought?

Hurting 2, Wednesday, 12 March 2008 22:01 (twelve years ago) link

I guess there is some risk of the bank defaulting on the loan, but if that happens, I think we can assume the bank is hosed anyway since I don't think the government is going to let them just walk away from the loan unless they are in fact bankrupt.

o. nate, Wednesday, 12 March 2008 22:04 (twelve years ago) link

The Fed's discount window is always portrayed as the 'lender of last resort' for banks in liquidity trouble. Hiowever, if a bank takes advantage of this, there is generally a presumption that the bank is in deep, deep shit. Their stock takes a big hit, other banks view them with increased suspicion, etc.

What this gambit seems to be doing is offering roughly the same opportunity, but without (they all hope) as much adverse baggage. It looks to me like an attempt to buy time for the banks while the latest interest rate cuts work their way into the system. It probably can't make anything worse in the big picture, but if things still look as bad in three months, then it won't accomplish jack shit.

Aimless, Thursday, 13 March 2008 00:23 (twelve years ago) link

rearranging chairs on titanic

laxalt, Thursday, 13 March 2008 07:37 (twelve years ago) link

yes. middle class now actually sitting in the ocean itself.

El Tomboto, Thursday, 13 March 2008 07:55 (twelve years ago) link

or I should say anybody who actually has to worry about expenses, as opposed to worrying about returns.

El Tomboto, Thursday, 13 March 2008 07:57 (twelve years ago) link

Approvals for new loans are dropping through floor in UK but mortgages and loans are how money is introduced to the economy, right? Money supply has been increasing at around 10-14% in the UK over last 3-5 years (similar figures in US?) - which all backs up a continuing inflationary scenario (which has been happening for years but had been hidden as it went into real estate). Is this now a pushing on a string situation? ie, for the inflationary scenario to continue won't loans need to continue?

obviously money has been going into commodities and gold but isn't this 'existing' money?

intuitively a continuing inflationary scenario seems to make more sense, if only because ben has read a lot of books on the depression and they'll do anything to avoid a repeat, and interest rates will presumably be cut aggressively further...but how is it going to get out there without loans and mortgages (I guess in UK mortgages and consumer loans take up a larger proportion of total debt since all UK industry got closed down)

laxalt, Thursday, 13 March 2008 08:06 (twelve years ago) link

guess it comes back to that old inflation vs deflation argument. or whether oil/wheat/gold are going to 'correct'. still have trouble conceiving of gold as anything but an 'inverse dollar' sometimes though

laxalt, Thursday, 13 March 2008 08:09 (twelve years ago) link

talking of which....close to 990 again

laxalt, Thursday, 13 March 2008 08:10 (twelve years ago) link

Unless a commodity is in a genuine shortage (i.e. orange juice after a massive freeze in Florida) then commodities are not really a value-added, growth-oriented kind of investment, but rather a hedge against capital losses, at times when financial instruments appear to be bad risks (i.e. bond ratings are being cut or inflation is accelerating).

Right now, traders (it's more neutral than calling them speculators, but let's stop calling them 'investors', ok?) have given up looking for returns and are looking to preserve capital from loss. That's why commodities are surging. There's a disctinct chance that the low interest rates are just going to fuel commodity speculation and push inflation up at a dizzy pace.

The Fed's goose is really cooked right now. They are nudging the dollar towards the cliff. As I said several months ago, if it comes down to saving the banks or saving the dollar, the Fed will jettison the dollar like a jet pilot hitting the big red EJECT button.

Aimless, Thursday, 13 March 2008 17:31 (twelve years ago) link

If I were the fed I would be quietly tapping up the good folks in the gulf, china and singapore and pleading with them to start buying up banks (moreso than the stakes they have already bought).

Ed, Thursday, 13 March 2008 18:47 (twelve years ago) link

Funny, but sobering.

Daniel, Esq., Thursday, 13 March 2008 21:00 (twelve years ago) link

laughing and crying

Hurting 2, Thursday, 13 March 2008 22:22 (twelve years ago) link

a toxic blend. just in time for spring break.

tipsy mothra, Friday, 14 March 2008 06:02 (twelve years ago) link

Anyone want to buy a slightly used Bear Stearns

Although probably good to see JP Morgan Chase involved in the bailout rather than just the Fed. Wasn't it JP Morgan who locked the US banking community in his ballroom until they agreed to bail out a collapsing bank?

Ed, Friday, 14 March 2008 14:33 (twelve years ago) link

It was his library

Ed, Friday, 14 March 2008 14:43 (twelve years ago) link

took this at a local bagel shop a few days ago:

http://img.photobucket.com/albums/v335/gypsyfrocksbedlam/IMG_0479.jpg

tipsy mothra, Friday, 14 March 2008 15:54 (twelve years ago) link

Indeed, although you'd have to be blind not to have noticed the price of staples going up.

Ed, Friday, 14 March 2008 15:57 (twelve years ago) link

they should print some of these

http://bankjegy.szabadsagharcos.org/xxcentury/p136_b.jpg

laxalt, Saturday, 15 March 2008 09:26 (twelve years ago) link

http://upload.wikimedia.org/wikipedia/en/9/97/500000000000_dinars.jpg

laxalt, Saturday, 15 March 2008 09:28 (twelve years ago) link

Who is next after Bear Stearns? Lehmann?

laxalt, Saturday, 15 March 2008 09:29 (twelve years ago) link

how long before one of those, buys one of these:

http://thelongestlistofthelongeststuffatthelongestdomainnameatlonglast.com/images3/currency5.jpg

xpost

Ed, Saturday, 15 March 2008 09:32 (twelve years ago) link

Ouch. Bear Stearns sold to JPMorgan at $2 a share. Tomorrow should be a fun day for the markets.

http://online.wsj.com/article/SB120569598608739825.html?mod=hpp_us_inside_today

o. nate, Monday, 17 March 2008 00:31 (twelve years ago) link

tell me, a total ignoramus, what the difference is between a recession and a depression---

Also, how did normal people with no savings make it through the depression?

Maria :D, Monday, 17 March 2008 03:51 (twelve years ago) link

"a recession is when your neighbor loses his job; a depression is when you lose yours" (i've seen that quote attributed to truman and reagan, among others).

i think that an economic depression is an economic downturn that lasts more than one year and an at least 10% decrease in a nation's economy during that period.

Eisbaer, Monday, 17 March 2008 04:07 (twelve years ago) link

Bear Stearns was on the brink of financial collapse Friday when JPMorgan (JPM, Fortune 500) and the Federal Reserve Bank of New York said they would provide the brokerage a short-term loan. Bear was dealing with a classic run-on-the-bank: The firm's short-term creditors refused to lend the firm any more money and simultaneously demanded repayment of outstanding debt.

O_O

Jimmy The Mod Awaits The Return Of His Beloved, Monday, 17 March 2008 04:12 (twelve years ago) link

In the nineteenth century, these were called "panics". Then some bright early version of a PR-type person substituted the more soothing euphemism "business depression".

Consequently, President Hoover spent a vast amount of time in 1930 and 1931 making soothing speeches about how the "depression" was a temporary matter and "prosperity was just around the corner." By the time he was done the great public had connected the term "depression" with a soul-scathing cash famine.

Thus, the new euphemism "recession" was born. Now the public (especially those who weathered 1981-84) has learned to connect "recession" with a soul-searing cash drought. No new term has been substituted as of yet, although the term "banana" was attempted by one Fed chairman with an odd sense of humor.

Aimless, Monday, 17 March 2008 04:13 (twelve years ago) link

the early 1980s recession was definitely the worst economic downturn since the great depression (at least till now). though that one was caused by the feds (under volcker) setting the prime rate at close to 20%(!) in order to kill late 1970s inflation dead (and we may yet see that kind of inflation given how bernanke has been shitting out money). depending on where in the USA you lived, it probably seemed a helluva lot like another Great Depression -- e.g., i'm old enough to remember what allentown/bethlehem, PA were like before the 1980s; both towns today are a hollowed-out shell of what they once were. shit, if you live in some parts of the USA right NOW (e.g., around detroit and cleveland), it probably ALREADY feels like another Great Depression.

Eisbaer, Monday, 17 March 2008 04:57 (twelve years ago) link

and for those who really wanna shit their pants -- is the head of lehman brothers whistling past a graveyard?

Eisbaer, Monday, 17 March 2008 04:59 (twelve years ago) link

oh man if more than just bear stearns winds up closing shop before this quarter's out it's going to be a fucking party

El Tomboto, Monday, 17 March 2008 05:18 (twelve years ago) link

You know, I knew Kudlow was off the deep end, but I hadn't realized HOW deep.

Ned Raggett, Monday, 17 March 2008 05:29 (twelve years ago) link

That sign in the bagel shop is appaulling!!

It's "trebled", damnit!!!

JTS, Monday, 17 March 2008 05:57 (twelve years ago) link

Why didn't I graduate college 10 years earlier?

Catsupppppppppppppp dude 茄蕃, Monday, 17 March 2008 06:05 (twelve years ago) link

Seriously, I could have made and lost a few hundred grand and would have been smart enough to have saved money to weather this shitstorm.

Catsupppppppppppppp dude 茄蕃, Monday, 17 March 2008 06:05 (twelve years ago) link

golds gone up $25 dollars this morning already and europe and us markets haven't even opened.

$1025 now, going to be a pretty rough day it seems!

laxalt, Monday, 17 March 2008 06:49 (twelve years ago) link

Gonna be a rough decade from here on in.

So if you were 56 years old and had a 401(k), would you take the penalty and cash out now?

Eazy, Monday, 17 March 2008 06:53 (twelve years ago) link

so what should i invest in at this point besides a shotgun and a water purifier

max, Monday, 17 March 2008 06:59 (twelve years ago) link

find something to sell to freaked-out white dudes. those guys will buy anything.

tipsy mothra, Monday, 17 March 2008 07:01 (twelve years ago) link

Just make something that Europeans and Canadians will buy.

Eazy, Monday, 17 March 2008 07:09 (twelve years ago) link

I wouldn't rely on Europeans...they are on same path just a little behind

laxalt, Monday, 17 March 2008 07:10 (twelve years ago) link

so fucking glad I work for the govt

El Tomboto, Monday, 17 March 2008 09:02 (twelve years ago) link

Even though I live in the UK I'm glad that I work for an org that's funded by a flat universal tax fee rather than anything dependent on profits

Tracer Hand, Monday, 17 March 2008 10:29 (twelve years ago) link

Nothing to fear but the Daily Mail.

Ed, Monday, 17 March 2008 10:30 (twelve years ago) link

Even though I live in the UK

This part of that sentence is probably superfluous

laxalt, Monday, 17 March 2008 10:31 (twelve years ago) link

Maybe, but this comment on a Larry Elliot article the other day made me wonder:

Please note that the dooomsters are missing one thing, reality. The reality is that in the new global economy the US growth engine is something of a side show. Globalisation has done one good thing, it has reduced the world's reliance on US growth. Anyone doubting it should look up the latest Chinese growth stats and tell the rest of us on this blog just how small the US export component of China GDP actually is....they will realise that China growth is not reliant on rising US growth. Neither is Russia's, India's, Brazil's, etc etc. Decoupling is not a wonky idea, it is a fact in a global economy that we have now, and for the next 15-years, wherein the primary driver is not US demand but internal infrastructural demand from the emerging markets (Brazil, China, India, Russia, and others). A US GDP slowdown from 4% real growth to 1-1.5% in 2008 does nothing to stop this process. As the UK is the epi-centre for all the financial, legal, insurance service provision for the new global economy, we too are surprisingly unreliant on US growth. These facts are rarely appreciated outside of capital markets... but facts are facts, the trends in the past few months have become clear. The UK will grow only slighlty under trend in 2008 before growth goes back to trend or above in 2009. This is not the year to fret about marginal debt, it is the year to avoid USD assets.

Tracer Hand, Monday, 17 March 2008 10:40 (twelve years ago) link

This may be true for Russia India Brazil (Mexico?)

But the situation for UK Spain Ireland Holland is bad not just because of exposure to US but because of own problems.

The way i read it might be more like

This is not the year to fret about marginal debt, it is the year to avoid USD assets and GBP assets

laxalt, Monday, 17 March 2008 10:47 (twelve years ago) link

So, gold then, do you prefer a safety deposit box or a sock under the floorboards?

Ed, Monday, 17 March 2008 10:49 (twelve years ago) link

Allocated physical Zurich or London

laxalt, Monday, 17 March 2008 10:51 (twelve years ago) link

Greenspan:

“The essential problem is that our models — both risk models and econometric models — as complex as they have become, are still too simple to capture the full array of governing variables that drive global economic reality,” Greenspan writes.

He goes on to say that bubble discontinuities, by their nature, can’t be predicted, and must pop on their own. “If, as I strongly suspect, periods of euphoria are very difficult to suppress as they build, they will not collapse until the speculative fever breaks on its own,” he writes. “Paradoxically, to the extent risk management succeeds in identifying such episodes, it can prolong and enlarge the period of euphoria. But risk management can never reach perfection. It will eventually fail and a disturbing reality will be laid bare, prompting an unexpected and sharp discontinuous response.’

i.e. Economists talk a lot of shit and don't really know what they're doing.

Hurting 2, Monday, 17 March 2008 15:04 (twelve years ago) link

Weimar America, wahoo

Dr Morbius, Monday, 17 March 2008 15:11 (twelve years ago) link

periods of euphoria are very difficult to suppress as they build

easy, duke

Tracer Hand, Monday, 17 March 2008 15:13 (twelve years ago) link

lol jim kramer 1 week ago "bear stearns is fine! do not take your money out of bear! thats just silly!"

http://www.redlasso.com/ClipPlayer.aspx?id=ae47b67d-2523-4946-a2ad-aadc68176f67

jhøshea, Monday, 17 March 2008 15:28 (twelve years ago) link

I don't get why people listen to that guy. Do they really think he's going to let them in on good investment tips at the top of his lungs over national cable television?

Hurting 2, Monday, 17 March 2008 15:30 (twelve years ago) link

Greenspan is worried his name is going to be all over this for the rest of time

laxalt, Monday, 17 March 2008 15:31 (twelve years ago) link

i fucking hope so all the irrationally exuberant greenspan worship is so gross

jhøshea, Monday, 17 March 2008 15:34 (twelve years ago) link

I think everybody realizes that now. It's funny, the number of things that the experts realize now.

Tracer Hand, Monday, 17 March 2008 15:37 (twelve years ago) link

Globalisation has done one good thing, it has reduced the world's reliance on US growth. Anyone doubting it should look up the latest Chinese growth stats and tell the rest of us on this blog just how small the US export component of China GDP actually is....they will realise that China growth is not reliant on rising US growth. Neither is Russia's, India's, Brazil's, etc etc.

This is pretty much true for China, Russia (they are basically propped up by oil revenues anyway??), India, and Brazil. Not so much for Japan (although Japan is certainly LESS reliant than it was 10-20 years ago), Canada...

jessie monster, Monday, 17 March 2008 15:41 (twelve years ago) link

China will definitely come out of this okay purely because of the size of its domestic market and a reduction in insanely high growth rates isn't really all that awful.

jessie monster, Monday, 17 March 2008 15:43 (twelve years ago) link

got big inflation problems though, i think?

laxalt, Monday, 17 March 2008 15:47 (twelve years ago) link

also china is full of MAGIC

max, Monday, 17 March 2008 15:58 (twelve years ago) link

and LUCK

888

jhøshea, Monday, 17 March 2008 16:01 (twelve years ago) link

where can i buy futures in PIXIE DUST

max, Monday, 17 March 2008 16:02 (twelve years ago) link

buy palladium instead

remy bean, Monday, 17 March 2008 16:04 (twelve years ago) link

i'm turning to theft of catalytic converters of large offensive s.u.v.s

remy bean, Monday, 17 March 2008 16:04 (twelve years ago) link

palladium is the new gold, bitch

remy bean, Monday, 17 March 2008 16:04 (twelve years ago) link

they're also artificially keeping their manufacturing costs down, which should bite them in the ass but PIXIE DUST etc. etc. xxp

jessie monster, Monday, 17 March 2008 16:04 (twelve years ago) link

what is the ADAMANTIUM market like nowadays

max, Monday, 17 March 2008 16:06 (twelve years ago) link

it's cutthroat

remy bean, Monday, 17 March 2008 16:07 (twelve years ago) link

buy kryptonite -- it's a hedge against the falling dollar AND superman

Hurting 2, Monday, 17 March 2008 16:13 (twelve years ago) link

well, some of us here may take what this article says to heart ...

Eisbaer, Tuesday, 18 March 2008 04:27 (twelve years ago) link

and then there's this interesting detail from the proposed bear stearns acquisition

Michael Hecht, at Banc of America Securities, in a note today wrote that J.P. Morgan should be paying as much as $40 a share for Bear, even factoring in the $6 billion for litigation reserves, the cost of deleveraging Bear and integration costs including tech and facilities.

someone's gonna get paid.

Eisbaer, Tuesday, 18 March 2008 04:32 (twelve years ago) link

but seriously guys.

what is a shitbin? is it like a euphemism for toilet? aren't euphemisms supposed to be less crass? or are there actually bins that people shit in? is it a british thing?

The Brainwasher, Tuesday, 18 March 2008 04:42 (twelve years ago) link

Thread Started by TOMBRIT

BIG HOOS aka the steendriver, Tuesday, 18 March 2008 04:45 (twelve years ago) link

Fuck you.

El Tomboto, Tuesday, 18 March 2008 04:49 (twelve years ago) link

Bear had what, a $20B cap last year. Wowzers.

I'd be surprised if Lehman went tits up but the thing those fucking quants and Greenspan never seem to want to account for is the emotion involved in securities. They can't do it so they avoid it, and if Lehman goes down in the short term, it's gonna be for emotional reasons and model driven. This whole fucking thing reeks of LTCM all over again.

Dandy Don Weiner, Tuesday, 18 March 2008 11:11 (twelve years ago) link

is it a british thing?

No.

I always thought it was like 'sin bin' but, you know, worse?

Ned Trifle II, Tuesday, 18 March 2008 11:16 (twelve years ago) link

I never heard of it before this thread

So people are expecting a full 1% cut today? Is that priced in? Does this mean if they pull a surprise and cut by only 0.5% (only!) that it could arrest the dollars fall, momentarily? 1% seems like full panic but that seems to be what is on the cards

laxalt, Tuesday, 18 March 2008 11:25 (twelve years ago) link

interesting that the pound is just about the only currency not rising against the dollar

laxalt, Tuesday, 18 March 2008 11:26 (twelve years ago) link

although not surprising

laxalt, Tuesday, 18 March 2008 11:26 (twelve years ago) link

It is rising, it's up a whole cent since this morning!

Ned Trifle II, Tuesday, 18 March 2008 11:39 (twelve years ago) link

why the charts so rosy?

Tracer Hand, Tuesday, 18 March 2008 16:37 (twelve years ago) link

free money on its way? lot of volatility, seems everytime there is a big drop theres a rally later till the next dose of bad news and subsequent drop

all short term noise surely

laxalt, Tuesday, 18 March 2008 16:51 (twelve years ago) link

there was a pretty good article about the state of the dollar in the NYTimes this weekend. Interest rate cuts logically won't stop the fall of the dollar because it'll just encourage investors to buy other currencies to get a better return on their investment.

jessie monster, Tuesday, 18 March 2008 18:06 (twelve years ago) link

well sure rate cuts will increase fall of dollar, but i mean if 1% is priced in and then it ended up only being 0.5% it could have a 'less negative impact' on the dollar, but a worse effect on markets as they want their crack hit of free money?

badboymakaveli from Windhoek, Tuesday, 18 March 2008 18:15 (twelve years ago) link

75 basis point cut to 2 1/4

limbo limbo limbo

The Macallan 18 Year, Tuesday, 18 March 2008 18:20 (twelve years ago) link

Things are getting very weird very fast -- and will probably get even weirder, faster, as the train wreck of bad debt meets the Saint Paddy's Day Parade of bacchanalian excess at the grade-crossing of destiny. The train is carrying America's financial system, but the engine driving it is peak oil, because declining energy resources necessarily means declining capital wealth -- and declining value of all the institutions, instruments, and markers that denote that wealth or hope to profit by trading in it. The fiasco leads straight to the necessary reinvention of American life on other terms and by other means.

The Macallan 18 Year, Tuesday, 18 March 2008 18:24 (twelve years ago) link

Yes looks like they are trying to walk the tightrope here...(shows how crazy things are that a 0.75% cut can be considered that way)

laxalt, Tuesday, 18 March 2008 18:24 (twelve years ago) link

let's all hope China keeps buying dollars.

jessie monster, Tuesday, 18 March 2008 18:30 (twelve years ago) link

are we in negative interest rate territory yet?

brownie, Tuesday, 18 March 2008 18:34 (twelve years ago) link

we should all be keeping our savings under our mattresses.

jessie monster, Tuesday, 18 March 2008 18:36 (twelve years ago) link

mattresses generate back pay! should I submit this to Readers Digest y/n?

brownie, Tuesday, 18 March 2008 18:39 (twelve years ago) link

omg did anyone else see jim kramer yesterday - raaaaare form - shit was apocalyptic

jhøshea, Tuesday, 18 March 2008 18:40 (twelve years ago) link

it should be the caption of a New Yorker cartoon. xp

jessie monster, Tuesday, 18 March 2008 18:40 (twelve years ago) link

Cramer can kiss my ass.

Dandy Don Weiner, Tuesday, 18 March 2008 19:13 (twelve years ago) link

jim cramer has been pretty amusing lately.

El Tomboto, Tuesday, 18 March 2008 19:23 (twelve years ago) link

"Bear Stearns is gonna be fiiiiiiine!"

BIG HOOS aka the steendriver, Tuesday, 18 March 2008 19:44 (twelve years ago) link

cramer can roll his bald head around my exponentially descending ball sack

burt_stanton, Tuesday, 18 March 2008 19:58 (twelve years ago) link

why is your ball sack descending, burt_stanton?

max, Tuesday, 18 March 2008 19:59 (twelve years ago) link

i don't know :[

burt_stanton, Tuesday, 18 March 2008 19:59 (twelve years ago) link

^ exponentially descending

BIG HOOS aka the steendriver, Tuesday, 18 March 2008 21:35 (twelve years ago) link

oh just STFU already

the money quote:

``He sounds like Herbert Hoover in 1930,'' said Bruce Bartlett, who served as a Treasury Department economist under President George H.W. Bush.

Eisbaer, Wednesday, 19 March 2008 04:33 (twelve years ago) link

A persuasive argument for increasing regulatory capital requirements on banks (written last November but still relevant):

Why banking remains an accident waiting to happen

o. nate, Wednesday, 19 March 2008 15:47 (twelve years ago) link

It's like the executive tells young J.R. in the Gaddis novel - "Make other people's money work for you."

Hurting 2, Wednesday, 19 March 2008 15:58 (twelve years ago) link

is anyone calling for capital controls yet? :p

jessie monster, Wednesday, 19 March 2008 16:00 (twelve years ago) link

Hey so maybe this is working for a minute anyway?

Shit is rallyin.

BIG HOOS aka the steendriver, Wednesday, 19 March 2008 17:11 (twelve years ago) link

Rally, pah

Shit Dead Cat Bounced.

http://image.guardian.co.uk/sys-images/Guardian/Pix/steve_bell/2008/03/19/DOWNCLIMB512.jpg

Ed, Wednesday, 19 March 2008 17:14 (twelve years ago) link

Bounced? Dead cat is down so far today.

Hurting 2, Wednesday, 19 March 2008 17:16 (twelve years ago) link

The Subprime Primer

Daniel, Esq., Wednesday, 19 March 2008 19:57 (twelve years ago) link

is anyone calling for capital controls yet? :p

Rep. Barney Frank, chair of the House Financial Services Committee, had this to say today:

US investment banks need more regulation-Rep. Frank

o. nate, Wednesday, 19 March 2008 20:08 (twelve years ago) link

water rolling downhill, etc.

Dandy Don Weiner, Wednesday, 19 March 2008 20:22 (twelve years ago) link

Hey so maybe this is working for a minute anyway?

Shit is rallyin.

-- BIG HOOS aka the steendriver, Wednesday, March 19, 2008 12:11 PM (3 hours ago)

HAW

El Tomboto, Wednesday, 19 March 2008 20:54 (twelve years ago) link

we have a 4-pane screen in here and right now it is like so:

TUNER 1, CSPAN 2: CEO Pay For Home Mortgage Companies
TUNER 2, CSPAN : Allegations of Fraud, Waste & Abuse in Iraq War Spending
TUNER 3, CNBC : Fannie & Freddie's Surplus Capital Requirement Cut From 30% to 20%
TUNER 4, CNN : Lou Dobbs Tonight will be discussing the dwindling US Economy with some economists (right now cafferty is reading mail about iraq)

El Tomboto, Wednesday, 19 March 2008 20:59 (twelve years ago) link

it is no longer necessary to use cut-ups or any other particularly holistic technique to see where my country is headed

El Tomboto, Wednesday, 19 March 2008 21:00 (twelve years ago) link

shitbin

http://www.treehugger.com/toilet-llqq-001.jpg

Dandy Don Weiner, Wednesday, 19 March 2008 21:11 (twelve years ago) link

round the bowl down the hole roll tide roll

El Tomboto, Wednesday, 19 March 2008 21:26 (twelve years ago) link

fuckin stan goff flippin me out with shit like this

Mark Jones eight years ago described the post-Cold War booms as the capitalist metropoles digesting the fallen Eastern Bloc, somewhat slowly, “like a snake who’s swallowed a goat.” The snake is shitting now… and starving.

The unfolding economic crisis — which surprised the mainstream commentators and analysts, but about which those crazy leftists have been Playing Cassandra for a decade — is now firmly off the tracks and roaring toward some abyss.

Maybe this
belongs in Rolling Looming Apocalypse?

BIG HOOS aka the steendriver, Friday, 21 March 2008 00:40 (twelve years ago) link

haw

El Tomboto, Friday, 21 March 2008 00:41 (twelve years ago) link

everybody wants to live in the end times

El Tomboto, Friday, 21 March 2008 00:41 (twelve years ago) link

even I don't believe suburbanites are going to rise up. that's crazy talk

El Tomboto, Friday, 21 March 2008 00:45 (twelve years ago) link

like, the suburban and exurban folks losing so much that they start a revolution because of this is like people saying microsoft is going to go out of business because everybody hates vista and the xbox is a money pit

El Tomboto, Friday, 21 March 2008 00:46 (twelve years ago) link

even I don't believe suburbanites are going to rise up. that's crazy talk

-- El Tomboto, Friday, March 21, 2008 12:45 AM

this is heartening somehow

BIG HOOS aka the steendriver, Friday, 21 March 2008 00:59 (twelve years ago) link

When it comes to the economy the suburban people, as they say, wouldn't know how to pour pee out of a boot if the instructions were written on the heel. They'd be just as likely to blame illegal immigrants, or too-high taxes on business.

Aimless, Friday, 21 March 2008 01:00 (twelve years ago) link

haha yeah democracy and its attendant myths are also a good hedge against uprisings. of course everyone probably said exactly that about feudalism too

El Tomboto, Friday, 21 March 2008 01:02 (twelve years ago) link

barry's column in esquire is pretty much why I love him: http://www.esquire.com/the-side/opinion/dont-fear-bear-stearns

You're supposed to raise your standard of living by working harder, being clever, earning more income -- not by using your long-term savings. And now this current generation is pretty much fucked. When push comes to shove and they go to take money out of their houses at retirement time, they’re going to find out that there ain’t a whole lot there. They better pray that Social Security is still around in 20 years -– not exactly a sure thing.

plus the fact that as a dude who runs his own firm in downtown manhattan and rolls out on the weekends to mcfuckin' richdude town, he still posts excitedly when he gets a great deal on some gadget - "Hey guys I found this 7.2 megapixel camera for only $174!!" total money nerd bro

El Tomboto, Friday, 21 March 2008 01:51 (twelve years ago) link

they won't rise up, but I wonder what it'd take for a mortgage strike. Rent strikes weren't that long ago, after all.

stet, Friday, 21 March 2008 02:45 (twelve years ago) link

It's important not to conflate well-grounded economic chicken littlism with grab-bag political nutso fantasizing

actually I'm not really sure why that's important at this point

Hurting 2, Friday, 21 March 2008 03:51 (twelve years ago) link

lol

BIG HOOS aka the steendriver, Friday, 21 March 2008 04:22 (twelve years ago) link

My workplace automatically enrolls us in some sort of mandatory-contribution pension, but the 401K/or whatever variation thereof, is optional. I requested information, but it seems I had to pick the stocks myself, rather than just sit back and let them do it for me. They don't match, so is it worth it to even do it?

Virginia Plain, Sunday, 23 March 2008 06:48 (twelve years ago) link

There are probably tax benefits, although I don't know if they're better than IRA or ROTH IRA accounts - you should probably ask the benefits person about that. I'd also guess you have options besides just straight stock-picking. I don't know a lot about it because my job doesn't offer any kind of 401k. But if you can, you're probably better off with mutual funds or indexes than trying to pick stocks.

Hurting 2, Sunday, 23 March 2008 15:45 (twelve years ago) link

I've never heard of a 401K plan where you straight up picked stocks instead of funds (and company shares). Look at the pension plan, think about what you'll need or want when you retire that the pension doesn't cover, then whip out a calculator or use any of dozens of free online retirement calculators to figure out what kind of percentage you ought to be putting away. When I select for my 401K contribs I go 50% fixed income/bond backed funds, 30% indices (like S&P 500 or dj small cap index) and 20% "growth" funds. Probably nothing wrong with 100% fixed/bond backed, I just like to tinker with everything.

El Tomboto, Sunday, 23 March 2008 15:51 (twelve years ago) link

the tax benefit is the same as a regular IRA in terms of effectively deferring taxes until you withdraw

http://en.wikipedia.org/wiki/401(k)_IRA_matrix

El Tomboto, Sunday, 23 March 2008 15:54 (twelve years ago) link

there are some 401(k)s that have a brokerage option, where you can buy individual securities or non-plan mutual funds or ETFs. mine doesn't, though, and i wish that it did b/c some of the fund offerings are pretty shitty.

Eisbaer, Sunday, 23 March 2008 15:58 (twelve years ago) link

also, i would take the roth 401(k) if it is offered -- b/c distributions will be tax free when they are made (absent some future congressional tinkering). it does hurt your paycheck, though, b/c contributions are post-tax.

Eisbaer, Sunday, 23 March 2008 16:01 (twelve years ago) link

pfft I don't need that many choices, I'd spend all day trying to allocate

El Tomboto, Sunday, 23 March 2008 16:02 (twelve years ago) link

and the equivalent of a "mortgage strike" is called "jingle mail" -- i.e., when one realizes that the "flip that house!" nonsense isn't gonna work any more and the house is worth less than the mortgage, and one just mails back the keys to the McMansion or the luxury condo to the mortgage processor.

Eisbaer, Sunday, 23 March 2008 16:03 (twelve years ago) link

I prefer the extra liquidity now over the roth stuff.
I know that my overall effective tax rate in 2042 will be in all likelihood quite a bit higher than 19.82% but by 2042 I will probably just be a brain in a jar anyway

El Tomboto, Sunday, 23 March 2008 16:09 (twelve years ago) link

http://news.yahoo.com/s/ap/20080321/ap_on_bi_ge/living_with_parents

gabbneb, Sunday, 23 March 2008 21:05 (twelve years ago) link

see, back in the day, that wouldn't even be an issue, because by the time you're fifty your parents are supposed to be well and dead or so close to it you're moving in anyway

El Tomboto, Sunday, 23 March 2008 21:11 (twelve years ago) link

This sort of talk:

Parents "jeopardize their financial freedom by continuing to subsidize their children," said Karin Maloney Stifler, a financial planner in Hudson, Ohio, and a board member of the Financial Planning Association. "We have a hard time saying no as a culture to our children, and they keep asking for more."

makes me feel a bit icky. If anything, I think our culture prizes financial independence from family way more than others. Sure no parents should indulge a deadbeat child forever, butI think it's worth risking your blessed "financial freedom" a little to help a loved one in hard times.

Hurting 2, Sunday, 23 March 2008 21:14 (twelve years ago) link

The Stifler family making a mark once again.

Ned Raggett, Sunday, 23 March 2008 21:17 (twelve years ago) link

There is, or should be, no shame in moving back with family, and there is no real financial pain for the parents in taking a child back in. although the article talks about subsidizing lifestyle as well as having them back home, not so sure about that

there has been massive wealth transference from young to old, it is no surprise this is happening

this article is not so bad, compared to the ones we have in the uk. the current vogueish articles are about 'the bank of Mum and Dad'. you would think that these articles would be about feckless children sponging off parents, but no! The Bank of Mum and Dad is being presented by the media as a viable and positive way to replace banks that will no longer lend!!! last gasps of the ponzi scheme over here

laxalt, Sunday, 23 March 2008 21:40 (twelve years ago) link

http://property.timesonline.co.uk/tol/life_and_style/property/article3590383.ece

believe it or not, The Times is a respected newspaper in the UK

laxalt, Sunday, 23 March 2008 21:41 (twelve years ago) link

Getting help from anyone is the ultimate libertarian sin (and probably the most common shameful libertarian secret)

Hurting 2, Sunday, 23 March 2008 21:49 (twelve years ago) link

Oh, it's probably funds, then, not stocks, but I thought there would be an option to pick A (high risk), B (mid risk), or C (low risk), for people who can't be bothered to do all the homework.

Virginia Plain, Monday, 24 March 2008 01:17 (twelve years ago) link

there are, but you kind of have to know the code.

El Tomboto, Monday, 24 March 2008 01:18 (twelve years ago) link

they should have the morningstar boxes for everything though, that's usually pretty good at clearing things up

El Tomboto, Monday, 24 March 2008 01:21 (twelve years ago) link

lol

OIL PRICE UNCERTAINTY

NEWS
Oil sets fresh record above $109
Oil hits record at $108 a barrel
Oil rises past $105-a-barrel mark
Oil soars to new high above $104

BIG HOOS aka the steendriver, Monday, 24 March 2008 15:36 (twelve years ago) link

they should have the morningstar boxes for everything though, that's usually pretty good at clearing things up

-- El Tomboto, Sunday, March 23, 2008 9:21 PM (Yesterday) Bookmark Link

So you're saying veggie burgers are the next growth area.

Hurting 2, Monday, 24 March 2008 19:49 (twelve years ago) link

hurr hurr

this is neat:

http://calculatedrisk.blogspot.com/2008/03/japans-financial-services-minister-has.html

El Tomboto, Monday, 24 March 2008 19:50 (twelve years ago) link

nothing wrong w/our economy cant be fix by a little redistribution or wealth

http://www.variety.com/VR1117982907.html

jhøshea, Wednesday, 26 March 2008 03:27 (twelve years ago) link

of of of wealth

jhøshea, Wednesday, 26 March 2008 03:29 (twelve years ago) link

rolling Iceland into the shitbin now:

Fears that Iceland could be the first country to fall victim of the global financial turmoil grew yesterday when its central bank abruptly increased interest rates 1.25 percentage points to 15 per cent in an attempt to restore confidence in its struggling currency and stave off a full- blown economic crisis.
http://www.ft.com/cms/s/0/b0499804-fad6-11dc-aa46-000077b07658.html

stet, Wednesday, 26 March 2008 03:49 (twelve years ago) link

If you haven't already enjoyed about as much of this as you can stand, today's Fresh Air was one of the best explanations I've heard of the current financial crisis:

http://www.npr.org/templates/story/story.php?storyId=89338743&ft=1&f=13

Hurting 2, Thursday, 3 April 2008 23:42 (twelve years ago) link

http://www.economagic.com/em-cgi/data.exe/fedstl/exszus+2

destruction of the US dollar since 1971

1971: $1 bought you 4.3 swiss francs
1981: $1 bought you 2.1 swiss francs
1991: $1 bought you 1.5 swiss francs
2001: $1 bought you 1.7 swiss francs

this time last year it bought you 1.2 swiss francs

now it buys you a swiss franc

laxalt, Saturday, 5 April 2008 12:15 (twelve years ago) link

I'm not convinced the CHF is by any means immune from everything right now (esp with UBS stuff going on) but it will be interesting to see how the $ fares against it over the next couple of years

laxalt, Saturday, 5 April 2008 12:27 (twelve years ago) link

http://farm3.static.flickr.com/2399/2388931511_bb89b35e6d_o.gif

its more dramatic over the last 40 but here it is since dotcom crash

laxalt, Monday, 7 April 2008 23:15 (twelve years ago) link

The Swiss franc is kind of an odd currency. Deprecation of the USD against the franc is probably just because Swiss inflation has historically been really low.

circles, Tuesday, 8 April 2008 00:34 (twelve years ago) link

Agreed, but isn't what makes it a good benchmark to measure against?

laxalt, Tuesday, 8 April 2008 00:36 (twelve years ago) link

better to measure against countries we do more trade with, I would think?

El Tomboto, Tuesday, 8 April 2008 00:38 (twelve years ago) link

The price of oil has actually fallen considerably against Picassos.

Hurting 2, Tuesday, 8 April 2008 00:41 (twelve years ago) link

that chart is worthless

Dandy Don Weiner, Tuesday, 8 April 2008 00:42 (twelve years ago) link

I don't have any data, but I would kind of assume that the GBP, Euro/Euro precursor currencies have all fallen against the Swiss franc post-Bretton Woods.

circles, Tuesday, 8 April 2008 00:43 (twelve years ago) link

Oh, yes, from that perspective agreed. I meant as a measure of depreciation of a currency (maybe this is why people wanted swiss bank accounts!) - though you are right, comparable currencies over the long term have probably weakend at similar rate to dollar

laxalt, Tuesday, 8 April 2008 00:44 (twelve years ago) link

Agree with Circles there

laxalt, Tuesday, 8 April 2008 00:44 (twelve years ago) link

What didn't you like about the chart Don? (just thought it would make a change from charts of dollar vs gold is all!)

laxalt, Tuesday, 8 April 2008 00:45 (twelve years ago) link

well it a way all that chart does is show that the swiss franc behaves a lot like a commodity

El Tomboto, Tuesday, 8 April 2008 01:34 (twelve years ago) link

True - which is why i figure it could be in an interesting measure of the path of the dollar/gbp over the next couple of years (cf inflationary vs deflationary bust). gold fulfills this function pretty well but can be emotive, volatile and speculative (the "is gold in a bubble?" arguments - whereas it harder, at least i think its harder, to argue that CHF is in a bubble

laxalt, Tuesday, 8 April 2008 07:44 (twelve years ago) link

Which side of the inflation/deflation fence do you sit on Tombot? or to ask another question, "Is Cash King Now?"

laxalt, Tuesday, 8 April 2008 07:45 (twelve years ago) link

I believe that real currency stability should be the goal of a well-managed economy and that nominal growth - god forbid nominal plateaus - at the expense of real value is a short-sighted, equity-favoring, egg-sucking pack of communistic lies designed to keep the rich fat and let everyone else die while they continue to believe that the universal franchise is just compensation for struggling through nigh-unescapable chumphood

El Tomboto, Tuesday, 8 April 2008 07:54 (twelve years ago) link

cash doesn't have to be king, but cash should never be a horrendously STUPID way to hold your worth, which is what it's become. If you ain't making money for the money changers you're just a little piddling peon and deserve your eventual destitude. Fuck the lot. Burn it down.

Oh, it's late, isn't it.

El Tomboto, Tuesday, 8 April 2008 07:56 (twelve years ago) link

but anyway I've been considering that my near-future purchase of a primary residence might be worth scaling back so that I can put a bit more into the markets - my timing has been off for the past couple of years, but I know that jim cramer is a day-trader imbecile, and I know that whatever I decide I want to live in is unlikely to appreciate by any reasonable amount over the next five years or longer.

El Tomboto, Tuesday, 8 April 2008 08:04 (twelve years ago) link

commodities are already too high. they'll go higher, but knowing when to sell in that market is rife with peril at this point.

El Tomboto, Tuesday, 8 April 2008 08:05 (twelve years ago) link

I agree totally, thats kind of what i was trying to get at with my figures vs CHF, that holding savings over the last 40 years has been the fed laughing at you, punished for having savings. i save, despite the fact i also save in a currency that is debased and is headed nowhere good any time soon:/

interesting about whether commodities are too high, i cant work it out. (ie 'gold is in a bubble' talk, is why i posted CHF figures. is CHF in a bubble?)

vaqueros, Tuesday, 8 April 2008 08:07 (twelve years ago) link

are people holding lots of swiss paper to dump on the market when they retire? is there a mass retreat into swiss currency from scary things like stocks or american bonds? That's what I mean by commodities being high. The "so-called-smart" (lol smarter than any of us) crowd is already in up to their elbows in chicago now. I always try to think three steps ahead (lol not rich yet).

El Tomboto, Tuesday, 8 April 2008 08:10 (twelve years ago) link

I know what you are getting at, but is there a mass retreat into commodities? I'm not saying there isn't, I'm saying I don't know - basically because I don't know how 'mass' mass is? At this stage of the game I'm happy enough just to be debt-free and with savings that could last a couple years in event of job loss. Can't see every being 'rich', more about a buffer ( but then how many people have any kinds of savings cushion? even rich people! who mightnt be so rich if can't liquidate assets in falling knife selloff!)

Whats chicago?

laxalt, Tuesday, 8 April 2008 08:18 (twelve years ago) link

chicago is the US commodities trading floor. it's where hardcore gamblers test their black box shit before trying it out on the "easy money" on wall street. smaller fortunes die far more horrible deaths in chicago on the daily, while the chubby ivy kids wring their hands in NYC over the perfumes of such unproven ideas as GOOG or APPL.

Anecdotally, a coworker told me that when he went to have his taxes prepared this weekend, his Girl April related to him that people are coming in crying, lost their job, their house, and please please jesus I just need a few dollars more, please don't make me owe the government too.

El Tomboto, Tuesday, 8 April 2008 08:26 (twelve years ago) link

If people out in the boondocks are having that kind of a year already, I don't know whether that means bottom by june or if we're in for a double dip.

El Tomboto, Tuesday, 8 April 2008 08:28 (twelve years ago) link

hmm im kinda seeing commodities (ok well gold) as long term hedge. volatility of thats tuff (and silver!!) wouldn't dare trade or try shorting it. i figure somewhere between 10-25% in gold as hedge for next 4 years or so. If it doesn't do well, silver lining means its maybe not as tin hat out there as it looks

laxalt, Tuesday, 8 April 2008 08:32 (twelve years ago) link

I see a big fat wad of stupid people selling off gold in quantity over the next decade until it's down to half of what is is now. I'll be wrong as usual, of course, I thought houses couldn't possibly go for half a million dollars out in the middle of goddamned nowhere, with no seaside and a horrific commute. On the other hand, I'm still right about that last part, after a terribly cruel and horrific fashion that's done nobody any good.

El Tomboto, Tuesday, 8 April 2008 08:35 (twelve years ago) link

Tin Hat Time: When do you think the banks realised what was going to happen? How much of it do you think was actually planned rather than incompetency (I'm not saying it was planned - and at face value the banks are major losers in this - but after the dust clears?) I mean, we've been here many times before? (though perhaps not in this scale, and it does look like unwinding of a post ww2 bubble as much as a post 01 bubble in many respects)

laxalt, Tuesday, 8 April 2008 08:44 (twelve years ago) link

I've been wondering about that too, but in my naive eyes it seems more like an inadvertent conspiracy of self-interest than a deliberate conspiracy, i.e. everyone who stood to make any kind of fee or commission on anything didn't give a fuck about the results of their actions.

At the same time it's hard to understand how major financial institutions could design and insurance companies could insure instruments based on an assumption that real estate would rise forever.

Hurting 2, Tuesday, 8 April 2008 13:35 (twelve years ago) link

Bubbles are shared illusions, a lot of people make a lot of money out of the shared illusions. Whether the institutions realised it or not they were building a game of timebomb pass the parcel. I think a lot of institutions did know what was going on because they were selling their dross off the books as soon as they could.

Ed, Tuesday, 8 April 2008 13:41 (twelve years ago) link

I lean more that way too....generally (The UK banks knew in 2001 I think - maybe didn't expect to go on as long as it did).

Yes to "everyone who stood to make any kind of fee or commission on anything didn't ive a fuck about the results of their actions" as in 'I'll be long gone when shit hits fan', but this doesn't explain higher up the chain - at what point did they know

(Semi?)-engineered downturns in the past (1907, 1913) seem to have been a lot...quicker? I'm just curious as to who is going to come out of this a winner (at face value the writedowns look bad for the banks, but on the other hand haven't JP Morgan basically just been 'given' Bear Stearns - after getting the means to do it...kind of from themselves - dunno if misreading that but it seems that way)

laxalt, Tuesday, 8 April 2008 13:45 (twelve years ago) link

Market manipulation has become the standard way for the rich to make money.

For example, some brilliant child in a hedge fund seems to have discovered that the world market for rice is huge, but prices have traditionally been set in the U.S. on the Chicago Merc trading floor.

Because rice is far from a staple in the USA, that market was fairly small. Small == easy to manipulate. Lately, the number of rice contracts traded has tripled. Not coincidentally, the world price of rice has shot up. And somebody has been making a killing. This whole thing is about as real as the Enron-induced electricity "shortage" in California in 2002.

Food riots in third world nations are apparently a small price to pay for mega-profits for some hedge fund and a big bonus for some smart kid... amirite?

Aimless, Tuesday, 8 April 2008 19:16 (twelve years ago) link

inadvertent conspiracy of self-interest
qft

this doesn't explain higher up the chain
I think it's the that people who really knew were one step from the top and could pass the blame upward to the very top, and those guys were off playing bridge and not giving a fuck

stet, Tuesday, 8 April 2008 20:20 (twelve years ago) link

yeah I mean my impression of the big ibanks and insurers and audit firms is consistently that b-school grads bust their balls "work hard party hard" trying to get up to that rarefied echelon and then once they're there actually showing up to the office more than once a week is below their station

El Tomboto, Tuesday, 8 April 2008 20:22 (twelve years ago) link

I know a lot of dudes at big ibanks (and hedge funds, for that matter) that fucking work all the time. Most of them are in their 40s and are pricks.

Dandy Don Weiner, Tuesday, 8 April 2008 21:21 (twelve years ago) link

Can anyone recommend good articles on speculation as a factor in current commodity price spikes?

Hurting 2, Tuesday, 8 April 2008 22:08 (twelve years ago) link

The US government has denied speculation is behind the spikes; quite odd they would even take any position in it in the first place.

burt_stanton, Tuesday, 8 April 2008 22:28 (twelve years ago) link

prevents them from having to take the ibanks to task next week after half the world goes to shit. see dystopian screenplay thread update on food riots already going down. "we told you last week, speculation had nothing to do with it."

El Tomboto, Wednesday, 9 April 2008 00:04 (twelve years ago) link

My cousin's son was an ibanker in wall street and died recently of a "mysterious heartattack" at age 26. Yeah..."work hard party hard" sometimes die hard 2 (i'm awful, i know)

Vichitravirya_XI, Wednesday, 9 April 2008 00:28 (twelve years ago) link

But if you're doing cocaine 11 times a day just to make it through your 70 hour workweek for a job you don't even like I don't know how much unlimited sympathy you deserve

Vichitravirya_XI, Wednesday, 9 April 2008 00:37 (twelve years ago) link

Well he wasn't exactly doing all that coke to help the poor or because it was the only way he could feed his family.

Hurting 2, Wednesday, 9 April 2008 00:40 (twelve years ago) link

As I recall, Dick Cheney publically and scornfully dismissed the idea that the California energy price hike was due to market manipulation back in 2002, too. That inconvenient fact was tossed down the memory hole after the Justice Department took Fastow and Lay to court.

Aimless, Wednesday, 9 April 2008 00:45 (twelve years ago) link

well and even in 2002 dick cheney lying through his ugly teeth wasn't really newsworthy

El Tomboto, Wednesday, 9 April 2008 00:53 (twelve years ago) link

Yeah it was more of a "this is how what all the other bros at work are doing too" thing. Or whatever.

Vichitravirya_XI, Wednesday, 9 April 2008 00:54 (twelve years ago) link

smartest guys in the room is an excellent documentary btw

El Tomboto, Wednesday, 9 April 2008 00:54 (twelve years ago) link

yeh, When Genius Failed (about LTCM) is a good kinda-complementary read

stet, Wednesday, 9 April 2008 00:58 (twelve years ago) link

Man, if genius keeps failing on us like this, we might have to stop acting surprised!

Hurting 2, Wednesday, 9 April 2008 01:01 (twelve years ago) link

I don't think anybody on this thread was surprised! mainly because we're not geniuses I guess

El Tomboto, Wednesday, 9 April 2008 01:03 (twelve years ago) link

My point was mainly that having this administration deny market manipulation is about as trustworthy as letting the flies look after the picnic.

Aimless, Wednesday, 9 April 2008 01:18 (twelve years ago) link

The US government has denied speculation is behind the spikes

LOLOLOLOLOLOL.

jessie monster, Wednesday, 9 April 2008 01:53 (twelve years ago) link

Happened upon this excerpt in Wikipedia. Might be sort of obvious, but it's still worth reading:

Inequality of wealth and income

Marriner S. Eccles who served as Franklin D. Roosevelt’s Chairman of the Federal Reserve from November, 1934 to February, 1948 detailed what he believed caused the Depression in his memoirs, Beckoning Frontiers (New York, Alfred A. Knopf, 1951):

As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation s economic machinery. [Emphasis in original.] Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.

That is what happened to us in the twenties. We sustained high levels of employment in that period with the aid of an exceptional expansion of debt outside of the banking system. This debt was provided by the large growth of business savings as well as savings by individuals, particularly in the upper-income groups where taxes were relatively low. Private debt outside of the banking system increased about fifty per cent. This debt, which was at high interest rates, largely took the form of mortgage debt on housing, office, and hotel structures, consumer installment debt, brokers' loans, and foreign debt. The stimulation to spending by debt-creation of this sort was short-lived and could not be counted on to sustain high levels of employment for long periods of time. Had there been a better distribution of the current income from the national product -- in other words, had there been less savings by business and the higher-income groups and more income in the lower groups -- we should have had far greater stability in our economy. Had the six billion dollars, for instance, that were loaned by corporations and wealthy individuals for stock-market speculation been distributed to the public as lower prices or higher wages and with less profits to the corporations and the well-to-do, it would have prevented or greatly moderated the economic collapse that began at the end of 1929.

The time came when there were no more poker chips to be loaned on credit. Debtors thereupon were forced to curtail their consumption in an effort to create a margin that could be applied to the reduction of outstanding debts. This naturally reduced the demand for goods of all kinds and brought on what seemed to be overproduction, but was in reality underconsumption when judged in terms of the real world instead of the money world. This, in turn, brought about a fall in prices and employment.

Unemployment further decreased the consumption of goods, which further increased unemployment, thus closing the circle in a continuing decline of prices. Earnings began to disappear, requiring economies of all kinds in the wages, salaries, and time of those employed. And thus again the vicious circle of deflation was closed until one third of the entire working population was unemployed, with our national income reduced by fifty per cent, and with the aggregate debt burden greater than ever before, not in dollars, but measured by current values and income that represented the ability to pay. Fixed charges, such as taxes, railroad and other utility rates, insurance and interest charges, clung close to the 1929 level and required such a portion of the national income to meet them that the amount left for consumption of goods was not sufficient to support the population.

This then, was my reading of what brought on the depression.

Hurting 2, Wednesday, 9 April 2008 03:00 (twelve years ago) link

Basically, this is how capitalism is built to operate. During the Eisenhower admisitration the highest U.S. income tax bracket was, iirc, 90%. Corporate taxes were much higher, too.

How odd it is that the mainline USA conservatives persistently want to portray the 1950s in the USA as some kind of lost paradise, while simultaneously maintaining that any country that levied such taxes would by absolute necessity be a hell on earth.

Aimless, Wednesday, 9 April 2008 03:21 (twelve years ago) link

lol do not try and reason w/those people

jhøshea, Wednesday, 9 April 2008 03:23 (twelve years ago) link

you guys didn't miss this ultimate schadenlol did you?

http://calculatedrisk.blogspot.com/2008/04/mortgage-woes-for-mortgage-bankers.html

DC downtown commercial space was still shitty as of a year or so ago, I can't imagine how bombed-out and desolate it might wind up looking as things get worse. Government can borrow on blood and tears, but non-profits and lobbyists run on cash and interest. My laughter is raucous and frequent but also hollow.

El Tomboto, Wednesday, 9 April 2008 03:26 (twelve years ago) link

which is worse right now in US, commercial or residential property? and which tanked first? News over here has always focused on residential. But this side commercial tanked first probably 12-18 months ago but didn't really get reported. The press in UK started switching to bears about 8-10 weeks ago, but its really gathering pace just this last week or so as the realisation that main street has a neutron bomb parked on it can no longer be denied

The pace in the UK i think may be much quicker than in the US. We went surprisingly quickly from "subprime is a US problem" to "top 10 subprime areas of the UK", from "will the *US* go into recession" to "the coming UK recession", but most surprisngly (even given UK press sensationalism), from "UK has a strong economy" to "oh shit, we are way more indebted than america" - speed of the last change seemed to be almost overnight - the denial about this point was very strong for a loooong time

laxalt, Wednesday, 9 April 2008 07:01 (twelve years ago) link

Sorry meant to say theres a lot of speculatively built office blocks and small scale 'commercial on ground floor with apartments above' that have been built over last 2 years here - and the residential has been taken up at least to a degree but where the commercial section has NEVER been occupied. large residential oversupply in the uk is open secret but, relatively may be even worse in commercial premises

laxalt, Wednesday, 9 April 2008 07:04 (twelve years ago) link

Back on the commodities thing.

We've had commodities futures and derivatives for the best part of 200 years now they are a useful way of managing risk and spreading income for producers and users of commodities. Yes there have always been speculators with no interest in production or use of commodities but rarely have they had the power to distort markets in the way hedge funds have now. Most economists believe that distorting markets is dangerous in the long term, leading to inefficiencies that leave people hungry and out of work. The some hedge funds are pissing in the fountain as badly as if we had price controls or high trade tariffs.

Ed, Wednesday, 9 April 2008 10:02 (twelve years ago) link

from the WSJ

------------------------
Volcker's Demarche
April 9, 2008

'You don't have to predict it. We're in it." Thus did Paul Volcker respond to a question Tuesday about whether he still predicted a "dollar crisis" in the coming years. We hope current Federal Reserve Chairman Ben Bernanke is paying attention.

Mr. Volcker, a former Fed chief, has a well-earned reputation for straight talk, but there is always strong institutional pressure not to second-guess one's successors at a place like the Federal Reserve. This makes his speech to the Economic Club of New York all the more remarkable for the sharp questions he raised about inflation, Fed independence and moral hazard.

On the dollar, Mr. Volcker's blunt talk of crisis is a welcome tonic to the devaluationist consensus that now dominates Washington. The world has been staging a run on the greenback, with damaging results if it continues. Mr. Volcker noted that when "concerns about recession are rife," the central bank will be tempted to "subordinate the fundamental need to maintain a reliable currency" to the impulse to shore up a flagging economy. The danger is that you lose both battles, as the U.S. did in the 1970s, and wind up with stagflation.

The present climate, Mr. Volcker told his audience, reminded him of nothing so much as the early 1970s. Then as now, certain commodity prices were rising fast – he cited oil and soybeans as two examples. Then as now too, these were explained away as speculative price run-ups and not as a harbinger of a broader inflationary trend.

We all know how that ended, and Mr. Volcker knows better than anyone. He was the one who, at the end of that decade, had to step in and raise interest rates to punitive levels to break the back of that bout of inflation. With commodity prices spiking again – soybeans are $12 a bushel today compared to $7 a year ago – Mr. Volcker is warning the Fed not to let inflationary expectations become embedded once again.

Mr. Volcker also argued Tuesday that the Fed's strenuous efforts on behalf of the housing market risked looking "biased to favor particular institutions or politically sensitive constituencies," in this case the housing industry. He did not argue that no government intervention was warranted – the crisis was, he said, "too threatening" for the government to stand aside.

But the Fed has a particular duty to defend the integrity of the "fiat currency" in its charge. And exchanging dollars for "mortgage-backed securities of questionable pedigree" both raises the specter of moral hazard and potentially undermines the world's faith in the integrity of the Fed's balance sheet. Unless the Fed can shut the door it opened with its guarantee of $29 billion worth of Bear Stearns paper – which "seems highly unlikely," in Mr. Volcker's words – it will have to take on oversight of the institutions it is now implicitly back-stopping.

Related to this, Mr. Volcker argued against a further extension of this implicit Fed guarantee to hedge funds or private-equity groups, whose failure pose little risk to the system as a whole. Right about now wouldn't be the worst time for such a hedge-fund blowup, if only to show that the Fed will let it fail.

In recent days, another former Fed Chairman, Alan Greenspan, has been making the rounds defending his legacy. Mr. Volcker, with the benefit of some additional distance from his time at the Fed, offered something more useful: A diagnosis of our current predicament and some sound warnings about the dangers of a Fed that responds too easily to political pressure and fails to protect the value of the dollar.

Dandy Don Weiner, Wednesday, 9 April 2008 11:47 (twelve years ago) link

Isn't it that the volatility, or spikes, are speculation ( and the equivalent drops are sell offs to meet margin calls), but the upward trend is because inflation is out of the bag and has been for a long time, but now even official inflation is wriggling loose?

laxalt, Wednesday, 9 April 2008 12:03 (twelve years ago) link

that is probably true but I think that speculation is driving a longer an bigger spike than we have seen before.

Ed, Wednesday, 9 April 2008 12:12 (twelve years ago) link

When do you think this spike started?

laxalt, Wednesday, 9 April 2008 12:18 (twelve years ago) link

Difficult to say, the hedgies provide a very good (as in dangerously efficient) feedback look for any economic process. It started as a purely demand related phenomenon. I guess at whatever point the hedgies started to get bored with credit derivatives.

Ed, Wednesday, 9 April 2008 12:23 (twelve years ago) link

given the amount of money hedgies and ibanks spend on complex quant modeling I seriously doubt that boredom drives the derivative (and other complex vehicles) market.

Dandy Don Weiner, Wednesday, 9 April 2008 12:37 (twelve years ago) link

I think there is has been way too much of a rush to proclaim a gold bubble (or a wheat bubble! what???) we have a bubble that last for years on end sustained entirely by cheap credit, the credit bubble busts and we're suddenly supposed to be in another bubble already? but bought with what? credit? the credit thats so much harder to get hold of? how does this work?

if this is a bubble the central banks and the IMF better hurry up and sell off their gold at the top of this 'bubble', no?

laxalt, Wednesday, 9 April 2008 12:55 (twelve years ago) link

Which comes back to the fed and the printing presses...where is that helicopter money actually going?

laxalt, Wednesday, 9 April 2008 12:57 (twelve years ago) link

banks

Dandy Don Weiner, Wednesday, 9 April 2008 13:02 (twelve years ago) link

Seems there will be some winners from all this then. Rather like in previous episodes

laxalt, Wednesday, 9 April 2008 13:03 (twelve years ago) link

f this is a bubble the central banks and the IMF better hurry up and sell off their gold at the top of this 'bubble', no?

shame they did it years ago.

Seems there will be some winners from all this then. Rather like in previous episodes

Seems to be the same people every time.

I don't think it is boredom driving the commodities bubble but I do think that some of those quant modeling chaps have discovered just how to create a beneficial (to them) feedback loop to increase the returns they can make from economic phenomena.

Ed, Wednesday, 9 April 2008 13:07 (twelve years ago) link

Well the IMF are getting ready for a big sell off aren't they?

laxalt, Wednesday, 9 April 2008 13:10 (twelve years ago) link

there's probably a growing market in hedge funds that deal with distressed companies or sectors.

quant modeling is so sophisticated that the investor is usually totally clueless about where the growth is actually coming from. Most popular modeling at hedge funds is based on complex debt structure and bank rates...this year is going to be an interesting year for hedges, that's for sure. I suspect most models don't account for a) a downturn this size, b) government intervention or c) more regulation. There's a lot of uncharted waters and turbulence in hedge funds right now.

Dandy Don Weiner, Wednesday, 9 April 2008 13:12 (twelve years ago) link

http://www.schoolnutrition.org/Index.aspx?id=2813

"Free" lunches starting to cost school districts money as a result of rising food and gas consts.

Oilyrags, Monday, 14 April 2008 17:21 (twelve years ago) link

We'd better hurry up and occupy another oil-rich country so as to reap the benfit of cheap oil again, such as we enjoyed after we invaded Iraq. I vote for Kazakhstan. Too many Shiites in Iran.

Aimless, Monday, 14 April 2008 17:32 (twelve years ago) link

Food costs rising fastest in 17 years
By ELLEN SIMON, AP Business Writer
Mon Apr 14, 4:10 PM ET
Steve Tarpin can bake a graham cracker crust in his sleep, but explaining why the price for his Key lime pies went from $20 to $25 required mastering a thornier topic: global economics.

He recently wrote a letter to his customers and posted it near the cash register listing the factors — dairy prices driven higher by conglomerates buying up milk supplies, heat waves in Europe and California, demand from emerging markets and the weak dollar.

The owner of Steve's Authentic Key Lime Pies in Brooklyn said he didn't want customers thinking he was "jacking up prices because I have a unique product."

"I have to justify it," he said.

The U.S. is wrestling with the worst food inflation in 17 years, and analysts expect new data due on Wednesday to show it's getting worse. That's putting the squeeze on poor families and forcing bakeries, bagel shops and delis to explain price increases to their customers.

U.S. food prices rose 4 percent in 2007, compared with an average 2.5 percent annual rise for the last 15 years, according to the U.S. Department of Agriculture. And the agency says 2008 could be worse, with a rise of as much as 4.5 percent.

Higher prices for food and energy are again expected to play a leading role in pushing the government's consumer price index higher for March.

Analysts are forecasting that Wednesday's Department of Labor report will show the Consumer Price Index rose at a 4 percent annual rate in the first three months of the year, up from last year's overall rise of 2.8 percent.

For the U.S. poor, any increase in food costs sets up an either-or equation: Give something up to pay for food.

"I was talking to people who make $9 an hour, talking about how they might save $5 a week," said Kathleen DiChiara, president and CEO of the Community FoodBank of New Jersey. "They really felt they couldn't. That was before. Now, they have to."

For some, that means adding an extra cup of water to their soup, watering down their milk, or giving their children soda because it's cheaper than milk, DiChiara said.

U.S. households still spend a smaller chunk of their expenses for foods than in any other country — 7.2 percent in 2006, according to the USDA. By contrast, the figure was 22 percent in Poland and more than 40 percent in Egypt and Vietnam.

In Bangladesh, economists estimate 30 million of the country's 150 million people could be going hungry. Haiti's prime minister was ousted over the weekend following food riots there.

Still, the higher U.S. prices seem eye-popping after years of low inflation. Eggs cost 25 percent more in February than they did a year ago, according to the USDA. Milk and other dairy products jumped 13 percent, chicken and other poultry nearly 7 percent.

USDA economist Ephraim Leibtag explained the jumps in a recent presentation to the Food Marketing Institute, starting with the factors everyone knows about: sharply higher commodity costs for wheat, corn, soybeans and milk, plus higher energy and transportation costs.

The other reasons are more complex. Rapid economic growth in China and India has increased demand for meat there, and exports of U.S. products, such as corn, have set records as the weak dollar has made them cheaper. That's lowered the supply of corn available for sale in the U.S., raising prices here. Ethanol production has also diverted corn from dinner tables and into fuel tanks.

Soybean prices have gone up as farmers switched more of their acreage to corn. Drought in Australia has even affected the price of bread, as it led to tighter global wheat supplies.

The jump has left people in the food business to do their own explaining. Twin Cafe Caterers in lower Manhattan posted a letter on its deli cooler: "Due to the huge increase of the gas, the electricity, the water and all the other utilities, we had to raise the prices a little bit." It went on to say that all its food prices have risen, too.

Wonder Bagels, in Jersey City, N.J., posted a letter from its wheat supplier, A. Oliveri & Sons, saying the recent situation was unprecedented.

"The major mills across the country are using words like 'rationing' and 'shortages' if things continue," it said. "We will sweat out the summer together, hoping there will be some flour left to purchase at any price."

The letter called for an immediate halt to exports and a change in farm policy, "stop paying farmers NOT to grow crops." A new farm bill, stalled in Congress, would expand farm subsidies if it passes, however.

For some Americans, the resulting increases might be barely perceptible. The Cheesecake Factory raised prices by 1.5 percent at the end of February, Applebee's by 3 percent.

But for the poorest U.S. families, the higher costs may mean going hungry. A family of four is eligible for a maximum $542 a month in food stamps, which never lasted the whole month before, Food Bank of New Jersey's DiChiara said.

"Now food stamps go fewer and fewer days of the month," she said.

The Food Bank recently got a letter of its own from a key vendor. Its grim message: Sorry, but the prices they charge the Food Bank would be increasing 20 percent, due to food inflation.

Vichitravirya_XI, Tuesday, 15 April 2008 08:39 (twelve years ago) link

Hey, Wonder Bagels! That place is good!

Hurting 2, Tuesday, 15 April 2008 13:05 (twelve years ago) link

what happened to the food riot thread? I couldn't get search to bring it up.

Oilyrags, Tuesday, 15 April 2008 14:13 (twelve years ago) link

what does this mean for I DIED

El Tomboto, Tuesday, 15 April 2008 14:14 (twelve years ago) link

how will the poor be able to afford maybe a little knosh? I wonder how long before some of the social fabric in the urban areas begins to fray if this stuff gets worse. Cities like Newark were solidly middle /upper middle class (with sections of extreme poverty) until the forgotten and marginalized rioted.

burt_stanton, Tuesday, 15 April 2008 14:14 (twelve years ago) link

A bit more localized, but still: wow, a lot to look forward to! - > http://www.slate.com/id/2188982
Here Comes the Next Mortgage Crisis
SUBPRIME WAS JUST THE BEGINNING. WAIT UNTIL CALIFORNIA'S PRIME BORROWERS START HANDING THEIR KEYS TO THE BANK.

quote:
"a coming wave of interest-rate resets in prime loans given to people with good credit that are just as bad, or worse, than we've seen in subprime."

Vichitravirya_XI, Tuesday, 15 April 2008 18:49 (twelve years ago) link

lol "Next", lol "was" - subprime foreclosures haven't even peaked.

Hurting 2, Tuesday, 15 April 2008 20:11 (twelve years ago) link

This is only 2007 data:

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html

StanM, Tuesday, 15 April 2008 21:00 (twelve years ago) link

(FYI: "Current account balance This entry records a country's net trade in goods and services, plus net earnings from rents, interest, profits, and dividends, and net transfer payments (such as pension funds and worker remittances) to and from the rest of the world during the period specified. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms." )

StanM, Tuesday, 15 April 2008 21:02 (twelve years ago) link

HOW MANY MEXICANS WERE AT THE APOCALYPSE

8 MILLION

WE ONLY HAD ONE PICKUP

BIG HOOS aka the steendriver, Tuesday, 15 April 2008 21:43 (twelve years ago) link

lol "subprime"

Tracer Hand, Tuesday, 15 April 2008 21:46 (twelve years ago) link

Ok, can someone explain the behavior of the U.S. stock market to me?

Hurting 2, Friday, 18 April 2008 15:51 (twelve years ago) link

(current behavior)

Hurting 2, Friday, 18 April 2008 15:51 (twelve years ago) link

i assume something happened overnight?

Tracer Hand, Friday, 18 April 2008 16:43 (twelve years ago) link

Well, these are the headlines from the WSJ:

Write-Downs Hit Citigroup Results

Associated Press
Citigroup posted a deep quarterly loss, booking at least $13.9 billion in write-downs stemming from its risk-taking ahead of the credit crisis and $3.1 billion in extra consumer-credit costs. The bank plans to cut 9,000 more jobs during the second quarter. 11:38 a.m.
• Deal Journal: Buyout Debt: Now Available in Stores
• MarketBeat: Live-Blogging the Conference Call
• Great Expectations for Merrill CEO
• Earnings Previews: Bank of America, Countrywide

Earnings Relief Rallies Stocks
Stocks surged, with major market benchmarks climbing by 1.5% or more, as encouraging earnings from Citigroup, Google, Caterpillar and others helped to turn aside some of the uneasiness that had hemmed in markets in recent weeks. 12:25 p.m.
• MarketBeat: MF Global to Investors: All Is Well.
• Deals of the Day: We'll Need You to Save Merrill Lynch.
• Data: Overview | Treasurys | Forex | Crude

Hurting 2, Friday, 18 April 2008 16:46 (twelve years ago) link

I mean that explains the day's rally I guess, but I still find it bizarre. Is this just missing the long-term forest for the short-term trees?

Hurting 2, Friday, 18 April 2008 16:47 (twelve years ago) link

perish the thought

Tracer Hand, Friday, 18 April 2008 16:52 (twelve years ago) link

http://goldprice.org/james-turk/uploaded_images/Oil-Price-780567.GIF

laxalt, Friday, 18 April 2008 23:19 (twelve years ago) link

Interesting.

Can anyone explain the phenomenon of the "petrodollar" to me, on that note? Are countries with stronger currenices more insulated against the current oil price spikes or are they purchasing with reserve dollars?

Hurting 2, Saturday, 19 April 2008 03:08 (twelve years ago) link

Also, sorry what do the thousands on the side of that graph represent? Is that number of goldgrams?

Hurting 2, Saturday, 19 April 2008 03:09 (twelve years ago) link

Hurting 2, the thousands on the side represent Ron Paul.

J0hn D., Saturday, 19 April 2008 03:41 (twelve years ago) link

Blue line = Ron Paul's stiff bonarz

Hurting 2, Saturday, 19 April 2008 03:50 (twelve years ago) link

(not trying to imply that the US should be on gold standard here, or that fiat is inherently bad, or any of that kind of stuff - more to point out the debasement of the dollar is long running, and that debasement of any currency must surely always lead to bubbles, because it encourages borrowing beyond means)

the chart further upthread showing $ vs CHF quartering since 1971 presumably implies that oil in CHF has not risen in the same way - i'll try find an oil/CHF chart to see if that is actually true or not

laxalt, Saturday, 19 April 2008 07:33 (twelve years ago) link

Controlling the world's reserve currency distorts the market in your favor. The USA has progressively leveraged that distortion.

The reason the world has tolerated this shit is that, while unwinding that leverage would certainly be disasterous for the USA, it would also hurt the world economy to a lesser but still quite painful degree.

And the best thing about this is that there will be no comeuppance for the USA and the debased dollar. Do you hear me? No comeuppance!

Aimless, Saturday, 19 April 2008 18:09 (twelve years ago) link

eotw fr

mkcaine, Saturday, 19 April 2008 22:47 (twelve years ago) link

Another good article from n+1's "Interviews with a Hedge Fund Manager" series:

Financial Meltdown: Anonymous Hedge Fund Manager Returns

o. nate, Wednesday, 23 April 2008 20:43 (twelve years ago) link

my "emerging markets" mutual fund is up 23% YTD! not that I had any money in it for most of last year.

El Tomboto, Thursday, 24 April 2008 16:36 (twelve years ago) link

Financial speculators reap profits from global hunger

By Stefan Steinberg

Global Research, April 24, 2008
wsws.org

A series of reports in the international media have drawn attention to the role of professional speculators and hedge funds in driving up the price of basic commodities—in particular, foodstuffs. The sharp increase in food prices in recent months has led to protests and riots in a number of countries across the globe.

On Tuesday, April 22, a UN spokesperson referred to a “silent tsunami” that threatens to plunge more than 100 million people on every continent into hunger. Josette Sheeran, executive director of the UN World Food Programme (WFP), noted: “This is the new face of hunger—the millions of people who were not in the urgent hunger category six months ago but now are.”

A recent article in the British New Statesman magazine, entitled “The Trading Frenzy That Sent Prices Soaring,” notes that increases in global population and the switch to bio-fuels are important factors in the rise of food prices, but then declares:

“These long-term factors are important, but they are not the real reasons why food prices have doubled or why India is rationing rice, or why British farmers are killing pigs for which they can’t afford feedstocks. It’s the credit crisis.”

The article states that the food crisis has developed over “an incredibly short space of time—essentially over the past 18 months.” It continues: “The reason for food ‘shortages’ is speculation in commodity futures following the collapse of the financial derivatives markets. Desperate for quick returns, dealers are taking trillions of dollars out of equities and mortgage bonds and ploughing them into food and raw materials. It’s called the ‘commodities super-cycle’ on Wall Street, and it is likely to cause starvation on an epic scale.”

World prices for basic commodities such as cereals, cooking oil and milk have risen steadily since 2000, but have escalated dramatically since the developing financial crisis in the US began to bite in 2006. Since the start of 2006, the average world price for rice has risen by 217 percent, wheat by 136 percent, corn by 125 percent and soybeans by 107 percent.

Under conditions of growing debt defaults arising from the US subprime crisis, speculators and hedge fund groups have increasingly switched their investments from high-risk “bundled” securities into so-called “stores of value,” which include gold and oil at one end of the spectrum and “soft commodities” such as corn, cocoa and cattle at the other. The article in the New Statesman points out that “speculators are even placing bets on water prices” and then concludes:

“Just like the boom in house prices, commodity price inflation feeds on itself. The more prices rise, and big profits are made, the more others invest, hoping for big returns. Look at the financial web sites: everyone and their mother is piling into commodities.... The trouble is that if you are one of the 2.8 billion people, almost half the world’s population, who live on less than $2 a day, you may pay for these profits with your life.”

Investment in “soft commodities” is currently highly recommended by leading market analysts. According to Patrick Armstrong, a manager at Insight Investment Management in London, “Raw materials can prove to be the best investment class for hedge funds because the market is so inefficient. This results in more chances for profit.”

Much of the international speculation in food commodities takes place on the Chicago Stock Exchange (CHX), where a number of hedge funds, investment banks and pension funds have substantially increased their activities in the past two years. Since January of this year alone, investment activity in the agricultural sector has risen by a quarter at the CHX, and, according to the Chicago firm Cole Partners, involvement by hedge funds in the raw material sector has trebled in the past two years to reach a total of $55 billion.

Large-scale investors such as hedge and pension funds buy futures—shares in basic goods and foodstuffs to be delivered at a fixed date in the future. When the price of the commodity rises significantly between the time of the investment and the time of delivery, the investor is able to take home a large profit.

In light of the current food crisis, substantial returns of profit are guaranteed. According to CHX figures, wheat futures (for delivery in December) are expected to rise by at least 73 percent, soybeans by 52 percent, and soy oil by 44 percent.

Major ecological disasters, such as the recent drought in Australia, which hit food production and drive up basic commodity prices, are good news for the corporate investor.

Substantially reduced harvests in Australia and Canada this year have led to soaring wheat prices. Deutsche Bank has estimated that the price for corn will double, while the price for wheat will rise by 80 percent in the short term.

Such ecological disasters, which can ruin ordinary farmers and mean poverty for millions through increased food prices, are an aspect of the “inefficiency” of the raw materials market referred to above, which currently makes “soft commodities” such an attractive prospect for major speculators.

Deadly greed

An article headlined “Deadly Greed” in the current edition of the German weekly Der Spiegel gives some details of the activities of hedge funds in food market speculation. The magazine cites the example of the hedge fund Ospraie, which is generally regarded as the biggest of the management funds currently dealing in basic foodstuffs.

The manager of the fund, Dwight Anderson, is nicknamed “the raw materials king.” Already, in the summer of 2006, Anderson was recommending the “extraordinary profitability” of agricultural crops to his shareholders. While Ospraie is reluctant to publicise its profit levels from speculation in basic commodities, a leading German investor is less reticent.

Andreas Grünewald started up his Münchner Investment Club (MIC) in 1989 with seed capital equal to just €15,000. MIC now controls a volume of €50 million, of which €15 million is from investment in raw materials.

According to Grünewald, “Raw materials are the mega-trend of the decade,” and his company intends to intensify its involvement in both water and agricultural stocks. MIC investment in wheat alone has already yielded profit levels of 93 percent for the 2,500 members of the club.

The Spiegel article points out that MIC and its members give little thought to the catastrophic consequences of their speculative investment policy for undeveloped countries. “Most of our members are rather passive and orientated to profit,” Grünewald notes.

MIC, with its €50 million, is a minor player compared to the finance giant ABN Amro, which recently acquired a unique certificate allowing it to speculate on behalf of smaller investors on the CHX.

In the wake of the hunger revolts that took place a few weeks ago, ABN Amro put out a prospectus noting that India has enforced a ban on exports of rice, which, together with poor harvests in a number of countries, has led to a worldwide decline in rice reserves. “Now,” ABN Amro notes in its prospectus, “it is possible for the first time to have a share in the number one foodstuff in Asia.”

According to the Spiegel report, those responding to the ABN Amro appeal were able to realise a 20 percent rate of profit in the space of three weeks—a period that saw a huge increase in investment in rice in Chicago and other major centres.

Biofuel investment

Another particularly lucrative investment sector contributing substantially to the current global food crisis is biofuels. Initially championed as a means of protecting the environment, biofuels have become increasingly identified by big business as a profitable alternative to increasingly expensive oil. Within the space of a few years, biofuel has become a booming private industry capable of generating large rates of profit.

Huge tracts of land across the planet have in recent years been switched from food crops to the production of ethanol or biofuel, aimed primarily as a supplement to oil-based gasoline. Next year, the use of US corn for ethanol is forecast to rise to 114 million tonnes—nearly a third of the entire projected US crop.

In the words of Jean Ziegler, the United Nations special rapporteur on the right to food, the switch to biofuels at the expense of traditional forms of agriculture is nothing less than a “crime against humanity.”

Although maize production worldwide is growing, the increase is being more than absorbed by biofuel diversification. According to the World Bank, global maize production increased by 51 million tonnes between 2004 and 2007. During that time, biofuel production in the US alone (mostly ethanol) rose by 50 million tonnes, absorbing almost the entire global increase.

Subsidised by the US government, American farmers have diverted fully 30 percent of corn production into the ethanol scheme, driving up the cost of other, more expensive, grains that are being bought as substitutes for animal feed.

The European Union, India, Brazil and China all have their own targets to increase biofuels. The EU has declared that by 2010, 5.75 percent of all gasoline sold to motorists in Europe must stem from biofuel production. This month, a UK law enforced a mandatory mix of 2.5 percent biofuel in gasoline sold to motorists. A similar law stipulating a staggered 10 percent increase in biofuel share in gasoline was recently struck down in Germany following opposition from the auto industry, as well as ordinary car owners who would be forced to buy new cars to accommodate the new fuel.

In addition to the rapidly rising price of basic commodities as a result of the decreased production of grains for food purposes, the switch to crop production of biofuels has served to orient food prices to the high price of fuel. An equivalence is emerging between the price of food and the price of oil.

According to Josette Sheeran of the World Food Programme: “We are seeing food in many places in the world priced at fuel levels,” with increasing quantities of food “being bought by energy markets” for biofuels.

With oil topping $100 a barrel, the biofuel sector is currently regarded as a potential source of huge returns for investors. The drive for maximum profits by the biofuels sector was summed up in the advertisement for a congress held in 2006, which declared:

“Biofuels Finance and Investment World is Europe’s definitive investor congress focusing exclusively on the value chain evolving around the new biofuels economy. Investors and financial institutions will gather with key industry stakeholders to discuss future investment opportunities, the risks and areas with huge potential for profit.”

The April 22 edition of Money Week recommends that investors stung by the subprime crisis switch their funds to the lucrative biofuels market. Money Week sides with Fortune magazine in identifying the oil multinational Royal Dutch Shell group as a guarantor of good returns: “We love it because it makes huge profits and is very cheap, but apparently it also has a large stake in Iogen, a Canadian firm with an exciting-sounding ‘potential breakthrough in ethanol technology.’”

Hurting 2, Tuesday, 29 April 2008 15:57 (twelve years ago) link

ya, letting people gamble financially on food and oil is a great idea.

bush's speech this morning: DRILLING IN ANWR WILL FIX GAS PRICES, what're you people fucking retarded?

GOTT PUNCH II HAWKWINDZ, Tuesday, 29 April 2008 16:07 (twelve years ago) link

yes

El Tomboto, Thursday, 1 May 2008 00:42 (twelve years ago) link

Who was the politician just on the Lou Dobbs show about credit cards.

And - is he for real?

cherry blossom, Monday, 12 May 2008 00:12 (twelve years ago) link

It's yet another $200 barrel of oil = apocalypse00 barrel of oil = apocalypse article, but the comments on it are funny in an intensely scary sort of way.

Elvis Telecom, Monday, 12 May 2008 21:27 (twelve years ago) link

lol america

Tracer Hand, Monday, 12 May 2008 21:28 (twelve years ago) link

Wayne Flanagan, a RE/MAX agent who sells bank-owned properties, said in zip codes like 30310 and 30315 values have taken a nosedive faster than public officials can account for.

"There are some price ranges like $20,000-$80,000 where 90 percent of the properties on the market are foreclosures," Flanagan said. "You've got one bank competing against another. It's a spiraling situation, downward."

El Tomboto, Tuesday, 13 May 2008 01:42 (twelve years ago) link

At least two real estate agents stop into Sweeney's each week looking for a job as bartenders or waitresses, he said.

El Tomboto, Tuesday, 13 May 2008 01:53 (twelve years ago) link

People of America do not worry. The Government is pleased to tell you that gasoline prices went down last month

http://www.bls.gov/cpi/cpid0804.pdf

laxalt, Saturday, 17 May 2008 06:39 (twelve years ago) link

THE US IS DOOMED TO CI-ISRAILI MONEYTARY HODGEPODGE IN LIGHT OF THE CHINAMAN WHO LEARNED MATH SINCE HE WAS 3

usic, Saturday, 17 May 2008 07:02 (twelve years ago) link

LIBERTARIAN RULE IN THAT THE CYBORGIAN ELITE WILL RULE CAPITAL TO A CERTAIN EXTENT? IS ZUCKERMAN A FLASH IN THE PAN OR AN ARMY OF OVERMEN

usic, Saturday, 17 May 2008 07:03 (twelve years ago) link

COMICBOOK TROLL THINKS FOR HIMSLEF!!!

Aimless, Saturday, 17 May 2008 17:45 (twelve years ago) link

Anybody have any thoughts on the future for dollar pegs in Gulf States, China and others?

Kondratieff, Monday, 26 May 2008 12:07 (twelve years ago) link

The Gulf States will not need to unpeg from the dollar anytime soon, unless there is a switch to pricing oil in euros. Oil is its own currency and it is stronger than it has ever been. This insulates them from most of the problems associated with a weak national currency.

China is a very interesting question. I'm sure they are rather perturbed about the weak dollar, but more in terms of the US Treasury debt they hold. However, China can hold fast to their dollar peg for some time, yet.

China can purchase many of the imports they need (aside from oil) from the USA. The capital they are accumulating can mostly be absorbed in building their domestic infrastructure for some time yet. If they are looking to make foreign investments, they can buy out banks and corporations in the uSA for a while. Under those circumstances, the dollar peg will not hurt their basic export market or their capital expenditures.

They can sit tight for a while, I think.

Aimless, Monday, 26 May 2008 17:19 (twelve years ago) link

my hollow soul chuckles each time I see one of those Cadillac advertisements on a major television network, while GM buys out another 19,000 employees' contracts because they can no longer move Escalades.

El Tomboto, Friday, 30 May 2008 17:25 (twelve years ago) link

i hope the die-hard reagonomics people can now agree that inflation causes wage demands rather than vice versa

Tracer Hand, Wednesday, 4 June 2008 14:29 (twelve years ago) link

shorter washpo, krugman, et al: "the silver lining so far is that this time, wage earners appear happy to be screwed!"

Tracer Hand, Wednesday, 4 June 2008 14:31 (twelve years ago) link

Wage and Price rises are always a symptom never a cause.

Kondratieff, Wednesday, 4 June 2008 14:38 (twelve years ago) link

Don't know if you guys think a poll is a good idea for future oil prices (Or any other commodities). Recession led falls or continuing rises - where do you stand?

Kondratieff, Wednesday, 4 June 2008 14:41 (twelve years ago) link

I love how all these people say this current downturn is "self-confirming", as if the fears of people are what caused this crisis in the first place. Not the wholesale deregulation of financial markets and criminally lopsided taxation policies... nope, not that at all. People feared it, so it's all your fault.

burt_stanton, Wednesday, 4 June 2008 15:57 (twelve years ago) link

bears cause bear markets!!! if only they'd leave us bulls alone!!

El Tomboto, Wednesday, 4 June 2008 21:16 (twelve years ago) link

http://pics4.city-data.com/ctrends/ctr15576.png

What do you guys make of Utica's seeming resistance to downward trend?

Kondratieff, Thursday, 5 June 2008 17:04 (twelve years ago) link

Everyone's just buying from everyone else. It's a little game they play.

Ned Raggett, Thursday, 5 June 2008 17:06 (twelve years ago) link

we gonna die

Jimmy The Mod Awaits The Return Of His Beloved, Friday, 6 June 2008 18:59 (twelve years ago) link

Is it just me or do investors have an extra hard time believing the Dow can go below a nice round number like 12000?

Hurting 2, Wednesday, 18 June 2008 19:54 (twelve years ago) link

good god, these finance write-downs are going to blow the country up.

El Tomboto, Wednesday, 18 June 2008 20:01 (twelve years ago) link

we gonna die

-- Jimmy The Mod Awaits The Return Of His Beloved, Friday, June 6, 2008 2:59 PM (1 week ago) Bookmark Link

Eisbaer, Wednesday, 18 June 2008 20:03 (twelve years ago) link

Nice knowing you, transport industry

From yesterday's House Committee on Energy & Commerce hearing

Mr. Chairman and Members of the sub-committee:

My name is Steve Williams and I am the Chairman and CEO of Maverick USA in Little Rock
Arkansas.

I have also served as a three time chairman of the Arkansas Trucking Association and am a
former chairman of the American Trucking Associations. I am on the Executive Committees of
the American Transportation Research Institute and the Transportation Research Board of the
National Academies of Science.

My company, Maverick USA, operates the second largest company-owned flatbed fleet in the
United States. We employ nearly 2,000 people and operate more than 1,500 tractors. My
company serves the steel, building material and the flat glass industries.

In 2007, despite revenues of $300 million we lost money for the first time in our 27 year history.
Our fuel bill increased by $12,000,000 between 2006 and 2007, and we were not able to recover
this increase due to a weak economy.

The national average price of diesel fuel on June 16, 2008, was $4.62 per gallon. If this price
remains constant for the rest of this year, our company’s fuel bill will increase from $66,923,000
last year to $114,954,000 this year, a 72% increase in one year.

The fuel crisis is having a dramatic effect on the trucking community. Tom Albrecht, an
industry analyst with Stephens, Inc., wrote on June 10, 2008, that these fuel prices could force 14
percent to 16 percent of the trucking industry to cease operations.

Not only will this further reduce capacity from the market, it will make the used truck market
even worse. There are few domestic buyers for used equipment and over the last year we have
been forced to wholesale our tractors to Russia and Vietnam.

El Tomboto, Tuesday, 24 June 2008 15:59 (twelve years ago) link

the rest is here:
http://energycommerce.house.gov/cmte_mtgs/110-oi-hrg.062308.EnergySpec.shtml

El Tomboto, Tuesday, 24 June 2008 16:02 (twelve years ago) link

whaddya know, decades of underinvestment in transport infrastructure actually has consequences

Tracer Hand, Tuesday, 24 June 2008 16:04 (twelve years ago) link

Energy Speculation: Is Greater Regulation Necessary to Stop Price Manipulation? – Part II

Whoot! for the coming US command economy.

Ed, Tuesday, 24 June 2008 16:05 (twelve years ago) link

no no tracer it's all because we didn't drill in ANWR when we should have, and we're letting the chinese drill sideways from cuba to florida to access the massive offshore reserves that nobody's been interested in until last month

El Tomboto, Tuesday, 24 June 2008 16:07 (twelve years ago) link

the gop drill drill drill grandstanding is kind of amazing at this point

El Tomboto, Tuesday, 24 June 2008 16:07 (twelve years ago) link

THEY PUT PEE PEE IN YOUR MIRKSHAKE!

Hurting 2, Tuesday, 24 June 2008 16:08 (twelve years ago) link

DRILL G*DDAMN IT, DRILL THE FUCK OUT OF STUFF OR WE ALL GONNA DIE

Tracer Hand, Tuesday, 24 June 2008 16:09 (twelve years ago) link

OUTTA MY WAY LITTLE MAN, DADDY'S GOT A DRILL

Tracer Hand, Tuesday, 24 June 2008 16:10 (twelve years ago) link

GLAGLGLGLAGALGALGGAHHAGHAGHAAGLGAGL

Tracer Hand, Tuesday, 24 June 2008 16:10 (twelve years ago) link

Spoken like a true descendant of John Henry.

Ed, Tuesday, 24 June 2008 16:10 (twelve years ago) link

you know, i think cheny et al really thought iraq was gonna forestall this shit

Tracer Hand, Tuesday, 24 June 2008 16:11 (twelve years ago) link

they had the best of intentions

Tracer Hand, Tuesday, 24 June 2008 16:12 (twelve years ago) link

The Romans would have handled this better. Conquered nations should be paying tribute, not breaking our budget.

o. nate, Tuesday, 24 June 2008 16:13 (twelve years ago) link

Has there been any mention in the media that any new drilling would be sold on the global market rather than just the US market? I know it's just another checkmark in a *very* long 'con' column, but it seems like opponents to drilling would mention it more often.

petey_carnum, Tuesday, 24 June 2008 17:34 (twelve years ago) link

we gonna die

BIG HOOS aka the steendriver, Tuesday, 24 June 2008 17:52 (twelve years ago) link

apocalypse homie laid out his theory today:

-oil hits $200/barrel by the end of the year
-energy prices go up and summer 09 is another long hot summer inna 68 stylee
-o gets got, riots
-old ppl dieoff in the northeast as energy gets too expensive to handle extremes of summer & winter
-us economy tailspins, rest of world follows
-http://images.amazon.com/images/P/6305075379.01._SCLZZZZZZZ_.jpg

BIG HOOS aka the steendriver, Tuesday, 24 June 2008 17:59 (twelve years ago) link

Hoosteen did you forget you started this
"Is It Thunderdome Yet?" A Rolling Looming Apocalypse Thread

El Tomboto, Tuesday, 24 June 2008 18:12 (twelve years ago) link

no sir just thought given crackpot homie used some numbers it might loosely fit in here but i forget this is interesting egghead thread not hoos paranoia jpeg thread carry on apologia

BIG HOOS aka the steendriver, Tuesday, 24 June 2008 18:16 (twelve years ago) link

it was the use of the mad max graphic that betrayed your true intentions

El Tomboto, Tuesday, 24 June 2008 18:17 (twelve years ago) link

yr apocahomie has concatenated two unrelated but plausible events in $200 barrel oil and obama getting offed. but while a few americans might riot, the vast majority would bury the dead, grit their teeth, put their heads down and pull their yokes even harder. no mad max to be found in that scenario.

Aimless, Tuesday, 24 June 2008 18:23 (twelve years ago) link

we're talking literal yokes

Tracer Hand, Tuesday, 24 June 2008 18:27 (twelve years ago) link

Oxen - The Next Big Investment Opportunity?

Aimless, Tuesday, 24 June 2008 18:31 (twelve years ago) link

hot damn, you know what always outperforms in an apocalyptic post-empire economy? indie fucking rock, I'm gonna be rich

J0hn D., Tuesday, 24 June 2008 19:24 (twelve years ago) link

As long as you're getting paid in Canadian dollars and Euros, eh.

Eazy, Tuesday, 24 June 2008 19:24 (twelve years ago) link

need to call my manager about promoting in "emerging markets"

El Tomboto, Tuesday, 24 June 2008 19:25 (twelve years ago) link

I'll eat rats before I'll tour Europe again

J0hn D., Tuesday, 24 June 2008 19:26 (twelve years ago) link

or perhaps just set myself up as an expert in building tiger economy fanbases

El Tomboto, Tuesday, 24 June 2008 19:26 (twelve years ago) link

oh smack Tom you wanna talk turkey you know how to find me

J0hn D., Tuesday, 24 June 2008 19:28 (twelve years ago) link

you'll eat rats and you'll like it

Hurting 2, Tuesday, 24 June 2008 19:28 (twelve years ago) link

building tiger economies (by strategy)

Eisbaer, Tuesday, 24 June 2008 19:39 (twelve years ago) link

stockpiling Gulden's for when push comes to shove on this rats question

J0hn D., Tuesday, 24 June 2008 19:40 (twelve years ago) link

Get a little Bollywood cameo and you'll be set to blow up in India.

Eazy, Tuesday, 24 June 2008 19:42 (twelve years ago) link

India is already halfway to an oxen-based economy already! Lucky fuckers.

Aimless, Tuesday, 24 June 2008 19:51 (twelve years ago) link

can oxen be used as an alternative to oil

El Tomboto, Tuesday, 24 June 2008 19:53 (twelve years ago) link

There's a fortune to be made in the dung alone!

Aimless, Tuesday, 24 June 2008 19:56 (twelve years ago) link

it's time to consider all the options

J0hn D., Tuesday, 24 June 2008 19:59 (twelve years ago) link

Whale oil is a fuel from another age

the future!!!

BIG HOOS aka the steendriver, Tuesday, 24 June 2008 20:31 (twelve years ago) link

i've been reading nothing but economics books lately (the soros book on the credit crisis isn't bad, amateur philosophizing aside), and this firedoglake piece feels so otm to me it's scary: http://firedoglake.com/2008/06/24/a-bright-shining-depression/

YGS, Wednesday, 25 June 2008 00:02 (twelve years ago) link

that article is fairly interesting until you get to

But what really needs to be done, which is to bring insolvent firms under government stewardship and either wind them down or reinflate them, goes against everything the past thirty years has stood for. It's just not the sort of thing neoliberals and neoconservatives, with their touchingly childlike faith in "free" markets, believe in, understand or can even seriously consider.

and then you just go "oh right, firedoglake"

El Tomboto, Wednesday, 25 June 2008 00:07 (twelve years ago) link

I mean they go from seemingly being critical of bernanke for eating bear stearns because in their world that somehow lets everybody else off the hook to saying in their conclusion that what really needs to be done is to do more or less exactly that with every company that isn't doing well. That's some sneaky communist bullshit.

El Tomboto, Wednesday, 25 June 2008 00:09 (twelve years ago) link

link is fucked?

BIG HOOS aka the steendriver, Wednesday, 25 June 2008 00:13 (twelve years ago) link

just google "shining depression"

I'm also kind of thinking a lot of the stuff about the Japanese economy since the bust is straight pulled out of his ass

El Tomboto, Wednesday, 25 June 2008 00:14 (twelve years ago) link

you'll eat rats and you'll like it
ROFL.

All needed lubrication to operate at peak efficiency...these potions were often found lacking in keeping these delicate instruments humming
Jokes write themselves.

americans tend to not begrudge the rich
http://bp2.blogger.com/_gze8GjcR_fY/RkfSJ2LKyII/AAAAAAAABeo/J8PyHXXDNx0/s400/homeless2.jpg

VeronaInTheClub, Wednesday, 25 June 2008 00:31 (twelve years ago) link

Jeez, Stirling Newberry. Haven't seen that name in ages.

Oilyrags, Wednesday, 25 June 2008 00:37 (twelve years ago) link

This gave me the vertigo:

http://homepage.mac.com/ttsmyf/RealDow.gif

Hurting 2, Wednesday, 25 June 2008 22:14 (twelve years ago) link

Clinton was more Reagan than Reagan ... which makes you think, how is anything going to get better? Even my grandfather, a life long Republican, thinks things have gotten out of hand and there needs to be a progressive party, though in his opinion one that doesn't belong to the traditional socialist-liberal tradition.

burt_stanton, Wednesday, 25 June 2008 22:23 (twelve years ago) link

Long & occasionally dry but fascinating interview with the co-heads of equity strategy at Societe Generale:

http://bigpicture.typepad.com/comments/files/053008_Welling_Edwards-Montier_REPRINT.pdf

(hat tip to Big Picture)

Brief summary is that they basically think we are at the start of a multi-year recession & equity bear market. The chart of the slow-motion post-1929 crash with attendant pollyanna optimisim at each technical bounce on the way down is worth the price of admission.

o. nate, Thursday, 26 June 2008 20:16 (twelve years ago) link

WE GONNA DIE

Eisbaer, Friday, 27 June 2008 17:59 (twelve years ago) link

The depression will be liveblogged

Hurting 2, Friday, 27 June 2008 18:36 (twelve years ago) link

Well Hurting, hopefully the economy is OK by the time we graduate law school :{

burt_stanton, Friday, 27 June 2008 18:44 (twelve years ago) link

wow, those societe generale dudes are challops kings. they must be making a killing by being so right about everything.

circles, Friday, 27 June 2008 18:58 (twelve years ago) link

the challops kings play songs of slump

Hurting 2, Friday, 27 June 2008 19:14 (twelve years ago) link

I read that SG interview and yeah those dudes are mean
I'm pretty sure we are all going to die though

El Tomboto, Friday, 27 June 2008 19:15 (twelve years ago) link

though I was glad to hear their version on why there's like 17 supertankers full of crude just sitting in the gulf. I speculated (lol) they might be just waiting for the right price on contract, because of institutional investors taking wacky long positions on oil waiting for the $200 barrel, and nobody's coughing that up yet

El Tomboto, Friday, 27 June 2008 19:19 (twelve years ago) link

I read on another website that the reason for those tankers sitting in the Gulf was that they are carrying a type of heavy crude which is not usable in most US refineries, so there's less demand for it.

o. nate, Friday, 27 June 2008 19:27 (twelve years ago) link

i kind of want to see the wsj article they mentioned, but i haven't been able to find it on their site

circles, Friday, 27 June 2008 19:27 (twelve years ago) link

well why would that be news? that would seem to imply there's usually 17 supertankers full of nasty tar sitting in the gulf.

El Tomboto, Friday, 27 June 2008 19:28 (twelve years ago) link

The "heavy crude" theory:

http://answers.yahoo.com/question/index?qid=20080523203326AAGQJh8

This is saying it's Saudi Arabia's oil though - whereas the Bloomberg story is about Iraqi oil which is being temporarily stored in tankers while they do some refinery maintenance.

o. nate, Friday, 27 June 2008 19:36 (twelve years ago) link

Sorry, it's Iranian oil not Iraqi.

o. nate, Friday, 27 June 2008 19:38 (twelve years ago) link

Another Bloomberg story which supports the heavy Iranian oil explanation:

http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=akLt5fJKQNr8

o. nate, Friday, 27 June 2008 19:39 (twelve years ago) link

okay I'll buy that, actually. Refineries being the bottleneck seems like the simplest explanation

El Tomboto, Friday, 27 June 2008 20:20 (twelve years ago) link

WE GONNA DIE

Eisbaer, Tuesday, 1 July 2008 17:09 (twelve years ago) link

link?

El Tomboto, Tuesday, 1 July 2008 17:13 (twelve years ago) link

http://www.mortuaryservices.com/

Aimless, Tuesday, 1 July 2008 17:16 (twelve years ago) link

so, worst month since the great depression

deej, Tuesday, 1 July 2008 17:17 (twelve years ago) link

I knew this thread would pop back up today.

Hurting 2, Tuesday, 1 July 2008 17:17 (twelve years ago) link

Not worst month, worst June. June has a tendency to be a strong month.

Hurting 2, Tuesday, 1 July 2008 17:18 (twelve years ago) link

right yeah i missed that

deej, Tuesday, 1 July 2008 17:18 (twelve years ago) link

BTW China's benchmark index apparently had its worst month ever.

Hurting 2, Tuesday, 1 July 2008 17:18 (twelve years ago) link

singa bouta dooma inna juna

circles, Tuesday, 1 July 2008 17:19 (twelve years ago) link

Think how bad off we'd be if it weren't fer all them there stimulatin' checks DC's been dropping on us! We're all such lucky bums.

Aimless, Tuesday, 1 July 2008 17:27 (twelve years ago) link

I've heard vague rumors for a while about a potential coming credit crisis II involving credit cards. Anyone have an opinion on this?

Hurting 2, Tuesday, 1 July 2008 19:26 (twelve years ago) link

Right now credit card issuers are riding high, because so many USA people use credit or debit cards at the gas station and their cut is a fixed percentage of the sale (iirc it's 2%). This has been jacking up their profits.

However, since a lot of USA people (apparently) were living high by borrowing against rising home equity spending the loan proceeds in the belief that they'd settle their debt when they sold. And since that equity has dropped considerably, while their debts have not, the presumption is that these same folks have been turning to credit cards to reinflate their finances. This, of course, won't do more than postpone things, while also transposing their debt to a higher rate of interest.

This is still in the whispering stage because there aren't any numbers out there to make it real. It's just the markets waiting for another shoe to drop.

Aimless, Tuesday, 1 July 2008 21:18 (twelve years ago) link

I heard an interesting NPR piece on gas station economics recently. High prices are actually hurting gas stations -- 1) station's profit margin per gallon apparently doesn't change a lot, 2) high priced reduce demand, and 3) as you say, credit card companies take a fixed percent of the transaction. So lets say a gallon goes from $3.00 to $4.00. The gas station owner makes the same 20 cents on the gallon (I completely made this number up and don't know the real numbers) either way, but the credit card fee goes from taking 6 cents to taking 8 cents out of the owner's profit. And to make things worse, more people, as you say, are using credit cards to pay.

Hurting 2, Tuesday, 1 July 2008 21:27 (twelve years ago) link

Visa actually recently reduced its transaction fees in response to this problem, btw. I guess ultimately it's not in their interest to force stations out of business but rather to keep them alive and squeeze as much as they can.

Hurting 2, Tuesday, 1 July 2008 21:28 (twelve years ago) link

http://www.templetons.com/brad/smalldarth.jpg

BIG HOOS aka the steendriver, Tuesday, 1 July 2008 21:35 (twelve years ago) link

I feel like this could go in the real estate thread too:

http://www.marketwatch.com/news/story/starbucks-pulling-plug-600-us/story.aspx?guid=%7b874B1409-ABC3-432E-85AA-4201C052948C%7d&dist=msr_1&print=true&dist=printMidSection

Remember when a coming-soon Starbucks was considered a sure sign that you should buy a condo in the neighborhood?

Hurting 2, Tuesday, 1 July 2008 21:35 (twelve years ago) link

The coffee-shop chain said both full-time and part-time positions will be eliminated but wants to transfer some of those employees affected to nearby stores.
Starbucks shares jumped 6% in late trading.

Gotta love capitalism.

Ned Trifle II, Tuesday, 1 July 2008 21:44 (twelve years ago) link

I wish they would cut some horrid AAA singer songwriters from the HearMusic roster instead.

Hurting 2, Tuesday, 1 July 2008 21:46 (twelve years ago) link

yeah, just trash their contract with antigone rising and save a few baristas' jobs.

Eisbaer, Tuesday, 1 July 2008 22:14 (twelve years ago) link

For . . . the Dow Jones industrial average, which dropped 14.4 percent in the six months through June 30, it was the poorest start to a year in nearly four decades.

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN3041264220080630?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews&rpc=22&sp=e

kamerad, Tuesday, 1 July 2008 22:25 (twelve years ago) link

Gotta love capitalism.

-- Ned Trifle II, Tuesday, 1 July 2008 21:44 (Yesterday) Link
I know right?
Lol at tiger economies.
Is anyone at all considering the word 'sustainability'?!

VeronaInTheClub, Wednesday, 2 July 2008 01:01 (twelve years ago) link

Anyone? Oh, yes. Many millions are considering this idea.

Several billions are not, especially those who control big financial investments. They only want to be richer at the end of the quarter. By year's end at the latest.

Aimless, Wednesday, 2 July 2008 01:42 (twelve years ago) link

Several billions are not, especially those who control big financial investments. They only want to be richer at the end of the quarter. By year's end at the latest.
Yeah thats who I was calling out, fuckers do not give a what.
I've heard some people talk of participatory economies and localising stuff? On a local scale that might work...

VeronaInTheClub, Friday, 4 July 2008 01:45 (twelve years ago) link

I mean on a 'small scale'

VeronaInTheClub, Friday, 4 July 2008 01:46 (twelve years ago) link

Well, you can certainly throw a chip or two (of your personal expenditures) on the pile of your local economy. I do this. Just an hout ago I sent to pick up this week's vegies from a local farm, a CSA, about five miles from my house.

All you can do is try. By this thime in my life, I have most of my basic needs already met, so it's easier for me than for someone just starting out. But, in the not so distant future, transport costs will be a much larger part of any item's price tag, so buying local will make more economic sense than it does today.

As life changes radically in the next couple of decades, all these trade-offs will become more obvious.

Aimless, Friday, 4 July 2008 02:35 (twelve years ago) link

Sometimes I find myself a little bitter cause it's like dammit why didn't I get to be born in the less-worrisome hooray fuckoff let's use up everything era?

But of course that wouldn't have made unsustainable living OK anyway. And anyhow I'm here and not there. Go to life with the lot you've got.

BIG HOOS aka the steendriver, Friday, 4 July 2008 03:45 (twelve years ago) link

Well, unless anyone here was born in the 40s, that pretty much applies to us all. And don't worry in a few years it'll bounce back and everyone will be out maxing the credit cards again, filling up the humvee and saying 'well that wasn't so bad' AND IT WILL NOW NEVER HAPPEN AGAIN so we don't need to worry.

Ned Trifle II, Friday, 4 July 2008 07:12 (twelve years ago) link

here's hoping!!

BIG HOOS aka the steendriver, Friday, 4 July 2008 07:15 (twelve years ago) link

And don't worry in a few years it'll bounce back and everyone will be out maxing the credit cards again, filling up the humvee and saying 'well that wasn't so bad' AND IT WILL NOW NEVER HAPPEN AGAIN so we don't need to worry

As long as you don't want to use continually debased western currencies to pay for imports like food and oil that is.

Kondratieff, Friday, 4 July 2008 11:45 (twelve years ago) link

And don't worry in a few years it'll bounce back and everyone will be out maxing the credit cards again, filling up the humvee and saying 'well that wasn't so bad'

I don't know if that's really going to happen.

Tracer Hand, Friday, 4 July 2008 11:48 (twelve years ago) link

ca 1985:

"If the rest of the world lived like Americans did, we'd need x times as much oil, and x times as much food as the entire planet is capable of producing!"

"Hahah OMG that is crazy. jeez"

Tracer Hand, Friday, 4 July 2008 11:49 (twelve years ago) link

All Hail Malthus.

Ed, Friday, 4 July 2008 11:49 (twelve years ago) link

Malthus was proved wrong by the continually increasing ability of technological advances in food production and efficiency to provide for the world's population. With the end of the oil era - and the end of all those petrochemicals that make food production so cheap - don't you think Malthus might end up being sort of right in the end?

I mean, I think it can't be repeated enough that Western standards of living rely fundamentally on inequality with the rest of the world. As justice grows, Western incomes and access to resources will shrink.

Tracer Hand, Friday, 4 July 2008 11:52 (twelve years ago) link

In the end maybe, but even with today's technology we can dramatically increase efficiency even if we don't increase production of anything.

Your second paragraph is OTM.

Ed, Friday, 4 July 2008 11:59 (twelve years ago) link

I mean, I think it can't be repeated enough that Western standards of living rely fundamentally on inequality with the rest of the world.

Yes with regards to resources. But this is verging on the development as zero-sum game fallacy.

lukas, Friday, 4 July 2008 13:35 (twelve years ago) link

Not so sure of that. It is entirely possible to achieve a better standard of living, right around the world, using less resources.

Ed, Friday, 4 July 2008 13:36 (twelve years ago) link

I don't know if that's really going to happen.

-- Tracer Hand, Friday, July 4, 2008 11:48 AM (7 hours ago) Bookmark Link

Right. I, and I assume Aimless, were being sarcastic.

BIG HOOS aka the steendriver, Friday, 4 July 2008 19:16 (twelve years ago) link

hey guess what just news cycle the fact that it now costs $160 to fill up a GMC Yukon did not stop the financial sector from being in a fuck ton of trouble

what's the trickle-down from lehman and bear stearns getting killed? how long can merrill lynch and fannie/freddie drag out putting their losses on the books?

El Tomboto, Tuesday, 8 July 2008 05:35 (twelve years ago) link

Right. I, and I assume Aimless, were being sarcastic.

-- BIG HOOS aka the steendriver, Friday, July 4, 2008 7:16 PM (4 days ago) Bookmark Link

I don't think Aimless was being sarcastic. I hope he wasn't. I on the other hand was.

Ned Trifle II, Tuesday, 8 July 2008 07:44 (twelve years ago) link

hello all. just thought i'd stop by to share the bizarre info that we were up considerably in June from last year, and are WAY up so far from last year's July as well.

i think this may just be proof that A) idiots are actually spending those stupid rebate checks and B) musicians are by and large, idiots. so don't get your hopes up.

BLACK BEYONCE, Tuesday, 8 July 2008 08:07 (twelve years ago) link

I was just thinking about Malthus the other day, and how he probably never would have guessed that as affluence increases, the birth rate decreases AND consumption increases by an degree that more than makes up for it.

Hurting 2, Tuesday, 8 July 2008 13:32 (twelve years ago) link

A lot of the 19th century economists (or at least the first half of the century or so) never really got to grips with Humanity's ability to manufacture demand.

Ed, Tuesday, 8 July 2008 13:41 (twelve years ago) link

Well, that's still good news, BB.

PS You don't need proof that musicians are by and large stupid. Next you'll try to prove to me that there cannot be more than everything.

Fluffy Bear Hearts Rainbows, Tuesday, 8 July 2008 13:57 (twelve years ago) link

I wonder when Obama will get around to this topic -- once all the faith-based groups are funded?

Dr Morbius, Tuesday, 8 July 2008 14:07 (twelve years ago) link

They're doing even more funding of that right now!

Ned Raggett, Tuesday, 8 July 2008 14:12 (twelve years ago) link

obama on economy and bankruptcy today:

http://www.time.com/time/politics/article/0,8599,1820883,00.html

akm, Tuesday, 8 July 2008 14:15 (twelve years ago) link

WE GONNA DIE

Eisbaer, Wednesday, 9 July 2008 19:50 (twelve years ago) link

Now what.

Ned Raggett, Wednesday, 9 July 2008 19:51 (twelve years ago) link

(the dow, the nasdaq, and the s&p 500 all dropped more than 2% today)

Eisbaer, Wednesday, 9 July 2008 20:00 (twelve years ago) link

Boohoo.

Ned Raggett, Wednesday, 9 July 2008 20:11 (twelve years ago) link

maybe I'll just stop the 401k nonsense and party hard.

Dr Morbius, Wednesday, 9 July 2008 20:13 (twelve years ago) link

TAKE THE HIT

Tracer Hand, Wednesday, 9 July 2008 21:26 (twelve years ago) link

Boohoo.

-- Ned Raggett, Wednesday, July 9, 2008 4:11 PM (Yesterday) Bookmark Link

i'm glad that you read this thread, ned, because this story about cheap jones beach concert tix may amuse you.

:-)

Eisbaer, Thursday, 10 July 2008 15:55 (twelve years ago) link

and if not that story, then my shitty linking abilitiesmight ;_;

Eisbaer, Thursday, 10 July 2008 15:55 (twelve years ago) link

The only reason to be concerned with one-day stock gains/losses is if you're about to buy something or about to sell something.

Hurting 2, Thursday, 10 July 2008 17:46 (twelve years ago) link

Fannie Mae and Freddie Mac to be bailed out by taxpayers?

scott seward, Friday, 11 July 2008 02:24 (twelve years ago) link

me

Maria :D, Friday, 11 July 2008 02:24 (twelve years ago) link

http://www.youtube.com/watch?v=XHNpSDSbjTg

"Oh my God."

El Tomboto, Friday, 11 July 2008 03:24 (twelve years ago) link

are you putting out a buy?

Maria :D, Friday, 11 July 2008 03:27 (twelve years ago) link

"I- I- I- I- I- I-"

El Tomboto, Friday, 11 July 2008 03:29 (twelve years ago) link

the OFHEO dude who said they were "adequately capitalized" had better fucking pray he's right or I'm about to have to change this thread title to something more emphatic

El Tomboto, Friday, 11 July 2008 03:31 (twelve years ago) link

Holy mackeral, Freddie and Fannie both down 40% to open trading today.

brownie, Friday, 11 July 2008 14:02 (twelve years ago) link

Chart at the top of the page at this moment = yikes

Tracer Hand, Friday, 11 July 2008 14:58 (twelve years ago) link

my Dad just called me pissed off about this >:0

bnw, Friday, 11 July 2008 15:17 (twelve years ago) link

Did he demand that you flood the market with cheap cotton futures?

Tracer Hand, Friday, 11 July 2008 15:24 (twelve years ago) link

so it's ok today to say ... WE GONNA DIE?!?

Eisbaer, Friday, 11 July 2008 15:53 (twelve years ago) link

seriously ... this statement of principles on how to solve this current financial mess is why i heart calculated risk as much as i do.

Eisbaer, Friday, 11 July 2008 16:13 (twelve years ago) link

holy shit I knew they were in trouble but didn't know it was that bad

wau

HI DERE, Friday, 11 July 2008 16:35 (twelve years ago) link

"We noted that the world economy is in good condition and growth is more evenly distributed across regions. ... We anticipate a smooth adjustment of global imbalances which should take place in the context of sustained and robust economic growth."

- G8 Summit communiqué, June 8, 2007, Heiligendamm

Tracer Hand, Friday, 11 July 2008 16:37 (twelve years ago) link

from the same document:

"While noting the positive contribution (sic) of hedge funds to financial-market stability, we also want to minimise systemic risks by increasing transparency and market discipline on the part of all parties involved."

Tracer Hand, Friday, 11 July 2008 16:38 (twelve years ago) link

"We noted that the world economy is in good condition and growth is more evenly distributed across regions. ... We anticipate a smooth adjustment of global imbalances which should take place in the context of sustained and robust economic growth."

- G8 Summit communiqué, June 8, 2007, Heiligendamm

-- Tracer Hand, Friday, 11 July 2008 17:37 (8 minutes ago) Bookmark Link

from the same document:

"While noting the positive contribution (sic) of hedge funds to financial-market stability, we also want to minimise systemic risks by increasing transparency and market discipline on the part of all parties involved."

-- Tracer Hand, Friday, 11 July 2008 17:38 (7 minutes ago) Bookmark Link
http://gispro.files.wordpress.com/2007/06/bullshit.jpg

VeronaInTheClub, Friday, 11 July 2008 16:48 (twelve years ago) link

yeah, that "CHRIST! Did a cow shit in here?" quote from kentucky fried movie is a pretty good summary of the economy today.

Eisbaer, Friday, 11 July 2008 16:51 (twelve years ago) link

I love how the graph is mincing around just above 11000, like it's ready to jump in but is afraid the water might be a little too cold

Tracer Hand, Friday, 11 July 2008 16:53 (twelve years ago) link

http://www.davemanuel.com/images/dead_cat_bounce.jpg

Eisbaer, Friday, 11 July 2008 16:54 (twelve years ago) link

Phil Gramm 'expert' lolz

Dr Morbius, Friday, 11 July 2008 17:02 (twelve years ago) link

this seems like a good time to post modok with a moustache
http://s89230137.onlinehome.us/BBC/blogfiles/MODOK_moustache.gif

El Tomboto, Friday, 11 July 2008 17:19 (twelve years ago) link

I thought that when the tech bubble burst the Big Dow would find its support at around 8000. Little knew I then, apparently. Still, it wouldn't shock me if it gets there now, over this housing bubble.

Aimless, Friday, 11 July 2008 17:42 (twelve years ago) link

One thing that puzzles me about the current crisis - it seems sort of common sense to me that any little thing can push an already teetering mortgage over the brink - a rise in gas and food prices, a layoff, etc., and it seems like those little things are on the rise. Do *analysts* consider that simple fact when they evaluate the mortgage and mortgage securities businesses? Like are their projections based on the assumption that things will follow their current trend instead of getting worse? And if so, is that why we keep getting *more bad news* surprises?

Hurting 2, Friday, 11 July 2008 18:01 (twelve years ago) link

yeah, i'm really an amateur about economics, but i'm kind of surprised that the fannie mae/freddie mac bombshell happened now and not sometime months ago. why is this?

goole, Friday, 11 July 2008 18:03 (twelve years ago) link

Short-sellers piling in, maybe?

o. nate, Friday, 11 July 2008 18:29 (twelve years ago) link

Does the 95% "institution owned" statistic for both of these companies have something to do with their semi-government-backed structure?

Hurting 2, Friday, 11 July 2008 18:34 (twelve years ago) link

A perfect photo for today (though I don't think it was taken today, sadly):

http://latimesblogs.latimes.com/laland/images/2008/07/11/k3uny1nc.jpg

Ned Raggett, Friday, 11 July 2008 18:36 (twelve years ago) link

Actually that deserves a 'Caption this photo' thread...

Ned Raggett, Friday, 11 July 2008 18:36 (twelve years ago) link

Does the 95% "institution owned" statistic for both of these companies have something to do with their semi-government-backed structure?

Well I imagine that contributed to the view that these were relatively safe investments that encouraged institutional investors to hold them. That could also be contributing to the free-fall, if all these institutions decide to get out at once.

o. nate, Friday, 11 July 2008 19:08 (twelve years ago) link

Well I don't know enough about how that stat is calculated and how up-to-date it is. I mean if a stock is 95% institution owned, a precipitous drop like this can ONLY come from institutions selling it off. Unless the number somehow reflects the fact that everyone else has been selling and only institutions are holding.

Hurting 2, Friday, 11 July 2008 19:34 (twelve years ago) link

I don't think that number's very up-to-date - probably updated monthly or less, I'd guess. I'm not sure how it's calculated though I guess these institutions periodically issue reports on what they've bought and sold, so that might be the source. I think these institutions typically trade in such large blocks that they usually try to place a block with another institution if they have to sell so that they don't move the market too much, but if they really are desperate to sell and they can't find someone willing to take a large block, then I guess they might have to sell in smaller lots. I'm not sure though.

o. nate, Friday, 11 July 2008 20:19 (twelve years ago) link

so much for IndyMac.

El Tomboto, Friday, 11 July 2008 22:55 (twelve years ago) link

The company was desperate for more capital but couldn't find investors willing to put fresh funds into what looked like a crippled institution.

A growing number of banks are facing a similar, if less dire, challenge, as investors who pumped billions of dollars into capital-hungry banks are now starting to balk at throwing good money after bad.

An exodus of depositors added to IndyMac's woes. Deposits are the lifeblood of banks, providing them with a stable, low-cost source of cash to fund their daily operations and lending activities. After Mr. Schumer raised questions about the bank, depositors withdrew $1.3 billion in 11 days.

It's unclear how much the failure will cost the FDIC.

El Tomboto, Friday, 11 July 2008 22:57 (twelve years ago) link

Part of me wants a total world economic collapse just so I can hear how surreal Kai Rysdall sounds reading completely horrific news in his cheerful style.

Hurting 2, Friday, 11 July 2008 23:35 (twelve years ago) link

barry's line today made me irlol

Fannie (FNM) and Freddie (FRE) fell more than 25% each, as the bailout plan makes it clear that shareholders are not going to be rewarded for showing such bad judgment as to own this crap.

El Tomboto, Wednesday, 16 July 2008 04:26 (twelve years ago) link

So like, what are the options Obama is offering? (In case he does actually win the presidency). I heard he's supposedly to be less progressive than Clinton on these US recession woes?

VeronaInTheClub, Wednesday, 16 July 2008 12:54 (twelve years ago) link

WE GONNA DIE

El Tomboto, Wednesday, 16 July 2008 17:51 (twelve years ago) link

I never thought Tom would turn into Jar Jar Binks.

Nicole, Wednesday, 16 July 2008 18:45 (twelve years ago) link

The front page of the Washington Post is LOL today: two articles on the sinking economy and part 3 of a like 15 part series on CHANDRA LEVY

Mr. Que, Wednesday, 16 July 2008 18:48 (twelve years ago) link

You know, taking you back to the last recession.

Ned Raggett, Wednesday, 16 July 2008 18:53 (twelve years ago) link

ok i'm a dunce about all this but bear with me, this is me half-repeating stuff i've read in a several different places

the housing crisis is huge but underlying inflation is part of the cause of it: ppl are more likely to skip out on a mortgage payment than on food or gas. so oil prices are the lurking problem underneath the entire slowdown. oil is more expensive lately but not as much as it seems in the US - oil is priced in dollars and all the foreign producers still want to make they money even tho the dollar is weak.

the dollar is weak because of the terrible fiscal position of the US government (monetary policy is no help here, either that or a relatively loose monetary policy actually hurts too?). our fiscal picture looks so bad because of massive wartime borrowing and spending (the war(s) and concomitant hawkishness re: iran are part of the instability premium on oil as well). the US congress and populace may have itself fooled that running the war off the books in emergency spending bills makes it free, but the economists at every bank and firm on the globe are not stupid -- they are right to not value the greenback very much. so, if we want to fix the economy, we have to end the war?

am i totally amateurishly zmag wrong about this or what

goole, Wednesday, 16 July 2008 18:58 (twelve years ago) link

we have to do a lot more than stop spending on shock & awe surge funtime & dinar casino games to fix this shit

I briefly considered taking the day off today to go down in front of the hill and make myself a posterboard sign saying NO BAILOUT but it's really hot

El Tomboto, Wednesday, 16 July 2008 19:08 (twelve years ago) link

no bailout rly?

i would like to get all the garbage out of the system and finally see where the bottom is, since that's what everyone seems to want to know. but i also don't want to be selling matches on the corner of marshall and snelling either

goole, Wednesday, 16 July 2008 19:14 (twelve years ago) link

Nothing can stop that now.

Jimmy The Mod Awaits The Return Of His Beloved, Wednesday, 16 July 2008 19:23 (twelve years ago) link

i plan to offer pencils also

goole, Wednesday, 16 July 2008 19:24 (twelve years ago) link

the dollar is weak because americans have spent beyond their means for deacdes and had the rest of the world finance it. the war et al have been catalysts perhaps but as tombot says, it'll take a lot more than no more shock and awe o fix this shit.

china (and to a lesser extent, india) is industrializing like crazy, creating demand for commodities on a quantitively different level than the world has known to date. this means that unless the earth has an abundance of presently unknown natural resources, prices are going to new levels where there are likely to remain.

meanwhile, speaking for russia at least, despite the fact that oil production is down slightly, a significant minority of people i know believe that the nasty secret is that oil companies are not particularly bothered about boosting productino to meet higher demand because the oil they pump next year will fetch a higher price than whatever they pump this year. (admittedly we're starting to see cost inflation cutting into the crazy profits - Gazprom's financials were pretty disappointing last quarter - so that theory may get tested over the next year or so)

mitya, Wednesday, 16 July 2008 19:35 (twelve years ago) link

i just lost my job :D

deej, Wednesday, 16 July 2008 19:38 (twelve years ago) link

wait i mean http://www.best-of-web.com/_images/080509-131410-727007.jpg

deej, Wednesday, 16 July 2008 19:39 (twelve years ago) link

:O

Jimmy The Mod Awaits The Return Of His Beloved, Wednesday, 16 July 2008 19:39 (twelve years ago) link

btw did you guys see the bit about how 10% of china's GDP is in Fannie/Freddie bonds? scary foreign policy angle

El Tomboto, Wednesday, 16 July 2008 19:39 (twelve years ago) link

ha we'll curb the yellow menace yet

goole, Wednesday, 16 July 2008 19:40 (twelve years ago) link

(I assume most everybody on these threads reads barry ritholtz on the regular, which may be false)

El Tomboto, Wednesday, 16 July 2008 19:40 (twelve years ago) link

yes, it's false - what's the link pls

mitya, Wednesday, 16 July 2008 19:54 (twelve years ago) link

http://blogs.cfr.org/setser/2008/07/12/too-chinese-and-russian-to-fail/

lol I did not see this was from CFR

El Tomboto, Wednesday, 16 July 2008 19:55 (twelve years ago) link

Solution: stop wasting your money on the Internet and high-tech. Apparently.

Ned Raggett, Wednesday, 16 July 2008 19:57 (twelve years ago) link

wow that guy is dumb

El Tomboto, Wednesday, 16 July 2008 20:01 (twelve years ago) link

But it's Larry Magid!

(Whoever he is.)

Ned Raggett, Wednesday, 16 July 2008 20:02 (twelve years ago) link

am i totally amateurishly zmag wrong about this or what

this is my new .sig file

Tracer Hand, Wednesday, 16 July 2008 23:39 (twelve years ago) link

Deej, what kind of job did you lose?

ps that sucks

Hurting 2, Wednesday, 16 July 2008 23:46 (twelve years ago) link

deej sorry u lost yr job man!

J0hn D., Wednesday, 16 July 2008 23:49 (twelve years ago) link

i was working at a company that gets contracted to write learning materials for other companies

zzzzzzzzzzzzzzzzzzzzzz but it paid the bills

deej, Wednesday, 16 July 2008 23:54 (twelve years ago) link

btw if anyone wants to know how to sell insurance im your man
it basically involves scaring the customer into spending more

deej, Wednesday, 16 July 2008 23:54 (twelve years ago) link

sorry to hear the news, deej :-(

Eisbaer, Thursday, 17 July 2008 01:38 (twelve years ago) link

zzzzzzzzzzzzzzzzzzzzzz but it paid the bills

-- deej, Wednesday, July 16, 2008 7:54 PM (1 hour ago) Bookmark Link

I feel you on that - you're describing the job I did for the last four years and it's still hard for me to leave it to go back to school.

Hurting 2, Thursday, 17 July 2008 01:39 (twelve years ago) link

frack

mitya, Thursday, 17 July 2008 23:38 (twelve years ago) link

I'm glad I keep all my krugerands in a safe under the bed

Shakey Mo Collier, Thursday, 17 July 2008 23:39 (twelve years ago) link

Bu-bye Citibanc!

Oilyrags, Friday, 18 July 2008 15:57 (twelve years ago) link

William Greider offers a provocative history of how we got into this mess, with plenty of blame to go around for Democrats and Republicans:

http://www.thenation.com/doc/20080818/greider

o. nate, Friday, 1 August 2008 15:01 (twelve years ago) link

<a href=http://money.cnn.com/2008/08/01/news/economy/jobs_july/index.htm?cnn=yes>;Working Men are Pissed! The Non-Working ones, too, actually.</a>

Oilyrags, Friday, 1 August 2008 15:36 (twelve years ago) link

lol trolling realtor.com for sub-$1000 properties in your area is fucked up

El Tomboto, Thursday, 14 August 2008 05:06 (eleven years ago) link

commenters on bigpicture were talking about how for some properties, after paying tax debts associated w/ and fees etc. you're essentially purchasing a negative in real terms, nevermind fucking condominiums moving at "take my house... please" prices

El Tomboto, Thursday, 14 August 2008 09:08 (eleven years ago) link

I mean at least with a shithole SFH in a detroit suburb you get the deed to the land

El Tomboto, Thursday, 14 August 2008 09:09 (eleven years ago) link

the dollar's at 1.86 against the pound today although i think that's more down to the british economy tanking

Tracer Hand, Thursday, 14 August 2008 10:17 (eleven years ago) link

Foresight!

Ned Raggett, Monday, 25 August 2008 14:23 (eleven years ago) link

BIN LADEN DETERMINED TO ATTACK INSIDE US MORTGAGE INDUSTRY

Pancakes Hackman, Monday, 25 August 2008 14:30 (eleven years ago) link

http://www.youtube.com/watch?v=712kRqri2No

El Tomboto, Wednesday, 27 August 2008 16:26 (eleven years ago) link

two weeks pass...

http://online.wsj.com/article/SB122109238502221651.html?mod=hps_us_my_companies

haha oh dear

caek, Thursday, 11 September 2008 15:16 (eleven years ago) link

http://www.rgemonitor.com/roubini-monitor/253567/if_lehman_collapses_expect_a_run_on_all_of_the_other_broker_dealers_and_the_collapse_of_the_shadow_banking_system

It is now clear that we are again – as we were in mid- March at the time of the Bear Stearns collapse – an epsilon away from a generalized run on most of the shadow banking system, especially the other major independent broker dealers (Lehman, Merrill Lynch, Morgan Stanley, Goldman Sachs). If Lehman does not find a buyer over the weekend and the counterparties of Lehman withdraw their credit lines on Monday (as they all will in the absence of a deal) you will have not only a collapse of Lehman but also the beginning of a run on the other independent broker dealers (Merrill Lynch first but also in sequence Goldman Sachs and Morgan Stanley and possibly even those broker dealers that are part of a larger commercial bank, I.e. JP Morgan and Citigroup). Then this run would lead to a massive systemic meltdown of the financial system. That is the reason why the Fed has convened in emergency meetings the heads of all major Wall Street firms on Friday and again today to convince them not to pull the plug on Lehman and maintain their exposure to this distressed broker dealer.

haha oh dear

caek, Sunday, 14 September 2008 20:55 (eleven years ago) link

Meanwhile, gas prices have jumped like $1.00 overnight in places like Knoxville. No idea what it is in portland, around the detroit suburbs it's 4.19/gal

kingfish, Sunday, 14 September 2008 21:31 (eleven years ago) link

Goldman and Morgan Stanley aren't nearly as compromised as Lehman is.

If the Fed was that worried about a run on commercial banks like JPM or Citi, they would have been writing a check this weekend like they did for Bear. Or maybe Paulson's just playing for a really slow liquidation.

Dandy Don Weiner, Sunday, 14 September 2008 23:13 (eleven years ago) link

so do I put my money in my mattress or not?

Every Day Jimmy Mod Is Hustlin' (Jimmy The Mod Awaits The Return Of His Beloved), Sunday, 14 September 2008 23:16 (eleven years ago) link

Oh, and Lehman is filing for bankruptcy tonight:

NYT:

"According to people briefed on the matter, Lehman Brothers will file for bankruptcy protection on Sunday night, in the largest failure of an investment bank since the collapse of Drexel Burnham Lambert 18 years ago."

Dandy Don Weiner, Sunday, 14 September 2008 23:18 (eleven years ago) link

I know at least ten people who work for Lehman in NY. Time to check their Facebook.

Dandy Don Weiner, Sunday, 14 September 2008 23:19 (eleven years ago) link

yes tell us of their 'status' updates

other extremists (deej), Sunday, 14 September 2008 23:25 (eleven years ago) link

yippee ki yay motherfuckers

HOOS clique iphones fool get ya steen on (BIG HOOS aka the steendriver), Sunday, 14 September 2008 23:27 (eleven years ago) link

yes, a lot of my oxford contemporaries went to lehman. having played football with this people, it's impossible not to enjoy this aspect of the shitbin scenario.

caek, Sunday, 14 September 2008 23:30 (eleven years ago) link

these people

caek, Sunday, 14 September 2008 23:30 (eleven years ago) link

Then this run would lead to a massive systemic meltdown of the financial system. That is the reason why the Fed has convened in emergency meetings the heads of all major Wall Street firms on Friday and again today to convince them not to pull the plug on Lehman and maintain their exposure to this distressed broker dealer.
Yeh, so, oops.

-- (stet), Monday, 15 September 2008 00:49 (eleven years ago) link

The Times is also talking about Merrill Lynch & AIG... are they all gonna collapse?

pterodactyl, Monday, 15 September 2008 00:56 (eleven years ago) link

Merrill is already gone: merger with BoA

-- (stet), Monday, 15 September 2008 01:03 (eleven years ago) link

oh, it's a sale not a merger
http://online.wsj.com/article/SB122142278543033525.html

-- (stet), Monday, 15 September 2008 01:10 (eleven years ago) link

bad move by BoA. This is the same bunch that bought Countrywide!

AIG hasn't looked good for a long time.

There won't be a run or systemic collapse.

Dandy Don Weiner, Monday, 15 September 2008 01:20 (eleven years ago) link

press ► (deej), Monday, 15 September 2008 02:25 (eleven years ago) link

cocksuckers at AIG are asking for MY money via a bridge loan.

Dandy Don Weiner, Monday, 15 September 2008 03:36 (eleven years ago) link

Caption this photo:

http://graphics8.nytimes.com/images/2008/09/15/business/15lehman.xlarge3.jpg

I guess if you figure you can't even get back IN the building on Monday...

Ned Raggett, Monday, 15 September 2008 03:38 (eleven years ago) link

and for those who really wanna shit their pants -- is the head of lehman brothers whistling past a graveyard?

― Eisbaer, Monday, March 17, 2008 12:59 AM (5 months ago) Bookmark

um, brown trouser days ahead?!?

Eisbaer, Monday, 15 September 2008 05:09 (eleven years ago) link

100 percent HOOS test (BIG HOOS aka the steendriver), Monday, 15 September 2008 05:24 (eleven years ago) link

the other night at my job where i telemarket for my school, this woman decided to give me a pledge so the i asked if she or her husband worked for a matching gift company, and she said "yes, lehman, but you better get it in quick" and then she laughed and i laughed back because i had no idea what she was talking about

funky house truther (J0rdan S.), Monday, 15 September 2008 05:28 (eleven years ago) link

now i do :[

funky house truther (J0rdan S.), Monday, 15 September 2008 05:28 (eleven years ago) link

Bad finger analogies

Ned Raggett, Monday, 15 September 2008 05:46 (eleven years ago) link

i wonder if lehman will sell off their awesome led screens.

http://www.untwist.com/images_projects/lehman_bros_anim.gif

tipsy mothra, Monday, 15 September 2008 05:52 (eleven years ago) link

better than badfinger analogies, one assumes

100 percent HOOS test (BIG HOOS aka the steendriver), Monday, 15 September 2008 06:05 (eleven years ago) link

nyt commenters <3 <3

funky house truther (J0rdan S.), Monday, 15 September 2008 06:08 (eleven years ago) link

September 14th,
2008
8:03 pm
The football analogy really doesn’t work. Lehman has just been knocked out of the playoffs, and actually knocked out of the league. The executives of Lehman and many Wall Street firms, unlike Ronnie Lott, did not play to help the team win, but instead exhibited extreme greed and foolishness.
— Posted by James

funky house truther (J0rdan S.), Monday, 15 September 2008 06:08 (eleven years ago) link

no SIR-- no credibility

100 percent HOOS test (BIG HOOS aka the steendriver), Monday, 15 September 2008 06:23 (eleven years ago) link

Jimmy Mod askin the real questions.

Remember when your friends would tell you "now if a major bank or the U.S. Government writes you a check that bounces, then you probably have more to worry about than if you're getting paid!" and you would have a corny laugh over it?

Mackro Mackro, Monday, 15 September 2008 06:47 (eleven years ago) link

Everyone is lookin all sad on the PATH train right now

sex viagra cialis hard teen firm wet tight sexy rod unit teens hole suck (max), Monday, 15 September 2008 12:56 (eleven years ago) link

"pound it bra, one last time..."

burt_mcgurt, formerly known as (burt_stanton), Monday, 15 September 2008 13:03 (eleven years ago) link

Louise Story reports that Ken Lewis of Bank of America, on a conference call this morning, said he believed Merrill Lynch was “more likely than not” to survive the current turmoil. Now there’s an endorsement.

Convert your pencil into a large pole (caek), Monday, 15 September 2008 13:51 (eleven years ago) link

Not gettin a real answer to mah questionsz :\

Every Day Jimmy Mod Is Hustlin' (Jimmy The Mod Awaits The Return Of His Beloved), Monday, 15 September 2008 13:58 (eleven years ago) link

burn, Wall Street, burn

Dr Morbius, Monday, 15 September 2008 15:35 (eleven years ago) link

so do I put my money in my mattress or not?

if your mattress ends with FCU or is otherwise a big consumer bank that doesn't buy securities/back investments in golf courses (USAA word) put money in that mattress.

Otherwise that money will just be worth less and less every day while it sits in your mattress

TOMBOT, Monday, 15 September 2008 16:51 (eleven years ago) link

that's what I thought.

Every Day Jimmy Mod Is Hustlin' (Jimmy The Mod Awaits The Return Of His Beloved), Monday, 15 September 2008 16:53 (eleven years ago) link

ZIRP

TOMBOT, Monday, 15 September 2008 16:57 (eleven years ago) link

i am enjoying being in school and having no money and learning about how all this stuff works without having a personal stake in it right now!

bell_labs, Monday, 15 September 2008 17:09 (eleven years ago) link

no money = no problems

bell_labs, Monday, 15 September 2008 17:10 (eleven years ago) link

me too. I have problems, but having money is certainly not one of them! good times.

Convert your pencil into a large pole (caek), Monday, 15 September 2008 17:17 (eleven years ago) link

my response to all this has been to get me a civil service position. soon I'll be double recession proof.

TOMBOT, Monday, 15 September 2008 17:21 (eleven years ago) link

so where do we go after we're done shovelling the ashes of wall st

100 percent HOOS test (BIG HOOS aka the steendriver), Monday, 15 September 2008 17:27 (eleven years ago) link

http://newsimg.bbc.co.uk/media/images/45019000/jpg/_45019745_bankerfrench226.jpg

The caption for this on the BBC website is:

Edouard d'Archimbaud arrived at work to be told everyone had been fired

Difficult to feel sorry for a guy with a smirk that says he knows he's got six months off before they all start again and a name like that.

Convert your pencil into a large pole (caek), Monday, 15 September 2008 17:32 (eleven years ago) link

http://www.bloggingstocks.com/2008/09/15/100-year-crash-110-banks-to-fail-regulators-flail-70-billion/

The Wall Street Journal reports that the Fed is expanding its lending facility for Wall Street banks. In addition to getting money from the Fed after posting collateral such as bonds, mortgage-backed securities (MBSs), collateralized debt obligations (CDSs) -- the banks can now get money for posting equities as collateral. To translate into English, after permitting two of Wall Street's biggest names to go under, the government is realizing that it may have made a mistake. It is now back in the business of bailing out Wall Street.

But this means that the Fed is becoming Wall Street's garbage collector. So when it takes MBSs, CDSs, and stocks as collateral, it is risking taxpayer money because in all likelihood, this collateral could be worth much less than its face value. But wait, there's more. The Fed is being joined by a $70 billion lending facility created by some banks to help bailout their brethren. And one analyst expects 110 banks (out of 8,400) to fail by July -- that would account for $850 billion in assets out of $13 trillion total.
...
What to do? If you need your money in the next 10 years, take it out of everything else and deposit it in sub-$100,000 accounts with profitable banks.

Vichitravirya_XI, Monday, 15 September 2008 17:39 (eleven years ago) link

Edouard d'Archimbaud arrived at work to be told everyone had been fired

This guy's name is like the premise for an Eddie Izzard bit.

Lehman will not hire me because of my low-class family name! I must become...Edouard...d'...archim...BAUD!

100 percent HOOS test (BIG HOOS aka the steendriver), Monday, 15 September 2008 17:57 (eleven years ago) link

BUT WAHT R TEH PROFITABLE BANX?>!!

Every Day Jimmy Mod Is Hustlin' (Jimmy The Mod Awaits The Return Of His Beloved), Monday, 15 September 2008 17:58 (eleven years ago) link

uhm, hm. i think for big banks bank of america and chase are doing fine?

i just set up to do my checking through schwab instead of wamu.

bell_labs, Monday, 15 September 2008 18:04 (eleven years ago) link

xp, retail banks like BoA, etc.

Convert your pencil into a large pole (caek), Monday, 15 September 2008 18:04 (eleven years ago) link

The ones that give checking accounts to the kind of person who posts on ILX.

Convert your pencil into a large pole (caek), Monday, 15 September 2008 18:04 (eleven years ago) link

The FDIC limit for personal accounts is $10,000, yes? Time to open more high interest internet savings accounts and move shit into cds (thanks remy)

html tsar (Catsupppppppppppppp dude 茄蕃), Monday, 15 September 2008 18:07 (eleven years ago) link

no it's 100k

bell_labs, Monday, 15 September 2008 18:08 (eleven years ago) link

i don't think very many people are stupid enough to have $100k sitting in a wamu account or are going to lose their money. i'm just worried about interruption of service.

bell_labs, Monday, 15 September 2008 18:11 (eleven years ago) link

Yea, internet savings accounts may not be the best choice in that case… In that case I'll be drinking at bars that take credit cards only ^_^

html tsar (Catsupppppppppppppp dude 茄蕃), Monday, 15 September 2008 18:17 (eleven years ago) link

My own personal perspective on the US economy has been being fired from a food service job i held down for a solid 2 1/2 years without any notice. Its a 24-hour diner that makes its bread and butter from the late-night hipster/drunkard/crackhead crowd and I was working 2nd shift, which has always operated in near-ghost town conditions. Anyways at the beginning of summer when everyone started freaking out about corn and food costs, etc. the owner went through two price hikes, some dramatic changes to the daily workings of the restaurant, and gave up a planned refurbishing. When I was let go - 2 hours before I was supposed to come in for a shift - I was told that he had been "looking at my sales". I actually felt like we were doing ok for a slow summer..

Anyways its been hell trying to find a fucking job since then. If I hadn't been in a very lucky and fortunate position I would definitely be homeless right now.

Adam Bruneau, Monday, 15 September 2008 18:21 (eleven years ago) link

Thank God I've saved about 8 months of salary for my retirement.

Dr Morbius, Monday, 15 September 2008 18:51 (eleven years ago) link

so, i should, like, get my money out of wamu quick, huh

gr8080 (max), Monday, 15 September 2008 19:11 (eleven years ago) link

only if you are worried about the administrative hassles of getting it back from the FDIC or not having access for a couple of weeks

your money is technically safe.

bell_labs, Monday, 15 September 2008 19:18 (eleven years ago) link

I had about 3 months saved w/ING and it all got eaten up this summer with stupid car shit. Now I ain't got shit in savings and I'm worried.

100 percent HOOS test (BIG HOOS aka the steendriver), Monday, 15 September 2008 19:20 (eleven years ago) link

When a bank goes into receivership, individual accounts are guaranteed up to $100,000. The problem then becomes how soon the affected funds will become available. In the past there have been delays, but that may (or may not) be less of a worry nowadays.

xpost - like bell labs said

Aimless, Monday, 15 September 2008 19:22 (eleven years ago) link

everybody should take their money out of whatever bank it's in, so we can really have a Black Monday

El Tomboto, Monday, 15 September 2008 19:58 (eleven years ago) link

these fools think they're undercapitalized now, wait until gr8080 and J-Mod liquidate them checkin' accounts

El Tomboto, Monday, 15 September 2008 19:59 (eleven years ago) link

tombot i would agree with you to not pile out of wamu, but. it is pretty inevitable they are going down at this point and it is not seeming as certain that they will be bought out, though i still think there is a good chance chase will pick them up.

i am not actually transferring money out, just no longer depositing anything more there.

bell_labs, Monday, 15 September 2008 20:06 (eleven years ago) link

i dont have a lot of money there and i was going to close the account anyway

gr8080 (max), Monday, 15 September 2008 20:14 (eleven years ago) link

so much for free checking for life ;-)

gr8080 (max), Monday, 15 September 2008 20:14 (eleven years ago) link

i'm gonna need a bigger mattress

gabbneb, Monday, 15 September 2008 20:14 (eleven years ago) link

does the FDIC even have very much capital these days?

Tracer Hand, Monday, 15 September 2008 20:29 (eleven years ago) link

About $50 billion, apparently:

That "run" could accelerate as people realize the FDIC fund has about $50 billion to "insure" about $1 trillion in assets at the nation's financial institutions, says Roubini. "They're going to run out of money" unless Congress acts soon to recapitalize the FDIC.

http://finance.yahoo.com/tech-ticker/article/56994/Top-Economist-Americans-Should-Worry-About-Bank-Deposits-if-Congress-Doesn%27t-Act?tickers=LEH,MER,BAC,AIG,WM,%5EDJI,%5EGSPC

o. nate, Monday, 15 September 2008 20:30 (eleven years ago) link

Maybe it's time to move to Chase lol

html tsar (Catsupppppppppppppp dude 茄蕃), Monday, 15 September 2008 20:33 (eleven years ago) link

I'm investing all my money in the Committee To Re-Elect

El Tomboto, Monday, 15 September 2008 20:36 (eleven years ago) link

Holy crap.

AIG down 62%.

felicity, Monday, 15 September 2008 20:37 (eleven years ago) link

Fun times:

Many employees toyed with their résumés in full view of colleagues. Others perused job-listing Web sites – Wharton’s alumni page was popular – and compared notes about headhunters.

“What have you heard?” was a common question, mostly met with shrugs and silence. No one seemed to know their specific fate. No staff meetings had been announced, and cries went up whenever media outlets posted a new tidbit about the firm’s liquidation.

Some desks had already been cleaned out, a hive of screens gone dark above tabletops bereft of personal items. The foreign exchange trading floor, on the third floor of Lehman’s all-glass Seventh Avenue skyscraper, was only about two-thirds full. Empty pizza boxes sat stacked in one corner; suit jackets hung on hangers at the end of cubicles.

Pairs of traders, their brows furrowed, whispered to one another at the ends of aisles. Some perused the bankruptcy papers that their superiors had filed just hours earlier. One trader examined the Wikipedia entry for “conservatorship.”

Ned Raggett, Monday, 15 September 2008 20:39 (eleven years ago) link

“I’ll have to figure something out before I run into money problems. What about you?” one man asked a colleague, who sat slumped in his chair, sneakers kicked up on a table. Packets of potato chips and a 12-pack of Aquafina water bottles sat untouched next to him.

“What will you do then?” one woman asked another. “I guess, go back to school … ?” came the uncertain reply.

Ned Raggett, Monday, 15 September 2008 20:40 (eleven years ago) link

yeah, getting into b school this year will be fun.

gabbneb, Monday, 15 September 2008 20:58 (eleven years ago) link

naw, they will all decide to become lawyers

bell_labs, Monday, 15 September 2008 21:01 (eleven years ago) link

that would give them another year, i guess

gabbneb, Monday, 15 September 2008 21:03 (eleven years ago) link

i wonder if the fallout of this is actually going to be the thing to bring down housing costs in nyc. i read that they are estimating 100,000 jobs cut on wall street this year. empty condo town usa.

bell_labs, Monday, 15 September 2008 21:12 (eleven years ago) link

lol

gabbneb, Monday, 15 September 2008 21:43 (eleven years ago) link

i don't think very many people are stupid enough to have $100k sitting in a wamu account or are going to lose their money. i'm just worried about interruption of service.

I just deposited a check written on a WaMu account and my credit union warned me that it could take a couple extra days for it to clear.

Elvis Telecom, Monday, 15 September 2008 21:47 (eleven years ago) link

Reminder to self: do not check IRA Roth account
Reminder to self: do not check IRA Roth account
Reminder to self: do not check IRA Roth account

Everything is Highlighted (Hurting 2), Monday, 15 September 2008 22:05 (eleven years ago) link

i wonder if the fallout of this is actually going to be the thing to bring down housing costs in nyc. i read that they are estimating 100,000 jobs cut on wall street this year. empty condo town usa.

― bell_labs, Monday, September 15, 2008 5:12 PM (52 minutes ago) Bookmark Suggest Ban Permalink

who is going to live in the MYNT and other such ugly ass locations now?????

gr8080 (max), Monday, 15 September 2008 22:06 (eleven years ago) link

My OMGWTF money is in a (non-FDIC) Vanguard money market fund -- one of those where if it breaks the buck then yes we will have bigger problems than worrying about whether the fund has "broken the buck." As in, "pass me the drumstick for that rat we're frying up here, Tom Joad." that said, these funds may be safer -- or more liquid -- than funds in some banks these days.

Eisbaer, Monday, 15 September 2008 22:07 (eleven years ago) link

Also, for the next few months I may have front-row seats to this Chernobyl-style bank fuck-up. Good times indeed ;_;

Eisbaer, Monday, 15 September 2008 22:11 (eleven years ago) link

http://graphics8.nytimes.com/images/2008/09/15/business/lehman.531.jpg

(As found outside Lehman offices this morning, sez the NYT)

Ned Raggett, Monday, 15 September 2008 22:20 (eleven years ago) link

I am Spartacus!

Vichitravirya_XI, Monday, 15 September 2008 22:43 (eleven years ago) link

I sent some of my friends at Lehman emails, wondering what was up. Then I read in Dealbook or some shit that the bank shut down their email yesterday. CAN YOU IMAGINE THOUSANDS OF IB ASSHOLES WITHOUT THEIR BLACKBERRIES??!!?!?!?!

Paulson has been pretty good in this.

Dandy Don Weiner, Monday, 15 September 2008 22:58 (eleven years ago) link

omg want (xpost)

Everything is Highlighted (Hurting 2), Monday, 15 September 2008 22:59 (eleven years ago) link

i wonder if the fallout of this is actually going to be the thing to bring down housing costs in nyc. i read that they are estimating 100,000 jobs cut on wall street this year. empty condo town usa

No.

NYT: "Nonetheless, he argued that the city remained in relatively strong economic shape. The city unemployment rate is at 5 percent, well below the national average of 6.1 percent. The vacancy rate for Manhattan office space is 5.4 percent, less than half the national average. Real estate values, which have plummeted nationwide, have held fairly steady in New York — in part because of international interest."

Dandy Don Weiner, Monday, 15 September 2008 23:07 (eleven years ago) link

although with Restaurant Week getting extended for what, a month, it seems like at least some sectors are being hit.

Dandy Don Weiner, Monday, 15 September 2008 23:08 (eleven years ago) link

Fallacy of hasn't happened so far = won't happen

Everything is Highlighted (Hurting 2), Monday, 15 September 2008 23:09 (eleven years ago) link

yeah, the Eurotrash demographic is still buying Manhattan real estate. The party may be over for parts of Brooklyn, Queens, and Hudson County NJ

Eisbaer, Monday, 15 September 2008 23:12 (eleven years ago) link

Even rich, property-buying eurotrash have finance jobs, use credit, have money in equities, etc.

Everything is Highlighted (Hurting 2), Monday, 15 September 2008 23:15 (eleven years ago) link

given that LEH employees are getting 6-9 months severance packages, I really don't see a huge majority breaking their leases. And eurotrash still get a nice deal on the exchange rate.

Dandy Don Weiner, Monday, 15 September 2008 23:20 (eleven years ago) link

Also, Black Swan to thread, pls.

Dandy Don Weiner, Monday, 15 September 2008 23:20 (eleven years ago) link

No, Black Swan needs to stay where it is, please, puddling around in an unwritten Tom Robbins book.

Rich, property-buying eurotrash don't have "jobs" as you or I know them

Tracer Hand, Monday, 15 September 2008 23:23 (eleven years ago) link

I'm referring to this already written book called The Black Swan, which is awesome, and unfortunately, goes unread by the vast majority of IB/HF/PE asswipes out there.

Dandy Don Weiner, Monday, 15 September 2008 23:28 (eleven years ago) link

that book is so badly written

cozen (cozwn), Monday, 15 September 2008 23:30 (eleven years ago) link

irrespective of the quality or novelty of its ideas

cozen (cozwn), Monday, 15 September 2008 23:31 (eleven years ago) link

and none of this was a black swan, this was just a bunch of greedy fuckos being shameless and refusing to acknowledge that they were lying to each other. Enron wasn't a Black Swan either

El Tomboto, Monday, 15 September 2008 23:37 (eleven years ago) link

the point of a black swan is that people operate on the assumption that a perfect storm won't happen--attribute it to greed or ignorance or whatever you want. Read the book.

Dandy Don Weiner, Monday, 15 September 2008 23:41 (eleven years ago) link

I recommend "Why Most Things Fail" by Ormerod as another good read, though, for people interested in alternative models of economic activity that aren't Freakonomics-esque BS

El Tomboto, Monday, 15 September 2008 23:43 (eleven years ago) link

That is a GREAT book.

And yes, obviously greed and decoupling from risk play a huge role here

Dandy Don Weiner, Monday, 15 September 2008 23:44 (eleven years ago) link

The guy who wrote it comes across like a clown and a hustler, and anybody who claims that what's happening now is a "perfect storm" i.e. a once-in-a-lifetime combination of seemingly unrelated events that produce a momentous calamity, would fit that description also.

Tracer Hand, Monday, 15 September 2008 23:47 (eleven years ago) link

Talking about the Black Swan

Tracer Hand, Monday, 15 September 2008 23:47 (eleven years ago) link

"Why Most Things Fail" is a good title for a book.

Tracer Hand, Monday, 15 September 2008 23:49 (eleven years ago) link

I'm just so glad that the folks entrusted with other peoples' money who subsequently pissed it into the wind are going to let us all share their pain - it's so democratic

Tracer Hand, Monday, 15 September 2008 23:52 (eleven years ago) link

perfect storm

Dandy Don Weiner, Monday, 15 September 2008 23:53 (eleven years ago) link

perfect storml?

Everything is Highlighted (Hurting 2), Monday, 15 September 2008 23:55 (eleven years ago) link

lol

100 percent HOOS test (BIG HOOS aka the steendriver), Tuesday, 16 September 2008 00:38 (eleven years ago) link

haha, did don weiner just create a fake wiki page to try to make tracer look like he cribbed, only to have it deleted moments later?

Everything is Highlighted (Hurting 2), Tuesday, 16 September 2008 01:06 (eleven years ago) link

haha, yeah, I have that much time on my hands. try deleting the "l" (sorry about my linkage error) and you get the definition:

"the simultaneous occurrence of weather events which, taken individually, would be far less powerful than the storm resulting of their chance combination"

which is what I was getting at, obviously.

I don't know where Tracer got his definition, but I guess it worked for his argument.

Dandy Don Weiner, Tuesday, 16 September 2008 01:22 (eleven years ago) link

I got it from my head!!

Tracer Hand, Tuesday, 16 September 2008 01:41 (eleven years ago) link

(That was me who made that page, derr)

Tracer Hand, Tuesday, 16 September 2008 01:45 (eleven years ago) link

Asia currently diving: http://finance.yahoo.com/intlindices?e=asia

Elvis Telecom, Tuesday, 16 September 2008 02:21 (eleven years ago) link

although with Restaurant Week getting extended for what, a month, it seems like at least some sectors are being hit.

it's extended every year (for select restaurants)

No, Black Swan needs to stay where it is, please, puddling around in an unwritten Tom Robbins book.

now wait a minute - reference, please?

gabbneb, Tuesday, 16 September 2008 02:29 (eleven years ago) link

"Why Most Things Suck" : an anthology featuring non-fiction by Thomas Frank, Jim DeRogatis, Chuck Klosterman, Jonathan Franzen, Rick Moody, and other luminaries.

Everything is Highlighted (Hurting 2), Tuesday, 16 September 2008 02:40 (eleven years ago) link

So Wall Street got fucked today.

ilxor, Tuesday, 16 September 2008 02:47 (eleven years ago) link

Besides, if this is a "black swan", how come it's like the 10th one this year?

Tracer Hand, Tuesday, 16 September 2008 02:53 (eleven years ago) link

Aw cmon, *everyone* in the banks has either read The Black Swan, or is aware of its central proposition--it's like a number one best seller (at least here in the UK).

I find the book quite disingenuous in some ways--he spends a long time talking about the fallacy of using the normal distribution in models, yet the idea of adjusting models to fatten out the tails of the distribution is almost as old as the Black-Scholes model itself. Taleb knows this--he's fully aware of what a volatility surface is.

There were clearly problems with the models people were using--severe and utterly retarded ones on the credit side--but The Black Swan is a straw-man argument.

aaaaaaaaaaaaaaaaaaaaaaaaaa, Tuesday, 16 September 2008 05:47 (eleven years ago) link

so which upcoming story is worse ? oh easy for me to say it's this one, since I've had an acct there since February...

I'm returning to BoA now

Monday, September 15, 2008 - 2:01 PM PDT
Chase seen as a likely suitor for Washington Mutual
San Francisco Business Times

http://www.bizjournals.com/sanfrancisco/stories/2008/09/15/daily18.html?t=printable

J.P. Morgan Chase & Co. is seen as a likely suitor for Washington Mutual, which is staggering under huge mortgage losses.

Earlier this year, Chase made overtures to WaMu that were rebuffed. The New York bank reportedly offered a stock-swap buyout valued at $8 per share, although other reports put the buyout price at slightly more than $4 per share based on conditions such as contingent payments made based on the performance of WaMu loan portfolio performance. Instead, WaMu went with a $7 billion financing led by TPG Capital, formerly Texas Pacific Group, that valued WaMu at $8.75 per share. TPG structured the deal for its 13 percent stake in WaMu so that it’s made whole if the bank sells for less than it paid within 18 months of the April investment.

WaMu’s shares (NYSE: WM) closed Monday at $2 per share, down 26 percent. Last week, Chase was reportedly in advance talks with WaMu again about a potential deal.

Also fueling speculation on a WaMu sale is the board’s decision this month to oust long-time CEO Kerry Killinger, who resisted selling the thrift. He was replaced by Alan Fishman.

“Killinger was fighting to shrink the balance sheet and keep the bank independent,” Dick Bove, analyst at Ladenburg Thalmann, told the New York Post this week. “By adding Fishman, who’s known as a guy who can get a bank ready for sale, they removed an important obstacle.”

Other banks that have been cited as potential suitors for WaMu include Wells Fargo (NYSE: WFC) and HSBC.

Chase (NYSE: JPM) could be attracted to Washington Mutual’s large branch network in areas where Chase has none. Specifically, key growth markets such as California and Florida. San Francisco bankers have long said it’s only a matter of time before Chase operates branches in the Bay Area.

A sale is looking increasingly likely for Washington Mutual, possibly in a government-assisted transaction. Should WaMu fail, the government’s already on the hook for the bulk of the bank’s long-term debt that’s owed to the Federal Home Loan Bank in San Francisco.

“The cost to the FDIC if this company fails is likely to be quite high,” Bove told the New York Post, adding that such a huge bank failure could cost the Federal Deposit Insurance Corp. $24 billion. One factor in making the bank’s failure so costly is that most of the bank’s deposits are mainly from mass-market depositors with relatively small balances that are well under the FDIC’s $100,000 insurance limit. Bove said the average size of WaMu’s checking and money market accounts is only $5,200.

Bove suggests that the best solution for resolving the WaMu situation may be the sale of WaMu to Chase or another party with the FDIC agreeing to cover all losses above a specific threshold.

Last week, Bove issued a note to clients suspending his rating on WaMu, which was “neutral” at the time. He made the move, citing the company’s memorandum of understanding it had received from regulators. He also noted in the Sept. 11 report to clients that he doesn’t expect WaMu to return to profitability until mid-2010.

Vichitravirya_XI, Tuesday, 16 September 2008 08:04 (eleven years ago) link

http://online.wsj.com/article/SB122148503202636197.html?mod=special_coverage

AIG Faces Cash Crisis
As Stock Dives 61%
By MATTHEW KARNITSCHNIG, LIAM PLEVEN and SERENA NG
September 16, 2008

American International Group Inc. was facing a severe cash crunch last night as ratings agencies cut the firm's credit ratings, forcing the giant insurer to raise $14.5 billion to cover its obligations.

With AIG now tottering, a crisis that began with falling home prices and went on to engulf Wall Street has reached one of the world's largest insurance companies, threatening to intensify the financial storm and greatly complicate the government's efforts to contain it. The company, whose stock fell 61% yesterday, is such a big player in insuring risk for institutions around the world that its failure could shake the global financial system.

AIG has been scrambling to raise as much as $75 billion to weather the crisis, and people close to the situation said that if the insurer doesn't secure fresh funding by Wednesday, it may have no choice but to opt for a bankruptcy-court filing.

"The situation is dire," a person close to AIG said.

Vichitravirya_XI, Tuesday, 16 September 2008 08:05 (eleven years ago) link

This is "ironic" now right? It's not really funny, except that it kind of really is...

http://www.jeroenbours.com/gallery.php?type=work&uid=88

Vichitravirya_XI, Tuesday, 16 September 2008 08:06 (eleven years ago) link

yeah, the Eurotrash demographic is still buying Manhattan real estate.

Don't know how many of these there are with access to funds. EU getting hit pretty bad too

Pecan Lake, Tuesday, 16 September 2008 09:58 (eleven years ago) link

Roubini can be a good read on some of this stuff. Over a longer time frame Galbraith

Haven't read black swan but Talebs other book is supposed to be a lot better?. Not really sure I agree with the concepts of black swans (Greenspan may be the swan himself, but is the post 9/11 debasement of the $ really a change in policy from anything post-1973? or even post world war two?)

Anyone read this? (I haven't - just saw it looking for something else)

http://www.amazon.com/Dollar-Crisis-Causes-Consequences-Cures/dp/0470821027

Pecan Lake, Tuesday, 16 September 2008 10:28 (eleven years ago) link

According to a Wall Street Journal bit, "Goldman posts sharply lower profit amid "marked decrease in client activity and declining asset valuations.""

Ned Raggett, Tuesday, 16 September 2008 12:42 (eleven years ago) link

Tracer, was your reference to this? have you been there?

gabbneb, Tuesday, 16 September 2008 13:01 (eleven years ago) link

WSJ:

London's commercial real-estate industry is more vulnerable than New York's because it has seen more building of office space in recent years. More than eight million square feet are being built in London's financial district. About 80% of that is considered "speculative," meaning the developer hasn't signed leases for it yet.

In London, Lehman leases a one-million-square-foot building in Canary Wharf and occupies 80% of that space, subleasing the rest. Lehman officials haven't announced plans for those offices. In New York, by contrast, there are only a handful of speculative office buildings.
[Bloomberg, Michael]

Michael Bloomberg

Still, stocks of companies that own Manhattan real estate were hammered. Merrill's biggest landlord in New York, Brookfield Properties Corp., saw its stock plummet 18% to $17.40 Monday as of 4 p.m. New York Stock Exchange composite trading.

In bankruptcy-court protection, Lehman's leases could be canceled, leaving landlords on the hook for gobs of space as job growth contracts. If Lehman gives up three-quarters of its roughly 2.7 million square feet of office space, the New York office vacancy rate would rise from the current 8.5% to 11.5%, a level not seen since the period after the Sept. 11, 2001, attacks, according to an estimate by Peter Riguardi, the New York president for real-estate brokers Jones Lang LaSalle.

Convert your pencil into a large pole (caek), Tuesday, 16 September 2008 13:23 (eleven years ago) link

That Bloomberg bit was a picture on my clipboard, not a quote attribution.

Convert your pencil into a large pole (caek), Tuesday, 16 September 2008 13:23 (eleven years ago) link

i wonder if my goldman sachs schoolmates will show up to class this week

bell_labs, Tuesday, 16 September 2008 13:58 (eleven years ago) link

"goole" (goole), Tuesday, 16 September 2008 14:35 (eleven years ago) link

haha oh shit i didn't realize that's some kind of howard stern thing

"goole" (goole), Tuesday, 16 September 2008 14:36 (eleven years ago) link

There were clearly problems with the models people were using--severe and utterly retarded ones on the credit side

lol credit risk "models"

Pierre Menard, autor del (Lamp), Tuesday, 16 September 2008 15:42 (eleven years ago) link

The AIG rumors continue.

Ned Raggett, Tuesday, 16 September 2008 16:44 (eleven years ago) link

I've been told, by two different and both reliable sources, that since I'm a Nat10n4l C1ty customer - I better start shopping for a new bank.

So where, exactly, is it safe to open an account?

jon /via/ chi 2.0, Tuesday, 16 September 2008 17:20 (eleven years ago) link

B of A, Citi

akm, Tuesday, 16 September 2008 17:22 (eleven years ago) link

credit unions, my pocket

akm, Tuesday, 16 September 2008 17:22 (eleven years ago) link

Wells Fargo seems to be doing all right. (Seeing as my basic day-to-day account is there, I admit bias.)