Bits Bucket And Craigslist Finds For August 17, 2007
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““Many customers are running out of money at the end of the month,” said H. Lee Scott Jr., the chief executive of Wal-Mart.”
http://tinyurl.com/25uqe9
America is running out of money
No, the middle class is running out of money. It’s all flowed to Wall Street, and foreign capitols. There is no money shortage in the Hamptons.
I continue to believe that corporate greed is setting the stage for serious political and social dislocations in this country, the likes we haven’t seen since the civil rights movement.
As long as the middle class thinks its $200,000 home is worth $1,000,000 everything will remain fine.
Exactly, that and you’d have to get them to turn off the TV. Even then a good deal couldn’t run around the block without going into cardiac arrest.
Or rather, as long as the working poor (60k/yr)think that 60k/yr is middle class, the status quo will remain.
Craven,
Don’t you know that “Tax cuts are good for the economy”?….. They just don’t tell you WHO they are good for…
“Don’t you know that “Tax cuts are good for the economy”?….. They just don’t tell you WHO they are good for…”
If you replace every instance of “the economy” that the government and MSM use with “the aristocratic elite” it will all make perfect sense.
The “rich” pay most of the taxes, so any tax cut is going to mostly benefit the wealthy….
Cute but not true. The average income earner pays a greater portion of his income in taxes.
That would be great if it were true. The fact is that lower incomes pay a greater percentage of their wealth in taxes.
If you overtax the rich, what makes you think there will be jobs for the middle class.
So its better to take a larger portion of wealth from the lower wage earners? Your logic is illogical.
In a way though he has a point. A lot of smart economists think Socialism is inevitable because the wealth divide will grow to the point where the majority actually benefit from higher taxes. At least they’ll benefit until the economy collapses under the burden of heavy taxation. Then the lower class becomes really poor.
http://en.wikipedia.org/wiki/Schumpeter
“The intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism; it will be replaced by socialism in some form. There will not be a revolution, but merely a trend in parliaments to elect social democratic parties of one stripe or another. He argued that capitalism will collapse from within as democratic majorities vote for the creation of a welfare state and place restrictions upon entrepreneurship that will burden and destroy the capitalist structure. Schumpeter emphasizes that he is analyzing trends, not engaging in political advocacy.”
I’ve never worked for a poor person.
Exactly my point. You’re a poor person working for da’ man.
You won’t benefit from socialism, either, there would be an elite group at the top stealing from you even more, just look at the Soviet Union’s history. If you’re talking west European style socialism, we’re already there, just look at the tax rates on the “rich” in the US, I put that in quotes because your average professional in LA or NY falls into that category. Cancer death rates are much higher in Europe, due to socialized medicine & the long waiting lists to see a doctor. Be careful what you wish for.
To condense complex issues related to fair taxation down to grade school capitalist/communist yammering is absurd.
Puleez…
Comment by kckid
I’ve never worked for a poor person.
But I have worked for those that were formerly poor and I have worked for several middle class small business owners.
Since the lower class also uses the majority of the benefits provided by the government (schools, libraries, health care), why is their paying a greater percentage of their earnings not fair?
Besides, that just isn’t true. The government takes nearly half of my pay once I pay every federal, state and local panhandler.
Yo, the poor have little to no disposable income, so taxes hit them harder even at a lower percentage.
And BTW, La Investor Girl: Where does your rich boss get most of her money? Other rich people, or middle-class/poor people. Take away the consumer, and you take away the boss.
jjinla, by virtue of your admission that the gov “takes half of ‘your’ money” establishes my point. You’re a part of the lower class I’m speaking of.
Poor people buy liabilities which is what keeps them poor, rich people buy assets which is what makes them rich. I know several former poor people who are no longer poor who understand this and now are rich. It makes no sense to put 22″ wheels on a rust bucket of an automobile but this is the mentality of the poor. As far as the middle class goes most are all show and no dough which is what is making the middle class poor
Little Tinfoil moment: Most folks haven’t a clue what is going on. KBR has been building prison camps around the country (google KBR + detention camps). The president is conspiring with the leaders of Mexico and Canada to dismantle our sovereignty and constitution in order to set up a North american union. Please note that none of this has been authorized by the american people. Congress, while aware of this, has chosen to waive their responsibility of oversight. Plan on a new Amero currency as well, perhaps as early as next year but more likely by 2010. This is plan B to a collapsing dollar.
What annoys the bankers the most is the inability to control gold prices effectively even though they have been selling into the market for years to control its price in order to keep it from sending off adverse signals to their debasement agenda. Look for a public policy change here as well.
At any rate, all is well and I’m sure the MSM will continue to keep us well informed on what color panties that Paris is wearing. Here is a link to what is going on up in Canada this month with regard to NAU.
http://www.globalresearch.ca/index.php?context=va&aid=6554
Thank you, auger-inn. Looking at the big picture, the agenda becomes clearer and current events start to make more sense. The powers that be already have Europe under a single government and currency. Next is North America, then probably Asia. Conditions will be created so that we ask for or even demand the Amero and the North American Union. We truly are living in the matrix where our entire “reality” is nothing but a carefully constructed illusion designed to keep us distracted and uninformed.
Cutting Through the Matrix
We have far too many prisons, and prisoners, already. Charley Reese lays it out here:
http://tinyurl.com/2wv759
Chip, wonderful! I believe Charley is in your neck of the woods, right? Although there are occasions when I don’t agree with him, overall I enjoy his point of view and his incisive way of getting to the heart of matters. Also like Paul Craig Roberts, who was assistant Secretary of the Treasury under Reagan.
“The individual is handicapped by coming face to face with a conspiracy so monstrous he cannot believe it exists”. J. Edgar Hoover, FBI Director 1924-1972, quoted in The Elks Magazine (August 1956).
Dawnal, thank you so much for locating that quote. Hoover (and he certainly knew whereof he spoke) was aware that the way to hide something is to make it so fantastic that no one would believe it.
“Lenin is said to have declared that the best way to destroy the Capitalistic System was to debauch the currency. . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose.”
John Maynard Keynes,
The Economic Consequences of the Peace,
1920, page 235ff
Hey, since when is the ability to connect-the-dots make one a “tin-foil hat” candidate. I know you were being facetious, but anytime someone calls out a naked emperor or peeks at the man behind the curtain they get the old “tin foil”, “urban myth”, etc. disinformation/propaganda treatment.
It’s been said when freedom fails
the best men rot in stinking jails
while those who cry ‘Appease! Appease!’
are hung by those they tried to please
Time will tell. Keep your powder try.
“Lenin is said to have declared that the best way to destroy the Capitalistic System was to debauch the currency. . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose.”
John Maynard Keynes,
The Economic Consequences of the Peace,
1920, page 235ff
Wow, I just did some quick research on KBR and that is really scary. What is also frightening is the proliferation of “supermax” style prisons, where prisoners are being kept in closet sized rooms, in complete isolation for months and even years at a time. This amounts to torture, the prisoners end up psychologically disabled. What happened to “home of the free”?
Same thing as your idea about “socialized medicine in “Europe”…an incredibly long, pervasive, and successful campaign to propagandize the gullible. Our medical system is the most expensive on the planet, but the WHO ranks us 37th (I may be off by one or two here). Who’s on first? France. Who waits for care? We do….New poll out a week or so ago….results in Newspeak….
My hope is the internet displaces a large enough portion of tv droolers that awareness, thus some means of responding to crisis, starts to grow exponentially. What a race it is.
Over the last few days my laughter has been largely at the “free market” despoilers screaming for government intervention…..and getting it, at least by proxy with BB opening the spigots a bit. Interesting times. Just wish they weren’t quite so close to my theoretical retirement.
“The only trouble with capitalism is capitalists. They’re too damned greedy.”
Herbert Hoover
Yogi Berra could not have come up with a better description of capitalists than that one by President Hoover!
One of my favorities, by a very smart guy:
“Predictions are very difficult, especially about the future.”….Niels Bohr
I agree with Niels. This is why I frequently point out that the best predictions are those which report on what has already occurred, but which is not yet common knowledge.
“The impossible I can believe…it’s the improbable, that I have trouble with.” Alfred Whitehead
I agree with Dr. Bohr, as well.
That being said, how about a prediction from Prof_bear GetStucco Professor Bear on the timing for an end to the War on Savers?
“…end to the War on Savers?”
I cannot predict how the violent skirmish currently underway between the Fed and the free market will play out better than anyone else…
savers should be happy that there are more candidates except them to fill all those new concentration camps (or maybe the financial elite want to round up all the EU savers as well?). Otherwise I would expect new laws very soon from the Paulson office that make saving money an Act of Terrorism.
Whatever, the War on Savers is definitely in higher gear from today.
Quote of the day! Thanx!
You are “dead on balls accurate”. The only question is how bloody the Revolution is gonna be.
I mentioned this to my wife this morning regarding a relative that works in international banking. For many years, the kids getting out of top colleges in business have been moving money from Main St to Wall St (of course Main St was complicit but they were stupid in doing so) with big rewards for these kids and their companies. Unfortunately, there isn’t anything on the horizon to load Main St up with more debt so that Wall St can collect fees and interest on it. And of course Main St is left holding the bag. Interesting times indeed.
I think you’re right, Craven. And, for those of you who aren’t fans of the Democrats, you’d better get used to them. Because they’re going to latch onto corporate greed as an issue for the ‘08 campaigns and beyond.
Wow, Slim, I dunno how successful they’ll be at latching onto corporate greed as an issue, especially since it would appear that Democratic candidates are just as supportive of corporate greed as their opposite numbers, albeit in a different way. They use vaseline.
Slim,
as a former dem, google the various candidates and see where their campaign money comes from…same folks who bought the repubs. As they say, not a dime’s worth of difference.
“America is running out of Money”
No we’re not. Bernanke just printed more this morning.
Forgot to add, who says money doesn’t grow on trees
Who says it doesn’t drop out of black helicopters in the form of cargo packets delivered straight to Wall Street banks’ bottom lines?
this particular rate cut is aimed at Main Street Regional Banks, who, I might add are the ones getting the calls from the local business’ to fund operations as bill paying is slowing, and in an effort to shore up Mom and Pops nationwide.
Nikkei was down 812 points. Think the DOW rallies?
That is over 5%. There was no ralley or PPT for Japan : )…
I also saw no short covering.
Could this be the Yen rising versus the Dollar? Liquidity injections?
http://tinyurl.com/2b47bj
http://tinyurl.com/2b47bj
Per Bloomberg, Nikkei down 874, and Yen highest since 1998.
Exporters like Sony and Toyota took the biggest hits.
And if the Fed does what the cheerleaders are screaming for, an interest rate cut to 5% or even below, the yen will rise even more against the dollar.
All the guys on CNBC think the market finishes up today because it is oversold.
They don’t mention the Japanese sell off.
Also, furious — absolutely furious — pumping for a rate cut/fatcat bailout this morning at around 7:30 AM. Forget who the wanker was.
Not to mention that the fed cut the discount rate THIS MORNING!!
Outrageous!!
What downside? The market was 11,000 a year ago and now its 12,800 after going to 14,000 in one year….
What is the problem?
Is the stock market now like the housing market…should only go UP?
They are afraid of banks failing.
This will give everyone a graceful exit and a good chance to short again. Just wait awhile.
Fed slashes savers’ throats to save bankers; PM’s rocket. The dollar is doomed!
I agree with you Tx. It does no matter what the Federal Reserve does. The US stock markets and the investment houses have lost credibility. Obviously, countries such as Germany which barely allowed Hedge Funds will stop all hedge fund activity.
This is not to let the primaries get out of stocks, this was to save the banks.
Txchick,
Do let us know when its good to re-up shorts.
This is to save banks. Like it or not, this is part of the Fed’s job. Since this is happening too fast, I’m ok with a small cut by the fed. Is that going to free up money for mortgages? Not really. Will it slow house price drops? Yea… but we expected that anyway.
Oh… I think banks will fail in numbers anyway. This is a band aid to keep a battleship afloat. Too little… too late.
Got popcorn?
Neil
Was watching German (DW) news in English on the telly last night, to get an idea of how our finances are thought of by our economic peers, and it was quite telling…
They spent 10 minutes of the 30 minute program explaining how it occurred, the risk to German banking, etc.
All of the blame is squarely on our shoulders at this point and our fellow first worlders are pointing their financial fingers of fate upon us, and as Hoz related…
Once you’ve lost financial credibility, it’s pretty much a straight ride to Palookaville, for any country~
Actually I know think the rate cut might have the opposite effect on the market ultimately because of the accompanying statement:
Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward. In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably. The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets.
“Is the stock market now like the housing market…should only go UP?”
The stock market does only go up. Where have you been? This is the Greenspan put policy, and BB said he would continue AG’s policies.
Inflation is more palatable when it comes in the form of higher home and corporate share prices, which make all the participants in the U.S. Ownership Society feel great about their nominal wealth gains. Creating inflation is also a great way to tax given that twenty-seven years ago, RR made any proposal to honestly raise taxes a form of political suicide.
That’s accurate Neil. If you look back at recent developments at Countrywide (no more Jumbos, 11.5 B loan, developing run), it makes sense. Apparently, it’s too big to fail.
Subprime has grown into a diplomatic issue Insane Lad. From the FT:
Nicolas Sarkozy, the French president, on Thursday waded into the subprime mortgage crisis that has thrown global markets into turmoil, with a call for G7 governments to work with central banks and the International Monetary Fund to improve financial transparency.
http://www.ft.com/cms/s/86e24ef8-4c2f-11dc-b67f-0000779fd2ac.html
I agree with TxChick and Hoz’s comments. I took a little off the table yesterday (unfortunately not more) and will take advantage of this bounce.
yep, this looks like it’ll be a good mini rally at least.
It’s back to the mines for me. (miners)
Posted at indexcalls.com:
re: Fed rate cut
“This move, a timid one whose effects on the market may not last the day, was designed specifically for the open today when index options expire on the open.”
You guys understand it’s the discount rate - and not the fed funds rate - that they cut?
So are HP and BB in on the “kill the shorts” play?
Dawnal: I think your “effects…may not last the day” comment on this discount rate cut may be right on. The opening bell rally has already been cut in half one hour into the day.
Maybe we’ll end Friday down after all.
I forgot what the difference is between the discount rate and the fed funds rate. Can someone give a short explanation? Otherwise, we’ll all be off to Wikipedia.
Helicopter engines have already been fired up… cargo drops of liquidity soon to follow…
AP
Fed Approves Reduction in Discount Rate
By MARTIN CRUTSINGER
AP Economics Writer
WASHINGTON
Friday, August 17, 2007 06:01:08 AM PT
The Federal Reserve, declaring that increased economic uncertainty poses risks for U.S. business growth, announced Friday that it has approved a half-percentage point cut in its discount rate on loans to banks.
The action was the most dramatic effort yet by the central bank to restore calm to global financial markets which have been roiled in the past week by a widening credit crisis.
http://marketplace.publicradio.org/apheadline_detail.php?story_id=D8R2PM680&group=ap.online.headlines.business
The Fed blinked
Wall Street winked
Let’s hope that it stays at just a discount-window cut (which had been at 6.25%).
the cargo cult prophecies are fullfilled today by the Gods from the FED. Bernanke wants to go into the history books as more than just an ordinary helicopter pilot, he wants to be even bigger than the eternal put guy.
it works miracles: Dutch stockmarket index today went from -2% to +4% within two hours.
This is no joke, the first thing I heard and saw when I walked outside this morning in SF was a helicopter flying a couple hundred feet overhead.
It was a shiny red one, for those who think the Fed flies only black choppers.
Plunge protection measures obviously work best when they are announced through the global MSM…
So now we understand that meteoric recovery yesterday… It wasn’t PPT doing anything directly. Ben just made a few calls, the banks all hit the Buy Button, and voila!
No physical intervention necessary. We’ll see how long it lasts though, this only makes official what the liquidity injections had been accomplishing to an even greater temporary extent.
No duh. Somehow, the info got sent to the “financial industry” long before it ever got to us. When will these guys ever get the picture that market corrections are there for a reason. Furthermore, do they really care that LAWS are there for a reason. I will not be surprised if we find out later that “someone” leaked the cut.
“It wasn’t PPT doing anything directly. Ben just made a few calls, the banks all hit the Buy Button, and voila!”
What in your opinion qualiies as ‘doing anything directly?’ I have a hard time imagining more direct action than a phone call to notify insiders the fix is in…
Actually doing the buying is what I mean by ‘directly’.
Who knows if the call even went out? Watchful big investors may have just been able to surmise that an emergency meeting was happening, made a few big orders. Then others jumped on the bandwagon.
The Fed does what the Fed does– manipulate the environment in which the market trades, lender of last resort, etc… but once they start buying directly that would be (to me) crossing the line to PPT land.
Buying PAAS and NEM the fed is on the way to blow another bubble.
A picture is worth a thousand words.
http://www.mises.org/markets.aspx
Charts are updated as needed.
Paul
This does say it all. Who is going to buy all these overpriced houses if:
1) The bank requires 20% down
2) The wages in the area would qualify someone for 1/3-1/2 of the lowest price house
3) It requires a good credit score
Housing will settle itself out. Lower interest rates won’t matter if you don’t have all three of the above.
I thouhgt a strong dollar was in the best interest of the U.S.
Dollar index starts to go up, time to drop the discount rate to kill the dollar again.
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=475517&in_page_id=1770
Unemployment rate is six times higher than official figures
Nearly ten million people in Britain are out of work - more than six times the official unemployment rate - it was revealed last night.
Our unemployment rate numbers are bogus too. They don’t take into account all the self employed people who were in real estate, morgage lending, and construction that do not collect unemployment benefits. Nor does that figure take into account all the millions whose unemployment has run out.
How about all the part timers? Look how many companies are keeping a strong part time status on many workers to avoid having to go to a hole over benefits etc…
My understanding is that one counts as “unemployed” if:
1) One is looking for a job and
2) One has no form of “earned income”.
So if you are self employed or part-time, you are considered mployed. And if you can’t find a job and move back in with mom and dad while you you take a class or two (and stop looking for work) then you don’t count as unemployed.
I think you are not unemployed if you do not qualify for unemployment insurance benefits. Down the road, when benefits run out, those falling off the dole will no longer be “unemployed”.
Your definition is correct, but the way they create the statistics is by analyzing how many people claimed unemployment benefits and doing a lot of statistical analysis and extrapolation.
Since self-employed people are eligible for unemployment benefits, they don’t show up on the inputs to the analysis when they become unemployed.
Remember, all economic statistics (even when collected/analyzed honestly) are estimates based on a LOT of assumptions.
CNBC is now calling for a rate cut.
They say they will keep calling for it until the Fed acts.
If the Fed capitulates to these supply side monsters, we’re doomed.
Even if they get the rate cut, it’s just putting off the inevitable.
It may slow foreclosures for some but:
-it won’t change the existence of the tapped consumer.
-Upside down will still be upside down.
-Lay-offs based on the sales slowdown will still be lay-offs.
-The fraud in the system will still be fraud.
-Flippers will still be feeding the alligator.
And how many people actually have 20% down saved to even buy a house from the people who are upside down or in foreclosure. Plus how many can really afford the prices in their area compared to their wages.
I do, and I can.
Timber!
Today’s move actually hurts homedebtors. Check out the long end of the yield curve; it is flying. This gift to the bankers is coming out of the ARM holders pockets.
I am frankly surprised a covert move to sterilize the inflation risk premium at the long end of the yield curve was not simultaneously executed with the announced discount rate cut.
This is Keynesianism pure and simple. Monetary stimulus from the demand side, not the supply side. Supply side attempts to increase production and is deflationary.
deflationary signals are all in place. There is no risk premium in this environment that is satisfactory.
But there is no stimulation to production. We’ve had a demand pull model since the early 1990s. That’s why our economy has mostly produced jobs for other people, not Americans.
America is not a producer, we are consumer/servicer…or demand pull, call it whatever you want.
nobody wants to admit that deflation is good for America, painful, but in the end.. a good thing.
Goldman Sachs is barking for a rate cut as well…wants 4.5.
Once again, Wall Street loves unregulated capitalism when fleecing the working stiffs, but demands government intervention when the Big Boyz feel a little pain.
That is because they say, if we collapse you are doomed.
It’s nice to be dependant on these private enterprises. My friend texted me and said rate cut, Cha-Ching. That is the mentality. They just don’t want the gravy train to stop. My fear is a stagnating economy with outsourcing and a fed funds rate at zero. Then what would Cramer be screaming for? I want the FED to drop money out of Helicopters!
“That is because they say, if we collapse you are doomed.”
That’s right: What’s good for Wall Street bankers’ record bonuses is good for America.
CNBC reporting 50 basis point cut at the discount window.
Futures surge, the bulls are back! False alarm everyone! Close up the blogs and buy a house or three!
I bought PMs big yesterday. Sometimes you get lucky.
Futures soar as a result. Moral Hazard?
Aug. 17 (Bloomberg) — The Federal Reserve, in an unscheduled announcement, cut its discount rate and said it’s prepared to take further actions to “mitigate” damage to the economy from the rout in global credit markets.
“Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward,” the central bank’s Federal Open Market Committee said in a statement released in Washington. “The downside risks have increased appreciably.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aMr45.9VOKes&refer=home
Ok.. So the Fed is/has greased the fixed income market. Does that mean 2/28 125%LTV notes all over again?
Does that mean 2/28 125%LTV notes all over again?
They could cut to 1% and I don’t think you’ll ever see that crap again in your lifetime. One thing about capitalism is recent history is usually remembered. It’ll take at least 1-2 generations to forget this bubble. Down payments and skin in the game are the rule now for at least 5-20 years no matter the interest rate.
Got diversified assets?
“It’ll take at least 1-2 generations to forget this bubble.”
I must disagree. You only need to look to the current Dow Jones bubble just 7 years after the tech dump. Fundamentals in the market don’t support a 13,000 point level but people kept buying.
Credit in the sub-prime car market was very easy in the mid 90’s, got tight in the late 90’s and early 00’s…now it’s easy money again.
These aren’t generational cycles but rather 5 year cycles. Home credit will get really tight. One lender will start making “pulse” mortgages where you just need a pulse to qualify. This will be at an incredibly high rate and the lender will make money. Other lenders will see this and come in slightly lower and the cycle will repeat. Give this 5 years to cool off, 5 years to get ramped up again, and 5 years to implode all over again. 15 years from now we’ll be talking about how easy money caused the real estate bust and we’ll be comparing it to the 2006-200? crash.
I hope and wish you are right. I did not care if the stocks went into a bubble or cars or art or bonds, but the Federal Reserve pushed housing into a bubble and that hurts everyone (except the government). It was and is theft on an unprecedented scale.
Does that mean they’ve made sure other countries will be following up with the same? If not, should we watch for foreign dollar dumping?
Excellent observation. The yen is breaking out hard to the upside. Yesterday was the biggest move in a decade. This move by the Fed will squeeze any Yen shorts very very hard. The carry trade is toast.
So the Fed took Poole out and shot him? Bernanke is no Volcker…what a wuss.
Bernanke’s the tweedy professor that goes unnoticed in normal times, a shrinking violet not used to the limelight…
Sooner rather than later, most of our countrymen that know not his name, will be uttering it in vain~
so true… the only bright side is that the fed released announcement sounded so dower.
Don’t you just want to find a way to text him “stupid ass”?
The Fed has already announced a discount rate cut. (Rest assured, Cramer, your voice has been heard!)
Not sure how big the impact of this will be, but by my rather sketchy understanding, the difference is that the discount rate affects discretionary lending to banks through the discount window (I am guessing CFC might be first in line today for a discount window loan?). By contrast, a Fed Funds Rate cut (the headline Fed interest rate determined by FOMC meeting vote) would have an immediate ripple effect through the whole economy.
Also not sure about the technical difference between “liquidity injections” and an FFR cut, as the way one gets the overnight lending rate to drop is to increase the high-powered money supply, which sounds a lot to a non-Fed-insider like injecting liquidity?
http://marketplace.publicradio.org/apheadline_detail.php?story_id=D8R2PM680&group=ap.online.headlines.business
Immediate effect is dollar down, stocks up, PM’s up.
Long-term the fed bias to fight inflation (nudge, nudge) is gone. Expect more cuts, more inflation, more economic destruction. It’s Weimar all the way. HeliBen just fried the deflationists and savers.
Yeah. Thanks BB. The DX gapped down in the morning and looks like its about to take crap.
Futile attempt to stop the deflation train. Many more hedge funds will fail. Several hundred CDOs now on credit watch and will be downgraded soon. The Fed is completely powerless in the real world now. The failure of this action to impact the actual lending environment in the real economy will demonstrate their impotence to the world. Gold and silver recover part of yesterday’s losses as the market becomes slightly less certain of future deflation. That won’t last.
Here is the FED statement link. From Bloomberg:
The Board is also announcing a change to the Reserve Banks’ usual practices to allow the provision of term financing for as long as 30 days, renewable by the borrower.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aiHUDlIJ1Ga8&refer=home
Perhaps they got spooked by the run at Countrywide yesterday.
Just saw a helicopter go over as the rate cut was announced….could be Helicopter Ben working early?
Cramer and company has won a brief reprieve.
Rate cut will not help. They can cut rates to zero and it will not effect the end result one whit….a dead economy.
Hopefully there will be enough tools left over to build a new dollar and economy after Wall Street and The Fed kills it.
“Just saw a helicopter go over as the rate cut was announced….could be Helicopter Ben working early?”
Bernanke and Paulson tossing Poole overboard.
This pretty much says it all:
http://www.theonion.com/content/files/images/Statshot-Paying-Mortgage.jpg
Thank You
I think that says a lot, but I don’t think that it “says it all” because it’s focused on subprime.
How about all the borrowers in the Alt-A Bay Area who are facing resets but are not subprime?
Let’s not forget them…
A much higher percentage of them call Dad.
LOL!
Unfortunately, that is true around here.
If everything is ‘contained’ , then why is the fed cutting rates.
Maybe someone showed them this video clip of a wildly-gesticulating Bottom?
http://www.youtube.com/watch?v=SWksEJQEYVU
SNOUT
O Bottom, thou art changed! what do I see on thee?
BOTTOM
What do you see? you see an asshead of your own, do
you?
Exit SNOUT
Re-enter QUINCE
QUINCE
Bless thee, Bottom! bless thee! thou art
translated.
Exit
BOTTOM
I see their knavery: this is to make an ass of me;
to fright me, if they could. But I will not stir
from this place, do what they can: I will walk up
and down here, and I will sing, that they shall hear
I am not afraid.
If everything is ‘contained’ , then why is the fed cutting rates.
I am dumbfounded! The market can go up 400% on a bubble and the fed does nothing and everyone thinks it is normal. However, the moment it drops 5% everyone is in a panic, the world is collapsing and the fed must do something immediately.
Strange world.
It won’t work for anything but the short term but the short term is where I live.
Yeah, the short term is where I live too. I’m currently renting, hoping to buy it.
Ms. txchick57….you’ve been talking about being long for two days now…it appears that you were correct. Can I ask how you knew?
Inflate or die.
I trade totally off charts and my knowledge of what the market “does” at certain inflection times, time of the year, etc. This one was easy, as was the second down leg in March.
I just think that the PTB won’t let this thing die this easily. Jobs and bonuses are at stake. Even after 25+ years of doing this, I am amazed at how fundamentals have a confluence with the charts.
I still think beta (tech) is the place to be, where people will try to catch up on losses to date to make the year end.
“Inflate or die.”
My orginal hunch when the subprime/credit markets started tanking was for the FEd to inject liquidity, and thus allow for steath inflation. Folks here say that it is SOLELY for the benefit of wall street/crony capitalists. That is partly correct, but a deeper reason may be that the Gov’t actualy fears a runaway deflationary collapse which would cause severe social disruptions in the general economy,leading to social unrest in an election year among the unwashed masses. They(the fed) would rather that the minority fixed income savers, retired folks on fixed incomes, the way- outnumbered responsible few such as on this blog who save and carefully invest, be sacriced via 10% inflation and devalued $ to benefit the vaster majority of zillions of irresponsible homedebtors, crony capitalists, big business, big influential banks, wall street, poor CC burdened averag idiot J6Pac comsumer, ect.
The questioniion is: who does the gov’ side with in deflation Vs Inflation? Answer: the vast majority of overburdoned CC/MEW-maxed-out debtors( 90% of US population) and big business interests. This means that we wil see going forward Weimer-Style inflation and the death of the $).
Better to pile on the debt long term at as low fixed interest as possible and stretch out pmts 10-20 tears, and pay back with devaluled $’s)
Looks like my small diversified Vanguard balanced Star fund (60 % stocks in 8 diffent stock classes, 30 % fixed, and 5-10% cash)will hold up OK. Also will make a first attempt to invest in a gold/PM fund. Have plenty of PM assets but in jewelry- coin in a vault, need easily convertible-to-cash PM assets).
yeah my portfolio is 60% equities. Clearly the rate cuts are inlationary. This will only help precious metals and stocks, but until wages catch up to be 1/3 the cost of purchasing the average house, it won’t help real estate.
Profit from this or be left in the dust.
Can’t wait for the PPT-denying, free marketeers to show up and tell us it’s perfectly normal to do this. LOL
No, my friend it is the Hand Of God otherwise known as the HOG
Maradona did eventually fess up that his HOG goal was indeed a good old fashioned handball.
If you want to have fun, just ask any Brit what they thought of that goal.
looks like more bailouts courtesy of central banks
Note to the wage slaves who think this is good news: Be careful what you wish for, the rich man looks out for no one.
Way OT… puts inflationary pressure on China:
Virus Spreading Alarm and Pig Disease in China
“A highly infectious swine virus is sweeping China’s pig population, driving up pork prices and creating fears of a global pandemic among domesticated pigs…. Animal virus experts say Chinese authorities are playing down the gravity and spread of the disease.
“So far, the mysterious virus — believed to cause an unusually deadly form of an infection known as blue-ear pig disease — has spread to 25 of this country’s 33 provinces and regions, prompting a pork shortage and the strongest inflation in China in a decade.
“More than that, China’s past lack of transparency — particularly over what became the SARS epidemic — has created global concern…. In part, the skepticism comes from the fact that pork prices have skyrocketed 85 percent in the last year — an increase that, absent other factors, suggests the losses from disease are more widespread than Beijing admits…. Officials in Beijing worry that widespread pork shortages and soaring food prices could prompt panic, unrest or inflation, undermining a sizzling economy.”
It’s really screwing up their CPI, food is 1/3. You take that out and their inflation figure is something close to 1%. It’s more a political problem. You can live without pork, but it’s strongly correlate, along with smaller household size, to the populace’s sense of progress, benchmark for standard of living increases. Sure they’d all like to have a washing machine and a car, but the pork has been right now, today. Keeps them in line.
They’re gonna have to revise their CPI basket in a hurry. It’s 1/3 food. Take away the pork/weather trouble and last inflation figure would have been 1%. You can live without pork, but while you’re waiting for that washing machine and car, it keeps you docile. This is a political issue.
It is going to upset our food prices here! China has the money to buy our entire beef and pork production (as well as our milk production). Got moneys, got milk?
But this is OK, because the Fed says food is hedonic inflation. You don’t have to eat, you can starve.
You can’t be too rich or too thin!
And across much of the country, cows have gone on the new “drought induced” fad diet…
Most cattle here in California were sold early underweight, or moved to the nearest state (Colorado) with grass, a tremendous expense.
Not like we have extra cows to sell to China…
We are in drought. “Gov. Jim Doyle issued an executive order Tuesday declaring a state of emergency in Wisconsin due to drought conditions, and asked U.S. Agriculture Secretary Mike Johanns to declare 52 counties as disaster areas.”.
Milk will go through the roof this winter. $22.69/100
Way OT
I don’t think it’s possible to be Off Topic in something called The Bits Bucket.
But I could be wrong…
ROTFL
True! This thread is for everything housing and economic related discussions. lol
From the link: “ Officials in Beijing worry that widespread pork shortages and soaring food prices could prompt panic, unrest or inflation, undermining a sizzling economy. ”
China has taken away liberty but maintains the peace through the promise of increased financial prosperity. That won’t happen if they don’t “bring home the bacon.”
Now, will China do a large revaluation of their currency?
Got popcorn?
Neil
Fed cuts discount rate.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a89yMX9v90rc&refer=home
Bear cuts jobs, may lose independence.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ah_VSZ1dLg44&refer=home
A portion of the NYC economy has been living off the future of the FBs. Now that the future has arrived, we’ll have our own FBs. We may not have had many option-ARMs. But we have the biggest housing supply boom since the mid-1960s running into a possible recession next year.
Glad I’m not short. Think that maybe caused the rally in financials yesterday?
Great call. Hat tip.
I’ve unloaded 40% of my futures position into this huge gap up. I never trust these.
Just sold a few, and covered my US Tbonds short from yesterday which just got hammered.
I’m totally playing with the house money now. No skin in the game.
You go Young lady!
Remember it should get to a 37% correction then hammer.
No shorts here either, but the puts need some closing. Next time a straddle?
What did the FED cut. I am confused between the overnight and bank rate figures?
they cut the rate at which banks can obtain a short term loan from the fed.
The fed cute its discount rate. It’s seen as a symbolic cut. However, if symbolic, what is the point in cutting it?
First step to further rate cuts, more liquidity, more inflation. Helicopters everywhere…
Not helicopters, B-52s
Sounds good…
http://www.youtube.com/watch?v=s2eRkB3FeJE
Heard it was gonna be a Lobster Drop…
http://www.youtube.com/watch?v=szhJzX0UgDM&mode=related&search=
Ben’s only option is to go on bluffing. We could always bomb Iran and bail him out.
If I understand this correctly I can take my subprime mis-marked AAA CDOs and borrow against them at the discount window at 5.75%. What if I decide or am unable to payback the loan. Does this mean that the fed will monetize these subprime loans?
Discount window borrowing (affected by the discount rate cut) is discretionary.
Overnight lending between banks (affected by the Fed Funds Rate set at FOMC meetings) is routine.
So generally, a discount rate cut has a more limited impact, though it could have a significant psychological impact, and could have a disproportionate impact on certain key players…
“What did the FED cut?”
my ballsack with a really dull knife.
$24900 I NEED TO SELL THIS HOUSE - VERY MOTIVATED!!! -
“The house is currently rented out at $250/month.”
http://phoenix.craigslist.org/rfs/399088139.html
Talk about desperation, this dude is advertising in PHX to try and sell this 100 yr old house at almost $190 per sq ft.
Just mail in the keys, it’s over!
Lip,
That house is $24,900 not $249,000. He’s asking less than $19/ sq ft which doesn’t seem too high. No address besides North Carolina though.
My bad.
Here’s where the New Home Builders are doing in AZ, building new $82 per sq ft POS. (Maricopa, that’s a little more than 10 miles from Ahwatukee/Chandler/Gilbert)
Phoenix real estate is gonna crash hard and still most people don’t have a clue. My real estate lady (be nice folks) just bought two repos thinking she’d buy on the dip and she said everything is going to be better once we get a new President. My dear, dear friend, when I showed her the Credit Suisse chart on resetting ARMs, her eyes got real big, and I think she saw the light.
http://phoenix.craigslist.org/rfs/399050072.html
Thanks to Ben, this blog, and the cast of incredibly smart people, I’ve been privy to this coming disaster for about 18 months. I think we all owe it to Ben to send him some $$$ on a monthly basis because there are going to be a lot more people joining us as this thing continues to unwind.
Lip
Watching CNBC and everyone is so giddy that a dozen banks can borrow money from the Fed cheaper. How does that help anyone not in those banks!
Stocks is such a schmuck’s game. I think that’s the real reason 401(k)’s have gained acceptness. It’s so all these companies can make money off our retirements, cause you can’t really take 401(k)’s out of the stock market.
Props to Lance Lewis
http://www.minyanville.com/articles/Fed-gold-dollar-crb-FOMC/index/a/13565
401k system=cheap worthless proxy for real pensions. When J6P stop handing the keys every election to these deficit spending, supply side fraudsters is when it will stop. Not a moment sooner.
People Are Smart
Yeah, and what’s the average 401k balance anyway? Its a joke. The wage slaves want to retire at 55 and live to 90 on their big bad 401k, scuba diving and horseback riding all the way.
The concept of retirement as it exists today is a complete and utter sham - a beckoning mirage designed to get folks to let others play with their hilariously modest savings - via the 401k.
Yeah, and what’s the average 401k balance anyway?
IIRC, its under 30K.
And if you have 100K you are in something like the top 10% (or is it 5%?)
Closing italics
One more time…
Yeah - I’ve often thought that.
Other than their house, J6P now has most of their wealth in 401(k). It’s beautiful self imposed corporate surfdom: Get J6P spend every last dime, then into debt via credit cards and houses at loan shark rates to corporate america. All of J6P’s “real” money is locked away for decades, keeping stock prices high for execs.
As a matter of fact, I’m trying to figure out right now how to put my husband’s 401(k) money into some hideously boring CD type investment earning 4.5 or 5%. The money market option pays .01 percent (no joke). Everything else is some high load mutual fund. Thank g-d my Roth IRA is at Vanguard- just moved into a money market.
You can probably borrow half the account value out and put it wherever you want. There shouldn’t be any tax implications unless you don’t pay it back on schedule (which can be up to 5 years, unless you lose your job).
Check your bond fund options. You might have one that is mostly T Bills.
Thanks for the ideas - I’ll look and see if there’s a T-Bill option.
Holy shit! you are dead on! 401k’s are for suckers. I work for a HUGE corporation. Our 401k choices are UNDERPERFORMING and when i complain the reps. tell me “yeah, they suck. we have to put our money in it too!”
The newest crappy thing theyve done is made it IMPOSSIBLE to move your money! we are only allowed to make ONE move every six months! A-holes…. so if you change your address, thats it for six months. If market is tanking, NOPE, can’t move your money out.
Ive asked many this question. “why can’t 401k’s have CD choices?” Obviously, they want our retirements in the game so others can make money off of us.
Im just so sick of all this nonsense. liz
When I changed my asset allocation the reduce stock exposure about 18 months ago, I got a “warning” that future changes might be considred “market timing” and subject to penalties from the 401k (it’s through Vanguard, so at least the fees are low). The worst part about the language was that there wasn’t a really good definition about what comprised market timing, and what comprised “rebalancing” — which was okay.
“401k’s are for suckers.”
Really? I’d like to know where else I can put pre-tax money and have that immediately matched by an equal amount of money.
If you are worried about safety, 401k plans have safe places to stash your money, even those with limited fund choices. If you don’t like your plans choices and think you can do better elsewhere, don’t participate in the plan and invest outside your 401k.
Not all employers match. Naturally opinions vary, and so do individual experiences, but the rise of the 401k does correspond to all the bubble blowin’. Plus, as an uninsured vehicle, the 401k lets employers and gov’t off the hook - the real reason that traditional pensions are nearly extinct.
“Not all employers match.”
70% do. Taking money out pre-tax, reducing my tax liability, then matching at least a portion of that money? Sounds like a sweet deal. But I am a “sucker.”
Ok Lou. Have your piddly 401k. Give the rest of us back our pensions.
Ain’t gonna happen.
Why should anyone be entitled to a pension? Pensions are part of the problem because they eventually eat companies alive - unless you want to shut our borders to global trade. The only pension strongholds left are in the government, and they can always tap us taxpayers for more dough.
Pensions are done, especially when you consider that most beneficiaries will be expected to draw on them for 30 or 40 years after retirement. Pensions were good decades ago when people retired and croaked within a decade.
Why should anyone be entitled to a pension? Did you ever have the foresight to consider that those drawing pensions EARNED them?
I doubt it.
If you are worried about safety, 401k plans have safe places to stash your money, even those with limited fund choices.
Not all 401k’s have any safe place to stash your money. Mine, for instance, does not.
Actually, most 401k plans offer bond funds and cash funds now too–they don’t provide the return of the stock funds, but are much less risky. After picking up some good returns in international and tech funds during the last three years, I moved almost everything into cash in the spring.
The only time I would be in anybond funds or cash funds in my retirement plan is 8 years or less from retirement.
Mortgage woes affecting Manhattan buyers.
http://www.nytimes.com/2007/08/17/nyregion/17mortgage.html
Some of the quotes are misleading. Yes, many high end buyers pay with cash, and can afford to put down more money or pay higher interest rates. But that doesn’t mean they will if they don’t have to. These folks are sharks.
The price is set by the marginal buyer. And a lot of those paying big bucks in Brownstone Brooklyn, in their heart of hearts, would rather be in Manhattan. And a lot of those paying big bucks elsewhere in Brooklyn would rather be in Brownstone Brooklyn.
Does anyone want to be in the burbs, other than the premier burbs, anymore?
WT,
Notice that buyer with a 500k income and a Fico in the 600s…that’s who’s been driving the market for ordinary, non-doorman 2 beds to 1 million–and with that income, assuming it’s real and not a lie, you’ve got a lousy credit risk–600s??? What, late pays, maxed out credit cards…?
I would like to introduce a new term to to HBB:
SIV
“Subprime Immunodeficiency Virus”
In many respects SIV is the financial equivalent of HIV. Just like HIV, SIV first appeared in a minority community (mortgage lenders, mortgage brokers, etc.) and was thought contained to this minority. Just like HIV the potential expansion beyond the minor community was denied by most pundits. Similar to HIV, SIV is contracted and spread through unsafe or risky activity or behavior. SIV has a lengthy gestation or dormancy period with the effects only showing years after the initial infection. In recent months eerily similar to the early years of HIV, SIV has shown itself to be 100% deadly to the infected financial institution.
I don’t mean to offend anyone with my parrallel of HIV and SIV but the similarities are all too obvious.
I invite all media to freely employ the term SIV to describe the viral infection presently inflicting our financial system.
An example of the use of this term would be the following:
“SIV has been detected in CFC. The company has recently taken an 11.5 billion ant-viral cocktail however experts believe this action will only stave on bankruptcy for 3-6 months”
or
“The Federal Reserve has detected symptoms of SIV in the broader financial system and has administered a $35 billion repo-cocktail which is believed by experts to relieve SIV symptoms for 3 days.”
SUV = Subprime Underwater Virus
Cramer says this will be the biggest up day in history. Jeezuz, makes me want to sell everything.
I have no feel for the options, but it seems to me that traders should be delta and gamma short and that as it rises they get shorter could cause more buying. Some stocks look like they will be pinned at strikes.
Yes indeed. That this happened on option expiration day is even funnier. I just wonder how much they’ll juice it and just filet the ones who were shorting yesterday.
I think this will give us all some great short entries down the road because these problems aren’t going away, but I wouldn’t do it today, that for sure!
I will wait and see, I covered half my short stocks yesterday and was hoping for a bounce to let them out again. If the stocks get to the short prices I will let some out.
They took out some of my offers. Wait and see game.
That’s right. I’m going to ride the pop up, then sell. Then get ready to short the market. They act as if this is a silver bullet. What happens when a month from now we still have this problem. Does Cramer scream for another cut?
I liked him better when he was miserable and screaming.
his eyes bulge out of his ugly bald head the same either way.
Scratch another keyboard.
Done. Remember the scene in Splash, Tom Hanks comes back to his apartment and finds the mermaid gone, rushes out to the elelvator and calls both of them, then goes into a crouch, hopping from foot to foot ready to jump into the first one that shows up? That’s me, in Euros and watching HKs, DAX or SEHK, and how low?
Cramer is just gloating because he thinks the Fed dropping the discount rate shows that he (Cramer) is now in control of U.S. monetary policy. I personally think the high profile drop in the discount rate is a sign of panic at the top, but then I am Professor Bear, after all…
http://www.youtube.com/watch?v=SWksEJQEYVU
http://marketplace.publicradio.org/apheadline_detail.php?story_id=D8R2PM680&group=ap.online.headlines.business
Good guess, GS.
This is the same guy - crying that people are going to lose their homes - who said there was no housing bubble until just relatively recently. In spring ‘06 on his show he had 2 balloons, one with Shiller’s name, the other with Roach’s. He took a pin and popped them both and said something like - here’s what I think about the housing bubble. They don’t know what they’re talking about.
You weren’t concerned for J6P then Cramer, when that was the time to help and tell them to stay out of realestate - you idiot!
What a fraud!
What does the Fed Discount Rate cut do for the dollar? Does it do anything?
Sometimes, it will effect the US treasury interest rates. If the yraise rates were the yield on T bonds become attractive the dollar will get stronger. In todays case the market for bonds had already priced in the rate cut; so bonds are selling off, no change in the dollar.
US dollar went down 1% against the euro in the last hours … markets are probably anticipating that the ECB will follow in the FEDs footsteps with more emergency rate cuts, otherwise the drop could have been bigger. Also huges moves in other currencies (probably some short covering?)
It’s a race to the bottom and no matter what fiat currency you are holding, you win…er, actually you lose.
“Beggar thy neighbor’s fiat currency…”
This is awesome. It is a direct, blow-by-blow narration of how someone became an FB.
I have no sympathy for this woman, even though I am guilty of the same kind of lazy thinking back in the ’90’s.
She doesn’t seem to want to blame anyone, either, she just seems bewildered at how this all could have ended up with her losing her home.
Fascinating:
http://www.knpr.org/audio2007/mp3/070814_foreclosures.mp3
The cost to insure the debt of Countrywide Financial Corp. (NYSE:CFC - News) fell on Friday after the Federal Reserve cut its primary discount rate by 50 basis points to 5.75 percent.
The cost to insure Countrywide’s debt with credit default swaps fell to a mid point of 462.5 basis points, or $462,500 per year for five years to insure $10 million in debt, said an analyst. The swaps had earlier traded at around 545 basis points.
I was guessing the critical condition of CFC must have something to do with the discount rate cut…
GS, excuse me, Prof Bear on the California blog last night, I posted that CFC is a primary and they achieved the “elite status” yesterday of being to big to fail.
“The Fed would not react to bail out Countrywide, but it would have to react to the possibility that the fate of a company like that could bring the economy to its knees,” Lyle Gramley, senior economic advisor with the Stanford Group Co. and a former Federal Reserve governor, told Reuters.
Good call, Sir Hoz.
This is in response to the run at cfc. The fed is spooked. There is not only panic at the fed. There is panic on the street.
From the fed text:
In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York and San Francisco.
They said something on CNBC this morning about people in Los Angeles rushing to get their money out, of Countrywide I think it was, I don’t think they meant banks in general.
My father has a large CD in Countrywide bank. He want to take it out. Does not care about the penalty. Countrycrime has take out a lot of ad in the paper showing it’s high CD rates.
He is in his 70’s and I bet many more at the senior center think the same.
lainvestorgirl,
If it’s happening at cfc, they probably want to stop it from spreading to others.
This rate cut will do nothing except create a rally where many of those who were long will use the rally to sell. A Fed rate cut is largely symbolic. Two oils run the stock market. Fear and Greed. At the moment, fear is much slicker than greed. As for the mortgage situation. It means nada, zip, nothing. The gorilla in the room is the hedge funds and derivaties. There is still trillions of dollars of US confetti money out there, leveraged in some cases as high as 10 to 1. I’m a short term trader. Usually out by the end of the day and never “in” more than 4 or 5 days. How long will this “bump” last? No telling but this does NOT mean we have seen capitulation. This simply firms up the crust on top of the quicksand but the bad stuff is still underneath.
DOW way up already at the open. No surprise there.
I guess plunge protection measures work even better when they are openly announced than when they are covert?
http://www.marketwatch.com/tools/marketsummary/
Headline indexes are rapidly losing altitude less than an hour after the Challenger launch…
What are these boneheads gonna do for an encore?
AAPL way up. Bought it around $112 yesterday and it’s already up to $123 ;-). Will dump it really soon!
Dumped at $122.50. Nice little pop.
STOCKS ARE UP OVER 300 points!!!
THE FED NEEDS TO DO SOMETHING TO STOP THIS MADNESS!
See the irony in my statement
I expect a dead dog drop come Monday.
Have the put trading curbs on the buyers?
If they have, they haven’t announced it.
Have they put trading curbs on the buyers?
HUGE SHORT SQUEEZE THIS MORNING.
up over 600 pts in 2 hours of trading (last hour of yesterday and first hour of today)!
People are Stupid!
As Tom noted, this is one heck of a short squeeze.
But notice, there is resistance at 13,000 on the DJIA… Its above… but that seems to be a selling trigger.
Far from over… not when layoffs are coming.
Got popcorn?
Neil
It was up 300 on the NYSE, Neil, and is now dropping like a rock almost 100 points in 10 minutes.
They made their temporary profits when they sold and now are heading for the exits….this will continue next week with more rate cuts with more wild highs and lows. They can only cut rates to zero and after that they are dead.
The whole market is a rigged parlay for the big boys and banks at top.
Time to take your cash while it is still worth something and buy what you need for survival…this economy is going to tank.
Off for the weekend, Neil, plenty of popcorn where I am going.
The DJIA trajectory so far today closely resembles that of the space shuttle Challenger.
Are all the D-ratic CIC candidates tainted by the housing situation?
Edwards, Foreclosure Critic, Has
Investing Tie to Subprime Lenders
By CHRISTOPHER COOPER
August 17, 2007; Page A1
As a presidential candidate, Democrat John Edwards has regularly attacked subprime lenders, particularly those that have filed foreclosure suits against victims of Hurricane Katrina. But as an investor, Mr. Edwards has ties to lenders foreclosing on Katrina victims.
http://online.wsj.com/article/SB118728685546999884.html?mod=hpp_us_whats_news
He is such a disingenuous skunk.
Homer: Weaseling out of things is important to learn. It’s what separates us from the animals … except the weasel.
Made my Friday to see that quote here.
Please don’t malign the weasels good name by comparison of that species to us.
Roidy
P.S. Nice jump in the S&P500 at opening. Now it and everything else is resuming the downward march. This is the FED’s version of “walking across the trading floor”. Don’t be fooled. It will have no effect in the end. This only made things worse.
cmon roidy, after your chop your arm off, whatya gonna do?
can I get a band-aid please?
Yesterday Bloomberg noted that Romney, with 250 million to his name, was a major investor in the losing Goldman Sachs hedge fund…might have felt a little pain, but not enough to keep him from filling up his gas tank and abusing his dog.
Oops… I guess hedge fund investments some times don’t go up.
This bull can live forever if the CB just pulls the right strings now…
The Lessons of ‘87
By Thomas Mayer
Word Count: 1,104
To understand why money markets have been so shaken by the U.S. subprime mortgage turmoil, and how they might be calmed, it is instructive to recall the events around the stock market crash of 1987. Back in that year, the U.S. Federal Reserve succeeded in restoring confidence in financial markets so that credit extension resumed. With savvy investors then picking up beaten-up stocks, markets quickly recovered and the economic expansion continued. Decisive central-bank action world-wide may well again lead to a relatively benign resolution of the present credit-market downturn.
http://online.wsj.com/article/SB118729904820000139.html?mod=opinion_main_commentaries
“…Decisive central-bank action world-wide may well again lead to a relatively benign resolution of the present credit-market downturn.”
Of course, all this really means is that now more people in America can go out and buy an “affordable” home & the ones that are ATM maxed… can now resume their consumer spending withdrawals and retain ownership of their “home prices always goes up” property.
O.K. everyone, all together now:
“We’re off to see the wizard, the wonderful wizard of OZ”
“We’re off to see the wizard, the wonderful wizard of OZ”
“We’re off to see the wizard, the wonderful wizard of OZ”
“…Just follow the “yellow” brick road..”
“…Just follow the “yellow” brick road..”
“…Just follow the “yellow” brick road..”
This bull can live forever if the CB just pulls the right strings now…
The String Theory Of The Market Universe
AP
Will Wall St. Woes Lead to Recession?
By MARTIN CRUTSINGER
AP Economics Writer
WASHINGTON
Friday, August 17, 2007 06:47:26 AM PT
The stock market is on a stomach-churning ride, the nation’s once high-flying housing market is sinking deeper into gloom, and credit, the lifeblood of the economy, is drying up. If consumers get nervous enough, many economists believe, all of these troubles could become the perfect storm that will plunge the country into a recession.
And the odds seem to be increasing with every new turbulent day on Wall Street. Since setting a record close of 14,000.41 just a month ago, the Dow Jones industrial average has shed 1,154.63 points in a string of triple-digit losing days that have raised anxiety levels not just on Wall Street but on Main Street.
The markets have been pummeled by a rapidly spreading credit crisis that began with rising defaults in subprime mortgages _ home loans made to people with weak credit histories. Now the problems are spreading to other borrowers.
Countrywide Financial Corp., the nation’s largest mortgage banker, was forced to borrow $11.5 billion on Thursday so it could keep making home loans. It was a move that rattled investors who have watched a number of smaller mortgage companies go under because of credit problems.
The shockwaves have extended to giant Wall Street investment firms such as Goldman Sachs, which announced earlier this week that it was pumping $2 billion into one of its struggling hedge funds. BNP Paribas, France’s largest bank, last week froze three funds that had invested in the troubled U.S. mortgage market.
The Federal Reserve and other central banks, responding to the widening credit problems, have infused the banking system with billions of dollars in an effort to keep short-term interest rates from surging and making credit even more difficult to obtain.
http://marketplace.publicradio.org/apheadline_detail.php?story_id=D8R2N8G80&group=ap.online.headlines.business
Recall that after deep sixing Arthur Andersen, the SEC felt it couldn’t do the same to KPMG because there had to be enough accountants left.
Perhaps the FED was thinking like Angelo that Countrywide is supposed to be one of the few mortgage lenders left.
Pretty soon we won’t have any more mortgage loans, and then it will be up to the PPT to keep both the housing market and the stock market propped up…
Huh. Guess I really will be a life time renter. The government is just going to keep pulling the strings to keep everyone solvent.
God damnit!
Can anyone who understands please explain in what sense dropping the discount rate is not a form of government intervention? Or did the PPT just do a 180 degree turn overnight?
Thursday, August 16, 2007
Listen to the show
The official line: You’re on your own
Treasury Secretary Henry Paulson (Getty Images)
Treasury Secretary Henry Paulson and the head of the Federal Reserve bank in St. Louis had basically the same message today — despite the market unease, there’s no plan for government intervention. Bob Moon has more.
http://marketplace.publicradio.org/shows/2007/08/16/PM200708161.html
Paulsons timely comment (he sure must have known about the planned surprise move on option expiration day when deniying the invervention the day before) was engineered to improve the effects of a short squeeze and generate extra fat profits for the Wall Street gangsters that were in on the story.
Greenspan conundrum: High returns are hard to find.
Bernanke conundrum: Safe bets are hard to find.
Thursday, August 16, 2007
Listen to the show
Even a safe bet is harder to find
Money, chart and pen
Worries about the usually safe investment in “commercial paper” — short-term bonds companies float to run their operations — are trickling through the markets. Moody’s chief economist John Lonski explains.
http://marketplace.publicradio.org/shows/2007/08/16/PM200708162.html
What is the tracker for Yen and for Dollars?
I’m sure they have Yen in Dollars. This is the dollar index.
http://quotes.ino.com/chart/?s=NYBOT_DX&v=s&w=1&t=c&a=2
my humble opinion is ignore the Yen Dollar look at the Yen Euro.
COMMENTARY
Fannie, Freddie and the Housing Bust
By ETHAN PENNER
August 16, 2007; Page A11
…
The current crisis is the result of the normal ebb and flows of credit cycles, and the free market will amply handle the correction that is already happening. Calls for Federal Reserve intervention or for other governmental involvement — including an increase of the Fannie Mae/Freddie Mac lending limits — must be rejected.
In the free market, those that made bad credit decisions must be allowed to pay the price, and only by paying dearly can lessons truly be learned. Borrowers who were unwitting and took on too much debt must learn that there are consequences for their actions. Homebuilders that built too many homes or overpaid for land need to face the consequences. Wall Street firms that provided credit to all of these activities with too much laxity must also pay a price. This is all part of a healthy correction.
All of these players reaped benefits during the housing boom that preceded the current crisis. Certain homeowners were able to temporarily live above their means. Homebuilder and bank profits have been exorbitant, and shareholders and executives of these companies have profited mightily in the boom. To not permit losses now would be a direct violation of the free-market ideals at the foundation of our economy.
Mr. Penner is a principal with the firm Lubert-Adler and is the managing partner of PGP, a real-estate investment firm. In the 1990s, as CEO of Nomura Capital, he helped pioneer the application of securitization technology to real-estate finance.
http://online.wsj.com/article/SB118723188037699335.html?mod=googlenews_wsj
Can Fed market intervention fully offset the unraveling of the carry trade? And will the unraveling accelerate or slow down in response?
Friday, August 17, 2007
Listen to the show
Asian markets fall hard
A foreign currency graph illustrates the yen’s climb against the U.S. dollar. The dollar slipped to 113.71 yen in Tokyo morning trade after players scrambled to exit risky bets. (Toshifumi Kitamura/AFP/Getty Images)
The Japanese yen is fast gaining strength against the dollar, but that could be bad for Japan’s heavily export-dependent economy. Really bad. Economist Andrew Hilton explains.
http://marketplace.publicradio.org/shows/2007/08/17/AM200708178.html
The Federal Reserve is trying valiantly to contain the infection, but unfortunately too late. If the Federal Reserve had acted last year and raised the Fed Funds to 6%, the irrational exuberance of the last year would not have occurred and we might have had a soft recession. The Federal Reserve has no options available at this point. There are no reserve requirements for member banks, so it cannot ease reserve requirements and the fed funds getting lowered obviously has had no effect - a short burst and now…
Hence, as I’ve been saying to Chairman Bernanke:
“‘Do the Volcker’ and drain the liquidity cesspool before we all drown!”
The drowning stopped so suddenly the patient is now choking…
My take on the decrease in the Discount Window today is that Bernanke got tired of th banks beating on his door in the early morning hours. Also probably a lot of special paperwork has to be filed in order to due the repos.
“Enough already. I’m dropping the Discount Window 0.5%. Now leave me fck alone!”
So Poole is MIA, Paulson is a lying sack, CFC is too big to fail, and the dollar is reaching for parity with the peso. The only thing I want to see thrown out of a helicopter is Bernanke.
And Cramer is the de facto head of the Fed–his slimy “lower the discount window now” dance was not an audition for American Idol, it was American fiscal policy on display.
“The dollar fell versus the euro and pound after the Federal Reserve reduced its discount lending rate to prevent credit market losses from slowing the economy.
The dollar declined against 15 of 16 major currencies as a reduction in borrowing costs dims the allure of U.S. assets. The decline today trimmed the dollar’s weekly advance as investors had sought safety in the currency after a global rout of credit markets.” (Bloomberg).
Spike, What is Mr. Cramer going to say this evening if the Dow is down 300?
LOL
Yes Hoz that seems to be a real possibility.
On CNBC they were interviewing some guy pre-trade and he was watching the boards with a wrinkled forehead. He stated that he saw a short rally but was afraid the day would end negative anyway.
The market seems to be giving back the early pop now but who knows?
“I’m sorry Hoz. I want you to know that I still have the greatest enthusiasm for the mission.”
Deron, That is being mean! LOL
Hoz,
If Cramer’s head explodes, I’ll personally write you a check for $100, to be spent on your favorite single malt.
“So Poole is MIA, Paulson is a lying sack, CFC is too big to fail, and the dollar is reaching for parity with the peso. ”
I see! The Fed’s real mission is to solve the problem with illegal immigration.
Ya’ll have a good day. I’ve got a stop in place so if this is a pop & drop, I’ll be out by the time I get back.
Yeah, how many lifeboats did the Titanic have? I like his view…
PETER BEUTEL, PRESIDENT AND OIL ANALYST, CAMERON HANOVER, NEW CANAAN, CONNECTICUT
“Obviously the Fed is very concerned about the situation. It’s hard to tell whether these more or less moves only a banker understands will help. They’ve left the key interest rate, the one that really affects consumers, steady. Hard to say but I don’t think it changes the underlying problem.
“After five years of taking savings, credit, and equity to pay for heating oil and gasoline and maintain a standard of living in the mistaken belief that oil prices would come down more quickly than they are, the cupboard is bare.
“Until oil prices come down they’re going to cause upward pressure on consumer prices, most notably food.
“What the Fed has been doing is helping bankers, not consumers, and that (the consumer sector) is where the problem lies. The Fed is hitting the top of the iceberg. And we all know it was the bottom of the iceberg is what sank the Titanic.”
The FED cuts rates and the stock market trends down after opening up 300 points. So now what another rate cut? Why not just to zero like Japan?
I think we are about to get a real world test of the “pushing on a string” theory so often mentioned by GetStucco aka Professor Bear.
yes … swings in stocks and currencies are getting bigger every day, and FED action seems to have less/shorter effect; the market seems to be setting up for the big one.
Late stage junkie effects. Bigger and bigger hits to get any response. All strung out and the junk hardly does anything. System failure is usually next.
That explains why my house looks like the last scene in Real Genius.
popcorn junky with pre hunky kilmer…
So MEATY!
Remember Japan’s big problem– insolvent banks and businesses that were kept alive by and unending supply of loans and bad debt that was never written off.
Hm, we’re not there yet but based on the past week’s events, I have to wonder what the strategy is at the Fed right now.
“…unending supply of loans and bad debt that was never written off.”
What about that elephantine quantity of bank REO sitting under the rug unsold? And all those underwater hedgies that have not yet reported on their underwater status? And Fannie Mae?
I am reasonably sure there is a great deal of bad news that has not yet been brought to light which may eventually show a closer similarity between the U.S. situation and Japan circa 1990 than is currently apparent.
Oh I agree… we’re waaaay past interest rates now. There’s a mile-deep ocean’s worth of bodies floating up. I’m just thinking about the response. Does a strategy even exist? Is the plan really to just keep pumping more water into the ocean?
If the Fed is playing it by ear, and we start choosing the path of least resistance, we could easily end up where Japan was. I guess I am saying there’s still time for us… A fairly shocking recession and in 4 years we’re recreating our economy, trade-balances, manufacturing, coming out of it okay. I think that is still possible on the optimistic side.
LOL. Practically right across the street from each other. And they’re both dumps.
$700,000
http://homes.realtor.com/search/listingdetail.aspx?zp=34112&ml=3&typ=8&sid=74ceba39c0324df38717ca4bd686cde9&pg=6&lid=1081410296&lsn=56&srcnt=56#Detail
$275,000
http://homes.realtor.com/search/listingdetail.aspx?zp=34112&ml=3&typ=8&sid=74ceba39c0324df38717ca4bd686cde9&pg=5&lid=1081946629&lsn=50&srcnt=56#Detail
In the good ole days, monopoly status was regarded as a negative. Nowadays, it appears that being “too big to fail” is the best way to get special favors in the form of free crisis insurance.
AP
Countrywide Taps Credit Line for Cash
Thursday August 16, 11:08 pm ET
By Alex Veiga, AP Business Writer
Countrywide Financial’s Credit Woes Force It to Borrow $11.5 Billion to Fund Operations
LOS ANGELES (AP) — The credit mess forced Countrywide Financial Corp., the nation’s largest mortgage lender, to borrow $11.5 billion on Thursday, shocking financial markets already reeling from the growing credit crunch and threatening to make home loans harder to get.
Countrywide said it borrowed the cash from a group of 40 banks so it could keep making home loans.
The announcement sent its stock tumbling about 11 percent and prompted one credit rating agency to downgrade its rating to near-junk bond status.
Countrywide is the largest mortgage lender by volume, accounting for more than 13 percent of the loan servicing market as of June 30, according to the mortgage industry publication Inside Mortgage Finance.
It made the borrowing move amid a credit crunch that has driven a number of its smaller peers to bankruptcy.
http://biz.yahoo.com/ap/070816/countrywide_mortgages.html?.v=2
“too big to fail” is the best way to get special favors”
I didn’t read all of the article, but how is tapping credit lines a “special favor”.
I agree that interesting things are happening, but there is far too much “tizzy-ing” going on on this board in recent days.
‘I didn’t read all of the article, but how is tapping credit lines a “special favor”.’
Sorry I was unclear, but I consider the surprise Fed move to drop the discount rate a ‘too-big-to-fail’ insurance claim payment to CFC, courtesy of anyone unfortunate enough to be long the $US.
Countrywide Leads Finance Stocks Up After Rate Cut (Update1)
By Elizabeth Hester
Enlarge Image
A Countrywide home loan branch office
Aug. 17 (Bloomberg) — U.S. financial-services shares rose for a second day, led by mortgage lender Countrywide Financial Corp., after the Federal Reserve cut banks’ borrowing costs to alleviate a credit crunch.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVO3HNQc3_kE&refer=home
Make no mistake guys, the FED is in CRISIS management mode. They are buying time. They are probably in the bunker right now trying to figure a way out of this mess. When the crunch spread to short term commercial paper, they folded. They can’t bluff their way out of this mess.
Got Manias, Panics, and Crashes?
got some frickn sleep cause I cashed it all out, again.
gaming is a little strong on the ol big bored for the jungle….
I likes my open market ops in daylight hours, not stealth of night… you cant hide in the jungle BB….I smell your fear.
I need some help. I have so money, it’s about 3 months salary. I wanted to put it into swiss francs. I looked at Everbank and was thinking of using their WorldCurrency Access Deposit Accounts. But since I have heard bad things lately about money market accounts, and I the fact that Everbank is owned by First Alliance Bank, I do not feel comfortable putting my money there.
Does anyone else know of another way I can get a account that I can make withdraws/deposits in a timely fashion, but that I can place my money in Swiss Francs? Thanks.
Alliance Mortgage Company formed First Alliance Bank in Jacksonville, Florida. On November 5, 2002 First Alliance Bank acquired EverBank and on February 2, 2004 the company took the name EverBank and EverHome for its consumer facing operations. Today EverBank is the largest bank headquartered in Jacksonville, Florida.
just open a discount brokerage account(ameritrade etc) and buy the swiss franc etf symbol FXF
swiss francs? after the yen carry trade started unwinding, this seems to be the only one-way bet left that can go sour.
mark from CNBC was just talking to an economist who was saying we need to return to the traditional tighter lending standards 20% down, etc.
Mark said, but if we return to that, that would mean that the recent runup in home prices in the last few years are a fallacy and that prices would need to return to where they were.
shes said YES! THATS RIGHT
no shit
I’m just learning about all this- can someone explain in simple terms how this cut helps the debt ridden on the edge of foreclosure home owner on their way to Walmart to get school supplies?
I’m no stock market genius, in fact I’m a complete idiot compared to others here, but in my esteemed opinion it doesn’t one bit and wasn’t intended to.
They still can’t pay their debt and their school supplies will go on a credit card.
It doesn’t. And it’s not supposed too either. They can go pound sand.
This is just an attempt to save the bonuses of a handful of people who have made reckless (criminal) decisions on wall street.
Mark from cnbc was just talking to an economist who was saying we need to return to the traditional lending standards 20% down, etc.
Mark said, but if we return to that, that would mean that the recent runup in home prices in the last few years are a fallacy and that prices would need to return to where they were.
shes said YES! THATS RIGHT
no shit
Not here on the Cali central coast…local talk show guy had a mortgage guy as a guest, explaining what is happening with loan programs disappear, jumbo rates going up, etc. He said “however, everyone wants to live on the Cali central coast, so don’t expect prices to come down so much”. I called in and asked what had changed in the last 4 years to double prices, wasn’t it the lose lending that increased demand way above what it would have been with traditional lending practices. The answer was yes, you have a point, but everyone wants to live here.
“don’t expect prices to come down so much”
Compared to what?
Compared to now…which would be 0%-10% off the high of 2005 or 2006.
If everyone wants to live here how come:
-trucks rentals are 2 to 5 times as much to rent to leave CA as to come in?
-Universities and hospitals are having huge problems getting qualified professional staff to take jobs here?
-I know more people contemplating leaving this year than I have known in the last 20 years combined?
There’s a difference between a sunshine tax (paying 4 times your income for a home instead of three times) and sunshine serfdom (paying 10 times.)
Everyone wants a Ferrari too - that doesn’t mean they’ll buy one if they cannot afford it. Of course, I could be wrong - maybe it is different this time?
We should all buy Ferrari’s as they may be the next bubble!
Interesting, isn’t it, how many folks recently bought houses they cannot afford at large multiples of the price of a Ferrari? Not that there’s anything wrong with that…
Yes, everyone wants to live there. The only thing holding us back is the price. To California: Hope you have caviar dreams and champagne wishes. Love ya. Mean it.
The Gold Window (1975-2007 r.i.p.)
Things are moving at breakneck speed financially and I expect this month to be the last chance to easily buy physical Gold, as it is currently traded on the open market, in our country.
When pieces of paper and computer blips are recognized for what they really are, blind faith…
100% of the world will want what only a few percent can have, as per Mother Nature’s rules of finance~
I’m betting you are wrong about the timing. I was sure the end was at hand in the 70’s. Sometimes things take longer than you expect, and take a windy path. Got a mercury dime in my change yesterday. Showed it to the girl at the register. She had no clue. I admire your goldbuggishness, but I think most of the people who have bought gold in the last few years where leveraged speculators, not savers. Fear is more important to gauge here than worth, in the short term. The speculator is not afraid of long term inflation, he is afraid of his margin call.
I have gold, have had it for a long time. Have cash too. I am holding my breath at the moment, betting the speculators are overextended and there is a vacuum pulling on them. They need cash to cover, not a long term store of wealth. Their wealth is debt.
I agree with Blue Sky, If you watch the Gold market is has jumped back and forth. On days when the bills need to be paid gold drops at a much higher rate. I think we have a lot of leverage that needs to unwind before gold demand goes through the roof. Fear is gaining steam but it is the fear of the unwinding that is driving decisions not fear of inflation. After all inflation has not been seen by the masses for a generation.
So it really doesn’t prevent the real guts of the problem which is the millions of home buyers who are circling the drain?
They know that there is nothing they can do to prevent those folks from going down the drain. They are trying to bring the crippled 747 down for a very hard landing (as opposed to an outright crash)
That’s not the problem. The problem was people at goldman sachs et al were seeing their bonuses circling the drain.
Like that cramer baggage said, ‘people are losing their jobs!’. (Like he gave two … before.
I roll my eyes at them.
Overleveraged homebuyers are part of the problem and not even the largest part. Their overleveraged equivalents in the real economy are debt-laden corporations and highly leveraged commercial developers. Then there are the overextended financial operators - hedge funds, CDOs, pirate equity and nonbank lenders. This move provides little help for any of these FBs and none at all for most.
Bloomberg: Bear Stearns cuts 240 mortgage jobs
August 16th, 2007
Bloomberg reports that Bear Stearns is cutting 240 jobs at two of its mortgage units, citing someone with knowledge of the cuts. Here’s more from Bloomberg:
Encore Credit, based in Irvine, California, is eliminating 100 positions, and the Bear Stearns Residential Mortgage Corp. division in Scottsdale, Arizona, is reducing its workforce by 140, said the person, who declined to be identified because the number of jobs isn’t being released publicly.
“In the normal course of business Bear Stearns Residential Mortgage Corp. and Encore Credit evaluate market conditions and staffing levels in an effort to identify areas where we can eliminate redundancies and improve the efficiency of our operations,” the New York-based firm said in an e-mailed statement today. “As a result we have made the decision to reduce our staffing levels and close two operation centers.”
The statement didn’t include the number of jobs that were cut, and a Bear Stearns spokeswoman, Renu Aldrich, declined to elaborate.
“The global credit squeeze is removing a crutch that has done much to prop up the U.S. stock market during the past 18 months.
The buyout boom, combined with corporate share repurchases, helped keep equity prices high by reducing the supply of stock in public markets by well over $1 trillion.
So if the current lull in deals turns into a prolonged slowdown, it could take away an important means of support from stock prices already rattled by the credit situation….”
Reuters
Aug 17
Hoz
You wanna scare a stock bull half to death? Ask him or her how long it will be until the credit cutoff forces companies to start issuing equity. I had that conversation yesterday with a mutual fund PM. His eyes went wide and after a few seconds his jaw just dropped.
“Incontheeevable!”
What do you mean by “issueing equity”? Releasing their bought-back stocks back into the market to raise cash? Could they legally do that?
VOLATILE OPPORTUNITIES
“…the Federal Reserve this morning has cut the discount rate by 50 basis points. S&P 500 futures responded with a dramatic 2% rise. Perhaps the financial crisis has passed. Perhaps not. We don’t know. But from out perch, the crisis wasn’t triggered because interest rates were too high by 50 basis points. As such, it’s hard to imagine that a 50 basis-point cut in the discount rate will cure what ails the financial system. Yes, it may bring temporary relief. But it’s our belief, naive perhaps, that something more fundamental has upset the former rosy state of affairs. Until and if that’s addressed, one might wonder if the recent turmoil still reflects deeper issues.
Even assuming that the bulls resume control, the inevitable correction will be that much bigger. With that in mind, it’s our guess that many investors have not been raising cash these past months. For those who are still fully invested, a market decline leaves no option other than to sell. In contrast, those with cash will be willing and able to help out for those on the other side of the trade…at a price.”
Reuters
http://tinyurl.com/2os5o3
Boy was I wrong about what BB was going to do . Don’t know how this is going to solve the pain of the bad loans made for years now .I guess if Wall Street get their way the next step is the FEDS will buy all the bad paper out there . Cramer said in essense that he loves the Feds now .
I hope that BB doesn’t actually lower the rates verses this short term thing they are doing now at the discount window .
“Boy was I wrong about what BB was going to do”
It’s a week positive right now, on the drop in the Discount Rate (fed to bank rate)…Wall Street wants a drop in the Federal Funds Rate (bank to bank overnight rate).
“Cramer said in essense that he loves the Feds now”
Idiot.
That should be “weak” positive, not “week” positive…I need my morning caffeine.
Curiously, a cut in the discount rate is really only to help the banks borrow from the Federal Reserve- not many banks like to borrow from the Federal Reserve (its kinda like borrowing moneys from my uncle Vinnie). Are these mopes that are buying stocks of the belief that the Federal Reserve cut the Fed Funds rate? Just curious, it changes nothing - it does not lower the interest on mortgages, it does not give a salary raise.
They might be mopes who assume that other mopes will buy on the belief that the Federal Reserve cut the Fed Funds rate — a sort of mopes-once-removed rally?
It’s easy to get confused these days. We cut you some slack before coffee.
Darn MoT, delaying my posts again.
“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.” — T. Jefferson
In the spirit of the times . . . .
Credit crunch – extraordinary policy shift — subprime-mortgage collapse
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJv5U5SQq6BU&refer=home
Dollar tanks
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFG2dGYJNU4M&refer=home
Those foreign investors will really be buying mortgage bonds now!
Talk about a rock and a hard place.
“Talk about a rock and a hard place.”
Many (most) of us had predicted this quite a while back. Part of the “glee” sometimes exhibited here is to “just get it over with and be done with it”.
“Credit crunch – extraordinary policy shift — subprime-mortgage collapse”
Is there a historical precedent for this fast of a Fed flip flop? I would think the Fed risks introducing policy-induced volatility on top of the volatile sea of froth that already buoys the Wall Street bulls…
Good grief - I just flipped on the tube and they’re replaying Larry King Live on headline news with financial “gurus” to give advice on the current economic situation. Old combover Trump, Kiyosaki, Bach, and a couple others. But advice from those three? They’re the ones who helped get us here. They’re on the band wagon now, but big deal. They were really singing a different tune a couple years ago.
Dum Dum Don thinks BB needs to do something fast - a la Cramer. He just called WallStreet a bunch of very greedy people. What a freakin piece of work.
Been out looking at that house again.
Very interesting. Looks like more people want to get out than get in.
My stop is in. Ain’t giving this windfall back. It would be very demoralizing to the bull camp if they can’t hold this rally.
Or maybe it would be a huge fakeout.
If this market fades, I would be shocked. Historically the markets break the day after the discount rate cut. (I think that is when the mopes realize it is a discount rate cut not a fed fund rate cut.)
Professor Bear respectfully disagrees with Knight Kiplinger’s advice, which could help whatever qualified buyers who remain to catch falling knives. The impact of the implosion of the mortgage lending industry on home prices is a shoe that remains to drop. I can’t say whether his advice represents ignorance of fundamental economic principles, or a deliberate attempt to mislead. On the other hand, perhaps those with jumbo salaries don’t mind loosing a few $100K.
Your Money
Tips on Surviving a Troubled Mortgage Market
Listen to this story…
Morning Edition, August 17, 2007 · Even credit-worthy borrowers are likely to feel the effects of the troubled mortgage market. Knight Kiplinger, editor-in-chief of Kiplinger’s Personal Finance magazine, says that many borrowers will have the best luck if they use local institutions, ones they have a relationship with already, for loans.
And for those looking to get into the home market, Kiplinger tells NPR’s Renee Montagne, it depends on the local market. And, he says, “Mortgage money is still under 7 percent” — a benchmark for a fair loan rate. But, he notes, buyers can look for a good value, and push for a bargain, on their homes.
One development that has been seen as a sign that the mortgage fallout could extend beyond the subprime market is the recent tightening of criteria for jumbo loans — or mortgages for more than $417,000.
“Somebody seeking a jumbo mortgage who has a jumbo salary will be fine,” Kiplinger said. “It’s only people whose incomes were not proportional to the size of mortgage that they were seeking who are out of the market right now.”
http://www.npr.org/templates/story/story.php?storyId=12866105&ft=1&f=1006
Talking head on KPBS San Diego Editor’s Round Table show is describing the death of the San Diego housing market to Gloria Penner. Gloria said the stock market is “going kind of crazy this morning.”
One of the editors says “I don’t see a recession coming.” The worst recessions (similar to the worst credit crunches) are the ones that nobody sees coming.
Call now to get your comment on the air:
1-800-895-5727
Correction:
1-888-895-5727
Listen to the archived broadcast later today:
Chinese Imports, Waring’s Resignation, Housing Market
Aug 17, 2007
Audio will be posted Friday afternoon.
This week, a large toy recall has raised fears about the safety of a variety of products that are being imported from China into the United States. What can the U.S. do to protect people from toxic Chinese imports?
Also, San Diego’s chief of land use and economic development has resigned after he continued to lobby to allow the controversial Sunroad high-rise building to remain in violation of FAA safety standards. Was Jim Waring forced out, or did he resign under his own accord?
And, the number of homes sold in San Diego is on the decline as potential buyers hold out for a good deal. Who will move first in the local real estate waiting game?
Guests:
* John Warren, editor and publisher of San Diego Voice & Viewpoint.
* Bob Kittle, editor of the San Diego Union-Tribune editorial page.
* Tim McClain, editor of San Diego Metropolitan Magazine.
http://www.kpbs.org/radio/editors_roundtable;id=9352
Bob Kittle (editor of the San Diego Union-Tribune editorial page) says falling prices will not lead to better affordability, because “prices have only fallen by 5%, and have sort of already bottomed out.”
Just wait until the credit crunch and future resets play out over the next four years. You ain’t seen squat yet, Bob!
“…because “prices have only fallen by 5%, and have sort of already bottomed out.”
Put your money were your mouth is Bobby Boy, my $5,000… say’s a year from today, 8/17/2007…. home prices will be min 10% lower, let’s start with the zip codes in Chula Vista… Babeeeeeeeeeeeeeee!
John Warren, editor and publisher of San Diego Voice & Viewpoint, is openly pandering for a bailout, but Kittle says that bailouts lead to bad financial decisions. This segment featured some great tidbits of housing bubble wisdom and disinformation as well, and was regretably too short to hash out the arguments.
“Kittle says that bailouts lead to bad financial decisions”
Oh, we never have bad financial decisions.
Homer: Aw, twenty dollars! I wanted a peanut!
Homer’s Brain: Twenty dollars can buy many peanuts!
Homer: Explain how!
Homer’s Brain: Money can be exchanged for goods and services!
Homer: Woo-hoo!
“The correlation continues! Billionaire Eli Broad, who’ll help shore up Goldman Sachs Group Inc.’s Global Equity Opportunities Fund, said art prices will decline as a result of losses by hedge funds and other large contemporary art collectors.”
Another bubble bursts.
Minyanville
Sounds like TxChick might get an opening soon…
Can’t wait. There’s a glass art exchange I watch and I am already seeing “reduced” and “motivated seller” listings on it. Kind of like houses! LOL
I have been short one of the auction houses since early July, covered half yest and let it out again this morn.
I accidentally used a Jackson Pollock piece of artwork, as a dropcloth when I was painting the house, the other day…
Not sure if I lowered or raised the value of it, in doing so?
I expected rates to stay flat through December. This is a short term fix that is long term inflationary, but it’s good for the stocks and good for precious metals. I’ll take it, ride with it, and profit with it. The way I see it, this new rate will probably stay at this level for 12 months. It buys us all more time to save more, build up gold reserves, dabble in stocks (I recommend OIL STOCKS, such as Pengrowth), and be prepared for a potential monetary crisis.
I’m not pessimistic anymore. I’m excited and this fits in with my plan for the next two years. My career outlook is even better in the next two years and that’s all I need to lock in a good level of financial security.
For young people, - save, save, save! There will be plenty of work for you and opportunities to save (equities are an inflation hedge so go for them) so don’t let dooma and gloomers here get you down.
For young people, don’t let Pollyannas talk you into buying stocks in the worst bear trap in recent memory. Stock market investing is not saving — it’s gambling.
Ha Ha! Good joke Perfessor Bear, Good Joke!
I wasn’t joking. In fact, stock market investing is the only legal form of gambling in Utah.
You can call stock investing anything you want. Maybe I will call it “oreo cookies.” I think I’ll go to Vegas and get a stock this weekend. Let’s see: Vanguard 500 index fund annualized yield per year since August 31 1976 to now (31 years): over 12%. Gambling never has odds like that, which is a 25 times payout of the original bid.
Yeah - nothing more enjoyable than antipiating living through a potential money crisis. It’s like going to Disney World everyday except for the disrupted lives and potential violence. Yippy!!!
I think this sums up how most of us feel.
http://money.cnn.com/2007/08/17/commentary/sloan_enablers.fortune/index.htm?postversion=2007081709
Cool article.
Profit from it or be left in the dust.
What the heck is up with Cramer? I’ve really never sat through a whole show but the annoying sound effects are just seat fillers and he doesn’t say much. His remarks are fluff lacking meat and potatoes of what is really going on.
He says we are saved-the world is saved–disaster was diverted…and then keeps dropping his 25 years in the biz. Who is this clown?
460 comments the other day, 370 so far today… can we say the bust is really picking up steam, or what? CalculatedRisk is hitting higher numbers overall, too. I simply can’t keep up!!!
Apologies if this was discussed earlier, but there is so much news flowing that I can’t keep up with it all (amazing that Ben can):
http://www.iht.com/articles/2007/08/16/business/hedge.php
If “”poor” Jeffrey Larson did not lose all he made off his hedge fund trades, then screw him, big-time. I hope he has to face most, if not all, of the people who lost so much because of his gambles.