Hubris Is Replaced By Fear
Some housing bubble news from Wall Street, Washington and beyond. Bloomberg, “ACA Capital Holdings Inc., the bond insurer being run by regulators after subprime-mortgage losses, won a month’s grace to unwind $60 billion of credit-default swap contracts that it can’t pay. ACA was founded in 1997 by former Fitch executive H. Russell Fraser, who left the ratings company in 2001 as it shifted focus to structured finance from municipal bonds.”
“Fraser said his idea was to start an A-rated municipal bond insurance company to guarantee a new crop of borrowers he sometimes called ‘the cream of the crap.’ ACA’s larger competitors such as Ambac and MBIA had enough cash to get the top AAA ratings on their insured bonds.”
“The bond insurers, also known as monolines, guaranteed $127 billion of CDOs backed by subprime-mortgage securities as of June 30, according to S&P. Bond insurers’ shares plunged last week and credit-default swaps rose to a record on concern the companies may be unable to meet their obligations as the subprime-mortgage securities and collateralized debt obligations they guarantee slump in value.”
“Ambac Financial Group Inc., the second-largest bond insurer, had its AAA credit ranking cut to AA by Fitch Ratings. Both Ambac and its larger rival, MBIA Inc., are under threat of losing the top grades from Moody’s Investors Service and S&P, a move that would throw doubt on the ratings of $2.4 trillion of securities.”
The Globe & Mail. “‘It’s a turn of events that has grabbed the attention of credit markets,’ said strategist Stewart Hall at HSBC Securities Canada Inc. ‘If you lose the insurers you have to consider what kind of cascading events occur.’”
“‘We have underestimated the extent of the poor underwriting across the entire mortgage-backed securities and collateral debt obligation market. This kind of systemic failure to assess risk has been difficult for us to believe,’ said Citigroup analyst Heather Hunt.”
“The risk of European companies defaulting soared to a record on concern credit ratings cuts at bond insurers Ambac Financial Group Inc. and MBIA Inc. may trigger forced asset sales and worsen credit market turmoil.”
“‘The major risk for credit markets remains forced selling on the back of downgrades of the insurers,’ said Jochen Felsenheimer, the Munich-based head of credit derivatives research at UniCredit SpA, Italy’s biggest bank. ‘The problem right now is there seems no way out.’”
“Credit-default swaps on Ambac, the second-biggest insurer, soared last week to $2.6 million upfront and $500,000 a year to protect $10 million in bonds, implying a more than 70 percent chance of default in the next five years, according to a JPMorgan valuation model.”
“It cost $2.6 million upfront and $500,000 a year for a similar contract protecting MBIA debt, signaling traders also see a more than 70 percent default risk in the next five years.”
“WestLB AG, Germany’s third-biggest state-owned lender, said today it will report a full-year loss of about 1 billion euros ($1.45 billion) and shore up capital after writedowns and trading losses triggered by worst U.S. housing slump in 26 years.”
From Reuters. “WestLB said its owners, local community savings banks and the state government of North Rhine-Westphalia, would foot the bill for the losses. It puts Germany back in the spotlight as one of the countries worst affected by the credit markets crisis, which almost sank two German banks and has sucked in many more.”
“In a letter to staff, WestLB CEO Alexander Stuhlmann also warned that further writedowns on withering subprime investments could not be ruled out.”
From Spiegel Online. “WestLB said that in addition to the loss it also expected to shoulder €1 billion in writedowns. Meanwhile, fears of a US recession led to sharp stock market losses on Monday with the German blue-chip DAX index falling as much as 7 percent in hectic trading before stabilizing in late afternoon. It was the biggest daily decline since the September 11, 2001 attacks.”
“‘There’s naked panic here — we’re seeing a classic crash,’ said one share trader. Analysts at JP Morgan Asset Management said investor sentiment had reached ‘panic level.’”
“WestLB will lower costs and ‘can’t rule out’ job cuts, said spokesman Marc-Sven Kopka. The state lender, which had 6,205 employees at the end of September, may cut as many as 2,000 jobs, German newspaper Rheinische Post reported yesterday.”
“WestLB has provided financing to about $14 billion of investment funds to prevent a fire sale of their assets after they couldn’t raise funding on the debt market. It extended a credit line for its $11 billion Harrier Finance structured investment vehicle as well as Kestrel Funding, which has $2.9 billion of senior debt, to help repay commercial paper.”
“The bank said in November that it would post a full-year loss because of the ’substantial price losses of structured securities.’ WestLB at that time forecast a ‘low three-digit million-euro loss’ before taxes.”
From Deutsche Welle. “Just a few months ago WestLB issued a statement assuring investors that its exposure to subprime securities in the United States was ‘relatively limited.’”
“In August 2007, WestLB said there was little reason for concern that it would get caught up in the US subprime crisis as 98 percent of the bank’s securities were rated ‘A’ or better. ‘The commitment is relatively limited, and its rating is very high, which signals that we do not have to be too concerned,’ a spokesman said.”
“German stocks fell for a fifth day Monday. Commerzbank led declines…on news that it was also being downgraded due to losses related to the subprime market tension. The bank’s losses are expected to be about 210 million euros for the fourth quarter of 2007, according to US investment bank Bear Stearns.”
“‘The situation remains tense,’ Michael Scholz, an equity strategist with WestLB AG told Bloomberg Television. ‘January has been a disaster for share prices so far. If this continues, we’ll have a problem this quarter.’”
The Associated Press. “Shares in China’s banks fell sharply Monday after news reports said its No. 2 lender, Bank of China, might write down holdings of U.S. mortgage securities and two others increased reserves for possible losses.”
“The reports were the first indication that Chinese lenders, which have so far avoided damage from the U.S. credit crisis, might face problems due to their holdings of subprime securities. Also Monday, China’s banking regulator warned that lenders might face risks from fluctuations in fast-rising real estate prices.”
“Bank of China is expected to announce a ’significant writedown’ on its $7.95 billion in U.S. subprime mortgage securities, Hong Kong’s South China Morning Post newspaper reported, citing unidentified sources.”
“‘The subprime woes in the U.S. have raised concerns at home about risks in the domestic mortgage market and prompted selling in banking and real estate companies,’ said Wang Junqing, an analyst at Guosen Securities in Shanghai.”
“China’s banks have seen revenues and profits soar in recent years, driven by a fast-growing economy and rising real estate prices. But the country’s industry regulator warned in a report released Monday that they might face higher risks from fluctuating real estate prices and financial conditions.”
“‘Property market price fluctuation possibly could increase credit risks facing the banking industry,’ said Jiang Dingzhi, vice chairman of the China Banking Regulatory Commission, said in a report.”
“Chinese regulators have raised interest rates repeatedly over the past year and tightened lending standards in an effort to cool a boom in investment in real estate and other assets. They have warned repeatedly that runaway spending could lead to a debt crisis if investors in ill-conceived plans default on loans.”
The Sydney Morning Herald. “Almost $43 billion was wiped from the Australian sharemarket yesterday after panic selling caused the 11th consecutive day of losses.”
“The longest sell-off in 26 years, and the strong prospect of more days of red ink to come, takes the market’s losses since the start of this year to almost $200 billion, as fears of a recession in the US continue to cause havoc on global sharemarkets.”
“Investors dumped financial service companies because of fears they could be hit by the fallout from the US subprime mortgage meltdown.”
“‘What perhaps we are seeing a foretaste of is that most financial companies can go bust because they have so much leverage,’ said Hugh Giddy, a portfolio manager at Cannae Capital Partners. ‘Allco, MFS and some of the property trusts are all in danger if they have too much leverage - people are becoming risk averse about lending money.’”
“‘They are battening down the hatches for recession. This isn’t over; simply because of the pattern of refinancing of subprime,’ said Colonial First State’s head of investment markets research, Hans Kunnen.”
“Jean-Claude Trichet and Lawrence Summers accurately warned investors a year ago about being too complacent.”
“Former U.S. Treasury Secretary Summers returns to the World Economic Forum in Davos, Switzerland, this week urging quick action in the form of economic stimulus to head off ‘a cascading loss of confidence’ in the U.S. economy after the collapse of its housing market.”
“‘When you have recessions from bubbles bursting, they tend to be protracted,’ says Summers, a Harvard economist. ‘There is the possibility, not yet at all the probability, that a recession could prove long and severe.’”
“As the hubris that Trichet and Summers decried last year is replaced by fear, an aversion to risk-taking may worsen the outlook for the world economy.”
“‘Davos was marked last year by an irrational exuberance,’ Josef Ackermann, CEO of Deutsche Bank AG, Germany’s largest bank, said in an e-mailed response to a question. ‘I hope that we don’t swing to the opposite this year and give in to an irrational depression.’”
“Bankers are dumping derivatives that drove the credit boom. At the same time, they’re constraining lending and eliminating jobs.”
“‘We have to pay for the sins of the past,’ Klaus Schwab, the World Economic Forum’s founder and chairman, said in a Jan. 11 interview. ‘The mood of Davos has changed.’”
“Trichet said at the 2007 forum that a ‘reappreciation of risk’ was ‘likely.’ Summers compared the confident mood then with the market sentiment that prevailed just before World War I.”
“The financial crisis may turn out to be one of the worst ever, concludes a new paper co-written by Davos speaker Kenneth Rogoff of Harvard, the former chief economist at the International Monetary Fund, and Carmen Reinhart of the University of Maryland.”
“‘The big question is how deep the losses in the banking sector will be,’ Rogoff said in a Jan. 15 interview. ‘They will be at least $300 billion to $400 billion, which would be a moderate crisis. But if house prices continue to drop, we could see two or three times those losses, and it will one of the bigger financial crises.’”
The Press Telegram. “The call to freeze interest rates is fast becoming the rallying cry for Democratic presidential candidates. Hillary Rodham Clinton is the latest to jump aboard. During a debate in Nevada last week, she called for an immediate five-year freeze on mortgage interest rates.”
“Interest rates move in response to many stimuli - too many for the government to lasso. And they are pretty much a private-sector affair. Those interest rates the candidates want to freeze are a revenue stream investors bet on.”
“‘You would be getting a forced haircut on your investment from the government,’ said Keith T. Gumbinger, VP of mortgage-rate tracker HSH Associates.”
“Fortune magazine senior writer Jon Birger offered this harsh assessment in an article that popped up on CNN.com: ‘Hillary Clinton is no dummy. Even her detractors know that. And yet in last night’s Democratic presidential debate in Nevada, Clinton floated what is perhaps the dumbest solution to the current mortgage mess I’ve heard from a top presidential contender.’”
“This is a bad time for all the players in the mortgage pool, and a rate freeze could make it worse.”
“‘It certainly would not speed the recovery of the housing market,’ Doug Duncan, chief economist of the Mortgage Bankers Association, told Birger in the story. ‘The problem now is that investors are already worried about what the risks are, and (a rate freeze) would only widen risk premiums more.’”
“Gumbinger also points out that whoever wins the presidency - Democrat or Republican - won’t take office until a year from now.”
“‘I think a year from now the problem in the American mortgage market is going to look drastically different than what we’ve seen so far,’ he said.”
The Statesman Journal. “I need a man. A man who can say ‘No.’ A man who rejects Big Nanny government. A man who thinks being president doesn’t mean playing Santa Claus. A man who won’t panic in the face of economic pain. A man who won’t succumb to media-driven sob stories.”
“A man who can look voters, the media and the Chicken Littles in Congress in the eye and say the three words no one wants to hear in Washington: Suck. It. Up.”
“Which leading GOP candidate represents fiscal accountability and limited government? Who will take the side of responsible homeowners and responsible borrowers livid at bipartisan bailout plans for a minority of Americans who bought more house than they should have and took out unwise mortgages they knew they couldn’t repay?”
“I don’t want to hear Republicans recycling the Blame Predatory Lenders rhetoric. Enough with the victim card.”
“Borrowers are not all saints. There’s nothing compassionate about taking money from prudent, frugal families and using it to aid their reckless neighbors and co-workers who moved into McMansions they couldn’t afford or went crazy tapping their home equity and now find themselves underwater.”
“Economist Tyler Cowen points out…something you never hear politicians spotlight. He notes, ‘As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications,’ according to research on more than three million loans done by BasePoint Analytics.”
“‘Many of the frauds were simple rather than ingenious. In some cases, borrowers who were asked to state their incomes just lied, sometimes reporting five times actual income; other borrowers falsified income documents by using computers.”
“‘Too often, mortgage originators and middlemen looked the other way rather than slowing down the process or insisting on adequate documentation of income and assets. As long as housing prices kept rising, it didn’t seem to matter.’”
“As we head toward Super Tuesday, the subprime mess and the economy will dominate, and the Do Something Democrat candidates will turn their spigot of overextended homeowner sob stories on full blast. Do Republicans want a clear alternative? Or will you settle for a lip-service conservative who will reward fiscal recklessness with only slightly less government intervention than the Dems?”
“Message to Washington: Stop treating every defaulting borrower like Mother Teresa.”
BTW, I have a message from a New York reporter looking for info:
‘I’m writing about the state of the Manhattan marketplace and wanted to contact would-be buyers to see how they’re feeling about taking the plunge to buy.’
Send me an email if you are interested and I’ll forward it.
thehousingbubble@gmail.com
Is this really the place he wants to go to find out what J6P is thinking?
Ben, I’m surprised you don’t have a flood of Wall Street analysts and financial reporters calling you for interviews every day, given the verifiable superiority of your assessments, and those of the veteran posters in here, to the overpaid, catastrophically-wrong “analysts” parked in lower Manhattan.
I find people living in NYC tend to suffer from the fishbowl effect and not being able to see past theirs.
Wait until New Yawkers’ disdain for “the flyover States” turns to an “Escape from New York” anxiety to evacuate their sinking urban hellhole for places like North Dakota.
Not all Noo Yawkers are like that. Some of us have lived all over the world.
I still hear “we are different” from Manhattanites.
Fools!
The “we are different” is just fear masked as braggadocio. There is an underlying despair that takes time to see.
After all, at first impressions, you are not privy to their inner thoughts, or the stresses of the marriage, etc.
But if you observe the same set for a while, you begin to see patterns that are not apparent initially.
Manhattan is not different, emphatically so.
What I have seen in the last few weeks in my neighborhood is shocking but keeping complete time with who was swimming stark naked.
NYC and specifically Manhattan is different. Don’t you know that!
Narrow mindedness covers a lot of territory.
LOL… You got that right. I want to see Barbara Corcoran with egg on her face.
Super Bowl?! What Super Bowl!
Are you including NYCityBoy and NYdj and WT and me in that “people in NYC” comment?
mgc99 and I live in nyc. you out-of towners-are just sore cause you’re not in the super bowl. when the giants take it all, manhattan real estate will go to the moon, alice.
Little ol’ me lives in NYC too.
Me too. I rent in Queens, work in the city, and I am looking to buy in Manhattan. I have the downpayment, but the prices are just too high, IMO.
I have a well paying job, but what if I lose it? My current rental situation will let me go on comfortably even if my income is cut threefold. I won’t buy until prices come sufficiently down. I want to be able to pay my mortgage even if I lose my job and have to downsize - as simple as that.
There are a few of you in NYC that are gems, but most everybody else can’t see past their noses…
And if you want to know where all the perps are, to start the fraud investigations, they just happen to all work on Wall Street, as luck would have it.
Sounds like we’re ready for a NYC HBB get together next month.
I’m in…HBB meet up……NYchk, i’m in sunnyside queens….
Not much happening here yet, a 2 family house here and there sold last year. Most owners within a few blocks have lived here a long time so no need to sell. Also only a few new apt condoze small 3-4 6 units, only a few empty lots left, but nothing really worth bulldozing for tear downs.
The biggest construction was the 2000 room self storage place, after they tore down a beautiful 50’s style 1 story commercial building, putting 100+ people out of work as the last women’s bra manufacturer on the east coast.
They just want you to look foolish.
This is standard strategy at the beginning of the bust. Get some smarty pants and make them look dumb using historical data.
There will be stock arguments like “Maybe you don’t make enough money”, or “Prices have doubled”, “Manhattan is different”, “What if you can never afford it”
The usual garbage.
Next.
“Prices have doubled” - exactly. Prices have doubled, but salaries/bonuses did NOT double. Something is very wrong with that picture, no?
Tomorrows open is gonna be something to watch.
Yeah, I will probably stay up late tonight and watch the Europe open and then get up early to watch bubble vision for their spin..
Not to worry, the PPT is calling an emergency meeting.
There is no PPT. I kept telling my colleagues this during the dot.com bust. They kept arguing PPT would come to the rescue. Sadly, I couldn’t gloat when it was finally agreed there was no PPT (NASDAQ was down below 3500 at that point), as everyone had gotten fired.
The market’s behavior is no surprise. We have been predicting a crash for sometimes. I thought it would be last oct around halloween but it lasted a bit longer. I don’t understand why people should be surprised.
You really have to wonder.
Dow closes at 11,200? Mid day lows in the 10’s?
TxChick - what are YOU going to do tomorrow? I’m sure many of us would like to know…
buys index calls at 9, gets stopped out at 3.
I’m wondering….whadda you think cramer is gonna be saying tomorrow?
That the FED are a bunch of idiots for not lowering rates faster. As if lower interest rates is a panacea… the silver bullet that just fixes everything. He ignores fraud. He jumped on the AG of NY for subponeaing Wall Street over all this corrutpion because it might make the stock price go down.
The FED is in a no win situation. This is what Greenspan dealt Bernanke. Cramer thinks he is an idiot for not lowering more… faster… and we think the FED are idiots for not raising rates in the face of the highest inflation we have seen in years. They can’t win…
“I’m wondering….whadda you think cramer is gonna be saying tomorrow?”
“Yadda, yadda, yadda.” Whoops, wrong Cramer!
Thanks for the laugh. I suspect we could get even better financial advice from that Kramer!
Bubblevision tomorrow is going to be priceless.
I’m curios… if anyone has reasonably direct connection any trading platforms could they possibly graph ping times/accept() times? I’m thinking those graphs superimposed onto the market graphs may tell interesting story.
Nothing. Watch.
I think I’ll unload about half of my March BBY 40s for an unsane gain if we open with a gap down. That will cover all my premiums thus far this year and allow me to sit back and watch it all unravel.
I have a large part of my account in a very illiquid small cap which is a takeout candidate and was up 18% on Friday. That one is the key to my well being and it tends to do well on days the market is bad. Index positions are fun to do but I never have enough in them to do serious damage.
I say I’ll watch it go down 800 pts.
Hey, TxChick (or anyone else), I was looking at the SPY June options and wondering what the difference is between the two quotes at the same strike price?
Different expiry dates (quarterly vs monthly).
Thanks
Will you eat popcorn?
“Fear has very large eyes.” — Russian proverb.
Cramer’s protuberant, bug-like eyes are going to be even more hysterical tomorrow.
someone will need to give him a drool bucket, as well
“Cramer’s protuberant, bug-like eyes…”
I thought the alarmists had to be wrong, but down and S&P futures are really at -4.5 to -5%. This is somewhat problematic. Between home equity losses and stock losses (401ks etc), the average homeowner is looking at losses in 2008 in home and stock portfolio values in excess of their income.
Dow Futures were up -550 points one point today. It would be bloodbath, but wonder how much $$$ PPT will put into market. The may slow the fall, but certainly, the stock market is heading to deep correction.
All contained…
http://www.thisislondon.co.uk/news/article-23433407-details/Black+Monday+as+biggest+FTSE+crash+since+911+wipes+off+nearly+£60bn+in+shares/article.do
Liar, liar pants on fire!
now we have to deal with all the social unrest that this credit crisis will no doubt cause.
I was in a gun shop this past weekend. Place was quite busy.
They sellin’ any black helicopters over there?
No, it was mostly a huge run on tinfoil hats.
In related news, the G’ment plans to step up spying on paranoid schizophrenics. Here’s the video:
http://tinyurl.com/yuq32j
Gator that was hilarious.
It felt good to laugh so hard while I’m so damn spooked.
I don’t want paper money to be thrown from helicopter onto my head…. They may come with wheelbarrows like in 1920’s in Germany.
Exactly. Having it dropped on your head is kinda demeaning.
Same when I looked last week. I was in there on a weekday afternoon, mind you, and there was probably at least 20 people in the store. Then again, since there aren’t too many gun shops in OC, maybe it’s always busy!
Yeah, ya never know when the poverty stricken will all rise up and catch a bus into Orange County to liberate some food!
I’m not so much worried about that, and by the way, I don’t live in OC. But in the long-term view of things, I don’t think it hurts to have a firearm or two on hand. Perhaps you’ve never been through a hurricane or wildfires before.
RE: I don’t think it hurts to have a firearm or two on hand.
Best story I ever read about the need to have a firearm came from a guy who rode out the social collapse in NO.
He along with a neighbor decided to stay in their homes and ride out the hurricane and floods.
When the water receded and the cops had run away, all he could hear at night were blood curdling screams and gunshots which came closer and closer to his home.
“I’ve never been so scared in my life. I was literally pissing my pants. I would have given everything I owned-my banks accounts-title to my motor vehicles-title to my house…everything, for a AK-47 and ammo supply…Why an AK?…Because the problem out there in the night was bigger than any pea shooter was going to handle. Never-ever will I get caught again. The fear was paralyzing.”
From the tone of the story the guy sure didn’t sound like a tin-foil hat type to me.
So as the saying goes…better to have one and not need it…than need it-and not have it.
So my mini shelties won’t protect me.
Shit even Scarlett had a gun.
12ga. pump for me, 20ga. semi auto for wifey.
cayo_ron, I hate to sound like a smart ass, but I doubt you’ve ever shot at anyone, either.
hd74man, I’d say your guy made at least two mistakes far greater than my mistake to delude myself enough to think I need a gun for social unrest problems… Let’s examine this, shall we:
“Best story I ever read about the need to have a firearm came from a guy who rode out the social collapse in NO.
He along with a neighbor decided to stay in their homes and ride out the hurricane and floods.”
Here’s an illustration of big mistake numero uno.
Fortunately, no I have never had to shoot at anyone and hope I never have to, but if it ever came to that. . .
As for “deluding” yourself as to whether you think you need a gun or not, one only has to read about the many times a law-abiding citizen has successfully defended his/her life/property with a firearm. Does that negate the fact that there are many tragedies because of said homeowner using the gun improperly/being on the wrong end, etc.? No, no more so than people being killed on the freeway by drunk drivers. But I don’t hear too many people saying they don’t want to drive because of that.
social unrest ??
Yep…
all it takes is one match to light a powderkeg.
who knows we could have a la riot scenario all over again
Instead of 10% of the population being miffed, it’ll be closer to 100%, this go round.
There’s still time to get away…
And, surprisingly enough, the LA riots affected me to the tune of a big fat zero.
I watched the inner city of angles burning, from my vantage point on Parker Mesa, in Topanga State Park, way back when…
Got S’mores?
I watched a little bit of it on TV in Champaign, IL. (Go Illini!)
Mildly amusing.
I was unlucky enough to find myself in the midst of the Rodney King riots while driving the 10. Scary as hell.
I was in Laurel Canyon. They were banging out and about in WeHo and near the Beverly Center. If Westsiders think they are ok - think again.
Also, the Northridge quake was a good lesson for me on how fast the store sheves emptied (legally purchased, not looted) of EVERY SINGLE THING.
Finally something besides popcorn
Got S’mores?
who knows we could have a la riot scenario all over again
Nah. Most of the “pod people” will simply retreat deeper into their video games and other electronic escapism.
I agree — I think riots are an unlikely scenario. However, I do think desperate times will breed more desperate people. There’s a lot of places in Latin America where they would kill you for $40. Every place there just about has bars on the window. Sad.
“pod people”?
“Assured at first by the town psychiatrist (Dr. Dan Kaufman, played by Larry Gates) that the cases are nothing but “epidemic mass hysteria,” Bennell soon discovers, with the help of his friend Jack Belicec (King Donovan), that the townspeople are in fact being replaced by simulations grown from plantlike pods; perfect physical duplicates who kill and dispose of their human victims. The Pod People are indistinguishable from normal people, except for their utter lack of emotion. The pod people work together to secretly spread more pods—which grew from “seeds drifting through space for years”—in order to replace the entire human race.”
http://en.wikipedia.org/wiki/Invasion_of_the_Body_Snatchers
There are lots of places in this country where they will kill you for $10.
Ain’t no way this crash causes a survivalist scenario. Nothing like that happened in the great depression. And today, we’ll be much faster to print up as many dollars as it takes to keep the basic system running. You say money must be lent into existence, and no one wants to borrow? Trust me, anything resembling mass chaos, and one meeting of congress would legalize xeroxed dollars.
The only crises where everyone dies but the survivalists are things like mass nuke attacks or an 80% lethal bird flu virus. Not financial panics.
(I’m not saying there won’t be increased violence, or that you shouldn’t store food and guns. Just that it won’t be Road Warrior time.)
I don’t think it will be Road Warrior time either, but then again, I think it’s safe to say our society has changed a lot since the Great Depression. It wasn’t too often back then that kids in school went in and offed 5 or 6 of their peers, etc.
Maybe they didn’t have as many kids offing other kids because they didn’t have dumbass parents that leave guns lying around.
Switzerland has way more guns per capita than the US, yet very few Columbines either. I think it has a lot more to do with the social fabric than the access to weapons; although I agree, obviously felons/mentally ill/unstable people should not have access to guns.
Rintoul,
One scenario and a question:
You’re asleep at night and hear the sound of breaking glass coming from your living room.
Which would you rather have in your hand, a gun or a phone?
Everyone I’ve ever met who’s been attacked or stalked owns a gun (including myself). If you’re still anti-gun, it’s because you’ve never had the pleasure of meeting a violent criminal in an unexpected way. Lucky you. Doesn’t mean you’ll always be lucky in the future.
I truly wish you the best, but think you need to reconsider the REALITY of what you’re talking about.
Sounds like the Y2K kooks are getting fired up again.
Y2K was the biggest non-event imaginable…
This is not a drill.
There is a big difference between wholesale societal breakdown (which I don’t think will happen), and a massive increase in assaults, robberies, and burglaries (which I think very well may happen depending on how bad things get). Being prepared for the latter scenario does not make one a kook any more than having a couple of gallons of water on hand for an earthquake or wearing a seatbelt when driving a car for that matter. To be sure, there will be some that will probably take it to an extreme but it does not hurt to be prepared either.
Ah yes. My roomate got a gun nut magazine or two. I was reading one at breakfast, with a so-called IT type saying that y2k was serious (and he had the expertise to say so), and that every houses needed 4 guns. 2 pistols, 1 rifle and 1 shotgun if I remember correctly. And well, y2k came and went without too much issue. A lot of money was made. I bought a business phone system that was SO nice, all because it wasn’t “y2k certified” … on the voice mail computer you had to type in the date manually one time after 2000… then it worked fine. It was fun being able to call from room to room in the house, and our calls were answered by Audix, just like the fortune 500s. But forget PBX phone systems, this time I want a house.
New credit card ad,
cost of 300 gallons of bottled water: $600
cost of 6 months of hard rations: $9000
cost of 50 gallons of kerosene: $200
cost of 1000 rounds of ammo: $300
Never having to pay your bill due to the fall of Western Civilisation: priceless
I think more bullets will be eaten by their owners than put into other’s bodies.
Agreed.
http://www.preparedness.com/
Time to stock up. I’m looking at investing in places that cater to the soon-to-be soaring demand for “preparedness” - freeze dried foods, emergency equipment and supplies, etc. This will be the new gold rush, and I want to be a part owner in the store that’s selling all the picks and shovels.
I have recommended before, and continue to recommend
Simply Living Smart
They seem to have a good way of explaining how to store foods that your family will actually eat.
Also, providentliving.org
“cost of 1000 rounds of ammo: $300″
Have you checked out the cost of bullets lately?
Yup, and it’s all the more reason to load your own.
“Good evening, ladies and gentlemen. I am not an expert or a scholar or an activist. I am more of an eye-witness. I watched the Soviet Union collapse, and I have tried to put my observations into a concise message. I will leave it up to you to decide just how urgent a message it is.”
“My talk tonight is about the lack of collapse-preparedness here in the United States. I will compare it with the situation in the Soviet Union, prior to its collapse. The rhetorical device I am going to use is the “Collapse Gap” – to go along with the Nuclear Gap, and the Space Gap, and various other superpower gaps that were fashionable during the Cold War.”
http://www.energybulletin.net/23259.html
Wow, that’s really, really depressing … even though I think the presenter is too pessimistic. I think the UK makes a better analogy.
He’s crackpot.
remember when Buffett warned a few years back (2002?) that derivatives were weapons of mass financial destruction? how right he was. Easy Al on the other hand, loved derivatives. If I have time, I’ll dig up his quotes on the subject.
I just wonder, does Easy Al hire bodyguards when he visits the offices from Deutsche Bank and the like? Or does he limit his paid advice outside the US to virtual visits now? There must be workers in these institutions that are getting a bit less happy with Uncle Al. They should begin to understand that this guy has cost their company billions (and lots of jobs, includes their jobs soon) with his reckless FED policies and is raking in millions as a reward …
Dr. Estranged Love
(or how he learned to stop worrying and love his debt bomb)
Okay, some of the ideas floating out there now are drifting from wacky, right through reckless, and straight to dangerous. What some people won’t say for a cheap sound bite that’ll grab J6P’s attention between Am. Idol and UFC.
It’s an election year. What else were you expecting?
Only that someone would acknowledge the seriousness of the situation and urge that we step away from the brink instead of taking a swan dive.
enter the black swan
exit the dragon
I hear dragon is pretty good cooked on the grill…..tastes like chicken.
“WestLB AG, Germany’s third-biggest state-owned lender, said today it will report a full-year loss of about 1 billion euros ($1.45 billion) and shore up capital after writedowns and trading losses triggered by worst U.S. housing slump in 26 years.”
Mmmm. I’d like to start taking in the historical perspective here. So I’m 40… when they start saying “the worst in more than 40 yrs”; I’ll be really impressed. Beyond my life time.
Probably going to hear “unforseen consequences” and “unprecidented” a lot too.
Kudos to Txchick. She called it prior to 1/01/08 when she said just wait and see all the music change after the new year.
i have been reading this blog almost 2 years now and just about all the “shocking news” to come out in the msm was beaten like a dead horse right here months if not years before it was blip on the radar for the msm
this blog has some very sharp people posting here, i have learned so much
thanks to all and especially ben
yup… the info here is about as good (usually a few weeks late though) than the info one gets from top investment sites (costing 3,000 per year). I read both…
At the risk of offending the anti-Rush crowd, mega dittos.
that one wasn’t too difficult. Once the bonuses were in hand, no need to hold it up any longer. It has been harder to judge the severity of it though.
Message to Washington: Stop treating every defaulting borrower like Mother Teresa.
No politicain is going to pick up this hot potato. The illusion of FB as victim must be preserved at all cost - til after the election.
I dunno. There are a lot of prudent voters out there, folks who didn’t get swept up in this fever.
If they were smart enough to say no to the mania maybe they’ll be smart enough to say no to bailouts
Let’s just hope there are enough of them.
I don’t generally agree with Michelle and don’t care about her political perspective, but I agree with the enough is enough of the fbs as victims crap. If they were seen as the greedy irresponsible thieves and liars or morons most were - no would would be trying to bail them out. Then again, I’m not sure they’re just being used as a way to bail out the big boys. It’s all just nasty and dirty and tiring.
I don’t usually read Malkin at all, but she’s been so all over this issue that I wonder if she doesn’t read HBB.
Maybe she posts here. Who could she be now…?
MM has a distinctive way of writing, haven’t seen that ’round these parts.
I wonder what is going on “behind closed doors” today on Wall Street? Perhaps a little anxiety? Blood pressure rising? Or is this madness just a slight kerfuffle that will be a mere “flesh wound” by mid-week?
Flesh wound like say, this one?
http://www.youtube.com/watch?v=fuzLs5O95aE
Got coconuts?
Bet the Zantec has disappeared off every drugstore shelf in lower Manhattan.
The downgrades limit the number of funds that can hold the securitized trust certificates representing interests in mortgages. Wall Street is stuck keeping them on their books. The resulting writedowns will be monumental. Investment banks make little to no money holding onto mortgages and other debt they cant package and sell to investors. At the same time, the related developers/owners are not able to make capital calls. My work has shifted to almost entirely writing memos regarding how to unwind these transactions, and what legal rights and remedies exist between the parties. No more fancy closing dinners, just emergency calls in the middle of the night from ppl that cant sleep.
Something tells me that packaging and selling debt is going to be rethought in a big way.
“ACA Capital Holdings Inc., the bond insurer being run by regulators after subprime-mortgage losses, won a month’s grace to unwind $60 billion of credit-default swap contracts that it can’t pay. ACA was founded in 1997 by former Fitch executive H. Russell Fraser, who left the ratings company in 2001 as it shifted focus to structured finance from municipal bonds.”
30 days to come up with $60 Large?
ha ha
The sheiks’ cell phones will be ringing off the hook tonight.
at gun point, probably?
So W came back from the Saudi dance party with nothing?
Hand holding, sword holding and the odd kiss, was all that came out of it.
“I can press when there needs to be pressed; I can hold hands when there needs to be — hold hands.” –George W. Bush, on how he can contribute to the Middle East peace process, Washington, D.C., Jan. 4, 2008
“ACA was founded in 1997 by former Fitch executive H. Russell Fraser”
If I remember correctly, the surname Fraser (Frazier) was originally an occupational name given to strawberry pickers. That might have some significance for people who frequent this blog.
This is the clearest example of “failure to regulate” we may see in our lifetimes. We need to cut through the BS and agree on one simple fact:
The government has a responsibility to regulate industries that pose a significant potential risk to the country. It is never acceptable to claim the free market will take care of it. Never.
The Republican Party needs to be held accountable for this. Otherwise they will do it again.
‘It is never acceptable to claim the free market will take care of it. Never.’
The government IS the housing market. The markets didn’t have anything to do with it.
Didn’t the Fed just do away with liar loans, etc? The law was there all the time. This is a government failure, pure and simple.
“…This is a government failure, pure and simple”
Now give credit where credit is due: there are examples of Gov’t success: Wars in Iraq & Afghanistan come quickly to mind.
I agree it is a government failure, and that was my point. The government has to regulate, and enforce those regulations, and in the last 7 years we have seen neither. And during this period all we heard from the government is regulation and enforcement is not the answer, and that the market takes care of everything.
Of course, it was always bullshit.
Once again the blog demonstrates the beautiful simplicity of the Hegelian dialectic and how easy it is effected in politics. I’d like to be living in a Popper positivist potentiality, but his Philosophy is just not teneble for people that are determined to mold the future, which is in essence, to make history. Making history, IMHO, is the primary motivation of most politicians.
American democracy is only one choice better than old Russian socialism. The illusion of choice makes it so much stronger in controlling the proles.Yes, a 50-50 split between the Repubs and Demos will keep things nice for the elite until people realize that the two party system can be represented by the Worm Ouroboruos!
You’re always gonna be screwed no matter what you supposedly “choose”.
P.S. Don’t forget that Clinton did sign the GLB act which effectively repealed Glass-Steagel.
Beautifully illiterated.
Again: there is a difference between government REGULATION (policing) and government SUBSIDIES (housing-targeted tax breaks, GSE/FHA underwriting, etc.).
We have had SUBSIDIES in spades, but hardly any REGULATION.
Exactly HARM. Subprime should be banned entirely. There is no need for it. It was used to rip off those who didn’t know any better.
“It was used to rip off those who didn’t know any better”.
Those that don’t know any better will “always” be ripped off!
People who understand interest, collect it. Those who don’t, pay it.
Said by somebody years ago, still true.
But am I grateful Social Security was never privatized…can you imagine the additional carnage we’d be facing if Wall Street had gotten their paws on that.
Benny Franklin.
Imagine the surprise Calpers retirees will get when their fund unravels..hundreds of spec homes in Mexico ,India,and no one will be there to save them
http://biz.yahoo.com/ap/080120/mexico_housing.html
“We have had SUBSIDIES in spades, but hardly any REGULATION.”
Enforceable regulation should exist where taxpayers are at risk.
“I don’t want to hear Republicans recycling the Blame Predatory Lenders rhetoric. Enough with the victim card.”
And I don’t want to hear the Democrats blaming the Predatory Lenders either. Who is the always the first to cry “victim” when someone is “disenfranchised” from their right to own a McMansion?
At the risk of sounding redundant, I say again: Republicans and Democrats are two hairy ass cheeks surrounding the same stinking bunghole: predatory capitalism. Both parties are on the make and on the take, bereft of any true principles or convictions, driven only by the imperative of conning 51% of the sheeple who actually lurch into the polling place each election, to pull the lever for THEIR whore and swindler, rather than the other guy’s. The toolboxes who continue to go along with this charade, touting THEIR worthless party over the OTHER worthless party, display all the moronic flock behavior of their counterparts in the animal kingdom, the lowly sheep. Baaaaaaaaaaaaa! Baaaaaaaaaaaa!
Ron Paul in 2008!
Amen — it does seem like it’s come down to that. The system doesn’t really favor any would-be politician who have principles.
Isn’t Ron Paul a Republican?
Wouldn’t Ron Paul’s ultra-free-market stance strongly endorse the “let the market rule” ethos that got us into this mess? I’d like to know what the Ron Paul supporters think he would have done to prevent the housing bubble and collapse.
Ron Paul is an old-school Republican - the kind who believes in limited government, personal responsibility, and looks out for Main Street rather than Wall Street.
BULLSEYE!
When interest on a loan is a tax-deductable, the federal government has already had too much involvement. Half-capitalism doesn’t work - it’s worse than either extreme.
I agree 100%
One question - who was in the White House when Enron was doing their dirty deeds? Around 1998 or 1999. Refresh my memory…
Opinions like yours always make sense right up until the end when they swerve left, as if the demos are completely innocent in all this. In fact, why didn’t Pelosi or Reid DO SOMETHING about the economy a full year ago when they took control of Congress? Maybe because they could care less about anything execpt getting reelected, like all politicians?
Even a youngster can see that running to rescue of those who created this monster is utter suicide. Why bother?
I think the average congressmen and senators are generalists so bloody uninterested in business & economics that they don’t attention - except when a lobbyist is “educating” them on this and that issue. Same for state legislature. The people who halfway care about and understand this stuff would never dream of running for office. I wonder if Bloomberg even gets it, really, or do his flunkies deal with all that.
Perhaps this mighy refresh your memory a little az_owner
It always amazes me how the quote “all politicians” do it when the offenders gets caught and their are crys for some accountability:)
http://archives.cnn.com/2001/ALLPOLITICS/12/12/column.billpress/index.html
You can’t seriously be comparing fraud by one company to the mess in the housing market that permeated every housing market and pretty much every financial institution in the US? Are you?
I do agree with your point about politicians though…none of them hire advisors on how to govern effectively. They all hire advisors on how to win the next election. There should be term limits for Senators. Make it 2×8 years. That’s enough time to get a lot done.
When the constitution was written, what was the life span of someone in the US? 40? Maybe 50? Do you think the authors thought that there would be such a thing as a Strom Thurmond?
Ok you want more than one co.? How about the whold DotCom bomb/bubble? Who was in charge then? Gee, let me think, now, was it Slick Willie? A Democrat? Who reappointed Uncle Al to oversee the new balloon? Again, wasn’t it someone with a D after his name?
OH, that’s right, I forgot, it’s all Bush’ fault and if it wasn’t his, it was Cheney’s or Roves’, right?
I get so tired of this everything is bush’s fault msm non thinking rote, regurgitaion. Get a clue and a thought of your own.
Yep. He is/was a stellar success…. Afterall you got Katrina, Iraq, and best yet, even an idiot can look like a genius with the banks money.
Ben Franklin, born 1704, died 1790.
Next!
Heck, the senate-congress didn{t even read the Patriot Act themselves, so when asked later, they didn{t know all that the PA included. Now, why keep voting them into office so they can ruin all lives?
The Elephant was in charge fully in the Senate-Congress.
Entirely possible that those people, like Tom Delay et all who are up on charges, were changing laws and all the while
BC was busy trying to protect himself on all those investigations that turned out so well.
Reps and Dems in congress-senate need to be cleaned out . Period. But don{t keep flapping that ole rag around.. “who was in charge in those days” old bs.
sheesh.
The Republicans FORGOT about the lessons learned after Herbert Hoover. The MISTAKE cost them 50 years in the political wilderness & the new deal
I don’t think Hoover was so bad. I think Hoover gets a lot of flack because he basically did what China is trying to do now, which is to deflate a known bubble before it gets even bigger, so that the fallout from it will be a little bit less. He knew his history, including the South Sea Bubble Mississippi Co., etc. He knew that there would be pain when the bubble burst, but that its bursting was inevitable and the bigger the bubble was allowed to grow, the worse the eventual pain would be. It was his bad luck that agricultural/weather issues exacerbated the problem. Like a lot of people on this blog, he had a great distaste for specuvestors who in his opinion contributed nothing to the productive capacity of the country and were instead a destabilizing force.
Speaking of holding Republicans accountable, here’s a story from the Slim Family Collection…
Seems that my aunt’s next-door neighbors were very good friends with Herbert Hoover. In fact, my aunt met him in the neighbors’ house when she was 5 years old. That would have been in late 1932 or early 1933.
What stood out for my aunt was the fact that Hoover was dressed in white from head to toe. Wasn’t something she saw every day — her father (my grandfather) wasn’t a wearer of light-colored suits.
Oh, I should also note that the neighbors’ dog walked up to Hoover and lifted his leg.
What happened next? Did it urinate?
This kind of systemic failure to assess risk has been difficult for us to believe,’ said Citigroup analyst Heather Hunt.”
This coming from an analyst for CITIGROUP? If anyone failed to assess risk, it was the Citi outfit.
And why is this so hard to believe? The system failed to assess risk not 10 years ago, in the dot.com disaster.
But weren’t we in a New Economy?
This kind of systemic failure to assess risk has been difficult for us to believe,’ said Citigroup analyst Heather Hunt.”
Saw the same quote and could not believe she had the temerity to write that. Has she been sleepwalking for the past few years? Possibly she just crawled out of a cave and looked around for the first time in years. Love to know what kind of salary and bonus she’s pulling down for that insight. Of course, it might be affirmative action–Citibank hires the brain dead.
As has been quoted here before: “It is hard to get a man to understand something if his living depends on him not understanding it.” — Upton Sinclair
Has she been sleepwalking for the past few years?
Maybe Hunt is only her middle name, and her real last name is Van Winkle…
She probably got hired because either she is cute and eye candy in the office, she went to some Ivy League School like Harvard and yale or she went to Stanford and heck.. she might still have to be cute.
Who cares about brains?
Actually, I know many of these chickie-poos (not that way, you dirty lechers!)
They are playing two roles — firstly, as analysts but they have an inherent bias to be “positive”. It’s not explicit but it’s there.
The other thing is that they are not managing their own money. So each statement is couched in “maybe”, “perhaps”, “unlikely”, and other b**ghole-cloaking verbiage more appropriate to a lawyer than a true analyst analyzing anything.
There is zero incentive to call a spade a spade, and plenty of career-ending disincentive to rocking the boat. Poor things!
I wouldn’t care to do their job but I sympathize (at some level.)
Not managing their own money, is exactly why the us voter, should rise up against the senate-congress when it comes to insurance coverage, and oh say …pensions.
cause they dont have to deal with our lowly level as a nation of having no health insurance coverage or pensions.
gosh, I too would be rather lax, if I didn{t have to pay attention to the masses.
…yeah, I remember the “New Economy”… wasn’t the selling point that recessions were a thing of the past? Nothing but growth, growth ,growth..!
Oh, and companies didn’t have to make a profit anymore. The day I read that, I sold all my long positions.
send her an email an ask her
heather.hunt@citigroup.com
btw i just did, il post if she replies
http://www.kitco.com The World Spot Price - Asia/Europe/NY markets
MARKET IS CLOSED
(Will open in 14 mins.)
Metals Date Time (EST) Bid Ask Change from NY Close
GOLD 01/21/2008 13:08 864.00 864.70
HOLY COW! Gold at $864. What happened?
I think we are staring at deflation.
Oil/bear market began early last week. Watch it re-play a’la 1990’s.
“HOLY COW! Gold at $864. What happened?”
People are going to cash. Cash is liquid. Cash rules.
Cash is king.
How can cash be king if it gets inflated all the way to Saturn? I’m starting to think we should dispense with the pretend gold standard and start backing currencies with something that’s consistent to value, but not a finite resource.
Like, one man-hour of ditch digging. Kinda hard to rig the value of that.
What makes cash king is what it can be readily exchanged for, which is everything that is for sale.
Nothing else compares.
I lived in Mexico City during the hyperinflation days of the 70’s. Cash was something wanted to get rid of as soon as you got it.
Gold coins (centenarios) were very popular then.
We ain’t there yet.
Take a look at all the financial problems Americans are having and consider what is the one thing that will solve them: That one thing is CASH, as in the USD.
It’s not more debt, it’s not a bigger house, a new car - it’s cash.
Cash rules because it is king.
Cash is already performing excellent relative to most asset classes right now. Sure you can try to supercharge it by converting it into something that may go up, but it also involves serious risk. As long as real estate, stocks and other assets are plunging I am happy to get savings and CD rates. I’m not in it for the interest. It’s for safety and the increased buying power relative to the assets I want to buy with it.
cash performing excellent? just about the first day it did relatively well in 20 years or so … now when gold goes back under $250 I might change my mind, but I don’t think I will see that again in my lifetime (certainly we will see $2500 first).
“Like, one man-hour of ditch digging. Kinda hard to rig the value of that.”
It’s impossible to import too without experiencing collateral expenses.
Having to sell positions to get cash to pay margin calls. Will rebound after Fed cut and serious inflation begins. IMHO.
I believe that during recession gold or many other commodities do not go up. Since everyone needs a cash to pay the losses and debt, they need to sell their gold. Gold would be holding if we were in verge of hyperinflation. But I see there is two opposing trends… prices of daily products go up, housing goes down, and people earned income stagnates…
I think the people who own gold are the least likely to need cash now to pay for their losses and debt; probably most of them are more-or-less debt free.
That’s the source of the risk, IMHO.
The only people who buy gold are those who CHOOSE to buy it. They don’t buy it for industry as much as they used to, they buy it because they think it’s going to go up in value.
And so it goes up. So more people who don’t need to buy it, buy more. And it’s a self-fulfilling prophesy of speculation and greed since there is a limited amount of it (growing at a relatively limited rate). It goes up, and up, and up….until it doesn’t, just like tulip bulbs.
At least real estate as a hedge against inflation has some use other than being pretty to look at…
I agree. I don’t know for sure where it will during the course of this recession, but my guess is down. At the very least, I think it’s very, very risky. And no, not all gold buyers are like the buyers on this blog. Hedge funds are into precious metals, too. And you can but they’re leverage to the hilt. And it would be a pretty good bet that the money they’re playing with, and their transaction volume, is more than enough to overwhelm other types of buyers.
Sorry for the typos. I really should learn to proofread before clicking.
That is a huge assumption. Personally, I liquidated a significant holding of gold during the Skye family inflection point (basically to redeem the children from the manic Ex). Comes a day when you will gladly draw down on that yellow “store of wealth” to pay for necessities. That’s what a “store” is for.
The current crisis is a debt crisis, not a loss of wealth crisis. Gold will be sold in fear to exit investment plays, then to cover debt.
I believe that during recession gold or many other commodities do not go up.
Gold is not a commodity. It is money.
For reference, you might want to check on how it did during the very bad economic times of the 1970’s.
What?! Gold always goes up in value. Where did you hear otherwise? Apropos not a lot, one of the worst inflation’s in recorded history was experienced by the Spanish empire as a result of the flood of gold from the New World. But it’s different now.
All i can say to all you gold bugs out there, is that the larger financial system doesn’t work the way you think it does. And if it did, it wouldn’t work at all.
Oh, and the Chinese are currently the world’s largest producers of gold.
http://www.forbes.com/markets/emergingmarkets/2008/01/18/china-gold-production-markets-econ-cx_jc_0118markets02.html
System effects now dominate.
Very well said. There were several other bubbles in medieval history as well. During silver boom in Central Europe (Bohemia, Saxony), abundance of silver led to economic expansion, but also increasing inflation throughout medieval economy. This was catastrophic since all monetary payments were fixed in specific value. While country was rich in silver, small unit of currency would disappear from circulation, which hurt the poor classes. Only large unit coins were available, but they were out of reach for thousands of peasants who need to pay taxes to king, church, and landlords. It ended with the largest medieval bankruptcy of that time and prolonged Hussite wars. The inflation was soon replaced with deflation, since the population had shrunk 60% and amount of silver in circulation remained stable till late 1490’s. Similar silver/gold/ore boom occurred through Europe since Romans and value of ore had fluctuated significantly through the era.
r.e. HOLY COW! Gold at $864. What happened?
I think everyone is desperate for cash to meet margin calls etc… that they are liquidating anything and everything to raise capital. Not so much individual investors, but the major institutions are facing the margin calls, from the CDOs especially.
Gold is a good place to get some cash because its only down 5% this year, and still up alot from last year. If anything this illustrates the advantages of owning gold in times of financial stress.
And just think if, say, 15 % of the population tried to withdraw their money from the bank at the same time, say during the next week or two. (Actually, even 5% would probably cause a bank run)
Surprise, surprise, the money isn’t there. Oh, you didn’t realize that when “deposited” the mony at the bank, that you in fact became an unsecured creditor who is making a loan to the bank of your deposit. At that point in time, when it dawns on millions of people that the money simply isn’t there (or only about one or two percent there), what happens?
Fine print in the FDIC is that your money is “insured” but they can hold it for 10 years, you can{t get to it.
“can´t” = sorry using a keyboard in another country.
uh oh - a pretty good case that the short term “solution” will be to inflate, like mad. Only thing is, I don’t know how valid the assumption is that wages will actually respond the way the PTB would envision under this scenario.
http://www.prudentbear.com/index.php/BearsLairHome
Some time ago it became clear that the decision to inflate has been made. I think they were for gradual inflation, but things might have to be sped up more…
The real problem is in the belief that you can, or should, try to avoid a recession in the first place.
We have to avoid a recession at all costs. The only way to pay interest on the debt, and maybe make Social Security payments for another 10 years is if we NEVER have a recession.
One serious recession and the government is broke and won’t be able to pay all that was promised.
“…even at Yale in the 1960s and that the “General Theory of Employment, Interest and Money” was able to have such a formative influence on the mind of the young George W. Bush. However he doesn’t seem to have got beyond the “Cliff Notes” version”
Shrub had to use the “Cliff Notes” otherwise, it would have messed up his work study time working with the “Cheer & Yell” squad.
“…the assumption is that wages will actually respond …”
I’d love to hear the position of someone who really believes rising wages will come to the rescue.
There will be no meaningful wage inflation in this cycle.
The only way I can see wages rising is a serious shortage of labor. And that ain’t gonna happen in this environment.
In terms of the amount of house I can buy, my wages are raising every day.
Deflation rocks!
get out of airline stocks…shortage 777 pilots. Expansion maybe limited.
speaking of shortage of labor.. protecting their mega pensions, the ones that still have pensions.
I think authorities noticed the wages problem years ago already, and because of that they shifted their efforts to the yearly home equity payout. In my country the average yearly gain from home equity (over the last 10 years or so) was around 1/3 or the median wage; for many homeowners (about 50% of population over here) is was close to an extra income, every year. Central banks have to respike the housing punchbowl or think of something else to provide an equally big totally fake income stream, otherwise the debt pyramid will self-destruct.
nhz,
Here in CA, home equity increases were often MORE than combined HH income.
Scary, huh?
Deflation means those in debt have a harder and harder time paying it off. Deflation means that the banks WILL fail and all depositors will lose their money.
If you care about preserving your wealth under all circumstances put 50% in PM and 50% in cash and put it all under your mattress.
“If you care about preserving your wealth under all circumstances put 50% in PM and 50% in cash and put it all under your mattress.”
And how do you propose to protect it when you leave the house? What may sound safe is not always safe!!
“We need a president who can say ‘No’ ”
by
MICHELLE MALKIN
I nominate Michelle as Woman of the Year. Make that Woman of the Decade.
If I weren’t married…
That’s funny, because every time I hear her speak I want to vomit. Funny how things work, isn’t it?
I noticed your fav is the biggest FB handout promoter ever. Hmm.
I don’t know much about MM, but she said something that needed saying, and before super tuesday.
Who…….MM?
“I noticed your fav is the biggest FB handout promoter ever. Hmm.”
I never said I liked Bush. Not sure where you got that from.
I do agree with what she said in that post. But personally I don’t like her brand of politics. She has the Ann Coulter gene.
“She has the Ann Coulter gene.”
Which is closely related to the Michael Moore gene, the Al Franken gene, the Jeanne Garafalo gene, the Randi Rhodes gene…
Not really my style — I’m afraid I’m more given to the George Will highbrow tone — but politics takes all kinds. Some people like elbow-throwing more than others.
If you ever read or listened to any of those people, you would understand how wrong you are and how towing the “they are all the same” party line is just silly.
I don’t recall Janeane Garofalo never called anyone a “fag” or wished for their assasination, as Coulter has.
amen, edhopper
That opinion piece was so completely on target that I printed it out and posted it on my cubicle wall. In fact, I’m going to memorize it verbatim.
If I weren’t married…
If I weren’t married, if she weren’t married, if I weren’t fat and bald……..
It is too bad that she can’t admit that Ron Paul should be her candidate because she appears to care more about endless foreign wars than America.
Bronwyn Lance Chester, an editorial writer at The Virginian-Pilot, stated in November 2004 when the newspaper dropped Malkin’s column that Malkin “habitually mistakes shrill for thought-provoking and substitutes screaming for discussion. She’s an Asian Ann Coulter. … She’s the worst of what’s wrong with punditry today. She adds absolutely nothing to genuine political discourse.” Malkin responded “I’m not Asian, I’m American, for goodness’ sake. I would take the comparison to Ann Coulter as somewhat of a compliment. I have a lot of respect for Ann Coulter.”
She lost me right there. Ann Coulter? Ouch!
She’s an Asian Ann Coulter. … She’s the worst of what’s wrong with punditry today.
What does ethnicity have to do with any of this? Talk about shrill commentary…next the editorial writer will tell us all to Beware The Yellow Peril!
(Red Menace…no? ok, Beware the Pink Elephant.)
Excuse me? I like Pink Elephants.
However, what I really want is a Pink Kangaroo!
While I agree with this particular statement you posted (“We need a president who can say ‘No’ ”), Michelle Malkin is a cretin and a pro-fake war, pro-corporate bloat and corruption, pro-Bush Tool Of The Man.
Count me in the vomit camp, Mr. Joe Momma.
Yeah, she is a paid liar.
Actually there is only one conservative I can really even listen to, and I disagree with a lot he says. But at least I think he is being honest about his beliefs. I can respect an honest man that I disagree with.
Pat Buchanan.
That’s it. The rest are complete disasters, just like Malkin.
Nope, she nailed it…what she said was right…i disagree with both your assessments, but hey who the f($* am I.
crush
Hey crush, no harm no foul. You are entitled to your opinion. There is plenty of common ground around here.
roger that joe…just thought (regardless of her slant/or propensity to slant) she’s calling people out, and her voice is stronger than most…good on her.
crush
“’This kind of systemic failure to assess risk has been difficult for us to believe,’ said Citigroup analyst Heather Hunt.”
I can’t believe it either, Heather. Then again, I’m not a Citigroup analyst.
in other news heather was shocked that it was cold this morning
in nyc.
Yeah, they were shocked a few years ago when the Hudson froze over not realizing that it’s not that rare!
They will place trading curbs immediately on Wall Street tomorrow. I would expect an emergency rate cut at some point during the day tomorrow, given what has happened overseas and what the futures point towards tomorrow.
I would have to think that the combination of high gas prices, ever-increasing food costs, lower interest rates depleting savers’ incomes, cratering housing prices, and now a plummeting stock market should be enough to unnerve even well-healed RE speculators.
Maybe even the market in Eureka, Ca. will finally start to participate in the downturn??!
“I would expect an emergency rate cut at some point during the day tomorrow”
IMHO, that would just add to the panic…rate cut is priced in, and doing it earlier would just mean more fear in the federal government…
correct - any emergency cut would have to be 100 b.p. or there’ll be another Bronx cheer. But the big chop is not out of the question for tomorrow - I’d give it a 40% probability.
This is definitely enough of a capitulation that even if bearish the next couple days is not the time to be adding new short positions. We now have not only a recession but a non-trivial recession priced in, IMO. To short now you really are forecasting Depression, and while it could happen, betting on it right here could be costly.
Super Tuesday…comes early
“…The World Economic Forum’s founder and chairman, said in a Jan. 11 interview. ‘The mood of Davos has changed.’”
Hey Cramas$… do you see debt people yet?
I was rooting for a Chinese Olympics Boycott…but a Global Market collapse is a good substitute.
Chinese Olympics Boycott… wanted to breathe easier and it looks like tt will happen. Davos world economic forum will have a big week. Governments won’t listen though.
“The bond insurers, also known as monolines, guaranteed $127 billion of CDOs backed by subprime-mortgage securities as of June 30, according to S&P. Bond insurers’ shares plunged last week and credit-default swaps rose to a record on concern the companies may be unable to meet their obligations as the subprime-mortgage securities and collateralized debt obligations they guarantee slump in value.”
$127 Billion test monoline.
Got Trout?
“‘What perhaps we are seeing a foretaste of is that most financial companies can go bust because they have so much leverage,’
- I wrote last Friday quoting an interview on Kudlow, ” The last ten years of prosperity is directly from ‘Leverage’ … of the stock market and homeowners ‘Heloc’s’ and flipping.
J6P had no real money of his own - only pretend appreciation etc.
Sobay, you are right, cause j6p and all the rest of us, didn’t get pay raises, but pay cuts to the tune of -35%…. glad to be a renter, cause if we wanted to downsize even further, we could, quickly. BUy one of those rvs cheap and put in rv camp. cheap.
don’t need to just saying, renting is what will help some of us here on the HBB.
Predictions for whats going to happen this week?:
I see Down first thing, then maybe an emergency rate cut, maybe not, definite a full 1% cut at the planned time, slight bounce upward of 500 points in there, and then the grind down again by friday. Dow 9000 in a by summer, if not sooner.
Dow 9000 by summer. What do you base this on?
some really gnarly s**t, man.
It will depend on tomorrow how much liquidity is injected into stock market. Right now, we can see 500 points drop in Dow. However, asian and european banks can pull some money during the night into market. They have large reserves. Question lays in this week. If market go down slowly and gradually or plunge suddenly. I will not make a prediction, how low Dow will go. But I do believe it will be around level achieved in 2004/2005 level which was around 10500 and destroying two years of growth since it gain from then to high last year.
and in a nutshell that is why the short side is so seductive. See how quickly years of gains are wiped out. You make so much, so fast. The tradeoff is it doesn’t happen very often.
sounds like playing the DONT PASS in dice. 7 doesnt come very often, but then you cash outr at everyone elses expense
Well, if you can sacrifice the whole “being wrong for very very long” for the payoff, there’s also the monetary rewards at the end of the day.
Emotionally, not so easy. Very very hard.
All negative theta strategies are like that. Emotionally impossible to handle. However, large payoff.
You sound like Nassim Taleb. If you haven’t read his book, _Fooled by Randomness_, I recommend it.
t-minus 19 hours 15 mins
My fear is so much of the general public is in denial about so much of this or clueless. Many don’t believe there’s any real harm looming and still are barely catching up with the idea that there’s a subprime housing problem. All they know about the current financial mess is that the prez is promising them free money - $800 checks, so they think it’s happy days are here again. So much ignorance and denial.
I agree. The public, especially those with real estate interests, is in complete denial. There was an article in the local rag, the Eureka Times Standard, about declining home prices and mounting foreclosures (although, as I expected, Humboldt county is dead last out of all counties in California for foreclosure auctions per capita). I made my 2 cents known about how crooked real estate agents, loan brokers, and especially dumb-ass buyers were the ones responsible for the current meltdown, and that prices would need to correct back to 1997 levels. I got plenty of responses about how Humboldt county is different and home prices will never fall! There is still tons of denial out there in my part of California, but hopefully the plunging stock market will convince these people how dire the situation really is.
No, not every real estate pro is in denial. In fact many executive staff are very keen to what is going on. Very keen.
I agree. I know some real estate pros. They are sitting on cash, and waiting for opportunities to come to them (which they will).
know some RE professionals who (2 come to mind readily) short sold their homes.
Exactly. J6Pak=Dollar short and a day late. He still thinks gold is a good investment and oil is skyrocketing.
Wow, gold is down an entire 2% against U.S. dollar and less than 1% vs ROW. Right now it’s less than 1% off its highs vs euro and pound. Is really getting pounded in this 20+% market correction, has really been a lousy investment over the last six years, three years, six months, etc.
During the credit crunch in August it went from the low 7s to the mid 6s and everybody shouted deflation! Just like that it went to $780 while everyone was wringing their hands about deflation. It’s gone from $660 to $870 in 6 months even as the dollar has stopped appreciating. I’m with aladinsane on this one - gold will continue to outperform paper assets.
dollar stopped =dollar started
Ok. Gold always goes up, just like real estate. Good grief.
I’m stepping away from the computer with my hands up.
This stuff I’m reading will take forever to reach the masses.
No shopping and keep quiet!
“so much of the general public is in denial about so much of this or clueless”
Here here. Purely anecdotal, but I find nobody in my day to day comings and goings who has any clue about any of this. I still meet people planning to buy houses, going to school to become real estate agents, who seemingly haven’t even heard that the real estate market might be in trouble.
“‘We have underestimated the extent of the poor underwriting across the entire mortgage-backed securities and collateral debt obligation market. This kind of systemic failure to assess risk has been difficult for us to believe,’ said Citigroup analyst Heather Hunt.”
Atrociti what’s happening eh, Heather?
‘As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications,’
There’s the Stunning Statistic for today. 70% liar loans? Somebody ought to stick that in Hillary’s piehole.
(IMO Hillary’s not a font of evil, but the Pander Bear act is getting old. At least Dodd knew when to stop.)
Somebody ought to stick that in Hillary’s piehole.
Amen!!!!!! (thats not all that should be stuck in her piehole)
“‘There’s naked panic here — we’re seeing a classic crash,’ said one share trader. Analysts at JP Morgan Asset Management said investor sentiment had reached ‘panic level.’”
Speechless!
After reading that last article from Ben, I can’t move.
BTW, I believe the preliminary NYC and New York State budgets are due to be presented tomorrow.
My suggestion: postpone the presentation, tear up the documents, and start over.
Meaning that the budget deficit will be a lot worse ??
“‘Too often, mortgage originators and middlemen looked the other way rather than slowing down the process or insisting on adequate documentation of income and assets. As long as housing prices kept rising, it didn’t seem to matter.’”
That is an understatement. I can say from personal experience, the a mortgage broker ADVISED me to lie about my income and told me exactly what to put down on my load application. I didn’t go for it but it goes to show you, they weren’t simply looking the other way.
“load application”???
A telling typo - if you were advised to inflate income, I’m sure it would have been nothing but a “load of s—”!
Be nice. Julie jud had a cohd.
“Led be fidadize your load abblicatiod…ACHOO!”
“I don’t want to hear Republicans recycling the Blame Predatory Lenders rhetoric. Enough with the victim card.”
“Borrowers are not all saints. There’s nothing compassionate about taking money from prudent, frugal families and using it to aid their reckless neighbors and co-workers who moved into McMansions they couldn’t afford or went crazy tapping their home equity and now find themselves underwater.”
Wow! Atl least *somone* gets it! The only True Victims of the sub-prime mess are the tiny fraction of the population that consistently tries to save money! With our negative savings rate, they’re a minority. Add in the 5% of the American people that pay 50% of the taxes, and you’ve got your victims.
and don’t forget there are plenty of victims outside the USA as well; maybe not a problem for the US right away, but probably more so in the more distant future.
I don’t know reuven. Chase came after me pretty hard to refinance. Again and again and again even after I laughed at them and called the local rep the devil. LOL That was fun.
The truth is if I wasn’t a total cynic from the word go they might have actually worn me down. They’re still sending me offers to take out a loan to fix up my new home now that I’m a renter. Idiots!
No offense, CarrieAnn, but that’s like blaming McDonald’s advertising for fat people.
I agree the lenders are nasty! But most home mortgages were “no recourse”, and we have bankruptcy instead of debtors prisons to protect borrowers against abusive lenders.
Isn’t that enough? There’s a limit to what we can do to protect people.
Ben, about Hillary. I don’t agree with her on her housing solutions. But I don’t define any candidate by just one issue. I am looking for a competent leader that can lead us out of the mess we are in. I remember the 1990’s very well and the Clinton admin was the most professionally managed we’ve ever seen. I don’t think we need a trainee right now. We need someone that can come in and get working on day one. I don’t see any alternative to Hillary and Bill. I am just glad we have that option. The housing plan she has sucks IMO, but I also know the Clinton’s are very smart and they may have the best plan to solve this problem. If anyone can solve the problems we are facing Bill and Hillary can. Love them or hate them, you have to admit they are smart and they know how to run the country.
I hope we can all rise above petty politics and agree we need a pro to solve these problems. Someone with on the job experience.
On the Republican side I would give the nod to Romney for the same reason. McCain would be another disaster.
Will the Clintons bring back Worldcom?
Oh yeah, and Pets.com too.
Man, those were great days of companies with solid economic foundations! The Nasdaq had every reason to be over 5000 with such solid fundamentals in place and such competent leadership at the top of government ensuring that all those earnings statements were legit, pre S-O.
Agree about Romney/McCain, but this will be a “clothespinner” for both sides I’m sure.
Can we really blame them for pets.com? lol
Apparently the Clinton’s were in charge of all the private money on Sand Hill Road, and then also in charge of all the private money who bought pets.com when it went public.
The tech boom/bust was simply the result of the invention of an entirely new business ecosystem (the internet), the excitement that surrounded it, and the desire for all sorts of people to exploit it for profit. This meant LOTS of investment, LOTS of failure, and the creation of a few juggernauts like Google, Yahoo, Amazon and eBay. Are you going to give the Clinton’s credit for Yahoo, Amazon and eBay? I sure as hell won’t.
No one on Sand Hill Road is lamenting the tech boom/bust. Taking massive risks for potentially massive rewards is what tech investing is all about. Too bad J6P didn’t understand the risks when he invested in Pets.com or Webvan.
S-O wouldn’t have stopped the tech boom/bust. It may have stopped Enron, but pets.com, Webvan, etc. would have all boomed and busted the same.
Also, another thought. Obviously the MSM has been brutal on Hillary, and it is clear they don’t want her to win. But I wonder if this economic crisis becomes so big that the MSM actually begins to shift support for her. The last thing anyone really wants to see is the US economy collapse. Even the people that hate the Clinton’s know they are very capable of fixing this mess. If they can’t, nobody can.
I would pay attention to the coverage she gets as the economic picture darkens. A clear signal would be negative stories coming out about Obama. There have been none yet but that would be a clear sign. I figure they are saving it up to swiftboat him later, once Hillary is out of the way, but if that happens you will know who the MSM wants.
I think the time is now to put politics aside and get a pro in DC.
Cruella d’Clinton is not what this country needs now, nor did it ever.
It’s a mistake to over-personalize “Great Man” politics and policy.
The Clintons ~might~ have more long-term oriented people in oversight positions — rather than the looters we have now — but the levers of power themselves are rather ba-roken at the moment.
“Love them or hate them, you have to admit they are smart and they know how to run the country.”
“Even the people that hate the Clinton’s know they are very capable of fixing this mess. If they can’t, nobody can.”
We have to admit, we know?
Joe, the casual way you have about thinking for others has gotten very insulting.
Just remember that GWB does not have to give up his throne:
http://tinyurl.com/2gqgrs
These Directives assign explicit power to the executive branch to run the federal government. The legislative and judicial branches of government become irrelevant. In effect, we have a dictatorship.
And under what circumstances can Bush invoke these Directives?
Paragraphs 2b and 2d explain it thoroughly:
(2) (b) “Catastrophic Emergency” means any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy, or government functions
I’m not wearing a tin foil hat, but it’s now possible for a president to postpone elections. I would assume that the way this conversation is going that there could be an economic emergency, which would need to be “controlled.”
It amazes me that ther are people that cannot or will not recognize the primordial, gut-level hate that a significant percentage of the United States population has for the Clintons.
The Republicans need to be sent to the woodshed for 10-20 years….the ONLY way they will pull out the 2008 election is if Clinton is the Democratic nominee.
Clinton? Fixing the mess? Did they ever run any successful business? If shit his the fan, your choices are Bloomberg and Romney.
billary and bill may not be our best hope but IMO people will be voting for change. How can she be any worse than the %#@!! that is in office now?
Hilary’s already been president. Time for someone new.
America… the last 17 years:
Bush…Clinton / Clinton…Bush / Bush…Clinton?
How does Wall Street deal with such diversity?
Sadly, it’s been 27 years of bushclintonbush…
No wonder you hate Malkin.
Clinton oversaw the biggest bubble of the 20th century, raking in tons of federal taxes that supposedly balanced the budget (his worshipers endless tell us), but its pop is somehow ignored by True Believers. Now we have a Bigger Buggle of the 21st century, and those same True Believers want to reinact the last one.
I didn’t know hiring goon squads (a.k.a. private investigators and professional mud-slingers), lying under oath, shredding law firm records, insider trading, and, oh yes, having endless phone sex during working hours in the oval office were signs of good leadership, but Bush seems to think highly of the Clintons too, so that tells us consistency is possible. Hillary Clinton is taking in a fortune in donations from investment banks and bankers, Wall Street firms, and non-existent Chinese/American citizens (same old, same old), so I expect her to do the right thing, as always. How well I remember is so called universal health care solution that would have forced every American to get an HMO policy (she just happened to have invested in HMOS), and her secret hearings involving insurance company/HMO lobbyists paying tens of thousands each for access. Ralph Nader was so impressed, he’s STILL blasting her for it. Her working group members were told they could not even consider a single-payer plan, which would, of course, have knocked out the HMO/insurance companies paying the Democratic Party huge bucks to be participants in the scheme.
By all means bring this charming duo back, so they can take whatever furniture they missed the first time they left the White House.
Incredulous, you are really a piece of work….sorry, but no one on this blog really enjoys listening to your bu11s4It rants.
Speak for yourself Hondje, and, by the way, dart-throwing doesn’t win any points.
i did. time for someone new.
I enjoyed his rant very much.
(You’re the second person in this thread to state how other people think.)
Thank you, but I didn’t think of it as a rant: just a partially-sarcastic response to joe mamma’s observations on the Clintons. Evidently their worshipers are still building idols in woodsheds, and to utter anything antagonistic is still heretical.
The housing bubble DWARFED the .com thing in every possible way - and our President STILL can’t balance the budget….
Since they are going to have eight years of presidential arrogance to build up, I’d rather they don’t have a head start from previous administrations.
Regardless of what I think the crimes of the two “families” are, (don’t ya feel like the mafia is running the country?) I don’t think the next Pres can stop this thing, or fix it. We didn’t have enough pain to do anything grass roots.
“The housing plan she has sucks IMO…you have to admit they are smart”
The housing bubble, collapsing credit, and the American economy are now taking center stage as THE issue. On this issue, you admit in the first breath that her plan “sucks”, and in the next, you say that we would have to admit that she is smart?
And I’m not picking on Hilary here…where were these “leaders of our country” a year ago, two years ago? Did they see this coming? And now, they, along with their “smart people” consultants that didn’t see this coming EITHER, are working on a fix, and I’m supposed to believe that they know what they are doing?
In other words, why should I believe that *any* of these candidates know how to “fix’” foreign policy? Or “fix” healthcare? Or “fix” social security and medicare? Or “fix” the economy?
I recommend that we stop playing partisan games, and start demanding more from our elected officials…FOR ONCE.
LOL, that’s too funny!
“As we head toward Super Tuesday, the subprime mess and the economy will dominate, and the Do Something Democrat candidates will turn their spigot of overextended homeowner sob stories on full blast. Do Republicans want a clear alternative? Or will you settle for a lip-service conservative who will reward fiscal recklessness with only slightly less government intervention than the Dems?”
Amazingly, the repos want another evang or an old man that wants to perpetuate war.
They stand for NOTHING.
I was raised with conservative beliefs and have pulled a lever for Bush a few times in my life, but the republican party is so lost in the woods that I’m embarassed about my registered party.
The democrats have a shot but it’s not with Hillary - she has zero centrist appeal. That’ll just lock in the Republican nominee. Then we’re stuck with another evangelical, hawkish, domineering bastard, with absolutely zero fiscal conservativism.
Bloomberg & Ron Paul with a “Draw Call” down the middle…..
“Trichet said at the 2007 forum that a ‘reappreciation of risk’ was ‘likely.’ Summers compared the confident mood then with the market sentiment that prevailed just before World War I.”
Guns of August, Funds of August.
“The reports were the first indication that Chinese lenders, which have so far avoided damage from the U.S. credit crisis, might face problems due to their holdings of subprime securities. Also Monday, China’s banking regulator warned that lenders might face risks from fluctuations in fast-rising real estate prices.”
Finally this stuff starts showing up in China. This is akin to someone aboard the Titanic saying they see something in the water ahead. They haven’t even realized its an iceberg yet.
They could easily over-react in China using the US housing bubble as a generalized bogeyman, 40% loss reserves geesh. Do they think we’re a bunch of beer-guzzling deadbeats?
This is a very interesting story…
http://www.reportonbusiness.com/servlet/story/RTGAM.20080118.r-cover-cibc19/BNStory/Business/home
Imagine leaving a year ago to sail around the world solo and just getting back.
Let’s see, last I heard there was that little problem with a small group of mortgages and it looked like house prices were leveling off in some areas, but the HB stocks were actually rallying. I remember Bob Pasani down on the floor of the NYSE and some mild-mannered debate about whether or not there would be “contagion” - I do remember Cramer laughing and mocking people who thought it was anything to be worried about.
Any update on that yet?
“Déjà vu”: from Mr. Beer & Cigar Guy… July 24th 2007:
Comment by Beer and Cigar Guy
2007-07-24 06:10:39
“… primarily related to its investments in prime home equity loans,”. PRIME loans?!? I thought that this couldn’t possibly happen? But then again, I also thought that there wasn’t a housing bubble. Then I thought that there was just a minor correction and prices would shoot back up any day. Then I thought that things would rebound in the spring. Then I thought that there MIGHT be a small issue in SOME subprime loans, but that it was such a miniscule segment of that market that it wouldn’t even matter. Then I thought, ‘So what, there IS a SMALL problem in subprime, but not every mortgage that goes into default actually gets foreclosed upon’. Then I thought there actually WAS a problem in subprime, but it was contained and would not effect the stock market or the economy. Then I thought that hedge funds blow up anyway and it was probably just coincidence that these were stuffed with CDOs- besides, it was contained to subprime mortgages. Then I thought that it might have spread a little to Alt-A mortgages, but not enough to mention. Then I thought that Alt-A was impaired as well and there was apparently rampant fraud throughout the entire market. But who would have thought that there could be problems with prime?!? Angelo- talk to me!
There…your update has been successful…restart your computer now?
“‘Davos was marked last year by an irrational exuberance,’ Josef Ackermann, CEO of Deutsche Bank AG, Germany’s largest bank, said in an e-mailed response to a question.
Ever have the feeling your “in” too early?
Let loose the hounds of Hell!
Comment by hwy50ina49dodge
2006-12-23 08:18:53
http://thehousingbubbleblog.com/?p=2053
Cause and effect in American economics: 2007 and beyond
“Irrational exuberance” precedes: “Rational emaciation”
Subject: Financial behavior of the masses (individuals)
One of the goals:
Anticipate
5. to nullify, prevent, or forestall by taking countermeasures in advance:
3. to perform (an action) before another has had time to act.
Emaciated:adjective
Origin: 1640–50; L émaciātus,… wasted away,… equiv. to é- e- + maciātus, ptp. of maciāre to produce leanness (maci(és) leanness + -ātus -ate1)
“A house divided against itself cannot stand.”
Abraham Lincoln
…and before him JC himself.
If that’s true, then we’re in big trouble.
Gov’t rebates & more $90.00 Oil = stabilized unemployment & house prices at the same time.
U.S. energy chief pleads for more Saudi, OPEC oil
“U.S. Energy Secretary Sam Bodman repeated his plea on Monday for more oil from top exporter Saudi Arabia,…”
“…He added however, that the United States had no intention of changing the rate at which it was filling its strategic petroleum reserves despite high oil prices.”
http://www.reuters.com/article/ousiv/idUSL2133633420080121?sp=true
I doubt the Saudis are capable of increasing production.
And by the way, it’s been 34 years since the first oil embargo, and the US strategic petroleum reserve is not yet filled.
Some fool released a bunch in 2000 trying to get their VP elected…
Another fool won by criticizing the first fool for “not having an energy policy”. Hows that working out with fuel at $3.50/gal?
Doesn’t everybody understand yet that the SPR isn’t for domestic consumption??? It would last a few weeks for the US, but months when deployed with the forces it’s really stockpiled to support. This stuff is for Blackhawks and Humvees…
Wouldn’t it be nice of the Dept. of Energy actually developed a coherent, long-term energy policy that would incorporate existing technology (say nuclear) with new technology to use the country’s assets (like an economical way to liquify coal) as well as supporting r&d into nonosolar, wave energy and anything else that might work?
Is there a reason for a Secretary of Energy to do nothing but beg the Saudi’s for more oil at any price?
I thought that was W’s job.
But W is the CEO president! …I never understood why the GOPs supported this legacy MBA dilettante. All hat and no cattle.
Ben,
Here’s the latest foreclosure numbers from today’s Austin Business Journal:
http://www.bizjournals.com/austin/stories/2008/01/21/daily3.html?f=et51&ana=e_du
“In the Central Texas region, six counties set new all time record highs in foreclosure postings,” says George Roddy, senior vice president of FLS. ”
Roddy says it’s too early to predict whether February’s surge is an anomaly or a harbinger of what’s ahead. “One month does not make a new trend,” he says. “We need to watch the next several months carefully. However, I believe we will continue to see foreclosures at high levels for some time and that we will periodically see these types of extreme surges.”
Europe Not Fearful of US Recession
Monday January 21, 3:07 pm ET
By Matt Moore, AP Business Writer
In Europe, Concern Over a US Recession, but No Fear of Falling Into One Yet
“There are other countries around the world that are more important than they used to be — eastern Europe, Asia, the oil countries,” he said. “Nobody is resilient but the U.S. is a bit less important than it used to be.”
http://biz.yahoo.com/ap/080121/recession_watch_europe.html?.v=1
Ignorance is bliss?
“Ambac Financial Group Inc., the second-largest bond insurer, had its AAA credit ranking cut to AA by Fitch Ratings. Both Ambac and its larger rival, MBIA Inc., are under threat of losing the top grades from Moody’s Investors Service and S&P, a move that would throw doubt on the ratings of $2.4 trillion of securities.”
A lot of bloodletting coming out of Moody’s…
Are they on their.?
Consumers Retrench As Economy Weakens
Monday January 21, 3:05 pm ET
By Eileen Alt Powell, AP Business Writer
Consumers Pull Back on Spending, Worry More About Debt As Economy Weakens
When the economy stumbles, “you have to begin living within your means, or you’ll be forced to do so,” Zandi said.
But Americans are much better spenders than savers, said Greg McBride, senior financial analyst with Bankrate.com, an online financial information service.
“Consumer spending isn’t something that gets turned on and off like a light switch,” he said. “People will say they need to cut back, but they often lack the willpower to do it.”
http://biz.yahoo.com/ap/080121/recession_watch_consumers_react.html?.v=2
“As we head toward Super Tuesday, the subprime mess and the economy will dominate, and the Do Something Democrat candidates will turn their spigot of overextended homeowner sob stories on full blast. Do Republicans want a clear alternative? Or will you settle for a lip-service conservative who will reward fiscal recklessness with only slightly less government intervention than the Dems?”
I get the sneaky feeling tomorrow is the real Super Tuesday.
First headline I saw this morning was something about somebody in Congress saying they they could have a “package” in place by March. I thought, oh boy, these guys have no clue what timely means.
But, tomorrow panic mode beings. I’m with U on AU - gold is looking like Mr. Right again.
If cash is king then silver is a GOD:
http://stockcharts.com/charts/performance/perf.html?GOLD,SILVER,USD,C,BBT,INDU,HGX,CFC
“WestLB said its owners, local community savings banks and the state government of North Rhine-Westphalia, would foot the bill for the losses. It puts Germany back in the spotlight as one of the countries worst affected by the credit markets crisis, which almost sank two German banks and has sucked in many more.”
Germans (Hans6pak?) didn’t really participate in the global housing bubble, but the wreckage done to their banking system because of it, will make up for their lack of participation.
http://www.youtube.com/watch?v=LZizOAR6a-c&feature=related
Watching all this financial carnage unfold, I feel a bit like Ed Norton/Tyler Durden in the final scene of FIGHT CLUB, serenely holding hands with Marla (Helena Bonham Carter) as they behold the skyscrappers housing the headquarters of the credit card companies implode and tumble down like dominoes.
Effing awesome, Sammy - that scene is always playing somewhere in the back of my head during times like these.
Instead of the California thread, perhaps its time for the Germany thread.
FWIW, on Friday I had finally convinced myself of a bottom in the current correction in PMs, at least enough to dip a toe in and go for a “long” swim.
I placed a limit order for 5K shares of CDE. It only dipped far enough to fill 100 shares. Well, it seems that was a little bit of manna from heaven for me with what went on today in the world markets, including PMs.
My no brainer trade for tommorow AM? On a gap down in miners, go long for a touchdown, though I’ll still only get in halfway.
Charts for your consideration:
http://stockcharts.com/h-sc/ui?s=SILVER&p=D&yr=3&mn=0&dy=0&id=p88588490191
What concerns me is the possibility of a panic scenario in the metals….panic buying. There is simply no other asset class that is more compelling to own outside the pm’s. I mean ultra compelling.
Buying at the 50dma would be prudent….if not before on a pullback.
Scale in……
Yahoo Plans to Layoff Hundreds…
http://www.nytimes.com/2008/01/22/technology/22yahoo.html?_r=1&hp&oref=slogin
How ’bout that continued selloff in the nikkei and aussie indices. Gap down again and -5% or so…
If I was Hindu I’d say “holy cow”!
Pussycat you still there?
But if you observe the same set for a while, you begin to see patterns that are not apparent initially.
well I guess you do!
God bless the great city of New York!
I’m awake. Had to wake up to see the EU open.
The Wall Street Journal: Trader made billions on subprime
“On Wall Street, the losers in the collapse of the housing market are legion. The biggest winner looks to be John Paulson, a little-known hedge fund manager who smelled trouble two years ago. Funds he runs were up $15 billion in 2007 on a spectacularly successful bet against the housing market. Mr. Paulson has reaped an estimated $3 billion to $4 billion for himself - believed to be the largest one-year payday in Wall Street history.
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“Now, in another twist in financial history, Mr. Paulson is retaining as an adviser a man some blame for helping feed the housing-market bubble by keeping interest rates so low: former Federal Reserve Chairman Alan Greenspan.
“‘Most people told us house prices never go down on a national level, and that there had never been a default of an investment-grade-rated mortgage bond,’ Mr. Paulson says. ‘Mortgage experts were too caught up’ in the housing boom.
“In several interviews, Mr. Paulson made his first comments on how he made his historic coup. Merely holding a different opinion from the blundering herd wasn’t enough to produce huge profits. He also had to think up a technical way to bet against the housing and mortgage markets, given that, as he notes, ‘you can’t short houses.’
“Also key: Mr. Paulson didn’t turn bearish too early. Some close students of the housing market did just that, investing for a downturn years ago - only to suffer such painful losses waiting for a collapse that they finally unwound their bearish bets. Mr. Paulson, whose investment specialty lay elsewhere, turned his attention to the housing market more recently, and got bearish at just about the right time.
“Mr. Paulson has taken profits on some, but not most, of his bets. He remains a bear on housing, predicting it will take years for home prices to recover. He’s also betting against other parts of the economy, such as credit-card and auto loans. He tells investors ‘it’s still not too late’ to bet on economic troubles.
At the same time, he’s looking to the next turn in the cycle. In a recent investor presentation, he said his firm would at some point ’start preparing’ for opportunities in troubled debt.”
Source: Gregory Zuckerman, The Wall Street Journal, January 15, 2008.
“It is hard to get a man to understand something if his living depends on him not understanding it.” — Upton Sinclair
But, that doesn’t mean we have to allow the ‘tool’ to be appointed to the highest office in the land…
EU is taking a crapper at the open. Schweet!